My Favorite Investing Week

 | May 12, 2014 | 11:30 AM EDT  | Comments
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Stock quotes in this article:

imos

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mu

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kerx

It's that time of year again. About 45 days after the end of each calendar quarter, investment funds release their quarterly 13F filings, revealing what securities they hold in their respective portfolios. I can't think of a more effective way to screen for stock ideas.

Over the coming days this week and next I will be thumbing through dozens of 13F's from a long list of money managers I follow and sharing any intriguing investment ideas.  

Some investors file early, others file on the 45th day, so each day should reveal something interesting. Just as interesting will be to see what buying activity, if any, today's best investing minds are doing in this market.  

Seth Klarman's Baupost filed an updated 13G last week, claiming an 11% position in ChipMos Technologies (IMOS), a Taiwanese tester and maker of semiconductor and memory products. This is Baupost's second high profile investment in the semiconductor arena, having dropped $1 billion in Micron Technologies (MU).

ChipMos has a market cap of $617 million and trades for 14x trailing earnings. Insiders own more than 20% of the company and the balance sheet is flush with $200 million in net cash. ChipMos will report quarterly earnings this Wednesday. For the month of April 2014, the company reported a 13% increase in revenues over the year ago period.  

Baupost also filed a new 13G claiming a 10% stake in Keryx Biopharmaceuticals (KERX), a company working on the treatment of renal disease. Last week, the company reported quarterly results and the shares caused shares to drop by 15%. The company has a Phase III drug Zerenex that treats a disease associated with chronic kidney disease.

On June 7, Keryx is expected to receive a PUDFA decision on Zerenex, the outcome of which has many an investor skittish. PDUFA stands for Prescription Drug User Fee Act, a law that allows the FDA to collect fees from drug manufacturers in exchange for an expedited decision. Given that Keryx reported widening losses last week and had to issue stock in order to raise capital, investors have become nervous.  

The stock is up nearly 100% from its 52-week low but down by 40% from the 52- week high. Baupost's latest disclosure sent shares up 7% after hours on Friday. Trading at $12, Keryx has a market cap of $1 billion, and over $150 million in net cash. Clearly, the June 7 decision is all the market is waiting for although Baupost's decision may give the company and shares a lot more confidence between now and then.

Any equity position Baupost takes is a very worthwhile idea in my book and worth the time to examine further.

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