Today we will see the last big flood of 13HF filings at the Securities and Exchange Commission (SEC). These forms, which track the activity of large funds, will be reviewed and analyzed almost as fast as they hit the tape. Many of the larger fund managers have achieved rock star status. David Einhorn, William Ackman and Daniel Loeb have the financial media waiting with bated breath for their reports.
I will read the reports like everyone else but I will resist the urge to add to the volumes of commentary that will appear. Instead, I will focus on those value managers who do not have celebrity status.
One of my favorites to follow is a manager who has aging rock star status. Michael Price is the value investing equivalent of the Rolling Stones. He learned under the tutelage of legendary investor Max Heine, and became a legend in his own right at the helm of the Mutual Series fund. Since retiring from the fund, he has run a private investment firm, MFP Partners, with a great deal of success but no longer attracts the attention of the press as he once did. I have been stealing Price's stock ideas for decades now and I can tell you he still has the chops of a star.
Like many astute investors, MFP has been buying the small banks. In the quarter he added two new positions to his portfolio of bank stocks. Only one is large enough to mention here but it's a solid pick. HomeTrust Bancshares (HTBI) is a North Carolina-based bank holding company that completed its conversion form a mutual thrift to an investor owned institution in July of this year. The stock price has moved up from the $10 offering price, but it is still very cheap. The stock trades at just about 75% of the post offering book value. The bank has struggled with problem loans and have a nonperforming assets ratio of more than 5. Normally this would scare me away but they are awash in capital after the conversion. They currently have equity to assets ratio north of 23. The have more than enough cash to survive and thrive as conditions improve.
He also bought two other very small banks on the quarter. His portfolio is full of banks that each has less than a $100 million market cap -- they are safe and cheap. It is worth your time to go read the filing and uncover these little gems for yourself.
The fund is also increasing its bet that there will be a turnaround and Boston Scientific (BSX). This stock has been in and out of several noted investors portfolio over the past few years as turnaround plans are announced and then abandoned. The core cardiac intervention markets are still suffering from competition and weak demand, especially in international markets but there are signs of improvement. The company recently had two pacemakers approved for use in Europe and this should help fuels revenue growth for the company. The stock has been something of a bust for long-term holders over the past few years, but the potential rewards appear to justify holding the stock as a high probability longshot.
Price also bought some of the battered big-cap tech names. He increased his stake in Intel (INTC) during the quarter. He also more than doubled his stake in Dell (DELL) during the third quarter. These companies will need to see strong improvements in consumer and government spending on IT to improve but they are very cheap on historical comparisons. I am not quite ready to buy these, but Price has proven himself to be far smarter than I have been over the years.
Price does not attract anywhere near the attention he did when he was running the Mutual Series of Funds. However, he still makes money for himself and investors as a very astute stock picker. It is worth the time and energy for investors to peruse his filings and steal those ideas that fit in with your approach to stock selection. Keep in mind that these filings are just a research list. You still have to do the homework before you pull the buy trigger.