Shrewd Minds Are Putting on the Brakes

 | Nov 14, 2013 | 1:00 PM EST
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It's my favorite time of the year again as an investor. No, I'm not talking about the holiday-induced market slowdown. This week, as with four other times during the year, marks the release of 13F filings from the SEC -- the quarterly snapshots that reveal the portfolio holdings of asset managers. Hands down, I find digging through 13F filings to be one of the best ways to find investment ideas.

One 13F I always look through is that of the Baupost Group, the hedge fund run by Seth Klarman. Twenty-plus years of approximately 20% annualized returns is all you need to know to realize Baupost's 13F is required reading.

It's no surprise that Baupost engaged in very little activity in the third quarter -- and the few moves it did make were mostly on the sell side, rather than on the buy side. Baupost significantly reduced its stake in oil giant BP (BP), from 18.5 million shares to 5.6 million shares. It also sold off its entire stake in American International Group (AIG) common shares, though it continued to hold AIG warrants.

The biggest move was adding to the position in Micron Technologies (MU) increasing the holding from 41 million to 64 million shares. Micron, a maker of semiconductor solutions, is currently the fund's biggest position, accounting for 32% of Baupost's equity portfolio. Shares in Micron have surged in the past 52 weeks, from $5 to nearly $19.

Shifting gears, Martin Capital is another fund I like to watch. Martin is a very small, yet focused value fund based out of Indiana, with around $150 million in assets, run by Frank Martin. The fund was very quiet in the third quarter, and that's also not surprising, given Mr. Martin's conservative nature. The fund initiated no new positions, and it did not add to any existing positions -- though it did completely exit its stake in AT&T (T). In fact, Martin was in sell mode all quarter, reducing equity exposure across the board. The biggest stake by far remains auto supplier Gentex (GNTX).

All 13F filings are due out by Nov. 15. Over the weekend, I will have the opportunity to dig through other filings, such as those from Fairholme, Greenlight, Third Avenue and a few others that clearly are worth watching. With markets setting new records, it seems that some of the shrewdest names may perhaps be putting on the brakes.

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