Analysis Of Institutional 5% Ownership Filings On Thursday

Includes: AEO, ANV, AUQ, VIP
by: GuruFundPicks

Many leading funds filed forms 13-D and 13-G (and form 4) with the SEC on Thursday, on January 5th, including Van Eck Associates and Royce & Associates, indicating that they had amended their ownership in U.S. traded public companies.

The forms are required to be filed within 10 days, so the institutions traded these shares sometime after the middle of December. Also, we have included here SEC Form 4 filings by Institutions that are considered corporate insiders by virtue of their holding more than 10% ownership, and in many cases having representation on the board of directors. The following are the most notable filings on Thursday of this week (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):

American Eagle Outfitters (NYSE:AEO): AEO is an apparel and accessories retailer that operates over 1,000 American Eagle Outfitters, Aerie standalone, and 77Kids stores in the U.S. and Canada. On Thursday, Royce & Associates filed SEC Form SC 13G/A indicating that it held 14.49 million or 7.48% of outstanding shares, a decrease from the 14.62 million or 7.55% that it reported holding at the time of its 13-F Q3 filing. However, even with the sale, Royce is still by far the largest institutional holder of AEO, with the next two largest ones being Perkins Investment Management (11.34 million shares) and Vanguard Group (7.15 million shares). Royce has been a long-term holder of AEO, having opened it in Q4 of 2007 at 0.96 million shares, and building it almost every quarter, including in Q3 of 2011 when it added 1.24 million shares. So the sale this quarter appears minor in that context. AEO has been in a trading range between $10 and $16 for most of last year, and it trades at a discount 12-13 forward P/E and 1.9 P/B compared to averages of 16.3 and 3.1 for its peers in the apparel and shoe retail group, while earnings are projected to rise modestly from $1.02 in 2011 to $1.11 in 2013 at an average annual growth rate of 4.3%. Its shares fell earlier this week after the company cut its Q4 guidance, citing weaker than anticipated demand that forced it to discount its products at aggressive promotions during the holiday season.

Aurico Gold Inc. (NYSE: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 Thursday, 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 they now hold 14.6 million or 5.2% of outstanding, a sharp decrease from the 28.9 million or 16.6% of outstanding shares that they reported in a filing just four weeks ago, implying that they sold 14.3 million shares in the last month. However, even with the sale, Van Eck is still the largest institutional holder of AUQ, with the next largest being United Services Automobile Association (10.3 million shares) and Heartland Advisers (10.1 million 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 exiting half of its position in AUQ, especially when shares currently trade at the low end of its 52-week range, down 40% from recent highs, is a significant negative. AUQ shares currently trade at a discount 6-7 forward P/E, and at 1.3 P/B, compared to averages of 11.2 and 3.6 respectively for its peers in the gold mining group.

Allied Nevada Gold Corp. (NYSEMKT:ANV): ANV is engaged in the exploration, acquisition, development and operation of gold properties in Nevada. On Thursday, Royce & Associates filed SEC Form SC 13G/A indicating that it held 7.19 million or 8.05% of outstanding shares, an increase from the 7.09 million shares it reported holding at the time of its 13-F Q3 filing. Royce is currently the second largest institutional holder of ANV, behind first-place Goodman & Co. (7.61 million shares). It opened the position in Q2 of 2007 with a 0.58 million share position, gradually building it up 9 million shares by Q2 of 2011. Looking at the long-term chart of the stock, they rode it up from the low single-digits to the $40s, so their selling of a small position now is not significant. ANV trades at a premium 18-19 forward P/E and 5.3 P/B compared to averages of 11.2 and 3.6, respectively, for its peers in the gold mining group, while earnings are projected to rocket up from 27c in 2010 to 40c in 2011 to $1.77 in 2012.

Vimpelcom Ltd. (NYSE:VIP): VIP is an integrated Russian telecommunications services provider, offering wireless, fixed-line and broadband voice and data services in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Vietnam, Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic, Italy and Canada. On Thursday, Bertofan Investments Ltd and Forrielite Ltd. filed SEC Forms SC 13D/A indicating that Forrielite was transferring 123.6 million shares of preferred stock, which represents 28.5% of preferred stock and 6.0% of VIP's issued share of capital, to Cyprus-based Bertofan.

General Discussion

Form 13-D is commonly referred to as the "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 10 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 as much as 18 weeks old by the time it is disseminated to the public.

Furthermore, by virtue of their 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. Furthermore, 13-D and 13-G filings often are a precursor to hostile takeover, company breakups and other "change of control" events, and often they will include a letter to management explaining the reason for taking a large stake in the company.

Credit: Fundamental data in this article were based on SEC filings, I-Metrix by Edgar Online, Zacks Investment Research, Thomson Reuters and The information and data is believed to be accurate, but no guarantees or representations are made.

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