It's that time of the quarter again, when investment managers release 13-F filings -- some of the best stock screens out there.
For those unfamiliar with 13-Fs, they're forms that the U.S. Securities and Exchange Commission requires investment managers to file quarterly to disclose holdings.
The revelation of a successful money manager's new position is a great way to narrow down a list of thousands of stocks to perhaps a few dozen worth checking out. Conversely, a money manager's sale of a position could be insightful to those who currently hold the security in question.
Of course, successful stock investing often goes beyond simply buying and selling securities. Not buying or selling is very much an investment activity in and of itself -- and the latest batch of 13Fs shows that inactivity appears to be the name of the game for many of market's best investors.
Let's start with the granddaddy of them all, Warren Buffett and his giant Berkshire Hathaway (BRK.A, BRK.B).
Last week, Buffett made headlines when he inked a deal to buy Precision Castparts (PCP) for $32.5 billion plus assumed debt. But over the weekend, we found from Berkshire's 13F that Buffett and his lieutenants were very quiet during the second quarter, save for a few strategic bets.
First, Berkshire effectively liquidated all of its energy holdings, including stakes in Phillips 66 (PSX) and National Oilwell Varco (NOV).
Conversely, Berkshire took a 9% stake in auto-paint maker Axalta Coating Systems (AXTA), but bought that stake directly from the Carlyle Group (CG). Berkshire also upped it stake in cable provider Charter Communications (CHTR).
Now, all of that might seem on the surface to be an active quarter for Berkshire, but the overall dollar volume of these transactions represents less than 5% of the company's total stock portfolio.
Here's what other money managers of note disclosed in their latest 13Fs:
- The Baupost Group. The Baupost Group's Seth Klarman is another talented investor who rarely makes headlines, but his track record speaks volumes. Baupost was very, very quiet during the second quarter, but established small positions in Frontier Communications (FTR) and Sanchez Energy (SN).
- Roumell Asset Management. Roumell did nothing more than add to existing positions in Covisint (COVS) and Rosetta Stone(RST) as those stocks got cheaper.
The bottom line
Reading between the tea leaves, the big money managers' reticence to buy much appears to boil down to a matter of valuations. Equities have been very prosperous investments for more than half a decade now, but the fun is over. Now it's time to pick your spots and be patient.
But as many value investors are showing, they're picking the spot of inactivity until better times arrive.