With 13F filing season right around the corner, investors will
once again be treated to a bevy of data regarding which stocks
some of Wall Street's most famous names were buying and selling
in the fourth quarter. This is also a time to remember the
dichotomy presented by 13F filings.
Sure, it is useful to know that investing luminaries such as
Bill Ackman, Warren Buffett and Carl Icahn initiated new
positions and sold out of others in the prior quarter.
Conversely, investors must remember that the copycat approach
does not always work because there is a good chance the retail
crowd will not be getting the same prices that the pros got.
Frankly, there is a good chance retail investors opting to use
13F filings as a guide to finding winning stocks will pay more
than pros did for the same names.
There is something else to note about 13F filings. That being
the pros are not perfect. No one has a perfect batting average on
Wall Street, not even the venerable Buffett, perhaps the greatest
value investor of all-time. All of that is to say that just
because a famed investor has parted ways with XYZ Corp. that does
not mean shares of XYZ are not worth a look.
Believe it or not, some of the stocks Buffett's Berkshire
Hathaway dumped or trimmed positions in during the third quarter
of 2012 have taken off nicely since then. Some are still worth
looking at, particularly for patient, dividend investors with
longer-term time horizons. In no particular order:
Procter & Gamble (NYSE:
) Berkshire trimmed its massive stake in the world's largest
consumer products in the third quarter and Buffett said
as recently as late October 2012
that his company had sold some P&G shares due to
Berkshire is still one of the largest P&G shareholders
having held 52.7 million shares at the end of the
, so it would not be accurate to say Buffett is bearish on the
stock. However, newcomers to the stock have been rewarded as
shares of P&G have surged almost 10 percent since early
What is interesting about P&G is not so much that
investors could have done well by going the opposite way of
Buffett. Rather, had investors played copycat to another
noteworthy professional they would be sitting on impressive
gains. Ackman's Pershing Square Capital Management
boosted its P&G stake to 34.4 million shares
during the third quarter
Pershing Square's stake in P&G was revealed in July 2012
and for all the controversy Ackman finds himself in the middle of
with Herbalife (NYSE:
), folks seemed to have forgotten that P&G has soared 19.5
percent since August. So even waiting a couple of weeks to follow
Ackman into P&G was not a bad idea.
Johnson & Johnson (NYSE:
) It is not surprising that Berkshire trimmed its stake in
J&J. Going back to 2011, Buffett was not a fan of the company
acquiring Swiss medical-device maker Synthes for most shares.
Acquisitions paid for in shares dilute current shareholders and
J&J paid for Synthes with two-thirds stock and one-third
Buffett did not idly criticize J&J. He put his money where
his mouth is by reducing Berkshire's stake in the Dow component
by 95 percent during the third quarter
. Translation: A few years ago, J&J was one of Berkshire's
largest equity holdings. Today, J&J is one of Berkshire's
smallest stock holdings.
In mid-December, we predicted
J&J would be one of the Dow's 2013 rebound
. That assessment has proven accurate as the shares are up 4.7
An investor that bought the stock in say November 2012 upon
learning Berkshire dumped most of its stake has earned 6.2
percent. Again, Berkshire selling most of its J&J stake does
not mean J&J is a bad company. An AAA credit rating, $2.9
billion in cash and a five-decade dividend increase streak say
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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