Every quarter, many money managers have to disclose what they've bought and sold. Their latest moves can shine a bright light on smart stock picks.
Today let's look at investing giant Seth Klarman, who founded the Baupost Group hedge fund company back in 1982. Klarman is a successful investor with a lot to teach us. He sticks to his value-investing principles so much that at times he has a large chunk of his assets in cash because he can't find sufficient bargains.
Why should you look at Baupost's moves? Well, according to the folks at GuruFocus.com, it has averaged gains of close to 20% annually since its inception, far outstripping the S&P 500.
Baupost's stock portfolio totaled $2.9 billion in value as of March 31, 2012, with just 19 holdings. The top three holdings, making up fully 45% of the portfolio's overall value, were Viasat, BP
So what does Baupost's latest quarterly 13F filing tell us? Here are a few interesting details:
For starters, Klarman didn't add any new holdings to the portfolio, though he did unload some, such as PDL BioPharma
Among holdings in which Baupost increased its stake were Idenix Pharmaceuticals
Baupost reduced its stake in several companies, including Hewlett-Packard and BP. Hewlett-Packard's history is littered with embarrassments, such as the Mark Hurd scandal, rapid CEO turnover, an aborted sale of its PC division, and dysfunction in its board of directors (it sports a poor "F" rating in governance from the folks at GMI Ratings). New CEO Meg Whitman plans to merge printer and PC lines, and many investors are choosing to watch and wait. Check out why our analysts think the company is "still dead in the water." Scandal-ridden BP, meanwhile, has many investors spooked by further financial consequences it may face due to its involvement in the big oil spill in the Gulf of Mexico. But with the stock down, many settlements now behind it, active drilling going on, and the company rolling out spill containment kits, some now see the stock as a bargain.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.
BP is not the only potential oil-related bargain around. Check out our special free report, " 3 Stocks for $100 Oil ," to learn about three compelling candidates for your portfolio.