Many leading funds, including Paulson & Co., Capital World Investors and Wellington Management, filed forms 13-D and 13-G (and form 4) with the SEC this week, on Monday to Wednesday, indicating that they had amended their ownership in U.S. traded public companies operating in the basic materials and energy sectors (other articles focused on the institutional ownership filings this week in the healthcare and technology sectors can be accessed by clicking on the above hyperlinks). The following are the most notable institutional trades based on our analysis of those filings (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):
Novagold Resources Inc. (NG): NG is a Canadian company engaged in the exploration and development of gold, silver and copper in Alaska and British Columbia. On Monday, famed hedge fund company Paulson & Co., with over $35 billion in assets under management, including $13.9 billion in 13-F assets per their latest Q4 filing, filed SEC Form 13D/A indicating that it holds 34.6 million shares, an increase from the 30.0 million shares it indicated holding in an earlier SC 13D filing at the beginning of March.
Paulson has been gradually building up its position in the company, having just added 2.75 million shares in Q4 to their prior quarter 20.20 million shares in the company, and then reporting adding another 7.0 million shares in February. NG currently generates losses, and trades at 7.3 P/B compared to the average of 2.3 for its peers in the gold mining group.
Cliffs Natural Resources (CLF): CLF is a mining and natural resources company, producing iron ore pellets, lumps and fines iron ore, and metallurgical coal products. It operates six iron ore mines in MI, MN and eastern Canada; two iron ore mining complexes in western Australia; five metallurgical coal mines located in WV and AL; and one thermal coal mine in WV. On Tuesday, Los Angeles-based Capital World Investors, with over $262 billion in 13-F assets, filed SEC Form SC 13G/A indicating that it holds 16.3 million shares, an increase from the 10.6 million shares it held at the end of Q4.
CLF reported in its Q4 two months ago, missing analyst earnings estimates ($1.30 v/s $1.61) and beat revenues ($1.66 billion v/s $1.62 billion); its shares currently trade at 5-6 forward P/E and 1.6 P/B compared to averages of 7.0 and 34.4 for its peers in the iron mining group.
Besides CLF, Capital World Investors also filed SC 13G's for Newfield Exploration Co. (NFX), an independent oil and gas company engaged in the exploration and development of crude oil and natural gas properties in the U.S., Malaysia and China, in which it reported holding 6.9 million shares, a decrease from the 15.4 million shares it held at the end of Q4.
C & J Energy Services (CJES): CJES provides hydraulic fracturing and coiled tubing services, with a focus on complex, technically demanding well completions, to the large exploration and production companies with unconventional resource positions. On Monday, leading private equity firm Greenwich, CT-based General Atlantic LLC filed SEC Form SC 13D indicating that it holds 3.4 million shares, a new position for it since the end of Q4. CJES shares trade at a current 5.5 P/E and 2.3 P/B compared to averages of 17.7 and 1.5 for its peers in the oil field services group.
Other major institutional filings this week in the basic materials and energy sectors included:
- ION Geophysical Corp. (IO), a provider of seismic products and services to the oil and natural gas industry worldwide, in which Fidelity Investments filed SEC Form SC 13G/A indicating that it holds 8.2 million shares, a decrease from the 18.8 million shares it held at the end of Q4; and
- Rexx Energy Corp. (REXX), an independent oil and gas company operating in the Illinois Basin, the Appalachian Basin and the southwestern region of the U.S., in which Wellington Management filed SEC Form SC 13G indicating that it holds 6.1 million shares, a new position for it since the end of Q4.
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 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 a hostile takeover, 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.
Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. 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.