Every quarter, many money managers have to disclose what they've bought and sold, via "13-F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Oaktree Capital (NYSE: OAK), founded by value investors Howard Marks and Bruce Karsh in 1995. The folks at Oaktree invest substantially in alternatives to common stock, such as distressed debt, corporate debt, convertible securities, and real estate. They do invest in stocks as well, though. The company's reportable stock portfolio totaled $10.2 billion in value as of June 30.
Those interested in learning more about Marks' investment thinking should check out his well-regarded book, The Most Important Thing. This blurb for it by Warren Buffett may heighten your interest: "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."
Interesting developments
So what does Oaktree's latest quarterly 13-F filing tell us? Here are a few interesting details.
New holdings include Getty Realty (NYSE: GTY), a real estate investment trust that owns gas-station properties. As a REIT, it's obligated to pay out at least 90% of its earnings as dividends, and it recently yielded 2.8%. Its revenue growth has been accelerating, but its bottom line has been shrinking recently.
Among holdings in which Oaktree increased its stake were EXCO Resources (NYSE: XCO) and Goldcorp (NYSE: GG). Energy concern EXCO has been affected by extremely low natural-gas prices. While other gas-focused companies have been shifting their focus more toward more profitable liquid natural gas, EXCO has not, leaving bullish investors waiting for a recovery in dry gas prices. The company has been upping its production lately, and cutting its costs.
With revenue and earnings growing, on average, at double-digit annual rates over the past five years, Goldcorp has been a successful acquirer of other companies. It's also been making sizable capital investments in various mining ventures, though it has also experienced some production delays because of weather and seismic activity.
Oaktree reduced its stake in companies such as casino company Melco Crown Entertainment (Nasdaq: MPEL). The company is very concentrated in the popular gambling Mecca of Macau and looks attractive to investors such as my colleague Travis Hoium. It's expanding with properties in the Philippines and elsewhere, but that takes time. Along with its rivals, it's experiencing a bit of a slowdown, in part because of the Chinese economy.
Finally, Oaktree unloaded several companies, such as Comcast. Cable services may not sound exciting, but many on Wall Street like Comcast for its hefty free cash flow generation -- to the tune of $8.7 billion over the past year. Comcast does carry a lot of debt, though, recently totaling more than $34 billion, though it has come down over the past few years. Comcast has been gaining Internet-access customers, but some worry about its marketing costs.
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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