Putting aside Warren Buffett and Carl Icahn who march to separate drummers my take-away on the quarter’s 13f reports shows sizable uniformity in portfolio composition
But first in pique I shut down my Bloomberg after Boeing faded on reporting their 737 jets showed some loose screws. The Great Humbler, (the market), once again, jerked me around. Sold half my Boeing, still outsized, and added to Apple, Microsoft, and Occidental Petroleum.
Unlike Icahn, I don’t deal in esoteric energy plays that nobody has ever heard about. Luck and pesetas, Carl.
Only academics massage concepts like sector weighting, market volatility and what’s the proper price-earnings ratio for the S&P 500 Index. Smart operators get a hunch and bet a bunch. I’m going against the grain buying 2-year Treasuries, which just crossed the 5% mark in yield.
The 13f reports are columns of numbers with no interpretive remarks. Before I look at buys and sells and sector compositions, I check the static ratio for turn over. It runs from low teens to 100% quarterly.
Renaissance Capital is a good example, but there are plenty of others. These guys trade intraday for quarters and half points. They are more like mathematicians than lowly money managers looking for the next Apple and Microsoft. Statisticians don’t think about underweighting or overweighting sectors of the market or specific stocks.
A house like T Rowe Price has been around as long as I can remember. T Rowe deals in big capitalization growth stocks. The average position rests around 1% but over 25% of assets go to Apple, Microsoft, Meta Platforms, Amazon, Nvidia, Alphabet, the usual growth suspects. Why not just buy the NASDAQ 100 Index and call it a day? Yes. It’s racier and best reserved for a bull market play.
What can you say about Tiger Growth Management? It adheres to highly volatile growthies: Meta Platforms and Microsoft tot up to 36% of assets. If anything, I am seeing more assert concentration as a theme than asset diversification.
I prefer Microsoft to Apple only because I find it easier to analyze, I’ve factual wherewithal to build an earnings model over three years. Too tough to pencil in new apps for the iPhone.
In money management you see uniformity of response or no response stretching out for years. When Cleveland Cliffs announced its play for U.S. Steel, I turned to my 13f reports and found uniformity of response or in this case lack of response. Money managers remain totally disinterested in cyclicals, particularly industrials. Even a higher quality piece of paper like General Electric. General Motors, found few takers. Nobody owns viciously cyclical paper like Alcoa, Ford. Exxon Mobil is nobody’s cup of tea.
Energy is an underrepresented sector of cash concentration, but it is sizable weighting in the S&P 500. Nobody’s betting on a comeback.
I like Buffett's energy plays. He carries a big position in Occidental Petroleum. There are always some stocks at 10 times earnings worthy of a concentrated play. Another major market sector nobody cares about these days is banking and financials, such as credit card purveyors.
Buffett here is the lonesome cowboy with his American Express position held for decade to decade. If I were bullish in our economic setting I’d own banks big time. Let someone else inventory JPM. Always looks expensive to me.
My favorite yield play is found in the MLP sector of energy houses. Enterprise Products Partners yields 8% but nobody cares. They’d rather drop capital owning U.S. Treasuries. If Enterprise’s liquids sector sluffs off, there’s some cyclical risk, but the dividend payout ratio seems comfortably covered, not extended.
I just bought more 2-year U.S. Treasuries, yielding over 5% but I’m losing money here. The old story: You do what on the face of it looks easily comprehensible and conservative, but then drop into the loss column. I’ll hold this paper to maturity and break even at least.
Deep basic? No visible rose garden in sight. I’m 40 percent long, fingers crossed.