Jeffrey Vinik achieved enormous success as the manager of Fidelity’s Magellan Fund and then as the head of Vinik Asset Management, allowing him to become a billionaire. He returned money to outside investors in 2000 but still files quarterly 13Fs disclosing many of his long equity positions in U.S. stocks. By comparing his filings to previous ones we can see which stocks Vinik bought in the fourth quarter of 2012 (13Fs are also useful for researching investment strategies, and we have found that the most popular small cap stocks among hedge funds generate an excess return of 18 percentage points per year). Read on for our thoughts on the five largest new stock positions reported on Vinik’s 13F and see the full list of his stock picks.
Weatherford International Ltd (NYSE:WFT) was the largest new pick in Vinik’s portfolio at a position of 5.5 million shares. Weatherford is an $8.8 billion market cap oil and gas equipment and services company; its stock price has fallen 25% in the last year, somewhat in line with the business’s lower earnings. While revenue has been up, reduced margins have pulled net income lower. Wall Street analysts think that Weatherford will recover, and the forward P/E is only 8, but we would be cautious when considering an investment. Billionaire Ken Griffin’s Citadel Investment Group was buying shares last quarter (find Griffin’s favorite stocks).
Vinik likes gold miners, counting Barrick Gold Corporation (NYSE:ABX) and NovaGold Resources Inc. (NYSE:NG) among his top five single-stock positions. He added AngloGold Ashanti Limited (NYSE:AU) to his portfolio in the fourth quarter of 2012, reporting ownership of about 910,000 shares. Anglogold is also a favorite of billionaire John Paulson, who has also been bullish on gold miners (check out more stocks Paulson’s fund owns). Anglogold is down 40% in the last year, as gold prices have been down a bit and a substantial gap has opened between gold prices and the prices of most miners.
Find three more stocks Vinik was buying: