Every quarter, many money managers have to disclose what they've bought and sold, via 13F filings. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at investing giant Bill Ackman, who founded Pershing Square Capital Management in 2003. An investor with roots in real estate, Ackman is an activist, often advocating strongly for big changes at companies in which he has invested heavily. Soon after Ackman invested in the Fortune Brands conglomerate, for example, the company began looking to spin off various divisions -- which it has now done, breaking up into the alcohol-focused Beam and Fortune Brands Home & Security
Pershing Square's reportable stock portfolio totaled $7.6 billion in value as of June 30, 2012, spread over just a small handful of stocks. Now that's concentration! Its top three holdings make up a whopping 58% of the portfolio's total value. They're Canadian Pacific Railway, Procter & Gamble
So what does Pershing Square's latest quarterly 13F filing tell us? Here are a few interesting details:
Procter & Gamble is a new and very major holding, and one with a lot of promise, despite having recently delivered underwhelming quarterly earnings and revenue and a disappointing performance in emerging markets. Given Ackman's history of activism, investors are watching to see what changes he pushes for. Some speculate that he might want to see some less profitable business units sold off, and the Duracell and IAMS pet food brands have been mentioned as possible candidates.
Pershing Square reduced its stake in Citigroup
Pershing's J. C. Penney
Finally, Pershing Square unloaded several companies, such as Kraft Foods
Fortune Brands Home & Security was in my colleague Jim Royal's "Special Situations" real-money portfolio, but like Ackman, he also sold off his position. The stock has doubled since its debut almost a year ago, leaving it no longer looking like a bargain. Its net income rose 9% in the second quarter, while revenue advanced 5%. The maker of home furnishings such as faucets and locks is poised to profit further as our housing market's recovery gains steam.
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 13F forms can be great places to find intriguing candidates for our portfolios.
Procter & Gamble's history of treating shareholders well earned it a coveted spot in our list of the three Dow stocks dividend investors need. To see what other stocks could help you retire rich, just click here and get your copy of our analysts' report.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Procter & Gamble, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Citigroup. Motley Fool newsletter services have recommended buying shares of Beam and Procter & Gamble. The Motley Fool has a disclosure policy.