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Hedge Fund Invests Big into IOC - cybersssss - 03-07-2013
http://www.fool.com/investing/general/2013/03/06/heres-what-some-big-time-quants-are-buying-2.aspx
Very nice and very promising.
Here's What Some Big-Time Quants Are Buying
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March 6, 2013 | Comments (0)
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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 the Renaissance Technologies hedge fund company, founded by James Simons, and known for its quantitative approach to investing. Simons explained in 2007 that, "We hire physicists, mathematicians, astronomers and computer scientists and they typically know nothing about finance... We haven't hired out of Wall Street at all." The company's most well-known fund is the Medallion Fund. Interestingly, most of the company's assets belong to employees of the firm, and outside investors are generally turned away.
Why should you look at Renaissance Technologies' moves? Well, it's hard to find performance data for it, but in his 2009 book "Blunder: Why Smart People Make Bad Decisions," Zachary Shore noted that Renaissance's flagship Medallion fund "has yielded an average 38% annual return since its inception in 1988. The fund has lost money only in a single year, 1989, when it dropped 4.1%." That's so remarkable that some have mused that it's either a Madoff-like Ponzi scheme or a simply amazing hedge fund.
The company's reportable stock portfolio totaled a whopping $34.3 billion in value as of Dec. 31, 2012, with several thousand holdings. (Concentration, thy name is not Renaissance Technologies!)
Interesting developments
So what does Renaissance's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are General Electric and PepsiCo. Other new holdings of interest include InterOil (NYSE: IOC ) . InterOil is an interesting beast -- it drills for natural gas in Papua New Guinea. It has major expansion plans, though, including building an export facility, and it's looking for partners to help finance its growth. Its reserves have a lot of potential, but they're not all proven. There's risk in this company, but Renaissance seems to think the possible rewards outweigh that.
Among holdings in which Renaissance Technologies increased its stake was Micron Technology (NASDAQ: MU ) . Micron is hoping that growth in tablets and smartphones, not to mention laptop sales, will drive demand for memory chips. Some expect the company to post strong results soon due to surging DRAM prices. But analysts at Lazard recently downgraded Micron, expecting DRAM prices to level off.
Renaissance Technologies reduced its stake in lots of companies, including Altria (NYSE: MO ) . The domestic tobacco giant's future doesn't look as rosy as its past, due to a shrinking smoker base in the U.S., more folks moving to discount cigarettes , and rising taxes and regulations. Respected analysts at Steifel Nicolaus recently rated the stock a buy, but my colleague Rich Smith thinks they're wrong. Altria sports a dividend yield of 5.2%, and its recent results have been strong, with solid management projections.
Finally, Renaissance's biggest closed positions included Boeing and Wells Fargo. Other closed positions of interest include Halcon Resources (NYSE: HK ) and Sandridge Energy (NYSE: SD ) . Oil and gas company Halcon has been growing by acquiring assets such as shale-field properties and is expected to grow by 30% annually in the next few years. It operates in the promising Bakken region, for example. The company recently reported 2012 net daily production up 128% over year-ago levels and proven reserves up by 417%.
Fellow energy concern SandRidge has been struggling lately, leading activist Dinakar Singh at TPG-Axon to push for some big changes such as the ouster of the company's CEO and a more coherent strategy. Many investors are wisely steering clear, but some see significant potential value, if the company can get its act together. In its latest quarter, revenue surged, but that didn't translate to bottom-line growth.
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.
Altria has been the best-performing stock of the past 50 years, but as the number of smokers in the U.S. continues to steadily decline, is Altria still a buy today? To find out whether everyone's love-to-hate dividend stock is a savvy investment choice or a hazard to your portfolio, simply click here now for access to The Motley Fool's new premium research report on the company.
RE: Hedge Fund Invests Big into IOC - ArtM72 - 03-07-2013
I don't follow MF at all anymore, but if 1/5 Caps rating is their lowest for a stock then I would have to call IOC a screaming buy.
RE: Hedge Fund Invests Big into IOC - Spartina - 03-07-2013
Amazing - when you click on the " there's risk" high lighted area of the interoil riff you come up with an article from Motley fool that's over a year old. In that article they describe the risk is mainly because of cash, long term dept, earnings, and profit margins. This is an EXPLORATION story!! It's not about cash flow - yet. They have the goods. Not to mention that most of those factors have improved since the article was written. When the "experts" are so vanilla with their evaluation of a company they can miss the diamonds in the rough. When I read stuff like this I feel so glad to be invested in IOC. Maybe it's just me but this seems like falling off a chair stupid simple. IOC will get their goods monitised, the only question is, when they finally do - and believe me they will, ( and drill the likes of Wahoo, Tuna, Whale, wahoo, Yahoo, dog, cat and mouse etc, etc), will the stock be worth 500? 1000? 1500?
RE: Hedge Fund Invests Big into IOC - Palm - 03-07-2013
It's not just you Spartina, but DB's posting about his talk with hedgies shows a lot of these old thoughts linger either out of ignorance, refusal to believe that things really have changed and/or ulterior motives. The shorts won't give up or be wiped away until a handsome buyout, monetization, or production forces them to relent. That process is close at hand.
RE: Hedge Fund Invests Big into IOC - cybersssss - 03-08-2013
Well the hedge fund guys are momentum players. They can really help to squeeze the shorts but if they sell on lack on news it can really crush the stock too.
The key here is that only around 20% of the float (so about 8-10 million shares) is really traded continuously. The big holders are not selling unless a material event occurs that causes them to reevaluate there position based on valuation and the IRR of the stock at that point. When that occurs new buyers will come in as well.
We really need a deal and then FID to solidify the stock and derisk the project to reduce the SEVERE discount it is trading at. When that occurs then the stock will be on a continuous rise as they are on the road to realize cash flow and find more hydrocarbons.
No delay on the deal....just do it!
RE: Hedge Fund Invests Big into IOC - Getitrt2 - 03-08-2013
"Experts" is not a word appropriate to use for Motley Fool. Their "analysis", ratings, and recommendations are incompetent, promotional, and worthless, pathetic even on something like IOC requiring in-depth research and understanding.