Here's What This Big Value Investor Has Been Buying and Selling
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 Diamond Hill Capital Management, founded in 2000 and based in Ohio. Its management has explained that, "Our research is predominantly a bottom-up process beginning with fundamental analysis of a company's profitability and market position, financial and competitive position, management quality, valuation, and growth components of valuation." Like other value-oriented investors respected by The Motley Fool, Diamond Hill seeks undervalued investments and margins of safety.
The company's reportable stock portfolio totaled $9.3 billion in value as of June 30, 2013.
So what does Diamond Hill's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Willis Group Holdings and Whirlpool. Other new holdings of interest include Baidu and Huntington Bancshares . Chinese search-engine giant Baidu has been hurt by China's slowing economic growth as well as by tough competition, such as from Qihoo 360. Many like its profitability and growth prospects, such as in video, and recent news that it's buying a major Chinese mobile apps company sent shares soaring.
Huntington Bancshares is viewed by many as a high-quality bank due to its low percentage of non-performing assets. It's also viewed favorably for its effective management and smart growth strategy. Its recently reported quarter featured earnings topping estimates, but revenue lagging them. Last quarter, it upped its dividend by 25% and recently yielded 2.4%.
Among holdings in which Diamond Hill Capital Management increased its stake was B&G Foods , a snack specialist recently yielding 3.3%. B&G has faced rising food costs in recent years, and has also been a frequent acquirer, though some would like to see it grow organically, without relying on acquisitions. (A recent buy is Pirate Brands, maker of Pirate's Booty snacks.) Its brands include Ortega, Mrs. Dash, Cream of Wheat, Underwood, Molly McButter, Baker's Joy, and Static Guard. Its just-completed quarter featured revenue up 8% but net income in the red and overall results underperforming expectations.
Diamond Hill Capital Management reduced its stake in lots of companies, including Devon Energy , which has been shifting its focus more to oil and liquids. The company has been seeing its debt grow while revenue and earnings shrink. Still, many like the company's involvement in promising shale fields and its savvy dealmaking and see the stock as attractive. Devon may be spinning off a master limited partnership with its midstream assets.
Finally, Diamond Hill's biggest closed positions included Chubb and Merck. Other closed positions of interest include mortgage insurer Radian Group , one of the most popular stocks among hedge funds -- for good reason, apparently, as it has more than quadrupled in value over the past year. The recovering housing market is helping Radian, along with tighter lending rules likely to lead to greater need for its coverage. Delinquent loans are a risk for Radian, as is strong competition.
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.
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The article Here's What This Big Value Investor Has Been Buying and Selling originally appeared on Fool.com.Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Baidu. The Motley Fool recommends and owns shares of Baidu. It owns shares of Devon Energy and Huntington Bancshares. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.