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 Caxton Associates, founded in 1983 by Bruce Kovner. The investment company is known for relatively few years of negative returns and for average annual gains of about 20% since its inception nearly 30 years ago (per a Wall Street Journal article). That’s a powerful record.
Caxton is also known for charging clients dearly for the privilege of going along for the ride. In an industry known for routinely charging 2% of assets annually while also taking 20% of profits, Caxton had long charged 3% and 30%, though that was shaved down to 2.6% and 27.5% last year — still very steep. (It’s not the only one with such above-average fees.)
The company’s reportable stock portfolio totaled $2.4 billion in value as of Dec. 31, 2012.
So what does Caxton Associates’ latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Williams Companies, Inc. (NYSE:WMB) and puts on the iShares Russell 2000 ETF , which focuses on small-cap companies. Other new holdings of interest include RR Donnelley & Sons Co (NASDAQ:RRD) and Northstar Realty Finance Corp. (NYSE:NRF). Commercial printer Donnelley provides labels, packaging, and more to the private and public sector. It prints many thousands of forms for the SEC and bought Edgar Online. Bears worry about its steep debt load and a possible reduction of its massive dividend, which recently yielded 9.4%. To succeed, the company needs to do more digital business.
Northstar Realty Finance Corp. (NYSE:NRF) is another strong dividend payer, recently yielding 7.5%. It has been growing its revenue at a double-digit clip over the past few years, and offers the benefit of being diversified between real estate debt, mortgage-backed securities, and the old-fashioned leasing of owned properties. While many mortgage-related real estate investment trusts (REITs) have been cutting their dividends, NorthStar recently upped its payout.
Among holdings in which Caxton increased its stake was Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), which operates casinos in gaming Mecca Macau. The company has been performing well lately, racking up revenue and earnings gains and more than doubling its EBITDA margin over the past few years. It’s expanding with properties in the Philippines and elsewhere, too. (The Philippines is expected by some analysts to become a $3 billion gambling market by 2015.)