Don't Ignore Low Profile Fund Managers

 | Aug 15, 2013 | 3:30 PM EDT
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I have to confess that I miss the days when no one else was paying attention to 13F filings every quarter. I used to have the luxury of sitting down and reading through them over a few days, but not anymore.

The holdings report gives a glimpse into the buying and selling of the nation's money managers and hedge funds, and it seem everyone reads them. The TV lights up with breathless announcement about what Warren, Seth, John, David and Bill are doing with their clients' funds.

The reports are fired up and put across the interwebs before I have a chance to get a second cup of coffee, and start marking up the latest report. Any edge that existed from the reports of the big well-known managers has been arbed out of existence by the speed of information.

That's not the case with the filings no one cares about -- except me, fortunately. We live in a headline and celebrity-driven world and only the rock star hedge fund managers are getting electronic ink every quarter. Some of the best value and distressed managers keep a pretty low profile and no one pays much attention to them.

One of my favorite filings each quarter comes from MFP Investors. Michael Price has not always been a "quiet stay in the background manager", but he has been since he retired from managing public mutual funds. He still is a great investor but since he is not on TV all the time no one tracks his buying and selling that closely anymore.

I have stolen some great ideas from Price over the years, but I have saved more by keeping track of what he is selling. His fund had jumped on the JC Penney (JCP) bandwagon, but exited most of the position in the second quarter before its recent plunge. He also reduced his exposure to the big banks and brokers by exiting Goldman Sachs (GS) entirely and trimming stakes in Citigroup (C) and Bank of America (BAC).

The legendary fund manager was putting money to work in some smaller financial institutions in the quarter. He upped his stake OmniAmerican Bancorp (OABC). The Fort Worth-based bank has 15 offices and about $1.3 billion in assets in the heart of one of the economically strongest states in the country.

It is a little rich for me at 1.2x book value but they have an equity-to-assets ratio of over 14 and nonperforming assets are just 1%of the total. This is a clean, strong bank in a strong economy. It is watching for an opportunity to enter the shares at a little better price.

The fund also added to stakes in Astoria Financial (AF), United Financial Bancorp (UBNK) and Northfield Bancorp (NFBK) in the quarter. I am always heartened to see that some of the more successful value types seem to share my enthusiasm for the trade of the decade in smaller bank and thrift stocks.

Price is also one of the investors playing the arbitrage and higher bid possibility of a higher offer for Smithfield Foods (SAFD). He bought $16 million of the pork processor in the quarter, almost tripling his stake. It looks like a decent arbitrage play with the stock trading a little below the $34 a share on an offer from Chinese company Shuanghui International Holdings Ltd. Activist investor Starboard Capital and others also are pushing for a higher price.

Starboard is trying to put together a consortium of hedge funds and private equity firms to top the offer from Hong Kong and to buy the company. It is only about a $.50 a share gain if the current deal goes through, but there is a possibility of a much bigger payout if a new bidder emerges.

Price bought more shares of women's apparel retailer Cache (CACH) in the quarter increasing his stake by 71% to more than 3.7 million shares. The company is in the process of executing a turnaround and it appears to be working. According to CEO Jay Margolis, the third quarter is off to a good start following the changes implemented earlier this year. The company exceeded analyst revenue estimates in the second quarter and appears to be positioned for a strong finish to 2013. Price and his fund own more than 10% of the company at this point.

The value added in 13f filings today is not the reports from the big well-known money managers and funds but there is still information that can make you money in filings from lesser known successful stock pickers.

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I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
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