Here's What This "Market-Destroying" Investor Is Buying
Every quarter, many money 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 Joel Greenblatt's Gotham Asset Management. It's of great interest to many investors because Greenblatt is the author of the well-regarded and best-selling The Little Book That Beats the Market; and because of the success of his system of seeking out companies with high returns on capital and hefty earnings yields. His "Magic Formula" has many fans. As my colleague Morgan Housel has noted, "The simple formula absolutely destroys market averages over time. Greenblatt backs this up with considerable statistical evidence."
Gotham Asset Management's stock portfolio totaled $829 million in value as of Dec. 31, 2011.
So what does Gotham Asset Management's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Southern Copper (NYS: SCCO) , a commodity play that's poised to benefit as the global economy improves, the housing market recovers, and more infrastructure projects get under way. On the down side, it carries more debt than many of its peers, and the volatile price of copper can send the stock up and down.
Among holdings in which Gotham Asset Management increased its stake were OmniVision Technologies (NAS: OVTI) and Frontline (NYS: FRO) . OmniVision saw its shares plunge sharply over the last year -- sending it to what some investors see as bargain levels. Driving much of the drop was the loss of iPhone business to rivals, but things look a bit brighter these days, as OmniVision wares may be found in new Apple products, such as iPad cameras. Oil tanker specialist Frontline also ran into trouble, restructuring itself in order to address debt problems. The stock has surged recently, though, on news of strong demand for tankers, though some are worried about a slowdown in China.
Gotham Asset Management reduced its stake in lots of companies, including GT Advanced Technologies (NAS: GTAT) . The solar energy specialist does sport an appealing big backlog of orders, but the solar industry has many worried about falling prices due to oversupply and slowdowns in orders from Europe due to financial crises there. Some are bullish about its LED business, though, especially since it looks like China might phase out incandescent lights and GT is established in China.
Finally, Gotham Asset Management unloaded several companies, such as Sirius XM Radio (NAS: SIRI) . Bears are worried about Apple's iProducts competing with Sirius -- and Pandora, as well. Others worried about the company's 12% price hike -- but it's looking like that hasn't driven away many subscribers. (iProducts and smartphones are experiencing explosive growth, though, and you can make good money off of them. Check out our special free report, "3 Hidden Winners of the iPhone, iPad, and Android Revolution," to learn about some compelling candidates for your portfolio.)
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 13-F forms can be great places to find intriguing candidates for our portfolios.
At the time this article was published LongtimeFool contributorSelena Maranjian,whom you canfollow on Twitter, owns shares of Apple, but she holds no other position in any company mentioned.Click hereto see her holdings and a short bio. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
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