Practical analysis for investment professionals
22 August 2012

13F Watch: Bullish on Consumer Staples and Health Care Stocks, Bearish on Technology and Energy

The U.S. Securities and Exchange Commission’s Form 13F filings, which institutional investment managers with more than $100 million under management are required to file within 45 days of the end of each calendar quarter, invariably captures the attention of the investing public. Of course, as Michael Santoli noted in his most recent Barron’s column, this information is dated and may not tell the whole story, as these filings omit short positions. And based on hedge funds’ recent performance, mimicking their moves may not deliver the desired results.

Nevertheless, it is always instructive to see which way the herd is moving, if for no other reason than to go in a different direction.

Based on a review of the aggregate filings for the second quarter of 2012, institutional investors added to their holdings in consumer staples and health care stocks while reducing their exposure to the technology and energy sectors. Among the most widely held stocks, portfolio managers as a group added to their holdings of Apple (AAPL), Microsoft (MSFT), Johnson & Johnson (JNJ), General Electric (GE), and Google (GOOG), and trimmed positions in ExxonMobil (XOM), Wells Fargo (WFC), IBM (IBM), AT&T (T), and JPMorgan Chase (JPM).

Here’s a quick look at some of the notable portfolio changes in the most recent quarter for some prominent investors:

  • Bill Ackman (Pershing Square Capital): Ackman established a sizable position in Procter & Gamble (PG), eliminated stakes in Kraft (KFT), Fortune Brands Home & Security (FBHS), and Family Dollar Stores (FDO), and sold down his Citigroup (C) stake. Ackman also maintained a sizable position in beleaguered retailer J.C. Penney (JCP).
  • Kyle Bass (Hayman Advisors): Bass initiated new positions in Electronic Arts (EA), Magnum Hunter Resources (MHR), Whiting USA Trust (WHZ), and GasLog (GLOG), while liquidating stakes in Monster Worldwide (MWW), MEMC Electronic Materials (WFR), MGIC Investment (MTG), Yahoo! (YHOO), FormFactor (FORM), Matador Resources (MTDR), and ZIOPHARM Oncology (ZIOP).
  • Bruce Berkowitz (Fairholme Funds): Berkowitz established a new position in Hartford Financial Services (HIG) warrants, and eliminated stakes in Mercury General (MCY) and Regions Financial (RF).
  • Warren Buffett (Berkshire Hathaway): Buffett initiated new positions in Phillips 66 (PSX) and National Oilwell Varco (NOV) and, uncharacteristically, abandoned his investment in Intel (INTC) less than a year after its purchase.
  • Jim Chanos (Kynikos Associates): Noted short seller Chanos established new positions in Whole Foods Market (WFM), Chicago Bridge & Iron (CBI), Oracle (ORCL), and Microsoft (MSFT), while eliminating holdings in BP (BP) and Activision Blizzard (ATVI). Chanos shared some of his short picks, including CONSOL Energy (CNX), Hewlett-Packard (HPQ), Banco Santander (SAN), and Fortescue Metals Group (FSUGY), at the recent CFA Institute Financial Analysts Seminar.
  • David Einhorn (Greenlight Capital): Einhorn went heavy into health care, establishing new positions in Cigna (CI), Coventry Health (CVH), UnitedHealth Group (UNH), Humana (HUM), WellPoint (WLP), and Aetna (AET). Aetna recently agreed to buy Coventry health for $5.7 billion, netting Einhorn a quick win. Other portfolio additions included Virgin Media (VMED), Hess (HES), Oaktree Capital Group (OAK), and Genworth Financial (GNW). Einhorn sold stakes in Dell (DELL), HCA Holdings (HCA), CA (CA), Research in Motion (RIMM), and Roundy’s (RNDY).
  • Jeremy Grantham (GMO): Grantham initiated positions in Royal Bank of Canada (RY), Cooper Industries (CBE), Embraer (ERJ), Grupo Televisa SAB (TV), Collective Brands (PSS), Citigroup (C), Suncor Energy (SU), Standard Microsystems (SMSC), BB&T (BBT), and Goldman Sachs (GS). Eliminated holdings included Viacom (VIAB), Home Inns & Hotel Management (HMIN), Liberty Media (LMCA), Shaw Communications (SJR), Tempur-Pedic International (TPX), Wynn Resorts (WYNN), Multimedia Games (MGAM), Johnson Outdoors (JOUT), Natuzzi (NTZ), and Ulta Salon, Cosmetics & Fragrance (ULTA). In Grantham’s latest quarterly letter, he warns of a global food crisis and advocates purchase of resource stocks.
  • Seth Klarman (Baupost Group): Klarman added new stakes in Oracle (ORCL), Genworth (GNW), Hess (HES), and Novacopper (NCQ), while eliminating holdings in Multimedia Games (MGAM) and Alere (ALR).
  • Dan Loeb (Third Point): Loeb had a busy quarter. Like Einhorn, he bumped up his exposure to health care during the most recent reporting period, establishing positions in UnitedHealth Group (UNH), Cigna (CI), WellPoint (WLP), Humana (HUM), Ariad Pharmaceuticals (ARIA), Aetna (AET), and Vertex Pharmaceuticals (VRTX). Other additions included News Corp (NWSA), Cabot Oil & Gas (COG), Plains Exploration & Production (PXP), Coca-Coca Enterprises (CCE), AIG (AIG), LyondellBasell Industries (LYB), Liberty Interactive (LINTA), Advance Auto Parts (AAP), Liberty Global (LBTYK), Enphase Energy (ENPH), Sensata Technologies (ST), Westlake Chemical (WLK), Newell Rubbermaid (NWL), Constellation Brands (STZ), and Informatica (INFA). Loeb also recently increased his stake in Yahoo (YHOO), two months after being added to the company’s board. He eliminated holdings in Google (GOOG), Marvell Technology (MRVL), Medco Health Solutions (MHS), Family Dollar Stores (FDO), El Paso (EP), Cisco (CSCO), Abercrombie & Fitch (ANF), Wells Fargo (WFC), Teradyne (TER), and Express Scripts (ESRX).
  • Howard Marks (Oaktree Capital): Marks initiated new positions in Getty Realty (GTY), Tata Motors (TTM), GT Advanced Technologies (GTAT), Ternium (TX), Petrobras (PBR), Taiwan Semiconductor (TSM), Itau Unibanco (ITUB), HDFC Bank (HDB), Companhia Brasileira De Distribuicao (CBD), and Companhia de Bebidas das Americas (ABV). Portfolio deletions included Delphi Automotive (DLPH), Time Warner Cable (TWC), Comcast (CMCSA), JAKKS Pacific (JAKK), Banco Bradesco (BBD), BRF Brasil Foods (BRFS), SINA (SINA), and ANSYS (ANSS).

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Apple Store logo photo from pio3 /

About the Author(s)
David Larrabee, CFA

David Larrabee, CFA, was director of member and corporate products at CFA Institute and served as the subject matter expert in portfolio management and equity investments. Previously, he spent two decades in the asset management industry as a portfolio manager and analyst. He holds a BA in economics from Colgate University and an MBA in finance from Fordham University. Topical Expertise: Equity Investments · Portfolio Management

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