Highlights from 104 fourth-quarter 13-Fs; My latest appearance on CNBC

1) It's good practice to keep an eye on what the "smart money" is up to...

Every quarter, I review a certain type of regulatory filing from many top investors called the 13-F – mining for investment ideas.

Institutional investment managers with at least $100 million in assets under management have to file a 13-F every quarter and disclose their equity holdings. By comparing with the previous quarter, it's easy to see which stocks were bought and sold during the quarter. That means these can be a good place for finding interesting stocks.

At the end of this e-mail is a summary of the fourth-quarter 13-Fs for 104 of the largest, best-known money managers that my friend Scott Tashman of trading firm Outset Global sent me.

I looked through all of them to see what caught my eye. And, frankly, fewer ideas than usual jumped off the page...

2) Jana Partners established a new position in one of my favorite insurers – Markel (MKL):

In fact, my team and I here at Stansberry Research recommended the stock last February in our flagship newsletter, Stansberry's Investment Advisory. Subscribers who followed our advice to buy are up 36% since then. (If you're a subscriber, you can read the full write-up right here.)

3) Meanwhile, Bill Ackman of Pershing Square was buying more of another recommendation in the Investment Advisory – shoe and apparel giant Nike (NKE):

Here in my daily e-mails, I wrote about Nike many times last year:

• My "first look" at Nike (August 9, 2024)
• Diving deeper into Nike (August 12, 2024)
• Bill Ackman buys a stake in Nike (August 15, 2024)
• A reader's comments on problems at Nike (August 20, 2024)
• A big leadership change at Nike (September 20, 2024)

In the Investment Advisory, my team and I recommended the stock in our September issue. (Subscribers can read that full issue right here.) Since then, our position roughly flat.

If you aren't an Investment Advisory subscriber, you can find out how to become one and gain access to our entire portfolio of open positions and recommended buy-up-to prices by clicking here.

4) Larry Robbins of Glenview Capital Management added a new position in online scrapbook website and app Pinterest (PINS), which I wrote about in my November 25 and December 3 e-mails:

He also exited dating-app company Match Group (MTCH), which I presented at the Stansberry Research Conference & Alliance Meeting in Las Vegas on October 23 – and shared with my readers in my November 8 e-mail.

5) Interestingly, Jeff Smith of Starboard Value has the opposite view on Match and was adding to his position in the fourth quarter:

I updated my analysis of Match after its latest earnings report in my February 7 e-mail, in which I concluded:

I continue to like the stock. Match remains a cash-flow machine, generating about $882 million of free cash flow ("FCF") last year, and used 85% of that (roughly $753 million) to buy back 7% of its outstanding shares.

The company plans to use at least 75% of this year's FCF to repurchase 5% to 7% of its shares, so I think there's a win-win for investors: The stock remains cheap, allowing the company to repurchase more shares (which mitigates the downside risk)... or the stock goes up.

6) David Einhorn of Greenlight Capital was buying more of fitness company Peloton Interactive (PTON):

I shared Einhorn's presentation on Peloton in my October 29 e-mail, when the stock was at $6.78 per share. It soon rallied to more than $10 per share but has pulled back to close yesterday at $7.43 per share.

Einhorn also threw in the towel on ODP Corp (ODP), better known as Office Depot. The stock has been a dreadful value trap, as you can see in this 10-year chart:

It caught my eye because someone posting under the handle "BlueFIN24" pitched it on my favorite stock idea website, ValueInvestorsClub ("VIC"). Only members can see the full ideas until 45 days after they're posted, so I'll give a brief excerpt of the pitch:

ODP Corporation formerly Office Depot at first glance looks like a terminally wounded business – they sell paper (in an increasingly digital world) through retail stores (as e-commerce eats everything) to office clients (as people increasingly work from home).

They have been furthermore led by a CEO in Gerry Smith who like Robert California in The Office engages in fanciful growth initiatives that have been massively shareholder destructive. This not only looks like a comical farce of a company a la Dunder Mifflin but trades like one – selling for less than 2x 2025 EBITDA.

The thesis for ODP in the past has been that they can pivot to B2B (which is their business that sells directly to office clients) and their retail stores can die or be sold off (generating cash along the way) – we even articulated this thesis in early 2021 on VIC.

And as it continues:

ODP received a bid from Sycamore which owns Staples for $40 a share in early 2021 (a roughly $2.1 billion bid for the business). They ended up in a back forth that ended with no deal for the whole company or for retail specifically. The stock traded up some and we closed our recommendation on VIC and our position, and the stock traded sideways for a while as management engaged in a massive share buyback – reducing share count from 54mm to 31mm.

After hitting a peak of $60 in early 2024, the stock has since just gone straight down in 2024 as activist investor HG Vora left the board and the B2B business which was supposed to be their saving grace saw a decline from $4 billion in sales to $3.6 billion. Greenlight which also owned shares puked their holdings in Q4 – having given up on the B2B as savoir thesis.

What makes the set up here interesting today is not just the massively reduced price (from $60 to $18) and very cheap ensuing valuation (2X EBITDA!), but the fact that much of the underperformance that happened the prior year in B2B was due to what will likely be temporary headwinds. Additionally, it appears that ODP is generating some green shoots in other verticals and with their Varis subsidiary which could in time totally change the narrative.

ODP reported weak earnings on Wednesday and tumbled 22%. This smells like a value trap that Einhorn was smart to sell...

7) Speaking of out-of-favor retailers, Ricky Sandler at Eminence Capital added a new position in Advance Auto Parts (AAP):

Like ODP, Advance also took a beating on Wednesday after reporting disappointing earnings. It's down 10% since I wrote about it in a three-part series in September (on September 11, September 13, and September 16), in which I concluded:

I wouldn't be willing to call Advance a "buy" right now because there's too great a chance that it's a value trap. [CEO Shane O'Kelly] has been in charge for a year and things are getting worse, not better. And [ValueInvestorsClub member natey1015] is right that, in retail, things can go south in a hurry.

I'm still not tempted with Advance's stock...

In addition, Sandler increased his stake in amusement-park operator Six Flags Entertainment (FUN), which is flat since I wrote about it on May 29 last year.

8) I would guess I've been on CNBC nearly 100 times over the years...

At one time, I was even an official "CNBC contributor." But yesterday morning was the first time I've been on as a political candidate!

If you're interested, you can see the five-minute interview I did here on YouTube.

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 my friend Scott of all the fourth-quarter 13-Fs he sent me: