If it’s November, it must be time once again for institutional money managers with assets of at least $100 million to update the Securities & Exchange Commission (SEC) on their stock holdings via Schedule 13F.
Back in August – the last time shareholders were required to update their holdings – I discussed David Einhorn’s new position in health insurer Cigna (NYSE: CI). When I wrote the article, the stock was trading for $44.68 per share and now trades at $50.87, a 13.9% gain in three months!
During the most-recent August-to-November period, 6 out of the 16 stocks highlighted (37.5%) made a profit (a sold stock is considered profitable if the stock went down in price). Making a profit is different from outperforming a stock index, however. Of the 14 stocks bought by the gurus, only six (42.9%) outperformed the S&P 500’s comparable loss of -3.8%. Of the two stocks sold, one (50.0%) underperformed the S&P 500, so the gurus were slightly better bears than bulls. Besides Cigna, other “buy” winners were Bill Ackman’s Burger King Worldwide (NYSE: BKW) (7.4%) and Julian Robertson’s JP Morgan (NYSE: JPM) (4.9%). The one “sell” winner was David Einhorn’s Dell (NasdaqGS: DELL) (-17.5%). In contrast, Bill Ackman’s sale of Citigroup (NYSE: C) was a big mistake – it rose 15.5%.
Value-investing legend Seth Klarman really stunk out the joint for the second consecutive quarter, underperforming the S&P 500’s -3.8% loss by a wide margin (almost triple). All four “buy” stocks highlighted from Seth Klarman’s portfolio lost value, with three of the four underperforming the S&P 500. Whereas biotech and gold stocks hurt Klarman last time around, this time what did him in were technology stocks – an industry sector Warren Buffett has repeatedly warned it is too difficult to understand and where competitive advantage is unsustainable (prior to Buffett’s large purchase of IBM (NYSE: IBM), that is). So let’s add tech stocks to biotech and gold as Klarman picks that should not be given undue deference.
All of the superstar investors also had at least one really bad trade. Besides Ackman’s misguided sale of Citigroup, losing “buy” trades include:
- Seth Klarman’s Hewlett-Packard (NYSE: HPQ) (down 31.4%)
- David Einhorn’s Marvell Technology Group (NasdaqGS: MRVL) (down 29.5%)
- Julian Robertson’s Barrick Gold (NYSE: ABX) (down 11.1%)
None of these superstar investors deserve recognition this past quarter for superior performance because all underperformed on two or more of their four picks. That’s coin-flip accuracy! Just goes to show you that mindlessly piggybacking on anybody else’s picks without doing your own research is no sure-fire way to beat the market. Bill Ackman didn’t do much trading in the third quarter, so I am going to replace him this time around with hedge fund manager Dan Loeb, recently famous for his shareholder activism regarding Yahoo!.
Nevertheless, these quarterly SEC filings are a gold mine of information as to what the smartest investors are buying and selling. A timely review of them can make you money. With that in mind, I thought I would vet the most recent set of SEC filings to see if there are any more hidden gems ready to make big moves.
I don’t list all guru transactions, just ones that I personally find noteworthy. If you also have a voyeuristic streak in you, read on.
1. Seth Klarman
|
Company |
Action |
% Change in Holding |
Average Purchase Price Per Share |
Comments |
|
Rovi Corp. (NasdaqGS: ROVI) |
Buy |
NEW |
$15.24 |
The CEO of this provider of interactive, on-screen television guides — formerly known as Macrovision and Gemstar-TV Guide International – bought 15,000 shares at $15 on Sep. 25th. This marks the first insider purchase in more than three years. |
|
Idenix Pharmaceuticals (NasdaqGM: IDIX) |
Buy |
85.3% |
$5.21 |
Sixth-consecutive quarter where Klarman has purchased shares in this Hepatitis C drug company. |
|
Hewlett-Packard (NYSE: HPQ) |
Sell |
-46.5% |
$18.47 |
CEO Meg Whitman has warned that a turnaround at the PC maker will take more time than previously expected. Klarman doesn’t want to wait. |
|
Microsoft (NasdaqGS: MSFT) |
Sell |
-80.0% |
$30.23 |
Windows 8 operating system has problems. |
2. David Einhorn
|
Company |
Action |
% Change in Holding |
Average Purchase Price Per Share |
Comments |
|
Computer Sciences (NYSE: CSC) |
Buy |
89.6% |
$28.42 |
Information-technology service provider beats analyst estimates in third quarter and raises guidance for remainder of the year. |
