'Good artists copy, great artists steal'; I have my eye on two new Berkshire Hathaway stakes; Highlights from 38 third-quarter 13-Fs; A look at GeneDx; Another fun day in New Zealand

1) Every quarter, I review a certain type of regulatory filing of many smart investors – looking for investment ideas to share with my readers...

As Apple (AAPL) founder Steve Jobs once said regarding a quote often attributed to a famed artist:

Picasso had a saying – he said, "Good artists copy, great artists steal." And we have always been shameless about stealing great ideas.

It strikes me as obvious that investors would be well served to adopt the same approach... but in fact, just the opposite is often the case.

Though few will admit it, I've observed that many of my fellow investors – especially professionals – suffer from a "not invented here" syndrome.

I think it's mostly rooted in intellectual arrogance. If another money manager already bought a stock, especially at a lower price, then other professionals' tender egos won't allow them to buy it because that would be a tacit admission that the other guy is smarter than they are.

For example, how many investors never bought Coca-Cola (KO) or Apple because these are well-known Warren Buffett investments?

Though I'll admit to having a healthy ego, I've never fallen into this trap. In fact, I go to an extreme in the other direction – I'm constantly seeking great ideas by talking to or following the smartest investors in the world.

For example, I read dozens of investors' letters (I especially recommend Howard Marks')... follow a handful of investors who have blogs (like Harris "Kuppy" Kupperman, Chris DeMuth, Eric Rosen, and Andrew Walker)... read e-mails from friends like Doug Kass of Seabreeze Partners... and attend numerous conferences like Guy Spier's VALUEx Klosters (and co-host my own, the Value Investing Seminar in Italy).

And when it comes to regulatory filings from smart investors, I like looking at 13-Fs.

Institutional investment managers with at least $100 million in assets under management have to file a 13-F every quarter, which discloses their equity holdings.

For regular folks, it's a way to see what the "smart money" is up to.

With this in mind, let's take a look at the latest moves by some smart investors...

2) The smartest of them all is Warren Buffett, who – along with Todd Combs and Ted Weschler – manages Berkshire Hathaway's (BRK-B) enormous stock portfolio.

Based on yesterday's closing prices, it's valued at about $294 billion (CNBC has a real-time tracker here).

Yesterday Berkshire filed its third-quarter 13-F, which didn't have any bombshells beyond Buffett continuing to sell down his massive stake in Apple, which I discussed in my November 4 e-mail.

Here's a Wall Street Journal article from yesterday with additional commentary: Warren Buffett's Berkshire Hathaway Takes a Small Stake in Domino's Pizza. Excerpt:

Warren Buffett's Berkshire Hathaway established new positions in consumer companies Domino's Pizza (DPZ) and Pool Corp (POOL) while mostly selling stocks in the third quarter.

The Omaha, Neb., company also slashed its recently established stake in Ulta Beauty (ULTA) and cut its holdings of Capital One Financial (COF) and Charter Communications (CHTR), according to a regulatory filing made public after the market closed Thursday.

Berkshire had already revealed that it continued selling down its flagship position in Apple during the quarter and reduced its big stake in Bank of America (BAC).

In total, as the article continues:

Buffett's company sold a net $127 billion of stocks in the first nine months of the year, according to its financial statements. In the third quarter, it sold $36 billion of stocks and purchased $1.5 billion.

The sales helped drive the company's cash pile to a record $325 billion at the end of September. (Some Berkshire observers reduce the cash total by subtracting a payable on the company's balance sheet for purchases of Treasury bills. That would leave the cash at about $310 billion – still easily eclipsing the previous high.)

After seeing Berkshires moves, I've added Domino's Pizza and Pool Corp to my list of companies to take a look at... so stay tuned for future e-mails on those.

3) Meanwhile, my friend Scott Tashman of trading firm Outset Global sent me a preliminary summary of the third-quarter 13-Fs for 38 of the largest, best-known money managers, which I've included at the end of this e-mail. A couple things in particular caught my eye...

Though my college buddy Bill Ackman's Pershing Square isn't on Scott's list below, website 13f.info posted his activity during the third quarter here. As I expected (discussed in my August 15 e-mail), Bill added to his stake in apparel giant Nike (NKE), increasing his position from 3.0 million to 16.3 million shares.

Bill also dramatically increased his stake in Canada-based alternative asset and real estate manager Brookfield (BN.TO)... so I'm adding that to my research list as well.

As you can see below from Scott's list, my friend Seth Klarman of Baupost was busy:

I was particularly interested to see Seth increase his position in Google parent Alphabet (GOOGL), one of my favorites, and establish a new position in the beaten-down shares of discount retailer Dollar General (DG) – another addition to my research list.

4) Speaking of Alphabet, I was intrigued to see a new investment by the company in GeneDx (WGS) – you can see it in Scott's list:

I had never heard of GeneDx, so I took a quick look on Capital IQ and saw why – it's in a sector that's far outside of my circle of competence. Capital IQ describes its business as follows:

GeneDx Holdings provides genomics-related diagnostic and information services. The company offers Centrellis, an AI-driven health intelligence platform that integrates digital tools and artificial intelligence allowing scientists to ingest and synthesize clinical and genomic data to deliver comprehensive health insights.

It provides genetic diagnostic tests, screening solutions, and information with a focus on pediatrics, rare diseases for children and adults, and hereditary cancer screening.

But what really caught my eye was GeneDx's stock chart – I'm not sure I've ever seen anything like it...

After peaking at more than $800 per share not long after it went public in November 2020, GeneDx then declined by 90%... then 99%... and finally by 99.9% – hitting a low of $1.16 intraday a year ago, as you can see in this chart:

But since then, the stock miraculously turned around and has risen by 64 times through yesterday's close. Some clever investor has a 64-bagger in less than a year – you don't see that very often!

This looks like a stock caught up in the AI bubble, which is reflected in the roughly 10% short interest in it. But Alphabet's investment gives it enough credibility that, just for fun, I took a look at the company's quarterly revenue and operating income since 2020:

To GeneDx's credit, revenue has risen steadily since the beginning of 2023 and operating losses have fallen sharply... but it's not the kind of growth I expected in light of the stock's parabolic move.

But it started from a very low base, as the stock today only has a $2 billion market cap and trades at 7.6 times trailing revenue. I wish I had looked at it a year ago!

5) My wife Susan and I enjoyed sea kayaking (where we saw some seals), hiking, sailing, and swimming yesterday in New Zealand's Abel Tasman National Park on the northern end of the country's South Island. Here are some pictures:

We're flying to New Zealand's North Island today, where we'll spend the last four days of our trip.

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.

P.P.S. Here's the full list from Scott on the third-quarter 13-Fs: