Wednesday, August 03, 2005

Seeing What the Pros Buy

The market had a fairly level day, although there were some big news (TWX, Adidas buying Reebok).
UNTD improved on last night's after-hours gains and managed to end the day up 7.93%
This pushed my overall position back into the positive side (+3%).
EBF has been showing some weakness lately, but I think I'm going to hold it.
The rest of my positions finished in the green (except FRX was flat).
Right now I'm comfortable with my positions (but cautious with EBF) and I need to find time to research more.

I'll start researching some of the stocks I've been mentioning lately and search for new candidates.
I'm bookmarking this Business Week article about companies that have upped their dividend for 25+ years. Some of these stocks will definitely be out of my price range (due to my low net worth, I can't buy 100 shares of a $70 stock, since that would take up almost 30% of my total net worth).

I read this article/interview of Timothy Vick from Sanibel Captiva Trust. The interview was pretty interesting and it detailed Vick's investment strategy that takes a lot from Buffett.
The article reminded me of something I did at my old job. We were interested in what some of the good portfolio managers were buying, but some of them were not very press-friendly.
So how would we find their holdings? (I'm not talking about big mutual funds, but lesser known firms). The one I looked into frequently was Private Capital Management, which Bruce Sherman runs. Sherman has had a fantastic track record, but it's hard to find out what they were buying.
I looked into the firm's 13F form. Any investment firm (mutual funds, investment management funds, etc.) is registered with the SEC. There might be a size limit, but I know my old firm ($250 million in assets, which is small) needed to be registered. Anyways, registered firms need to submit a quarterly form (13F) of their holdings. By examining quarter to quarter, you can see what the firm has bought or sold. By using the value figures, you can also get a decent range on the price they paid for the stock.
How to look at the 13F: Go to the SEC site, click Search for Company Filings, click Companies and Other Filers, then in Company Name put in the firm's name (Private Capital Management), next click the specific company (the PCM I want to look into is based in Florida, so I'll click the one with FL). This will list all the forms they have to submit, from here you can scroll to find the 13F or you can search by form type (which is helpful if you want to get multiple quarters without taking too much time). After you find the 13F, click that or "text" that should appear next to it. This will bring you the form. Scroll down until you start seeing a big list of holdings.
It will show the stock name, the value, and the total shares. I compared multiple quarters with each other to see what stocks they were adding or selling and it was pretty interesting.
I think this would be great for people with a long-term view. You can find a firm/manager with a strategy you agree with and then compare the 13F's to see their activity. Your price will have a lag since these are quarterly reports, but if you're holding for the long term a few months shouldn't affect the results too much.

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