Assured Guaranty Ltd. (AGO), Tripadvisor Inc (TRIP): Do You Own This $2 Billion Hedge Fund’s Best Stock Picks?

Page 1 of 2

Smaller cap stocks don’t get as much attention from bankers, analysts, and most other investors. Generally speaking, this leaves them less-efficiently priced than their larger peers. Hedge funds take advantage of this by dedicating their research teams to work on the little guys, and consequently, they produce a significant amount of their alpha from the small-caps. According to our analysis, investing in the smart money’s top small-cap picks has generated an annual alpha of more than 15 percentage points per month between 1999 and 2009 (learn more about this phenomenon here).

BRIDGER MANAGEMENTLet’s take a look at the top small-cap stock picks of one hedge fund in particular: Roberto Mignone’s Bridger Management. The stocks listed here had market capitalizations between $1 billion and $5 billion at the end of the third quarter, which is consistent with the criterion used in our strategy (see all of Roberto Mignone’s stock picks).

Assured Guaranty Ltd. (NYSE:AGO) is Mignone’s top small-cap holding, sitting at the No. 5 spot in his latest 13F filing with the SEC. Assured Guaranty’s subsidiaries offer a range of credit-related services to infrastructure projects, state governments and utility districts. Shares of the insurer are up more than 25% on the year, and it will report its fourth quarter earnings in close to a month. Assured Guaranty is coming off of two consecutive EPS beats by an average margin of 12.2%. A PEG ratio near 0.5 and a forward earnings valuation under 7x indicates that investors could see more upside if the company can impress with Q4 results. It’s tough to argue with Mignone here.

The fund manager’s second largest small-cap investment is Tripadvisor Inc (NASDAQ:TRIP). Shares of the online travel site have been a great investment over the past 12 months, returning a little over 45% in value. While Tripadvisor looks a little overvalued at the moment, the sell-side is expecting bottom line growth in excess of 20% annually over the next two years, so there are reasons for momentum-seeking investors to remain bullish. Over the long, long run, Tripadvisor has Google problems, as the tech giant’s acquisition of ITA Software gives it a greater foothold in this space. Still, for those focused on the shorter term, Tripadvisor offers solid growth.

Who’s the best of the rest?

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!