Last week we saw the deadline of filing 13F forms with the SEC. These forms list security positions held by money managers and hedge funds. The deadline is 45 days after the end of a calendar quarter, so the current filings track moves made in the first quarter of the year. Many investors use the filings as a source of ideas for their own portfolios.
It’s not always easy to sort through the rationale for some hedge fund managers’ purchases, but fortunately we have Portfolio Grader to help us identify the best stocks being bought by the best investors.
One of the stocks being snapped up by large investors in the first quarter was Virgin Media (VMED). The communication and media company has been surprising analysts with its strong momentum in spite of doing much of its business in the United Kingdom. The company has posted a strong earnings surprise in three of the past four quarters and analysts have raised their expectation for the next two quarters and next year.
Several of the world’s top-performing hedge funds — including Third Point, Lone Pine and Farallon Capital — were heavy buyers of the stock in the first three months of the year. More important, the strong fundamental performance of the company led to the stock being upgraded last year: The stock remains an “A”-rated “strong buy” in Portfolio Grader.
Johnson & Johnson (JNJ) continues to be a must-own stock among the world’s largest money managers. The consumer products and pharmaceutical giant has a solid research and new product pipeline. The company’s consistent performance landed it on the list of “B”-rated “buy” stocks last fall, and it moved up to a “strong buy” after another solid earnings report in February. The stock remains a must-own stock for most investors.
As the banking sector continues to put aside the credit problems of the past few years, institutions are continuing to accumulate the best-of-breed large bank stocks. Investors should follow their lead and focus their bank stock buying on “buy”-rated stock like Citigroup (C), M&T Bank (MTB) and JPMorgan Chase (JPM). All are seeing buying pressure form large institutions and are rated “buy” in Portfolio Grader.
It is important to realize that you can use the 13F filings as a jumping-off point for further research, but don’t blindly follow the big boys. Many of them are still intrigued by the past success of Apple (AAPL) and it has cost them as the “F”-rated stock has tumbled out of favor. Use Portfolio Grader to sort the list of intuitional favorites to find those with the best fundamentals that will attract attention as the market’s advance narrows over the summer.