Here's What These Slow-and-Steady $3 Billion Investors Are Buying
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 money managers Douglas C. Lane & Associates, founded in 1994 and based in New York City. The firm devotes a high-profile section of its website to its unofficial mascot, the turtle, chosen for its willingness to stick its neck out and its perseverance, among other things. A profile in Barron's summarized its investment strategy by noting that "the firm invests long-only, aims for low portfolio turnover and takes a long-term view -- typically three to five years -- of securities." Between 1994 and now, the money it manages for clients has grown from $300 million to close to $3 billion, which suggests that the firm is doing something right.
The company's reportable stock portfolio totaled $2.7 billion in value as of Sept. 30.
So what does Douglas C. Lane's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are Twenty-First Century Fox and Adobe. Other new holdings of interest include Regions Financial , a regional bank focused primarily in the Southeast. It emerged from the recent financial crisis in relatively good shape, and repaid its TARP obligation back in 2012. Regions Financial faltered a bit in its third quarter, though, posting disappointing results partly because of mortgage weakness. Bulls are hopeful about its mobile banking ambitions. Regions tripled its dividend in April and yields 1.3%.
Among holdings in which Douglas C. Lane & Associates increased its stake was Celgene , a biotech company that has seen its shares double in value over the past year, in large part because of its successful cancer drug Revlimid. (In its third quarter, Revlimid sales grew 12% and topped $1 billion.) Celgene is applying for the drug to be approved for additional indications, too. Another victory is pancreatic-cancer-treating Abraxane, recently approved by the FDA. The company's pipeline is promising, too, featuring drugs such as apremilast, which fights autoimmune conditions.
Douglas C. Lane & Associates reduced its stake in lots of companies, including International Paper and tobacco giant Altria . International Paper is facing pressure from the growth of digital communications over paper ones, but its recent quarterly earnings report topped expectations because of growth in cardboard packaging for shipping. Deutsche Bank recently downgraded its stock from "buy" to "hold," seeing weak demand and rising inventories. International Paper upped its dividend payout by 17% in September and announced plans to buy back up to $1.5 billion worth of shares in the next few years. It yields 3.1%.
Altria has rewarded shareholders greatly in the past, but it now faces challenges such as rising taxes, regulations, competition from discount cigarettes, a shrinking smoker base, and even counterfeit cigarettes. Still, its latest quarter featured revenue up 5% and earnings more than doubling. The company has great expectations for its innovative product lines, such as electronic cigarettes -- though the FDA might regulate those, too. It doesn't hurt that Altria's customers are literally addicted to its cigarettes. Altria stock yields 5.1%.
Finally, Douglas C. Lane's biggest closed positions included News Corp. and Allscripts Healthcare Solutions. Other closed positions of interest include energy giant Kinder Morgan Energy Partners , which sports an even heftier yield than Altria, at 6.4%. The company's COO recently spoke with us about shifts in the global energy market, and about how investors might view master limited partnerships such as Kinder Morgan Energy Partners. Kinder Morgan's CEO collected more than $1 billion in 2012, but that was more a return on stock he received.
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.
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The article Here's What These Slow-and-Steady $3 Billion Investors Are Buying originally appeared on Fool.com.
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