Many leading funds, including Blackrock Inc., Dodge & Cox and Capital Research Global Investors, filed forms 13-D and 13-G (and form 4) with the SEC last week (June 4nd to 8th, 2012), indicating that they had amended their ownership in U.S. traded public companies operating in the healthcare and technology sectors. Based on our analysis, the following are four noteworthy buys and three sells in those sectors (a prior article on noteworthy 13D/G filings in the basic materials and energy sectors can be accessed by clicking on the above hyperlink). Also, for more info on Forms 13-D and 13-G, and how to interpret that, please refer to our instablog discussion on institutional trades:
First Solar Inc. (FSLR): FSLR manufactures and sells solar modules using a thin-film semiconductor technology for residential and commercial markets in the U.S., Europe and Asia. In addition, it also designs, constructs, and sells photovoltaic solar power systems. On Friday, Los Angeles-based Capital World Investors, with over $262 billion in 13-F assets, filed SEC Form SC 13G/A indicating that it does not hold any shares of the company, selling out completely of the 8.5 million share position it held at the end of Q1. Capital World was not alone in dumping FSLR, as overall, funds cut a net 11.8 million shares of FSLR from their portfolios in Q1, ending with 57.5 million shares at the end of Q1.
FSLR stock has been a train-wreck falling over 93% from its highs in February of last year, and down about 60% YTD, with losses even more exaggerated than the average for the solar industry that has seen stock prices fall by an average of 73%, as represented by the Guggenheim Solar ETF ($TAN). The industry has been hurt by a perfect tsunami of sorts, including overcapacity in manufacturing, the rollback of European subsidies, and increasing competition, due to lower natural gas prices, for large-scale utility projects.
It was speculated earlier that the imposition of 31%-plus tariffs on Chinese producers to prevent alleged Chinese dumping of solar products in the U.S. market would help domestic producers like FSLR, but judging from the direction of the stock price movement, that does not seem to be the case, or at least the market seems to judge that it may not be enough to reverse FSLR's fortunes. Indeed, some have begun to make comparisons to Solyandra, as another example of failed government policies. The stock, meanwhile, may have begun to quietly bottom, trading at an attractive 3.2 forward P/E and 0.35 P/B, while earnings are projected to rise slightly from $3.88 in 2011 to $3.96 in 2013.
In addition to FSLR, institutions also indicated via their 13D/G filings last week that they cut shares in the following two technology sector companies, both of which also have seen plunging stock prices recently (like FSLR):
- Microchip Technology Inc. (MCHP), that manufactures microcontrollers, application-specific standard products, and related mixed-signal and memory products for the consumer, automotive, office automation, communications and industrial markets, in which Capital World Investors (see above) filed SEC Form SC 13G/A indicating that it holds 1.5 million or 0.8% of outstanding shares, a decrease from the 16.6 million shares it held at the end of Q1; and
- ON Semiconductor Corp. (ONNN), that is a supplier of broadband and power management ICs and standard semiconductors used in fiber-optic networking equipment and portable electronics, in which the world's largest and most prominent asset manager, Blackrock Inc., with over $3.5 trillion in assets under management, filed SEC Form SC 13G/A indicating that it holds 19.7 million or 4.3% of outstanding shares, a decrease from the 28.6 million shares it indicated holding in a prior SC 13G filing in February.
On top of these, institutional investors also indicated via their 13D/G filings last week that they added to their positions in the following healthcare and technology sector companies, the first two of which have seen plunging stock prices recently:
- Sprint Nextel Corp. (S), that offers a comprehensive range of wireless and wireline communications products and services to consumer, businesses, and government markets in the U.S., Puerto Rico and the U.S. Virgin Islands, in which value-based investment management firm Dodge & Cox, with more than $78 billion in 13-F assets, filed SEC Form SC 13G/A indicating that it holds 307.4 million or 10.3% of outstanding shares, an increase from the 229.0 million shares it held at the end of Q1;
- Hewlett Packard Co. (HPQ), a Silicon Valley marquee company, that is a leading provider of IT and outsourcing services, PCs and peripherals, printers and scanners, and servers and storage devices, in which San Diego-based shareholder activist value-oriented hedge fund manager Relational Investors, with $5.94 billion in 13-F assets, filed SEC Form 4 indicating that it added 5.0 million shares, increasing its holdings in the company to 34.5 million shares;
- St. Jude Medical (STJ), that develops cardiovascular medical devices for cardiac rhythm management, atrial fibrillation, cardiac surgery, cardiology and neuromodulation, in which Los Angeles-based Capital Research Global Investors, with over $223 billion in 13-F assets, filed SEC Form SC 13G/A indicating that it holds 32.2 million or 10.2% of outstanding shares, an increase from 28.4 million shares it held at the end of Q1; and
- Valeant Pharmaceuticals (VRX), that develops primarily branded drugs to treat central nervous system disorders, pain and cardiovascular disease, in which San Francisco-based shareholder activist-oriented hedge fund ValueAct Capital Management, with $6.46 billion in 13-F assets at the end of Q1, filed SEC Forms 4 indicating that it purchased 0.4 million shares, increasing its holdings in the company to 17.6 million shares.
Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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