Latest 13F Reveals Technology Hedge Fund’s Newest Positions
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Seminole Capital Management is reaching its eighteenth year in existence, after being incorporated in 1995 in New York City. Michael Messner has managed the fund since its inception, favoring the Technology, Financial, and Basic Materials sectors primarily. It recently filed its latest 13F on the first of this month, outlining the fund's newest buys, sells, and top holdings. Messner made purchases in thirty-five new stocks, and we have done the leg work of analyzing his top five largest new investments below (compare them to his Q3 filing here).
Aerospace company and airplane manufacturer Boeing (NYSE: BA) tops our list, capturing roughly 3.3% of Seminole's $1.8 billion in assets under management. BA recently reported Q4 earnings last week, coming in at $0.09 over analysts’ expectations and guiding 2013 revenue numbers in the $82-$85 billion range. While positive news, it falls short of EPS reports for the same quarter a year prior. In addition, BA was hit in January with regulations from the FAA that grounded the company's 787s after an emergency landing was required in Japan due to a malfunction. Doug Silverman of Senator Investment Group has both a stock and call position in BA.
Seminole continued to build upon its aerospace holdings by purchasing Honeywell (NYSE: HON). HON faired much better than BA this past year, returning 16.7% versus Boeing’s flat performance. The company also comes with a dividend yield of 2.4%, a positive when seen through the eyes analysts, earning HON multiple buy ratings. HON’s forward price to earnings ratio is smaller than its trailing measurement, signifying a possible increase in earnings for 2013. Clint Carlson of Dallas-based Carlson Capital dramatically bumped up his position according to his last 13F.
Insurance holding company Lincoln National (NYSE: LNC) was a new $350 million investment for Messner, claiming 2% of the fund’s dollars. The company operates multiple insurance arms (as well as retirement services) through subsidiaries. LNC has trumped analyst earnings estimates four times in a row, coming in at better-than-expected numbers, including a beat on the announcement yesterday. The stock’s impressive return last year of 20% may show some signs of overheating, as one year mean price targets are near parity with current values. Billionaire Ken Griffin showed a decline in his LNC position according to his Q3 2012 13F (see Citadel’s top holdings here).
Emerson Electric (NYSE: EMR) is a global engineering service provider that caught Messner’s eye in the last quarter. The $42 billion market cap company competes with giants like General Electric and Hitachi. Seminole acquired almost 630,000 shares; that amount will give the fund additional income with the stocks high dividend yield of 2.9% (the highest of on list). Investment banks and ratings houses are either initiating at or downgrading EMR to neutral, with four equivalent ratings in the past three months from the likes of Morgan Stanley and Oppenheimer. David Harding, whose personal wealth reaches into the ten figures, has about $5.5 million committed to EMR (check out his heaviest positions here).
Telecom player Qualcomm (NASDAQ: QCOM) stands as Seminole’s fifth largest new initiation, and for good reason. They are Apple’s main supplier for iPhone5 baseband processors, and they contribute numerous parts to a whole catalog of phone models built by Samsung, Nokia, etc. Qualcomm’s recently announced earnings brought on a beat as well as a strong outlook for 2013, as markets all over the world look to upgrade their mobile data speeds (i.e. more LTE users in the states, as well as Indian/Chinese users transitioning from 2G to 3G phones). We see a strong future for Qualcomm, as does John Hurley of Cavalry Asset Management, which holds almost 12% of his portfolio in QCOM.
This article is written by Eric Winter and edited by Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article. The Motley Fool recommends Emerson Electric Co.. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!