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 investment advisory firm Douglass Winthrop Advisors. It’s of interest because it employs a Foolish “low-turnover, buy-and-hold strategy ,” which has served it well. Since its inception roughly a decade ago, its equities investments have averaged annual gains of 8.3%, vs. 7.1% for the S&P 500. Management noted in a recent letter to shareholders, “As committed long-term investors we keep our clients invested through good days and the inevitable bad ones. While this makes for some queasy moments, our clients understand that what really matters are long-term returns net of fees and taxes.”
The company’s reportable stock portfolio totaled $750 million in value as of Dec. 31, 2012.
So what does Douglass Winthrop’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings include Mueller Water Products, Inc. (NYSE:MWA) and Allergan, Inc. (NYSE:AGN). Other new holdings of interest include Walter Energy, Inc. (NYSE:WLT). Walter is a pure play in metallurgical coal, which is needed by the steel industry, among other things. Along with other coal companies, it got a boost from China’s plans for development and growth. Some wonder whether the company will be bought out. After taking a $1.1 billion acquisition-related charge last year, the company’s near-term prospects look a bit murky. Coal consumption in the U.S. isn’t expected to surge, but developing economies are much more promising.
Among holdings in which Douglass Winthrop increased its stake was Enterprise Products Partners L. P. (NYSE:EPD), one of the largest master limited partnerships and a specialist in midstream oil and gas operations. It recently sold out capacity at a new propane dehydrogenation facility, and aims to build more. It’s also working on paying down debt, but that hasn’t kept it from upping its dividend over many years. It had a good year in 2012.
Douglass Winthrop reduced its stake in lots of companies, including Altria Group, Inc. (NYSE:MO) and Devon Energy Corporation (NYSE:DVN). To many people, the future for domestic tobacco giant Altria doesn’t look as rosy as its past, due to a shrinking smoker base in the U.S., coupled with more folks moving to discount cigarettes and rising taxes and regulations. Respected analysts at Steifel Nicolaus recently rated the stock a buy, but my colleague Rich Smith thinks they’re wrong. Altria sports a dividend yield of 5.1%.