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Of the various tools available to investors that aid in obtaining a sense of important market trends is to monitor the trading activity of some of the world’s largest and most influential institutional traders. Wallace Weitz is one such investor whose value approach to investing has proven successful and stood the test of time. What follows is a discussion of some of Mr. Weitz’s recent buys, as well as some discussion and analysis of each of the stocks discussed. Ultimately, tracking the portfolio of such an investor is backward-looking, but can still offer a fair amount of insight into important trends:

Target Corporation (NYSE:TGT) – As of the end of the first quarter of 2011, Mr. Weitz added heavily to his holding of TGT, increasing his position size by 5484% at an estimated average purchase price of $53.44 per share; this resulted in a portfolio weight for TGT of 1.57%. The company looks attractive against its two closest competitors Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST).While WMT has a slightly lower price-to-earnings ratio of 10.7 versus 11.5, when growth estimates are included, the price-to-earnings over growth (PEG) measurements are in line (1.08 and 1.09 respectively). With an operating margin of 7.8% relative to 6.0% for WMT, the slight edge goes to TGT.

Overall, both discounters should be benefiting from the ongoing economic pressure facing consumers. Tightening credit, despite low rates, and the persistence of higher levels of unemployment mean that consumers are likely to remain focused on value and discount shopping. Furthermore, as higher commodity prices remain intact, there is added upward pressure on food prices – both companies have proven themselves competitive in the grocery segment, so this is another positive.

Microsoft Corporation (NASDAQ:MSFT) – As of the end of the first quarter of 2011, Mr. Weitz added to his holding of MSFT, increasing his position size by 32% at an estimated average purchase price of $27.04 per share; this resulted in a portfolio weight for MSFT of 1.34%. Once the darling of the market, MSFT has quietly been performing behind the scenes and putting together very respectable numbers. Trading at a trailing price-to-earnings multiple of just 9, the stock looks very cheap relative to competitors like Apple (NASDAQ:AAPL) (with a price-to-earnings of 14.5), Google (NASDAQ:GOOG) (with a price-to-earnings of 19.9), and Oracle (NYSE:ORCL) (with a price-to-earnings of 16).

MSFT also has the highest operating margin at nearly 40%, which puts it 4 to 5% ahead of any of the other three listed companies. As a catalyst for future performance, the Windows platform for smartphones, while not stealing headlines, has quietly made inroads and gained acceptance as a streamlined alternative to mega-genius phones from Apple and Android. The company has maintained dominance in the enterprise space and should continue to be a solid performer moving forward.

Southwestern Energy Company (NYSE:SWN) – As of the end of the first quarter of 2011, Mr. Weitz added heavily to his holding of SWN, increasing his position size by 238% at an estimated average purchase price of $38.89 per share; this resulted in a portfolio weight for SWN of 1.22%. The company has a heavy concentration in the natural gas space, making it attractive at current levels. Using United States Natural gas (NYSEARCA:UNG) – the largest natural gas ETF (exchange traded fund) – as a proxy, one can see that the commodity has traded in a fairly tight range for the last year or longer.

Currently, the price is near the 52-week low and looks primed for a positive break out to the upside. Such action in the commodity price will have a positive effect on SWM. This will also benefit Chesapeake Energy Corporation (NYSE:CHK), a close competitor, and a more pure play on natural gas. SWM also has a crude element to the company. Crude prices have sold off over the last several week, and also appear well positioned moving forward. The expected strength in the energy segment should be seen as bullish for both SWN and CHK.

CVS Caremark Corporation (NYSE:CVS) – As of the end of the first quarter of 2011, Mr. Weitz added to his holding of CVS, increasing his position size at an estimated average purchase price of $33.91 per share; this resulted in a portfolio weight for CVS of 1.16%. CVS is currently very well positioned as we head into the back-to-school period. The companies expanded minute clinic vaccination options should provide significant cash flow and may serve as a good catalyst for the stock moving into the third quarter.

By the numbers, CVS and competitor Walgreens Co. (WAG) have very similar metrics, so the preference in this case goes to the catalyst described. WAG is not without similar offerings, but CVS seems to be in an advanced position and looks more attractive.

Texas Industries, Inc. (NYSE:TXI) – As of the end of the first quarter of 2011, Mr. Weitz added to his holding of TXI, increasing his position at an estimated average purchase price of $41.41 per share; this resulted in a portfolio weight for TXI of 0.25%. Positioned in the commodities space, TXI presents an interesting case of seeming contradictions. While commodities have been strong, construction has slowed. On the other hand, road construction – driven by government spending – has been solid.

CEMEX (NYSE:CX) looks to have solid metrics, and with a significantly larger balance sheet and market capitalization, the stock should offer a greater level of security and stability.

Grand Canyon Education, Inc. (NASDAQ:LOPE) – As of the end of the first quarter of 2011, Mr. Weitz added to his holding of LOPE, increasing his position size by 15% at an estimated average purchase price of $17.19 per share; this resulted in a portfolio weight for TGT of 0.20%. With the recent shake up in federal funding for education, private education corporations have gotten increased attention.

The industry as a whole is likely to trade more on macro factors, like any decisions from the Department of Education, than on stock specific news. Relative to its peers, Apollo Group, Inc. (NASDAQ:APOL) and Capella Education Group, Inc. (NASDAQ:CPLA), the stock appears to be fairly priced and competitive. The catalysts for any outperformance are difficult to predict outside a DOE ruling, so a diversified approach within the group may be preferred.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 6 Big Buys by Investor Wally Weitz