One solid piece of advice Charlie Munger, Warren Buffett’s partner at Berkshire, recently gave a hedge fund manager was to “follow great investors," recalls Charles Mizrahi, value investing specialist and editor of Insider Alert.
He said to carefully read what other great investors are doing to get ideas. There is no easier way to do that than by following SEC filings.
Each quarter, money managers with $100 million or more in assets file form 13-F with the SEC. The form provides an inside look at the latest buys and sells of the manager.
The 13-F filings are made public 45 days after the end of each quarter. The most recent 13-F became available on May 15 for the quarter ending March 31.
There are several great managers I follow, and when they initiate a new buy position, I take notice.
Once such investor is activist Paul Singer’s fund Elliott Associates. The fund takes positions in companies it believes are undervalued and pushes for changes in strategy and in the boardroom.
In its latest filing, Elliott Associates took a large position in NRG Energy (NRG), a leading independent power producer. Bluescape Energy Partners, run by John Wilder, is partnering with Elliott to push for changes at NRG.
Wilder and his team are credited with overhauling Texas utility TXU Corp., which sold for $48 billion in 2007. Wilder has extensive experience in running utilities and increasing shareholder value.
Together, Elliott and Bluescape have a little more than a 9% position in NRG. Our research is telling us it should be an attractive investment.
We will be adding it to the Special Situation Portfolio if the stock price closes at or below $15.25 per share.
