Hedge funds and many other institutional investors are required to file 13Fs within six to seven weeks after the end of each quarter. While the overwhelming majority of these filings occur close to the end of that period, some funds file their documents earlier and this means that we can get a fairly recent picture of a large share of a fund’s long equity positions. Libra Advisors, a hedge fund founded in 2000 by Ranjan Tandon which has tended toward basic materials investments, recently filed its 13F and so it may be of use to see which stocks it likes as either a source of ideas or as a way to understand what the investment team is thinking. Here are the five largest holdings from Libra’s 13F portfolio (see the full list of stock picks) as of the end of December 2012:
Libra owned about 590,000 shares of China Mobile Ltd. (NYSE:CHL), making it the largest position in the 13F portfolio. The mobile telephone company had about 650 million customers at the end of 2011. The trailing earnings multiple is only about 11; recent growth numbers have not been particularly strong, many investors are worried about Chinese macro conditions, and recent episodes of accounting fraud at other Chinese companies have hurt valuations generally. Billionaire Ken Fisher’s Fisher Asset Management had initiated a position of almost 4 million shares in the third quarter of 2012 (check out more stocks Fisher was buying).
Another of the fund’s top picks was Microsoft Corporation (NASDAQ:MSFT), with a position of 1.2 million shares. Even though this was down significantly from three months earlier, the tech company remained Libra’s second largest holding by market value. Microsoft had made our list of the ten most popular stocks among hedge funds for the third quarter of the year (find more of the ten most popular stocks). Microsoft trades at 9 times forward earnings estimates (for the fiscal year ending in June 2014) and does pay a dividend yield above 3%, though we think that investors should wait for more data on the Windows 8 release before considering it.
Three more of Libra’s stock picks, in basic materials:
Tandon and his team cut their stake in Newmont Mining Corp (NYSE:NEM), a $22 billion market cap gold and copper miner, to about 440,000 shares but the company was still one of Libra’s largest positions. Point State Capital, which is managed by former employees of billionaire Stanley Druckenmiller’s Duquesne Capital, owned about 930,000 shares at the beginning of October (research more stocks Point State owned). Newmont’s numbers have been down due to lower commodity prices, and the stock has fallen 25% in the last year. Analysts expect a strong 2013 but the company is certainly closely tied to the gold and copper markets.
Libra increased its stake in Gran Tierra Energy Inc. (NYSE:GTE) from 3 million to 3.4 million shares. Gran Tierra is a $1.5 billion market cap oil and gas company operating in South America, with most of its acreage in Peru. The stock trades at 18 times trailing earnings, though Wall Street expectations are for a very good year and so the P/E based on 2013 consensus is only 9. We would be wary of a company with such high growth expectations. Amber Capital had most of its 13F funds invested in Gran Tierra.
Another stock the fund owned was Goldcorp Inc. (NYSE:GG), another large-cap (the current market capitalization is $30 billion) gold and copper miner. Goldcorp actually reported double-digit growth rates in revenue and earnings in the third quarter of 2012 versus a year earlier, though its pricing does account for some future growth with a trailing P/E of 20. We also expect that recent performance has been anomalous and long-term the company will depend on commodity prices. As with many gold miners, the stock price is down in the last year (17% in this case).
Disclosure: I own no shares of any stocks mentioned in this article.
