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 Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!