Billionaire Jeffrey Vinik’s Latest Stock Picks

VINIK ASSET MANAGEMENTJeffrey Vinik became famous as an investor during his days in the early to mid 1990s when he ran Fidelity’s Magellan mutual fund. He then left Fidelity and founded Vinik Asset Management, which today primarily manages money for family and friends. Vinik files a 13F with the SEC about seven weeks after the end of each quarter, giving the general public the chance to see what the fund has been buying and selling (at least in terms of long equities). Here are some investment themes that we noticed when going through the 13F and comparing it to previous filings.

Which gold miner? Vinik was very active in the gold mining industry. While the fund sold a considerable number of its shares in Barrick Gold Corporation (NYSE:ABX) and sold over 80% of its shares in Goldcorp Inc. (NYSE:GG), it initiated a position of 14.5 million shares in NovaGold Resources Inc. (NYSE:NG). Barrick, which was still Vinik’s largest stock holding reported on the 13F, and Goldcorp are giants in the industry with market capitalizations above $30 billion (Novagold has a much smaller market cap, of $1.2 billion). All three stocks are down in the last year, but Novagold has fallen the furthest as Wall Street analysts expect the company to be unprofitable both this year and next year. It’s possible that, being a distressed business, its stock price has the most to gain from a recovery in gold prices, but we’re not sure we’d want to be so dependent on gold going higher. The other two gold miners differ a bit: Barrick is much cheaper in terms of its P/E multiples at 10 times trailing earnings and 7 times forward earnings estimates (compared to 21 and 12, respectively, for Goldcorp). However, Barrick’s earnings were down 55% in the third quarter of 2012from its levels in Q3 2011, so its low multiples make some amount of sense. We think that gold watchers should be considering the miners as well as more direct ways to invest in gold.

Best Buy. Best Buy Co., Inc. (NYSE:BBY) has been suffering as Amazon and other retailers poach much of its electronics retail business, but the stock price has been bumping around recently as co-founder Richard Schulze moves towards a potential takeover of the company. It’s not clear that he’d actually be able to execute- Schulze would need substantial private equity and debt capital to make the buyout work, and while the current EV/EBITDA multiple is a very low 2.3x we think that lenders might balk. The stock is down 44% in the last year and trades at only four times forward earnings estimates as the market is highly skeptical of the sell-side’s optimism. Read our analysis of Best Buy as a public company. Vinik liked the stock during the third quarter, closing September with 5.2 million shares in its portfolio, but we’d avoid the stock- long and short positions would both carry too much risk.

Selling Home Depot. Vinik cut its stake in The Home Depot, Inc. (NYSE:HD) from 1.7 million shares at the beginning of July to about 300,000 shares by the end of the quarter. Home Depot’s stock has been up as investors look to increased housing and construction to drive demand, but in the third quarter earnings were only up 1% from a year earlier. Adage Capital Management, which is managed by Phil Gross and Robert Atchinson, had been a major holder of the stock during the second quarter. At 22 times trailing earnings, we don’t think that Home Depot is a good buy.

Our impression is that Vinik made a good call by selling Home Depot- the pricing seems a bit high right now. Best Buy is a different story: it’s possible that the potential for a buyout is keeping the price up and if that transaction doesn’t happen shareholders could see a correction. We don’t have a particularly strong opinion on the gold miners, though it looks to us like Vinik is depending quite a bit on higher gold prices by taking such a large position in Novagold.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!