Here's What One of the Richest Hedge Funds Has Bought and Sold
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 GMT Capital, a private investment company founded by Thomas Claugus in 1990 that manages several hedge funds and other accounts. Its stock portfolio totaled $3.9 billion in value as of March 31, 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 13-F filing tell us? Here are a few interesting details:
New holdings include beleaguered drugstore chain Walgreen (NYS: WAG) . Its split with Express Scripts has cost it many customers and billions of revenue dollars, but some think that its stock has been over-punished. After all, revenue is still growing, and earnings have been growing at an accelerating rate. Better still, the stock offers a dividend yield near 3%, and has been hiking its payout by more than 20% annually, on average, over the past five years, with plenty of room for further growth.
Among holdings in which GMT Capital increased its stake was semiconductor fabrication equipment giant Applied Materials (NAS: AMAT) . It, too, is a solid dividend payer, with a recent yield of 3.5%. It's a very cyclical company, and whenever the global economic recovery gets under way in earnest, it's likely to fare well. The glut of solar panels has hurt it a bit, but near-term demand seems promising.
GMT Capital reduced its stake in lots of companies, including Corning (NYS: GLW) . Many bears are tired of waiting for the stock to perform well, and are dismayed by weak demand for LCD glass, but they're overlooking the company's Gorilla Glass, which is selling well and is likely to be present in many mobile devices, which are enjoying explosive growth. It also has a promising telecommunications division and is a fiber-optic giant.
Finally, GMT Capital unloaded several companies, such as Magnum Hunter Resources (NYS: MHR) and SandRidge Energy (NYS: SD) . Oil and natural-gas specialist Magnum Hunter sports an amazing average annual growth rate for revenue of 125% -- but earnings are still in the red. The folks at GMT are not the only bears -- the stock is heavily shorted, to the tune of 28% of float, as of mid-May.
SandRidge has investors worried in part because of its steep debt load, coupled with low prices for natural gas. It's focusing more on its oil business these days, which is more profitable, but that strategy may not be enough for terrific results. Still, it has been investing and exploring aggressively, and might reward risk-takers.
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. 13-F forms can be great places to find intriguing candidates for our portfolios.
It's reasonable to be doubtful about SandRidge and even Magnum Hunter -- so if you would like to profit handsomely from energy, cast a wider net. Consider checking out our special free report, too, on "The Only Energy Stock You'll Ever Need."
At the time this article was published LongtimeFool contributorSelena Maranjian,whom you canfollow on Twitter, owns shares of Corning, 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 Corning.Motley Fool newsletter serviceshave recommended buying shares of Express Scripts and Corning. The Motley Fool has adisclosure policy.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.
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