Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.
Today, let’s look at the D. E. Shaw company, founded by David E. Shaw and with a reportable stock portfolio totaling $41 billion in value as of Dec. 31, 2012.
Shaw is known as a math wizard and a quantitative investing pioneer. His firm is reportedly extremely selective, hiring less than 1% of applicants — and Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos once made the cut.
So what does D. E. Shaw’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Kraft Foods Group Inc (NASDAQ:KRFT) and ADT Corp (NYSE:ADT). Other new holdings of interest include Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) . Spectrum has been experiencing strong growth due to the success of its colorectal cancer drug Fusilev, but that was partly due to a supply shortage faced by generic competitors. With that issue going away, Spectrum recently trimmed its growth expectations, sending the heavily shorted stock down sharply. Still, it has more than a dozen other drugs in development in its pipeline, and has broadened its scope with the recent purchase of Allos Therapeutics, Inc. (NASDAQ:ALTH), which is expected to help cut costs and also includes the lymphoma drug Folotyn. Spectrum also recently secured rights for the bladder-cancer drug apaziquone.
Among holdings in which D. E. Shaw increased its stake was Acadia Pharmaceuticals Inc. (NASDAQ:ACAD) , which has tripled in value over the past year, on high hopes for its pimavanserin drug, which treats psychosis in patients with Parkinson’s disease and is nearing the phase 3 trial finish line. If the drug gains FDA approval, it will enjoy little competition and could be a big winner for Acadia. The company thinks the drug also might be effective against psychosis related to Alzheimer’s Disease and is conducting trials for that as well.
D. E. Shaw reduced its stake in lots of companies, including Mesabi Trust (NYSE:MSB) and Molycorp Inc (NYSE:MCP) . With a recent hefty dividend yield of 8.2%, Mesabi Trust is a royalty trust collecting a cut of the proceeds from iron mined by a Cliffs Natural Resources Inc (NYSE:CLF) subsidiary — and then paying them out to shareholders. Unlike many companies with fixed payouts, Mesabi’s fluctuate over time, along with the fortunes of the mines, and while royalty trusts often have expiration dates, Mesabi’s expiration isn’t happening anytime soon. A possible downside for the stock is a slowdown in demand for ore, particularly in China, which has been one of several issues for Cliffs.