Last year was not a good year for hedge funds. The entire hedge fund industry struggled during the past year, but there were some exceptions. Take Seth Klarman’s Baupost Group for example. It ended 2011 on a gain. Klarman believes that the company’s “focus on risk-aversion and the pursuit of excellent long-term results” instead of focusing on “quick gains, short-term trades and market momentum” is the main reason for its success. Since its inception in 1982, Baupost Group has returned an average of about 20% annually. It is currently the 11th largest hedge fund in the world with approximately $24 billion AUM. (more…)

Focusing on stocks with large insider purchases is always a good starting point to choose stocks to be analyzed. On average, these stocks are more likely to outperform the market in the short term –and the reason is simple. Insiders are more knowledgeable and experienced about their companies and industries than your average investor. Additionally, their income is usually highly correlated with the company’s performance, so if they increase their exposure to the company, it usually means they are quite sure the purchase will be profitable. (more…)

Louis Navellier is well-known for his “little book” – that’s “The Little Book That Makes You Rich” for the uninitiated. In this Business Week best seller, Navellier describes his stock selection system. He explains how he is able to pick stocks primarily by taking a look at their fundamentals and buying pressures. According to Navellier, the “A” graded stocks returned 1267.9% for the past 13 years, compared with only 61% for the S&P 500 index.

However, Navellier’s performance has not shown the same strength in recent years. In fact, over the past year, his returns have been a bit disappointing. Most of the funds under Navellier & Associates generated negative returns last year and underperformed their benchmarks – but Navellier is slowly recovering this year. To date, the largest 10 positions in his 13F portfolio at the end of 2011 have returned 14%, versus 11.4% for the S&P 500 index over the same period.

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This is an article about the performance of SAC Capital’s top 10 positions. Even the biggest money management firms are not immune to allegations of insider trading. Just last year, Steven Cohen‘s SAC Capital Advisors was investigated by the SEC for insider trading by one of its employees. Luckily, the negative news did not prevent SAC Capital from delivering decent performance last year. Its flagship fund returned 8% net of fees last year, a year during which the whole hedge fund industry struggled.

So far this year, Cohen has continued his strong performance. Since the beginning of 2012, the largest 10 positions in SAC Capital’s 13F portfolio generated a weighted-average return of 19.07%, versus 9.89% for the S&P 500 index in the same period.

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Warren Buffett is one of the most well-respected money managers in history, so, when his Berkshire Hathaway has a large position in a company, it is generally worth taking note. US Bancorp (USB) is one such position. It is one of the largest positions in Buffett’s portfolio. As of December 31, 2011, Berkshire Hathaway had $1.9 billion invested in this stock.

US Bancorp is also quite popular amongst the 350+ hedge funds we track – a fact that further highlights the value of this stock. At the end of last year, there were 38 hedge funds with US Bancorp positions in their 13F portfolios. Andreas Halvorsen’s Viking Global had nearly $600 million invested in US Bancorp at the end of last year. Ric Dillon, Lee Ainslie, David Dreman, Israel Englander, and Ken Griffin are also all in favor of the company. (more…)

Shares of bookseller Barnes and Noble (BKS) jumped on news that Barry Rosenstein’s Jana Partners initiated a 12% stake in the company. The news, which was announced late April 20, caused Barnes and Noble’s share price to swell over 21% – clearly the market is behind the event driven fund, and with good reason.

Though Jana Partners lost 23.4% during the 2008 financial crisis, it recovered in the following years, returning 23.9% in 2009 and 8.4% in 2010. By 2011, the fund was up about 200% since its inception. So far in 2012, Jana is doing quite well. The largest 10 positions in its 13F portfolio have returned 15% so far this year, versus 9.5% for the S&P 500 index during the same period. (more…)

Is Disney a good investment? Most hedge funds have at least one or more Dow stocks in their portfolios. Some even invest strictly in mega-cap blue chip stocks. Companies that fit this profile tend to be stable performers – and Walt Disney Co (DIS) is no exception. The company has returned almost 10% a year (annualized) since 1962 versus roughly 7% for the market at large.

Disney was owned by 33 hedge funds at the end of 2011. These hedge funds had a total of $2.53 billion invested in Disney at the end of the fourth quarter. Ric Dillon’s Diamond Hill Capital, for instance, initiated a brand new $58 million position in Walt Disney over the fourth quarter last year. Tom Gayner, Ken Griffin, Richard Chilton, Wallace Weitz, Jeffrey Vinik and Ray Dalio are also bullish about the company. (more…)

David Tepper, Appaloosa

Superstar fund manager David Tepper worked as the head trader on the high-yield desk at Goldman Sachs until he left to launch Appaloosa Management in 1993. Under Tepper’s management, Appaloosa was up 132% in 2009 and returned 30% net of fees in 2010. In 2011, a year when many hedge funds reported sub-par performance, Tepper’s fund was down about 5%.

So far, Tepper is on track to reverse last year’s loss in 2012, at least based on the largest 10 positions in his 13F portfolio that is. Those 10 positions, assuming he has not changed anything since the end of 2011, have returned a weighted average of 22% so far this year, versus 10.4% for the S&P 500 index during the same period.

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In order to regulate insider trading, the SEC requires corporate insiders to report buying and selling their companies’ stocks within two business days. Some investors take advantage of this information by imitating insider transactions – and we absolutely agree. In our view, it is always a good starting point in picking which stocks to analyze by focusing on stocks with large, recent insider transactions. In this article, we are going to discuss a few large-cap stocks that have had big insider purchases recently – over the past week, from April 16 to April 20, to be exact. All the companies listed here have a market cap of at least $10 billion. (more…)

Patrick McCormack’s Tiger Consumer Management is one of the many seeds from Tiger Management. Like its brethren, the fund is also housed at 101 Park Avenue in Midtown Manhattan. Founded in 2006, Tiger Consumer does not change its net exposure based on a market or economic view. Instead, it concentrates on two governing factors to its growth – liquidity and research capacity – according to McMormack’s letter to investors in 2010. (more…)

Is Bristol Myers a good investment today? Like many other large-cap drug manufacturers, Bristol-Myers Squibb (BMY) is faced with patent expiration on key products and risks related to new drug development and regulatory approval. The company is expected to lose its patent protection on a certain number of its key drugs over the next four years. In order to offset the inevitable loss of sales, Bristol-Myers Squibb has been making great efforts to expand its product portfolio. The company has also been restructuring to reduce costs and better focus on its core business. (more…)