It's good practice to keep an eye on what the "smart money" is up to...
That's why I like to review a certain type of regulatory filing: the 13F. Institutional investors with at least $100 million in assets under management have to file these quarterly to disclose their equity holdings.
13Fs make it easy to see which stocks were bought and sold during the quarter versus the previous quarter. That means they can be a good place for finding interesting stock ideas.
This PDF summarizes the third-quarter 13Fs for 37 of the largest, best-known money managers (sent to me by my friend Scott Tashman of trading firm Outset Global).
Let's review which ones caught my eye this quarter...
1) I always first look at what the greatest investor of all time, Warren Buffett of Berkshire Hathaway (BRK-B), is up to:
I was pleased to see that he agrees with my bullishness on Alphabet (GOOGL), snapping up around $5.3 billion worth of shares during the third quarter.
And he continues to trim Berkshire's massive and wildly successful stake in Apple (AAPL), this time by 15%, as he sold another 41.8 million shares.
The only other move that caught my eye – made by Ted Weschler (who, along with Buffett and Todd Combs, picks stocks for Berkshire) – was the small 4% increase in Sirius XM (SIRI) shares, a position currently worth $2.6 billion.
After noting Weschler's purchase of 32% of the company last year, I did an analysis of Sirius XM on October 23, 2024 (and followed up on October 28 and December 9). I concluded:
Sirius has two strikes against it that make me reluctant to pursue this idea...
First... is its ballooning debt load.
The second is that this business appears to be a classic melting ice cube. In the most recent quarter, paid subscribers declined by about 2% in the SiriusXM segment and about 5% in the Pandora segment...
If [my family is] at all representative of other customers – and I think we are – then SiriusXM is just another subscription service (and a very expensive one at that), competing head-to-head with Spotify, Apple Music, and other giants, most of whose content is free.
That doesn't bode well for the future of Sirius. So adding it all up today, I would avoid the stock.
It was a good call: 13 months later, the stock is down 18.4% compared with a 15.5% increase in the S&P 500 Index (both including dividends).
My concerns remain, so I'd continue to avoid the stock.
2) Next, I'm always interested to see what my college buddy Bill Ackman of Pershing Square Capital Management is up to...
And the answer is almost nothing, other than trimming a tiny bit of his Alphabet position:
Doing very little trading is a sensible way to invest.
3) Another old friend, David Einhorn of Greenlight Capital, had a busy quarter:
David continued building his position in project management company Fluor (FLR) – which Ricky Sandler of Eminence Capital also added to his portfolio. So it's on my list of stocks to look at.
His most interesting new position is in United Parks & Resorts (PRKS), which operates theme parks and water parks under the SeaWorld, Busch Gardens, Sesame Place, Aquatica, Water Country USA, Adventure Island, and Discovery Cove brands.
I wrote about the company at length in 2024 on August 16 and August 19. I concluded:
After taking a look at United Parks' financials and getting this additional perspective, I'm intrigued enough to investigate this further by visiting some of United Parks' properties and perhaps get a chance to talk to someone in management.
I actually hope to see mediocre operations – that it's hard to buy a ticket, the food is terrible, etc. – because that's the key to this investment: that there's plenty of low-hanging fruit for management to pick to improve operations, margins, and cash flows.
If so, then this stock, fueled by huge share buybacks, looks like it could easily double.
Thankfully, however, I didn't recommend the stock... Since then, it has tumbled 32.5% versus a 17.7% increase in the S&P 500.
It has been dragged down in part due to the implosion of fellow amusement park operator Six Flags Entertainment (FUN), whose stock hit a 15-year low on Friday. It's down 70% in the past year.
Despite this, two funds established new positions in Six Flags during the third quarter – Jana Partners and Land & Buildings.
I discussed Six Flags' merger with Cedar Fair on May 29, 2024. I concluded:
I'm not fully convinced yet.
The key concern I have [is] regarding competition – not from other amusement parks, but other forms of entertainment...
And I agreed with this takeaway posted by someone on the Value Investors Club forum:
I think the more important issue is that theme parks have lost wallet share. [In my opinion] this loss has led to market concerns about the future relevance of theme parks.
Specifically, within the leisure sector, since 2019, theme parks have been trailing in participation levels compared to the broader industry recovery curve...
The lag in recovery paints theme parks as underperforming within the broader leisure marketplace post-pandemic, leading to investor concerns about a possible secular peak in the spending category. In other words, given the data over the last 4 years, is it not fair to be worried that theme parks might be the next movie theaters?
But today, at their much lower prices, I think both PRKS and FUN are worth another look. So keep an eye on upcoming dailies...
4) My friend and investing legend Seth Klarman of Baupost made quite a few moves during the quarter as well:
The one that most caught my eye was the new position in railroad giant Union Pacific (UNP). It was one of the most popular stocks during the quarter, as Third Point, Senator, and Corvex also established new positions.
I'm definitely going to be taking a look at UNP, as I'm very familiar with railroad stocks. Berkshire owns BNSF Railway, and I made good money following my friends, activist investors Bill Ackman and Paul Hilal, into Canadian Pacific Kansas City (CP) and CSX (CSX).
5) In addition to buying UNP, Dan Loeb of Third Point increased his position in Casey's General Stores (CASY) and trimmed his position in Rocket (RKT):
I covered Loeb's analysis of Rocket – and shared my own – on August 20. And I did the same for Casey's on August 21.
6) Lastly, Jeff Smith of Starboard Value increased his position in Tripadvisor (TRIP), trimmed Match Group (MTCH), and sold out of Pfizer (PFE) – all of which I've written about a number of times (archive here, here, and here, respectively):
Overall, it was good to see investors I respect a great deal sharing my bullishness on Alphabet and Tripadvisor.
And I plan on taking a closer look at United Parks & Resorts, Six Flags, Fluor, and Union Pacific. So stay tuned...
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.