The 13F filing deadline was extended until close of business today because of the President's Day holiday, so we have not seen all of the holdings of the select group of value and activist investors I track each quarter.
We have seen a lot of the earlier filers, however, and there are some interesting data points emerging among the holdings of value-oriented investors during the final three months of the year. Stealing ideas from the best investors on the planet just seems to be common sense to me. For the next few days I will be fairly busy combing the filings of safe and cheap stocks ideas uncovered by the world's best free research department.
Mohnish Pabrai has always run a fairly-concentrated portfolio and it has worked well for him. He took concentration to a whole new level as he put about 30% of his portfolio into just one stock. He bought almost 14 million shares of Fiat Chrysler Automobiles (FCAU) during the final three months of the year.
The stock is not cheap based on price-to-earnings or price-to book-value but the EV/Enterprise value is just four, so it is cheap on that factor. This is an impressive collection of automotive brands as they sell cars like Chrysler, Jeep, Dodge, Ram, SRT, Fiat, Alfa Romeo, Lancia, Abarth, and Fiat Professional names in addition to luxury cars under the Ferrari and Maserati nameplates. They also have the iconic MOPAR parts business as well. Together with his 2019 General Motors (GM) warrants, Pabrai has more than 50% of his fund riding on the future of the auto industry.
Google (GOOGL) is now the sixth largest holding in the Pabrai 11-stock portfolio as he purchased over $18 million of the tech leader. I cannot make a case for the stock as a value selection, but I concede that Mohnish Pabrai is a lot smarter than I am and will probably do very well with the stock. He also purchased more WL Ross and Company (WLRH), the special purpose acquisition companies run by Wilber Ross, the legendary distressed investor. I should have jumped into it a long time ago, but as the deadline to make a deal gets closer every day I will be buying stock very soon.
I also noticed in the early filings that Sears Hometown and Outlet Stores (SHOS) is getting some love from some smart folks. I am not a fan of Sears itself but this spin off is worth another look. It trades at just 60% or so of book and also places high on the Novy-Marx quality value screen.
When I look at the headlines I see new franchises popping up in small towns all over the place in the past few months. Canadian value investor Francis Chou has been a buyer of the stock, as has Royce Funds and the Jim Simons quant value team at Renaissance Technology. This one should probably be on our radar screen for a near-term purchase as well.
David Nierenberg of D3 Funds is one of my favorite investors to follow. Not all of his stocks fit in with my book-value approach , but the ideas I have stolen form him that fit have had tremendous returns. Two of his three stocks that he was buying in the quarter had pretty big drops in price
That's didn't keep him from adding to his stake in C&J Energy Services (CJES) or Houston Wire and Cable (HWCC) during the final few months of the year. He also added to his stake in Malibu Boats (MBUU) as the year came to a close. Nierenberg looks for multiples of his money over time not mere percentages and he appears to have a very high conviction in these three stocks.
By the close today, we will see a flood of 13f filings and there will be chatter all over the web about what Warren, David Einhorn. Bill Ackman and other well-known investors were buying and selling in the final months of 2014. I will read those, but I will pay a lot more attention to what the smaller value guys, activists and community bank investors have been up to lately.
I can't gain much of an edge following the same handful of big guys everyone else is. But knowing what the smaller folks who are turning in great numbers are doing with their cash can be a source of profitable long-term ideas.