Here's What a New Berkshire Director's 2,556%-Gainer Fund Has Been Buying
Mar 11th 2013 11:30PM
Updated Mar 12th 2013 1:00AM
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 Eagle Capital Management, founded in 1988 by Ravenel Boykin Curry III. It has as a general partner Meryl Witmer, who was recently tapped to be a new director at Warren Buffett's company, Berkshire Hathaway . Value-oriented Eagle prides itself on its focused portfolio of only a few dozen stocks, as well as its consistency, and long time horizon. Since inception, it has gained 2,556%, versus 769% for the S&P 500.
The company's reportable stock portfolio totaled $14.1 billion in value as of Dec. 31.
So what does Eagle Capital's latest quarterly 13F filing tell us? Here are a few interesting details,
The biggest new holdings are Kraft Foods Group and the SPDR S&P 500 ETF . Kraft was spun off last year from the Kraft Foods mothership, which then took on the moniker of Mondelez International . Kraft Foods now specializes in domestic groceries, including brands such as JELL-O, Oscar Mayer, and Planters, while Mondelez focuses on global snacks and beverages, including brands such as Oreo, Trident, Tang, and Cadbury. Kraft recently disappointed investors, with an earnings update featuring earnings down sharply as a result of pension and restructuring charges, among other things. Kraft faces many competitive threats, such as from private labels. On the plus side, it does offer a 4.1% dividend yield.
Among holdings in which Eagle Capital increased its stake was Mondelez, which recently posted slightly disappointing earnings. It has been hurt by weakness in Europe, but bulls have high hopes for operations in developing markets, where growth is often more rapid. It also boasts assets such as boffo brands with pricing power, though it's also carrying a lot of debt.
Eagle Capital reduced its stake in lots of companies, including U.K.-based Vodafone . Bulls had already been excited about its Smart II low-cost, mass-market smartphone, and its entry into the promising mobile-payments market, as well as a new deal to provide mobile service in 30 nations. Adding to that are reports that Verizon might be interested in ending its wireless-based partnership with the company or perhaps merging with it. Vodafone is huge, with more than 400 million customers, and its stock recently yielded 3.8%.
Finally, Eagle Capital's biggest closed positions included Willis Group Holdings and Cimarex Energy . Other closed positions of interest include Motorola Solutions and Waste Management . Fortune magazine named Motorola Solutions as one of America's Most Admired Companies, and it is earning some investors' admiration, too, shrinking its debt and growing its free cash flow. It's trading near a 52-week high and yields about 1.6%. It operates in the field of public safety equipment, and its government contracts business grew 12% in 2012.
Waste Management, a garbage and recycling giant, yields 3.8%. Its recycling activities hold a lot of promise, and its big network of landfills gives it an edge. It's not growing quickly, but it should get a boost as the construction business heats up. It has strong cost-cutting efforts under way, and it boasts prodigious cash flow. Some would also like to see it grow a little faster, but many municipalities, its customers, are cash-strapped.
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.
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The article Here's What a New Berkshire Director's 2,556%-Gainer Fund Has Been Buying originally appeared on Fool.com.Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Berkshire Hathaway and Verizon Communications. The Motley Fool recommends Berkshire Hathaway, Vodafone, and Waste Management and owns shares of Berkshire Hathaway, Cimarex Energy, and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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