What do the top hedge fund and mutual fund Gurus like in the non-metallic and coal mining industry? This article, the twenty-second in a series, identifies through a research of the latest available institutional 13-F filings the Gurus that are most invested in the non-metallic mining, and the specific stocks within that industry they prefer to hold in their portfolios. The industry includes primarily coal mining companies, but also other non-metallic miners of diamonds and bentonite. Also, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now beginning to come out. About 40% were out as of this weekend, and most should be filed by the end of this week. As such, once 13-F filings are complete for all Guru funds, in the next series starting the end of this week to the beginning of next week, I will bring to you the ‘Top New and Added Picks’ of Guru funds by industry/sector detailing this time not the top holdings, but more importantly what ‘New’ positions they took and what existing positions they added to in the latest March 2011 quarter.
The first twenty articles in the series identified Gurus that are over-weight in the Solar sector, Utilities sector, China stocks, Airline sector, Optical Networking sector, Chemicals industry, Oil and Gas Exploration Industry, the Automobile Industry, the Biotech Industry, the Consumer Non-Durable Goods Sector, the Gold and Silver Mining Industry, and the Regional Banking Industry, the Insurance Industry, the Computer Hardware and Peripherals Industry, the Big Pharmaceuticals and Generic Pharmaceuticals segments, the Money Center and Foreign Bank Sector, the Semiconductor Equipment Industry, the Broadcasting and Publishing Industry, the Computer Software Industry, and the Foreign Telecommunications Services Industry, and the and the stocks within those industries/sectors that they hold in their portfolios (For those familiar with the series, skip over to the sixth paragraph).
A Guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of Gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called Gurus.
The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the US Equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading non-metallic mining companies is $120 billion which is 0.8% of the overall market. The table lists five investment Gurus whose funds have invested at least 5% in the non-metals mining Industry, which is more than six times the average of 0.8%. The following is a list of the top metals mining company picks of Guru funds over-concentrated in that Sector:
- Teck Resources Ltd. (TCK), a Canadian miner of coal, copper, zinc, molybdenum, gold and lead mainly in Canada, the U.S., Chile and Peru.
- International Coal Group or ICG Inc. (ICO), a producer of bituminous, sulfur steam and metallurgical coal from 12 complexes in WV, VA, MD, IL and KY. The company was recently acquired by Arch Coal Inc.
- Arch Coal Inc. (ACI), engaged in the production of steam and metallurgical coal from surface and underground mines.
- Consol Energy Inc. (CNX), a producer of bituminous coal and coal-bed methane gas primarily in the northern and central Appalachian and Illinois basins.
- Cloud Peak Energy Inc. (CLD), a producer of coal in the Powder River Basin through three wholly-owned surface coal mines in WY and MT.
- Alpha Natural Resources (ANR), engaged in the production, sale and processing of coal from 66 mines and 13 preparation plants in VA, WV, KY and PA.
- Peabody Energy Corp. (BTU), engaged in coal production and sale through 28 operations in the U.S. and Australia.
Fund and Guru
Type of Fund
Assets Under Management
Percent Equity Portfolio invested in Equities of Companies in the non-Metallic Mining Industry
Major non-Metallic Mining company positions in Portfolio
Woodbine Capital Advisors LP (Josh Berkowitz)
Hedge Fund - Global Macro
$ 440 million
Schneider Capital Management Corp. (Arnold Schneider)
Mutual Fund and Separate Accounts – Deep Value
$ 1.8 billion
ACI, CNX, CLD
Invesco Private Capital, Inc. (Wilbur Ross)
Hedge Fund - Distressed Investing
$ 920 million
Capital Growth Management LP (Ken Heebner)
Mutual Fund Manager
$ 6.8 billion
TCK, ANR, BTU – sold TCK and reduced ANR and BTU per most recent 13-F filing on Friday; and added position in ACI
Pabrai Investment Funds (Pabrai Mohnish)
Hedge Fund – Value-driven
$ 340 million
Hedge fund Woodbine Capital Advisors was founded by Soros Fund Management alumni Josh Berkowitz and Marcel Kasumovich in 2009, and uses a global macro strategy to make its investments.
Wilbur Ross is the founder of hedge fund Invesco Private Capital. He specialized in leverage buyouts (LBOs) and is well known for investing in distressed companies and restructuring failed companies.
Wayne, PA-based Schneider Capital Management, founded in 1996 by Arnold Schneider, offers four value-style strategies based on a fundamental approach to investing, and caters to approximately 27 separate account clients and several thousand mutual fund shareholders. They focus on equities throughout the Capitalization range and offer strategies ranging from small to large cap equity strategies.
Please note that Schneider Capital Management just filed its March 2011 quarterly 13-F on last Friday and per that, they still maintain similar exposure to the industry, with positions in the same three companies as the previous quarter, but slightly increasing their positions in CLD and CNX, and reducing slightly their holdings in ACI.
Ken Heebner, co-founder of Capital Growth Management, manages the CGM family of mutual funds. He has a reputation of making bold sector bets, and was on the cover of the June 9, 2008 issue of Fortune magazine, and was called as America's hottest investor.
Please note that CGM just filed its March 2011 quarterly 13-F on last Friday and per that, they have sold their position in both TCK, their largest holding in the group at over $250 million, they also reduced their position in ANR to 1/4th of the original position by selling almost $75 million worth of equity and they also reduced their position in BTU by over 50%. In addition, they took a new position in the industry with CNX. Overall, their holdings in the industry declined from over $500 million to just over $100 million, thereby making them not concentrated in the sector anymore.
Mr. Pabrai runs a $340 million Hedge Fund. He is a value investor, investing primarily in out-of-favor smaller companies, with a market capitalization of less than half a billion dollars. His portfolio is generally concentrated with less than 10-20 companies (for more detail of Pabrai’s fund and his holdings and new picks, please see my previous article on May 5th, 2011.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.