These are heady times for the nation's top
fund managers. I've conducted a deep review of the top 20 holdings
of the nation's most famous fund managers, and the relative gains
or losses since those holdings were acquired. The recent
performance has been remarkable: More than 85% of their recent
trades (according to recent
filings) are currently profitable.
Their stock-picking prowess is surely in evidence, though it
doesn't hurt that the
Dow Jones Industrial Average (DJIA)
has risen for seven straight months. Yet even these top managers
make mistakes. Almost every one of them is holding a dud in their
portfolio. The holding has slumped in value since they bought in,
implying they were either flat wrong, or just premature. These
managers are expected to update their holdings with fresh 13-F
filings in the next two weeks, so it will be interesting to see
whether they've doubled down on these
, or are cutting their losses.
For the rest of us, these laggards may point the way to value.
Having the chance to buy stocks that are now quite cheaper could be
a way to piggyback on these pros without overpaying. Here's a short
list of losing picks among top fund managers...
Running through this list, a clear theme emerges. Investments in
natural resource stocks have proven ill-timed.
Newmont Mining (NYSE:
NovaGold Resources (NYSE:
, for example, have been slumping along with other gold miners,
though as my colleague Steve Orlowski
those fund managers would be unwise to bail on them now.
In a similar vein, Bridgewater Associates' Ray Dalio, arguably the
on the planet right now, has made a rare misstep with
Peabody Energy (NYSE:
. He failed to foresee the slump in demand for coal. But at least
for this coal-miner, as
I recently wrote
, better days may lie ahead.
For this bank, timing is everything
Roughly 15 months ago, the U.S.
appeared to be turning a corner. Few suspected the European
financial problems would evolve into a full-blown crisis. With the
clouds parting, Fairholme Capital's Bruce Berkowitz and Pershing
Square's Bill Ackman loaded up on
while it traded in the low to upper $40s. But a few months later,
the economic skies grew cloudy again and this bank stock got
absolutely crushed, briefly falling below $25.
Shares have retraced about half of that loss, and at this point it
looks like a solid value play, trading well below tangible
. If Ackman and Berkowitz can hang on, then they may still see
their investments move back up above the prices they paid. By my
math, Citigroup could hit $50 or even $60 within a few years.
(That's why I hold it in my
$100,000 Real Money Portfolio
Go with the best
If you like to follow the moves of leading hedge fund managers,
then you should always keep an eye on the Baupost Group's Seth
Klarman. I noted his impressive long-term track record
in this article
-- and more recently, my colleague Andy Obermuller took
a fresh look
at his most recent holdings.
Tracking Klarman's moves can be especially profitable, as he tends
to focus on off-the-radar stocks that often slump even further
before finally gaining traction. And it's happening again. Right
now, several of his picks are underwater. But if history is any
guide, Klarman is not mistaken with these picks, just premature.
Klarman is currently carrying a 15% to 20% loss in Novagold
Allied Nevada Gold (NYSE:
. Watch out for his next moves in these holdings as the next round
of 13-F filings are submitted in a few weeks.
Risks to Consider:
These pros may have decided to reduce or eliminate their
exposure to these lagging picks in the first quarter, so keep an
eye out for the 13-F filings before buying.
Action to Take -->
Investors often tend to
up on stocks that the pros are buying, often paying more for shares
than the investment gurus did. It's wise to track their moves, but
even wiser to buy stocks for a price lower than what they paid. Any
of the stocks I mention above are good starting points for further
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-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority owns shares
of C in one or more if its real-money or investment portfolios.