Here's What a High-Performing Hedge Fund Has Bought and Sold
Dec 7th 2012 6:38PM
Updated Dec 7th 2012 6:44PM
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 GMT Capital, a private investment company founded by Thomas Claugus in 1990, that manages several hedge funds and other accounts. Its reportable stock portfolio totaled $3.6 billion in value as of September 30, 2012. You don't generally grow that large without doing some things right. The company's Bay Resource Partners hedge fund was named one of the richest 100 last year, by Bloomberg. In its first 15 years, it averaged a 20% annual return, almost twice that of the S&P 500.
So what does GMT Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Superior Energy Services and Tyson Foods . Oil and gas drilling specialist Superior Energy has averaged annual 10% losses over the past five years, leading some to now see it as a bargain, with its P/E ratio below nine. Its last quarterly report wasn't thrilling, with management pointing to a contracting U.S. market, and hurricane-related downtime, but management also waxed bullish on international growth and further promise abroad.
Among holdings in which GMT Capital increased its stake was carbon fiber manufacturer Zoltek Companies . Bulls are excited about the growing use of carbon fiber in items ranging from car engines, which can be made lighter, to wind turbine blades. But bears worry that the company's promise may not be realized any time soon.
GMT Capital reduced its stake in lots of companies, including Corning and Stillwater Mining . Glass and fiber-optics giant Corning has suffered from weakness in the LCD panel market, with its stock averaging annual 17% losses over the past two years. That situation seems to be changing, though, with Corning management recently suggesting higher-than-expected LCD TV sales. Demand for its Gorilla Glass is also strong, as it's found in millions of smartphones and tablets, and its flexible new Willow Glass is also promising. With its current and forward P/E ratios below 10, the stock looks attractive.
Stillwater has been struggling over the past year, in part due to platinum and palladium prices. It's shifting some of its focus to copper and gold, and stands to benefit from an uptick in the auto industry, as well as renewed interest in white metals from the jewelry industry. The company worried investors recently, with news of a $300 million debt offering.
Finally, GMT Capital's biggest closed positions included Taiwan Semiconductor and Coach . Other closed positions of interest include Peabody Energy . It might be a bit surprising to see Peabody on this list, as the largest U.S. coal producer has been called "the victorious King of Coal." But, despite its strong performance, its debt has been growing - in part due to purchases in Australia that can help it serve Asia. And, meanwhile, many suspect that coal's glory days may be over.
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. Therefore, 13-F forms can be great places to find intriguing candidates for our portfolios.
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The article Here's What a High-Performing Hedge Fund Has Bought and Sold originally appeared on Fool.com.Longtime Fool contributor Selena Maranjian owns shares of Corning. The Motley Fool owns shares of Coach and Corning. Motley Fool newsletter services recommend Coach and Corning. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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