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A politician would be silly not to do opposition research. A baseball team would be goofy not to use scouting reports. By the same token, an investment manager would have to be singularly incurious not to check out what other managers are buying and selling.

Once a year in this column I construct a Purloined Portfolio, made up of stocks that are held by other managers I particularly respect. This year, the managers are Scott Black, Randall Eley, Ken Heebner, David Katz and Charles Royce.

My information on the managers’ holdings came from public filings. It’s possible that a manager might have sold one of the stocks highlighted here.

Scott Black

From Scott Black, who runs Delphi Management in Boston, I select Cleveland-Cliffs
. This is a steel maker and iron miner, and the stock is deeply out of favor.

As consensus builds that the U.S. will enter a recession in 2023 (if it’s not already in one), investors flee from cyclical stocks such as steel companies. That’s why this stock is remarkably cheap – less than three times recent earnings and less than five times the earnings analysts forecast for 2023.

Cleveland-Cliffs is a major iron miner at a time when world supplies of iron are crimped by the Russia-Ukraine war. Some company insiders have bought the stock this year, notably Celso Goncalves Jr., the chief financial officer.

Randall Eley

From Randall Eley, founder of Edgar Lomax Co. in Alexandria, Virginia, I choose Chevron
, the second-largest U.S. oil company, ranked by production. Energy stocks have been hot lately, but they went through a terrible six-year stretch, roughly from 2014 through 2019. Since 2014, oil and gas companies have become much more disciplined about how much they spend on exploration and drilling.

Chevron shares are up 34% this year through October 14 (nice!) but they are up only 39% for the past ten years (ugh). While the stock is no longer screamingly cheap, I consider it quite reasonably priced at 11 times earnings.

Ken Heebner

Ken Heebner is chief investment officer at CGM Trust in Boston, and runs mutual funds including the CGM Focus Fund. From his portfolio I draw Antero Resources
, a natural gas producer based in Denver.


Antero shares sell for roughly half their high from the heavy days of 2014. The stock price is 13 times recent earnings, but less than four times the earnings analysts predict for 2023. Gas is in keen demand, and gas in storage is lower than usual.

David Katz

Based in New York City, David Katz is chief investment officer for Matrix Asset Advisors and manages the Matrix Advisors Value Fund. From his holdings I recommend TE Connectivity Ltd. (TEL), a Swiss maker of electrical connectors and sensors.

One important customer segment for TE is the auto industry, which is heavy on electronics these days. Car sales may improve in 2023, as production-crippling chip shortages ease. The shares have fallen 33% this year, yet sales and earnings are actually up.

Charles Royce

Charles (Chuck) Royce is the head of Royce Investment Partners and the longtime manager of the Pennsylvania Mutual Fund. He’s known as a champion of small-stock investing.

From his portfolio, I’d pluck Air Lease
as a speculation. The company, based in Los Angeles, leases aircraft, mostly to Asian customers. It had an 11-year profit streak going before suffering a loss in the past four quarters.

As of June, Air Lease had a fleet of 911 planes, 392 of which it owned. It has spent heavily on new aircraft, and may have over-spent.

Debt is high, so this stock is risky. However, the company has been buying back its own shares. And the stock is cheap, selling for less than book value (corporate net worth per share).

Past Record

This columns is the 19th time I’ve compiled a Purloined Portfolio. The average return on the previous 18 has been 13.1%, compared to 9.7% for the Standard & Poor’s 500 Total Return Index. Of the 18 sets of recommendations, 14 were profitable and 10 beat the index.

Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.

My Purloined Portfolio from a year ago suffered a 2.3% loss, but that was 16 percentage points better than the 18.9% loss for the S&P. The best performer was Diamondback Energy
, up 35%, drawn from the holdings of Scott Black.

Disclosure: I own Cleveland-Cliffs and Diamondback Energy personally and for most of my clients. One or more of my clients owns Chevron.


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