These Valentine’s Day Filings Can Set You Up for Outsized Gains

Investing Strategies

The 13F filing deadline for institutional investment managers was on Valentine’s Day, and it passed with the usual fanfare from the media.

By fanfare, I mean they covered the filings least likely to serve as a launching pad to outsized profits for individual investors.

Let me do the opposite, and set you up for some above-market returns.

Man seriously reading the paper while having breakfast

Form 13F filings listing the positions of every major money manager, hedge fund titan, hedge fund titan wannabe, investment advisor, family office endowment, and corporation with over $100 million invested in public securities are due at the Securities and Exchange Commission 45 days after the end of every quarter.

By comparing this quarter’s filing to last, you can easily see what the best investors on the planet are doing for their investors and themselves. It is not a list of the stocks they have been discussing on TV or what the experts think they may have purchased, but the what they have actually bought and sold.

Go to almost any investment website last week, and the 13F discussion was a hot topic. Everyone was talking about what the legendary rock star investors were buying and selling. If you do a Google (GOOG) search for 13F filings, three of the first four stories are about what Warren Buffet and his Berkshire Hathaway bought and sold in the final quarter of 2023.

I can imagine a more worthless pile of information for investors seeking high returns than a list of stocks purchased by one of the largest corporations in the country, which is also managed by a 93-year-old man. Yes, Buffett is one of the greatest investors and businesspeople of the last 100 years. That cannot be argued. But his goals and those of his corporation are not the same as yours.

Michael Burry of The Big Short fame also gets into the Google search top 20.

You must pay attention to Burry. Not only did he hit one of the most significant home runs in history by shorting mortgage-related securities in the GFC, but he’s also had a solid track record before and since that happened.

Michael Burry also passes my biggest test for idea piracy. To determine this, I plug his top holding into my handy-dandy calculator to see whether he beats the market over the long run. This takes all the leverage and sizing factors out of the equation and allows me to determine the best stock pickers over time with the same goals as us. They are looking not just to beat the market but to trounce it and pile up wealth at a rapid rate.

In the final three months of 2023, Burry’s largest position included large-cap China stocks like Alibaba (BABA) and JD.Com (JD). I wish him luck, but I refuse to buy stock in countries domiciled in a nation that hates me and whose definition of shareholder rights is simply: “None.”

Burry also has a big position in Nexstar Media Group Inc. (NXST), a large owner of TV stations with more than 200 stations across the United States affiliated with major networks. It also owns networks such as the CW and News Nation, the fastest-growing network in the United States. Burry is a big fan of networks, it seems, as he also has a large stock in Warner Bros. Discovery (WBD), the owner of the Discovery Network and its collection of channels, as well as HBO and Cinemax. And, he also bought back into Qurate Retail Inc. (QRTEA), a stock he has owned and sold several times in the past few years. That company, Formerly Liberty Interactive, owns internet and cable TV shopping stations, including QVC International. At 70% of book value and two times expected earnings, the stock is statistically cheap but has been something of a value investor’s burial ground over the past several years. Qurate is probably worth a small speculation as a hero-or-zero stock. Business either improves by sending it to a multiple of five or more times the current stock price, or else it falls into oblivion.

Burry also bought shares of a restaurant chain with some serious upside potential if it continues spreading across the country. GEN Restaurant Group Inc. (GENK) is a cook-it-yourself dining experience with 30 locations across seven states. The chain has two things going for it: first, it provides a unique experience. Second, Korean BBQ is delicious.

GEN Restaurants IPO’d last summer and has fallen more than 50% since then. The stock is not cheap, but it is growing rapidly. I would not load the boat with this busted IPO, but aggressive investors who understand the math of longshots with decent fundamentals might find it worth taking  a small position.

Two of the most critical sectors for long-term investors are energy and technology. A handful of firms consistently deliver high returns investing in these areas, but they are not firms you have ever heard of unless you are as big a geek as I am.

Stay tuned for my Thursday video, when I’ll have more.

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