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

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Avis Budget Group (NASDAQ:CAR) is Mignone’s third largest small-cap holding, sitting at the No. 15 spot in his entire portfolio. Avis has been a booming investment over the past 3-month (32.7%), 6-month (47.0%) and 12-month (48.7%) periods, indicating that investors are using the stock to buy in on the bullish car rental marketplace. Avis announced it would acquire car-sharing service Zipcar earlier in January, and assuming that anti-trust regulators don’t put a stop to the deal, it should be completed by this spring.

Avis’ earnings currently trade at a 13% discount to the rental industry’s average, and Wall Street expects accelerating EPS growth over the next half-decade. Analysts predict 29.7% annual growth compared to Avis’ 13.9% average over the past five years.

Charles River Laboratories (NYSE:CRL), meanwhile, is Mignone’s fourth favorite small-cap stock, and is already up more than 10% year-to-date. The biotech company wasupgraded to overperform by JPMorgan and Wells Fargo at the end of last year, and it recently completed its acquisition of majority ownership of Vital River, a Chinese research model servicer. Charles River has beaten the Street’s earnings forecasts in four consecutive quarters, and reports its fiscal Q4 results about two weeks from now. If the company can meet or beat the sell-side’s 60-cent EPS and $281 million revenue estimates, shares could appreciate further. Charles River currently trades at a modest 14.5 times forward EPS, which is below peers Life Technologies and Idexx Labs by an average discount of 31%.

Last but certainly not least, Ironwood Pharmaceuticals (NASDAQ:IRWD) is Roberto Mignone and Bridger Management’s fifth largest small-cap holding, sitting at the No. 23 spot in the fund’s 13F portfolio. Ironwood may be best known for its drug Linzess, which is prescribed to those suffering from chronic constipation and irritable bowel syndrome. Some analysts think Ironwood’s drug can become a billion-dollar-a-year giant (see Will This Drug Be a Cash Cow?), and the company did report a blowout third quarter in its latest earnings.

A couple weeks ago, the stock saw major downgrades from UBS, Zacks and TheStreet, but Mizuho, WallachBeth and Ladenburg Thalmann raised their price targets. Still, at elevated price-to-sales (9.3x) and book (9.7x) multiples, it may be best for investors to find a more attractive entry point into Ironwood.

Disclosure: I have no positions in any of the stocks mentioned above

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