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Apple, AIG, Herbalife: What Superstar Investors Bought and Sold in the Fourth Quarter


The quarterly 13F filing season lets us peek into the minds of the world's leading investors. Financials were in during the fourth quarter, while techs were out.

With another February comes another quarterly disclosure of the holdings of institutional money managers with assets of at least $100 million. The Securities & Exchange Commission (SEC) requires these managers to report their stock holdings via Schedule 13F within 45 days of the end of each quarter.

In November, when these investors last updated their holdings (as of the end of the third quarter of 2012), Investing Daily's Jim Fink highlighted four picks from each of four different investment gurus-Seth Klarman, David Einhorn, Julian Robertson, and Daniel Loeb-to see what they can tell us about which stocks may be moving up-or down.

In that article, he discussed Seth Klarman's new position in Rovi Corp. (NASDAQ:ROVI). Since Fink's article came out on November 16, Rovi has soared from $14.53 to today's level of $18.24, for a 24.7% gain in three months.

These updates also give us a chance to stack these investment pros up against one another and see how their picks compare.

In the last three months, 13 of the 16 stocks highlighted (81%) in Fink's article made a profit (a sold stock is considered profitable if it went down in price). The gurus also did reasonably well against the performance of the S&P 500 Index (INDEXSP:.INX). Of the 12 stocks they bought in the third quarter, eight (66.7%) have beaten the S&P's 10.39% return in the past three months. Of the four stocks sold, two (50%) underperformed the S&P 500, so the gurus were better bulls than bears.

In addition to Rovi, the "buy" winners included David Einhorn's Computer Sciences Corp. (NYSE:CSC) (+35.9%), General Motors (NYSE:GM) (+11.0%) and Yahoo (NASDAQ:YHOO) (+16.0%); Julian Robertson's Charter Communications (NASDAQ:CHTR) (+15.7%), (NASDAQ:PCLN) (+12.5%) and Ocwen Financial (NYSE:OCN) (+16.5%); and Daniel Loeb's AIG (NYSE:AIG) (+19.2%).

Losing trades included Daniel Loeb's increased position in Apple (NASDAQ:AAPL), which has plunged 18.7% in the last three months. On the sell side, Seth Klarman missed out on a big gain by cutting back on Hewlett-Packard (NYSE:HPQ), which has risen 27.0%, and Julian Robertson is likely regretting lowering his interest in Goldman Sachs (NYSE:GS), which has soared 34.1%.

Of the four, Seth Klarman stood out as a laggard for the third consecutive quarter. Of his two buys, only Rovi, beat the S&P 500, while shares Idenix Pharmaceuticals (NASDAQ:IDIX) badly underperformed, rising less than 1% in the past three months. In addition to the above-mentioned ill-timed sale of Hewlett-Packard, he also sold Microsoft (NASDAQ:MSFT), which went on to post a 4.9% gain.

These miscues illustrate how important it is to do your own research and not merely follow the actions of investment pros, no matter how distinguished they may be; in addition, it's important to keep in mind that these 13F filings are usually out of date by the time they are released and likely don't paint an up-to-the-minute picture of each investor's holdings.

Nevertheless, they are still a gold mine of information as to what the smartest investors are buying and selling. A timely review of them can make you money. With that in mind, here are some highlights from all four investors' just-released 13F filings.

Note that the following is not a full account of these gurus' transactions, just a few that are worth noting. If you're keen to see what picks the cream of the investment crop are making these days (and who isn't?), read on.

1. Seth Klarman
Company Action % Change in Holding Average Purchase Price Per Share Comments
AIG (NYSE:AIG) Buy NEW $33.95 AIG is now the most popular stock among hedge funds, according to MarketWatch. The insurer has surged 41% in the past year.
Hewlett-Packard (NYSE: HPQ) Sell -100% $14.46 Klarman sold 46.5% of his stake in the struggling PC maker during the third quarter and finished the job in the fourth.
Oracle (NASDAQ:ORCL) Sell -22.60% $31.84 The networking giant's latest earnings beat expectations, but its hardware group continues to struggle.
Idenix Pharmaceuticals (NASDAQ: IDIX) Buy 72.5% $4.41 Klarman adds to his holdings in the hepatitis C drug company for the seventh straight quarter.
2. David Einhorn
Company Action % Change in Holding Average Purchase Price Per Share Comments
Microsoft (NASDAQ:MSFT) Buy 41.3% $28.20 Its recent $2 billion loan to the group taking PC maker Dell (NASDAQ:DELL) private shows that it will do whatever it takes to fend off competition from Android.
Apple (NASDAQ:AAPL) Buy 19.80% $590.52 Einhorn ups his position as he takes Apple to court over its plan to adopt measures that he says will limit its ability to issue preferred shares.
Seagate Technology (NASDAQ:STX) Sell -49.50% $28.03 Stock has doubled since Einhorn bought the bulk of his original stake in 2Q 2011.
Cigna Corp. (NYSE:CI) Buy 15.30% $51.29 The health insurer has risen 35% since Klarman revealed that he had taken a position in his August 2012 13F filing.
3. Julian Robertson
Company Action % Change in Holding Average Purchase Price Per Share Comments
Google (NASDAQ:GOOG) Sell -20% $707.62 Google's number of paid clicks is on the rise, but cost per click is down as users squint to see the company's ads on their iPhones.
Berkshire Hathaway (NYSE:BRK.B) Buy NEW $87.64 Class B shares of fellow guru Warren Buffett's holding company have risen 17% since mid-November, including a 3% gain in the wake of his recent deal to take over Heinz (NYSE:HNZ)
ADT Corp. (NYSE:ADT) Buy NEW $41.47 The security system maker is up 24% since being spun off from Tyco (NYSE:TYC) International in late September; it's now Robertson's largest holding by value.
Barrick Gold (NYSE:ABX) Sell -100% $37.73 The gold miner's shares have softened along with the yellow metal's price.
4. Daniel Loeb
Company Action % Change in Holding Average Purchase Price Per Share Comments
Mondelez International (NASDAQ: MDLZ) Sell -100% $33.82 Posted disappointing results in first quarter after spinoff from Kraft Foods.
News Corp. (NASDAQ:NWSA) Buy NEW $24.32 Shares of the diversified media company have jumped 48.7% in the last 12 months. Loeb's betting its run will continue.
Herbalife (NYSE:HLF) Buy NEW $39.75 Loeb has joined Carl Icahn by going long on the supplement maker after Bill Ackman revealed his 20-million-share short position.
Morgan Stanley (NYSE:MS) Buy NEW $17.68 After disclosing his stake in January, Loeb said Morgan "is in the early stages of a turnaround" and questioned why Morgan pays its execs more than its competitors do, even though "it is a smaller and simpler bank."

This article by Chad Fraser originally appeared on Investing Daily.

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