By David Merkel, CFA of Aleph Blog
In the fourth quarter of 2011, I decided that I needed to analyze the 13F filings of major investors who I thought were bright. The first stage was looking at track records, and then finding the 13F filings. Some investment management companies make them difficult to find. And, prior to three quarters ago, formatting issues allowed managers to make it a lot more difficult to compare 13F data across managers.
But now data must be submitted in a uniform format, using extensible markup language [XML]. That can be fed into Excel with little effort, and much of the prior data scrubbing goes away. That data scrubbing took an extra day at least.
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
That said, the central challenge for someone that does not have a Bloomberg terminal is converting the CUSIP numbers [Committee on Uniform Securities Identification Procedures numbers] into ticker symbols. Those numbers are owned by the American Banking Association, and they charge a pretty penny to use them. I asked the folks at AAII [American Association of Individual Investors] to include a CUSIP field in their deluxe stock screening package, and they said something like, “Are you kidding? Do you know what the American Bankers Association charges for it?!”
When I started, I asked my bright, then 12-year old daughter to build up our own CUSIP to Ticker database. She worked for many hours, producing a significant database for which I paid her well. Since that time, I have maintained that database.
After I download via XML all of the manager reports that I want to follow, I sort out all of the CUSIPs I have never seen before, and find their tickers.
What used to take a week now takes a little more than a day in total, start to finish.
One thing that I do differently than some others in analyzing 13F filings is that I am interested in what percentage of the market capitalization the positions represent, and how large the net increase in positions is relative to market capitalization.
After that I look at three things:
- What are the largest holdings as a group as a whole as a percentage of market cap,
- What are the largest net increases in holdings as a group as a whole as a percentage of market cap, and
- What ideas are new, that no one invested in last quarter, and two or more invested in this quarter?
Now I am not saying that I have the formula right, but this feels right to me. I invite readers to suggest their own ways of screening through 13Fs to determine the most worthy investment ideas.
But before I leave for the evening, another boon: here are the tickers generated by my 13F methods this quarter:
AAL, ADT, ALSN, AN, BCS, BIOS, BRX, CAM, CAR, CCI, CLH, COH, CSLT, CSTM, CTRP, CTXS, CYH, DAR, DDC, DSW, DV, DVA, ENDP, ENT, EPE, ESRT, EVTC, FLXN, GHC, GLPI, GME, GS, HMHC, HOLX, HW, IBP, IDIX, JNPR, KATE, KIN, KN, KSU, LNN, LPNT, MDR, MTOR, NADL, NCLH, NMIH, NUAN, PAH, PBF, PHH, PLCM, POST, QEP, QLIK, RCII, RDN, REIS, RFMD, RH, RLD, RPXC, SBAC, SC, SFUN, SNMX, STAY, SWI, SYMC, TDG, TLM, TLMR, TQNT, TRLA, TRW, TWI, USG, VECO, VIPS, VOCS, VOXX, VRTX, WPP, XL, XONE, YRCW, ZINC
After the last few articles, you know almost all of the companies that I am considering investing in versus my current portfolio. Have look as you like, and maybe a few of them are good investment ideas.