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 (who stepped down in 2011). The investment company is known for relatively few years with negative returns, and for average annual gains of about 20% since its inception several decades ago. That’s a powerful record. It hasn’t done as well recently, though, gaining just 1% in 2011, 2% in 2012, and 16% in the first half of 2013.
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 reduced some in 2012.
The company’s reportable stock portfolio totaled $2.0 billion in value as of June 30, 2013.
So what does Caxton Associates’ latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are puts on the iShares Russell 2000 ETF and calls on Ford stock. Other new holdings of interest include New York Community Bancorp, Inc. (NYSE:NYCB) and 3D Systems Corporation (NYSE:DDD). New York Community Bancorp, Inc. (NYSE:NYCB), known for prudent management of credit risk, has grown by an annual average of 28% since its IPO in 1993. That’s kind of impressive! It has been buying other banks and expanding its commercial and industrial lending business. The bank’s second quarter featured estimate-topping earnings and a rising net interest margin. Some see the bank’s sizable multifamily loan portfolio as an ace in the hole, offering refinancing-related income. For patient investors with conviction, the stock offers a whopping 6.9% dividend yield.
3-D printing is still in its infancy, with much promise, and 3D Systems Corporation (NYSE:DDD) is well positioned within the industry and investing in further growth. For example, it recently bought The Sugar Lab, which is developing printable food. Despite significant short interest, the company recently received an upgrade from Citigroup analyst Kenneth Wong, and it has been innovating and releasing new products. Some see the stock as overvalued now, but others just see lots of room to grow.
Among holdings in which Caxton Associates increased its stake was power management company Eaton Corporation, PLC Ordinary Shares (NYSE:ETN). It posted revenue up 40% in its last quarter, but earnings per share dropped, in part due to dilution caused by its issuing more shares. Its $12 billion acquisition of Cooper Industries has been boosting its competitive position and giving it some tax advantages. Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) upped its dividend by 11% earlier this year; it yields 2.6% now. Some worry about innovators eating Eaton’s lunch and see the stock as no bargain at recent levels, while others are bullish about its growth prospects once global economies heat up more.
Caxton Associates reduced its stake in lots of companies, including regional banks Synovus Financial Corp. (NYSE:SNV) and Regions Financial Corporation (NYSE:RF). Georgia-based Synovus Financial Corp. (NYSE:SNV) recently repaid its $968 million TARP debt, in part by issuing more stock. Its credit quality has been improving, and it has been posting strong return-on-equity (ROE) numbers. It just reported its fourth profitable quarter in a row, too. Analysts at Zacks upgraded it in July to a strong buy, noting, “A decline in non-interest expense, improvement in credit quality and strong capital ratios depict the scope of sustainable profitability in the forthcoming quarters.” Analysts at Drexel Hamilton downgraded the stock in August, though, on valuation concerns. The stock yields 1.2%.