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 & Co., founded by David E. Shaw and with a reportable stock portfolio totaled $53.2 billion in value as of June 30.
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 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 positions are call options on Microsoft and puts on Tesla Motors. Its biggest new holdings are Gilead Sciences and Scripps Networks Interactive. Other new holdings of interest include New York Community Bancorp, Inc. (NYSE:NYCB) and Pinnacle Foods. New York Community Bancorp, Inc. (NYSE:NYCB) has been growing via acquisitions and its management is known for prudent management of credit risk. It has been growing its commercial and industrial lending business, and its second quarter featured estimate-topping earnings and a rising net interest margin. Some see the bank’s sizable multi-family loan portfolio as an ace in the hole, offering refinancing-related income. For patient investors with conviction, the stock offers a whopping 6.8% dividend yield.
Pinnacle Foods is a recent IPO, with a strategy of “Reinvigorating Iconic Brands” and a new dividend, yielding a solid 2.7%. The company has a significant debt load, but it also has a strong brand lineup, featuring brands such as Birds Eye, Aunt Jemima, Hungry-Man, Van de Kamp’s, Armour, Lender’s, Mrs. Paul’s, Vlasic, Log Cabin, Mrs. Butterworth, Duncan Hines — and now Wish-Bone, thanks to a recent $580 million purchase. In Pinnacle’s second quarter, revenue dropped 3%, with management noting, “We delivered another quarter of strong earnings growth as we expanded gross margins through effective productivity programs and ongoing improvement in product mix.” The quarter impressed analysts at Zacks enough to lead to a rating upgrade, to Strong Buy.
Among sizable holdings in which D.E. Shaw increased its stake were Freeport McMoRan Copper & Gold and BMC Software. Smaller holdings that were greatly increased include Exelixis, Inc. (NASDAQ:EXEL) and Pengrowth Energy Corp (USA) (NYSE:PGH). Biotech company Exelixis, Inc. (NASDAQ:EXEL) has bulls excited about its cabozantinib drug, which, as COMETRIQ, is approved to treat thyroid cancer and even more promising, is in trials to treat prostate cancer and metastatic renal cell carcinoma. The company is looking at treating as many as nine different conditions with it, such as bone tumors. On the downside, though, Cometriq is expensive, and the company’s debt has been growing, along with its share count. In its second-quarter conference call, management noted that it’s tripling its sales force for COMETRIQ on promising sales from community physicians.