Leading funds, such as Van Eck Associates Corp. and Carlson Capital, filed forms 13-G with the SEC yesterday, on Wednesday December the 7th. This indicates that they had amended their ownership in U.S. traded public companies. The forms are required to be filed within ten days, so the institutions traded these shares sometime between the last week of November and yesterday. The following are the most notable filings from yesterday (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):
Cano Petroleum (CFW): CFW is engaged in the exploration and production of oil and natural gas in TX, OK and NM. The company's focus is on domestic, mature oilfields that eliminate exploration risks and uncertainties associated with international operations. On Wednesday, Dallas, TX-based hedge fund manager Carlson Capital, headed by Clint Carlson and with $6 billion in equity assets under management, filed SEC Form SC 13D/A indicated that it had reduced its holdings to 2.86 million or 6.3% of outstanding shares, after selling 0.87 million shares from the 3.73 million shares that it held at the time of its 13-F Q3 filing.
Carlson is a long-term and by far the largest holder of CFW, having initiated the position in 2008 when CFW traded up to almost $10, and owned as much as 5.6 million shares in 2008/09. CFW shares have been in a tail-spin after hitting a high of 85c earlier this year, as it has posted poor operating results, missing analyst earnings estimates and higher losses in recent quarters. Furthermore, it has extremely high short-term debt of $72 million relative to its current market-cap in the $45 million range, and was recently warned on December 1st that it faces a risk of being delisted from the NYSE AMEX.
Aurico Gold Inc. (AUQ): AUQ, formerly known as Gammon Gold, is a Canadian company engaged in the exploration and development of gold and silver mining properties in Mexico. On Wednesday, basic materials and energy focused investment manager Van Eck Associates Corp, with over $20 billion in equity assets under management, filed SEC Form SC 13G, indicating that it had added 1.2 million shares to its 28.4 million share position in AUQ at the end of Q3.
Van Eck now holds 10.5% of outstanding shares, by far the largest institutional holder of AUQ shares. Van Eck is a long-term holder of AUQ, having held shares of AUQ and its predecessor Gammon Gold at least since 2008, and has gradually built up the position from the three to four million shares that it held in 2008. We believe that Van Eck's adding to its large position is a strong sign of confidence in the outlook for AUQ. The company trades at a discount 8-9 forward P/E, and at 1.5 P/B, compared to averages of 13.2 and 4.1 respectively for its peers in the gold mining group.
RAIT Financial Trust (RAS): RAS is a self-managed and self-advised real estate investment trust (REIT) that invests in, manages, and services real estate related assets with a focus on commercial real estate. On Wednesday, hedge fund manager RIMA Management LLC, with $350 million in equity assets under management, filed SEC Form 13G/A. This indicates that it now holds 5.1 million or 11.8% of outstanding shares, adding 3.9 million shares to its 1.2 million share position in RAS at the time of its Q3 13-F filing.
RIMA has been building a position in RAS since the end of 2010, and with this purchase, it becomes the largest institutional holder of RAS shares. RAS trades at a discount 4-5 P/E on a trailing-twelve-month (TTM) basis, and at 0.20 P/B, compared to averages of 9.4 and 0.8 for its peers in the mortgage REIT group.
Minefinders Corp. (MFN): MFN is a Canadian company engaged in the exploration and development of gold and silver with interests in the U.S. and Mexico. On Wednesday, basic materials and energy focused investment manager Van Eck Associates Corp, with over $20 billion in equity assets under management, filed SEC Form SC 13G. It indicated that Van Eck added 0.4 million shares to its 7.8 million share position in MFN at the end of Q3. Van Eck now holds 10.0% of outstanding shares, the second the largest institutional holder of MFN shares behind Prudential Plc, that owns 13.4 million shares.
Van Eck is a long-term holder of MFN since 2006, and has gradually built up that position from less than a million shares in 2006/07. We believe that Van Eck adding to its large position as the stock rode to all-time highs at the end of Q3 is a strong sign of confidence in the outlook for MFN. The company trades at a discount 11-12 forward P/E, and at 2.9 P/B, compared to averages of 13.2 and 4.1 respectively for its peers in the gold mining group.
Vista Gold Corp. (VGZ): VGZ is engaged in the exploration and acquisition of gold properties in the U.S., Australia, Mexico and Indonesia. On Wednesday, basic materials and energy focused investment manager Van Eck Associates Corp, with over $20 billion in equity assets under management, filed SEC Form SC 13G indicating that it added 0.3 million shares to its 6.9 million share position in VGZ at the end of Q3. Van Eck now holds 10.1% of outstanding shares, the second largest institutional holder of VGZ shares behind Sun Valley Gold LLC, that owns 8.2 million shares.
Van Eck is a long-term holder of VGZ since 2006, having initially bought shares when they were priced in the $8 to $13 range. Van Eck has been aggressively adding to its VGZ position as it held less than 2 million shares at the end of 2010 and has been accumulating shares since then, so that although its initial position was bought much higher in the $8-$13 range, while subsequent larger buys have been close to $2. Van Eck adding to its position is a sign of confidence in the outlook for VGZ going forward. VGZ currently generates and is projected to incur losses going forward, and it trades at a 1.8 P/B compared to an average of 4.1 for its peers in the gold mining group.
Form 13-D is commonly referred to as “beneficial ownership report,” and is required when a person or a group of persons acquires beneficial ownership of more than 5% of the voting class of a company’s equity securities; form 13-G is the abbreviated version of the form that is allowed under certain circumstances.
The information in forms 13-D and 13-G is extremely timely as it is required to be filed within ten days after the purchase, in contrast to 13-F quarterly filings by Institutions that are filed every three months. The information contained in 13-F filings, thereby, can be as much as eighteen weeks old by the time it is disseminated to the public.
Furthermore, by virtue of its 5% ownership in public companies, the information contained in the 13-D and 13-G filings indicates only high confidence or high conviction moves by institutions and insiders, and hence can be interpreted to be of greater relevance to the investment community than the 13-F quarterly filings. 13-D and 13-G filings often are a precursor to hostile takeovers, company breakups and other “change of control” events, and often they will include a letter to management explaining the reason for their taking a large stake in the company.
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