|
General Motors (NYSE: GM) |
Buy |
23.8% |
$21.06 |
Einhorn bought shares for the second-consecutive quarter, reversing course after his first-quarter share reduction. The U.S. automaker reported its best October sales since 2007. What recession? |
|
Yahoo! (NasdaqGS: YHOO) |
Buy |
NEW |
$15.60 |
The Internet portal is coming back to life under new CEO Marissa Mayer. |
|
Apple (NasdaqGS: AAPL) |
Sell |
-25.0% |
$635.18 |
Good market timing by Einhorn, as the maker of the iPhone and iPad has suffered through its own bear market. |
3. Julian Robertson
|
Company |
Action |
% Change in Holding |
Average Purchase Price Per Share |
Comments |
|
Charter Communications (NasdaqGS: CHTR) |
Buy |
NEW |
$76.31 |
New CEO Thomas Rutledge is turning things around. Fourth-largest cable TV operator in the U.S. has big growth opportunity expanding into Internet and telephone services. Service area is less penetrated than those of competitors. |
|
Priceline.com (NasdaqGS: PCLN) |
Buy |
NEW |
$631.72 |
Curse of Captain James T. Kirk notwithstanding, the online travel website beat third-quarter earnings estimates and is buying growth with its acquisition of comparison-shopping website Kayak Software. |
|
Ocwen Financial (NYSE: OCN) |
Buy |
67.8% |
$22.90 |
Robertson has already made a 50% profit on this servicer of sub-prime home mortgage loans. Loan modifications and foreclosures are a big business in this weak economy. But take note: Fitch recently cut the company’s credit rating. |
|
Goldman Sachs (NYSE: GS) |
Sell |
-83.4% |
$104.19 |
With Obama’s re-election, a tough Volcker Rule limiting investment bank’s proprietary trading will hurt Goldman’s profit margins. |
4. Dan Loeb
|
Company |
Action |
% Change in Holding |
Average Purchase Price Per Share |
Comments |
|
American International Group (NYSE: AIG) |
Buy |
944.4% |
$32.65 |
With the U.S. government no longer in control of AIG, Loeb thinks the insurer can now shine. Trading at only half of book value, the stock is cheap. Beat analyst estimates in the third quarter. |
|
Murphy Oil (NYSE: MUR) |
Buy |
NEW |
$52.80 |
Spinoff of refinery operations will unlock value similar to what happened with ConocoPhillips (NYSE: COP) and Marathon Oil (NYSE: MRO) |
|
Apple (NasdaqGS: AAPL) |
Buy |
67.1% |
$635.18 |
Taking the bullish side of David Einhorn’s bearish trade. That’s what makes markets, folks. Apple’s earnings report in January could be a blowout. |
|
Nexen (NYSE: NXY) |
Buy |
NEW |
$23.21 |
Loeb is betting that the Canadian government will approve the $27.50 per share takeover of the energy producer by China’s state-owned CNOOC (NYSE: CEO). |
What do you think of this article? Please post your feedback in the “comments” section below!
3 Comments So Far
Leave a Reply
Our comments section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a personal question about your subscription or need technical help, please contact our customer service team. Thank you.
You must be logged in to post a comment OR register below.
well written and informative
IT IS VERY UNFORTUNATE OBAMA DOES NOT SEE THE FORREST FOR THE TREES; OR IS IT JUST A GAME WITH THE GOAL OF HAVING MORE CONTROL, EVENTUALLY TURNING THIS COUNTRY INTO A SOCIALISTIC SOCIETY?
HE IS SITTING IN THE DRIVER’S SEAT AS A RESULT OF VERY METICULOUS TIMING AND UNDER ALL THE PROPAGANDA WE ARE BEING FED THERE CERTAINLY HAS TO BE A PLAN. HE IS NOT AN IDIOT ! NOW TURN TO CONGRESS. ALL THESE FAT TURKEY’S HAVE A “PART- TIME” JOB. OBVIOUSLY, THE DOWN TIME OPENS THE OPPORTUNITY TO BE WITH LOBBIEST WHO HAVE DRAMATICALLY INCREASED SHARED TIME.
DO YOU REMEMBER WHEN THERE WAS DISCUSSION ON THE FLOOR ABOUT
TERM LIMITS ??! THAT WAS THE BEGINNING OF DROPPING THE BALL ON OUR FOOT AND ALLOWING THE WHOLE SMELLY MESS TO BE BAD ENOUGH TO RUIN CONTROL BY WE,” THE PEOPLE”. THEN YOU ADD ON TOP OF THAT THE GREATEST MAJORITY ARE IN THE “TOP ONE PERCENT”. IT’S CALLED “GREED”. NOW JUST HOW DID THEY GET THERE ??
FURTHER, WHEN THE.PEOPLE REACH A CERTAIN POINT… WELL IT IS GOING TO GET VERY UGLY.
Its more disturbing that republicans can not face reality, and stop crying about Obama. Grow up. Are you ok with republicans rigging the House of Reps? Are you Ok with voter supression + voter disenfranchisement? Greed is evident in th erepublican party. Why is it fair to have wealtly people like Romney + Buffet pay a 10% Federal income tax rate?