13F filings for the fourth quarter of 2012 are in and we have been looking through them as part of our investing strategies and in order to provide information about what many notable investors, including billionaires and hedge fund managers, reported owning as of the end of December. Even though that was some time ago we have found that it is possible for investors to profit from 13F filings; for example, the most popular small cap stocks among hedge funds average an excess return of 18 percentage points per year (learn more about our small cap strategy).
Nelson Peltz is a value and activist investor who heads Trian Partners, and has become a billionaire due to his success in finance. His picks tend to be long term, and so investors can be somewhat confident that Trian’s current top stock picks are close to what they were two months ago. Here are some trends which we noticed in Peltz’s 13F for the fourth quarter of 2012 compared to previous filings:
Selling State Street. At the end of September, Trian had reported a position of about 9 million shares in State Street Corporation (NYSE:STT) but then sold shares over the course of the quarter. The fund entered 2013 with only 3.2 million shares in its portfolio. State Street operates both a custody banking business and an investment management business, and has a market capitalization of $26 billion. The stock trades at 14 times trailing earnings, and has actually been reporting good growth numbers recently: last quarter its revenue was up 6% compared to the fourth quarter of 2011, and with higher margins as well earnings grew by 23%. We’d actually think that investors might be interested in learning more about the company. Tiger Cub Andreas Halvorsen’s Viking Global had owned 6.2 million shares of State Street at the end of the third quarter (see Halvorsen's stock picks).
MeadWest. On February 15th- after the 13F disclosed that Peltz had initiated a position of 1.6 million shares last quarter- packaging company MeadWestvaco Corp. (NYSE:MWV) rose 13%. Its current market capitalization is $6.4 billion. MeadWestvaco’s products are used for packaging food, beverages, and personal products. Sales were down by 11% in the fourth quarter versus a year earlier, and the stock actually looks pricy at a trailing P/E of over 30 (of course, Peltz may use activist tactics to prod the company into unlocking shareholder value, so the current valuation metrics may not be as critical here). Peer International Paper Company (NYSE:IP) carries a trailing P/E of 23, and a forward P/E of 9 as Wall Street analysts expect considerable improvements in earnings over the next couple years.