Michael Messner’s Seminole Capital Top Picks From the Latest 13F

Many hedge funds have been filing their 13Fs for the fourth quarter of 2013 lately. In these forms, they disclose most of their long equity positions as of the end of December. Although the portfolio information is a few weeks old, there are still a few ways for investors to use it.

We have found, for example, that the most popular small cap stocks among hedge funds outperformed the market by 18 percentage points even though we started measuring the returns a couple of weeks after 13Fs have been made public. It can also be productive to treat individual 13Fs as free recommendations from fund managers- not necessarily to be followed, but to be considered briefly and then researched further if they seem appealing.

In this article, I will briefly look into Michael Messner‘s Seminole Capital (Investment Mgmt)´s equity portfolio. These hedge fund´s holdings -worth more than $2 billion- are mainly oriented towards technology and financial companies.

The Boeing Company (NYSE:BA)

Prepare for Landing

Seminole has placed its largest bet on The Boeing Company (NYSE:BA), a $91 billion market cap designer, developer, manufacturer, vendor and servicer of commercial jetliners, military aircrafts, satellites, missile defense systems, human space flight systems and launch systems and services. Mr. Messner’s fund owned 1.02 million shares at the end of last year (down from 1.37 million in the previous quarter), valued at roughly $139.03 million –which comprises about 6.8% of its portfolio.

This investment certainly makes sense, since the company is particularly positioned to continue to boast profitability (especially given a $441 billion backlog, about 5 times estimated 2014 sales, which provide strong revenue visibility). In addition, The Boeing Company (NYSE:BA) offers one of the widest returns on equity in the industry, and pays out 2.37% of the current stock price in the form of quarterly dividends.

On the other hand, the stock has been quite beaten up over the past few days (price is down by more than 10% since Jan. 28th) and growth projections amongst analysts are not so encouraging -especially due to Lockheed Martin Corporation (NYSE:LMT)’s ascent in the industry and the Sequestration, which limits the budget of the U.S. Department of Defense. This might have motivated Messner’s retreat from The Boeing Company (NYSE:BA).

Moreover, Seminole cut its exposure to another behemoth in the Aerospace industry: Delta Air Lines, Inc. (NYSE:DAL). This was the fund’s second largest holding by the end of Q3. However, it now occupies the fourth place in Messner’s list. Over Q4, the fund sold more than 1 million shares, and now owns 3,22 million, worth more than $88.41 million.

Mr. Messner must be seeing something in the Aerospace industry that most analysts can’t, since mean recommendations for both companies are close to a “strong buy.” Moreover, it is difficult to find the reason behind Seminole’s sale of Air Lines, Inc. (NYSE:DAL)’s stock, since the company boasts above average margins and returns (with a return on equity of 4,644%), pays out dividends, and trades at 12.2 x P/E, almost half the industry average valuation.

 

Shifting Towards Technology

As Seminole slowly moves away from the Aerospace industry, it is getting closer to the Technology segment. The fund started a huge position in Apple Inc. (NASDAQ:AAPL). Holding just 240,200 shares, this stake still comprises 6.66% of its equity portfolio (the second largest bet), since it is valued at $134.76 million.

Other interesting new buys at the tech segment are Google Inc (NASDAQ:GOOG), of which Seminole acquired 61,678 shares that represent 3.4% of its portfolio; and Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC), which –together- stand for almost 4% of the fund’s total holdings.

 

A Diversified Portfolio

Finally, we would like to highlight two other relevant moves. First off, that of Tyson Foods, Inc. (NYSE:TSN), a food producer and distributor of which Seminole owned 3.38 million shares by the end of Q4, up by around 150% over the quarter. The other interesting case is that of Royal Dutch Shell plc (ADR) (NYSE:RDS.A), the Dutch integrated oil & gas company, to which Seminole increased its exposure by 35%, and now holds over 1.21 million shares, worth more than $86.5 million.

The aforementioned companies occupy the third and fifth place in Seminole’s portfolio, respectively.

 

Disclosure: Javier Hasse holds no position in any stocks mentioned.

Recommended Reading:

Hedge Fund Highlights: Jeffrey Altman, Seth Klarman & Ken Griffin

Sanford J. Colen Sends Letter To Board of MicroStrategy (MSTR); Wants Investor Communication Program

Hedge Fund News: Kyle Bass, Bill Ackman & Nouriel Roubini

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. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits 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!