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 Citadel Advisors, founded and run by Kenneth Griffin. It’s one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $66 billion in value as of March 31, 2013.
According to the folks at InsiderMonkey.com, Griffin and his team use “a combination of advanced computer code, complicated financial algorithms and secrecy. Griffin was using quantitative, technology-based methods before many other firms had cell phones.” The company took a big hit of more than 50% back in 2008, and with an impressive 20% gain in 2011, finally surpassed its 2008 high.
Interesting developments
So what does Citadel’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Chevron Corporation (NYSE:CVX) and salesforce.com, inc. (NYSE:CRM). Other new holdings of interest include Brazilian oil giant Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), which has seen its stock fall over the past few years. The company is weighed down by a lot of debt, but there are also promising signs from it, such as rising production numbers as some offshore rigs are brought back into service. Some are hopeful that solid car sales in Brazil will boos Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR)’s business.
Among holdings in which Citadel increased its stake was American Tower Corp (NYSE:AMT). With the stock averaging 25% annual gains over the past decade and a forward P/E ratio near 30, some see the real estate investment trust (REIT) as overvalued. Others still see opportunity, though, expecting growing demand for the company’s towers that facilitate wireless communications. Another plus is its rising dividend, which recently yielded 1.4%. Its international growth has also been particularly strong lately.
Citadel reduced its stake in lots of companies, including Regions Financial Corporation (NYSE:RF), which has also been upping its dividend payout aggressively, tripling it a few months ago. The bank’s first-quarter earnings topped analyst expectations, but also featured a drop in revenue. Its improved performance in Federal Reserve stress tests has encouraged investors.
Finally, Citadel’s biggest closed positions included NetApp Inc. (NASDAQ:NTAP) and Newell Rubbermaid Inc.(NYSE:NWL). Other closed positions of interest include CenturyLink, Inc. (NYSE:CTL) and Corning Incorporated (NYSE:GLW). Telecom company CenturyLink, Inc. (NYSE:CTL) has recently been yielding 6.1%, but that reflects a recent dividend cut of about 25% as the company focuses more on share buybacks. It landed a hefty Pentagon contract in April, with a possible 10-year value of $750 million, and has been moving into promising arenas such as cloud computing. The company has substantial debt, topping $19 billion, but also significant free cash flow, near $3 billion annually. Its debt load is lower than some peers, too.
Corning Incorporated (NYSE:GLW) has suffered lately due to low prices and demand for LCD substrates, but it’s enjoying solid demand for its Gorilla Glass, which generated more than $1 billion in 2012 revenue. The company’s flexible new Willow Glass is promising, too, and though some have worried about sapphire glass threatening Gorilla Glass, sapphire is much more expensive, and Apple Inc. (NASDAQ:AAPL) is sticking with Gorilla for the foreseeable future. Despite some issues such as falling profit margins, there’s a solid case to be made that Corning stock is attractively priced at recent levels and a good long-term investment. The company has upped its dividend, too, and yields 2.7%.
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.
With the explosive growth of smartphones worldwide, many investors thought they would ride Corning’s dominant cover glass to massive investment returns. That hasn’t played out yet, as mobile growth has failed to offset declines in the company’s core business.
The article See What This $66 Billion Hedge Fund Company Is Up To originally appeared on Fool.com.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Apple and Corning. The Motley Fool recommends Chevron, Petroleo Brasileiro (NYSE:PBR) S.A. (ADR), and Salesforce.com. It recommends and owns shares of American Tower , Apple, and Corning.
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