Every quarter, fund 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 Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well-known activist investor, famous for publicly airing his opinions about companies in which he invests and not mincing words when he's displeased.
His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over the 15 years ending in 2010, Loeb racked up a cumulative gain of 1,519%, compared with just 170% for the S&P 500.
Third Point's stock portfolio totaled $2.5 billion in value as of Dec. 31, 2011, with 40 holdings.
So what does Third Point's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include semiconductor company Skyworks Solutions (NAS: SWKS) and fertilizer giant PotashCorp (NYS: POT) . Skyworks Solutions' appeal is simple: It makes radio-frequency chips that are used in smartphones -- in particular, iPhones, which are selling rather briskly. The company is expanding the scope of its offerings, too, and supplying chips to other devices, such as LED TVs and tablets. The case for Potash is even simpler and more reliable: As our global population grows, we'll need to produce more and more food, and fertilizers can make farms more productive. In the shorter term, Potash is benefiting from lucrative contracts held by the cartel it belongs to.
One of Third Point's holdings makes up a whopping 36% of its total asset value. That's Yahoo! (NAS: YHOO) , and Third Point's stake in Yahoo! grew by 17% over the quarter, although it sold a third of its call options on the stock. Some have been drawn to Yahoo! for its stake in China-based Alibaba.com, which is going private and buying out much of Yahoo!'s stake in it. Bulls are speculating that with its cash infusion, Yahoo! might be able to buy its way into some new and more profitable business directions. They're also intrigued by Yahoo!'s allegations of patent infringement against Facebook.
Third Point reduced its stake in solid-state memory specialist SanDisk (NAS: SNDK) . Its long-term prospects are bright, given expected growth in everything from smartphones to laptops and tablets, but right now, in our sputtering economy, some of its customers are holding back on orders.
Finally, Third Point unloaded several companies, such as Mosaic (NYS: MOS) . Like Potash and other fertilizer peers, Mosaic is seeing a temporary slowdown, which has disappointed some investors. Those with their eyes on the long term, though, should be pleased with investments the company is making in its future.
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. 13F forms can be great places to find intriguing candidates for our portfolios.
If you're interested in companies such as Skyworks Solutions and would like to ride the coattails of the dynamic and profitable new digital age, check out our special free report, "3 Hidden Winners of the iPhone, iPad, and Android Revolution." You'll learn about some other companies positioned to prosper.
At the time thisarticle was published LongtimeFool contributorSelena Maranjian,whom you canfollow on Twitter here, holds no position in any company mentioned.Click hereto see her holdings and a short bio. The Motley Fool owns shares of Yahoo.Motley Fool newsletter serviceshave recommended buying shares of Yahoo. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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