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Billionaire Barry Rosenstein Cashes In On Walgreens, While 2 Other Funds Make Bullish Moves On These Stocks

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Hedge fund investors and other money managers have filed their 13Fs for the September quarter, but those positions may be substantially outdated considering that two months have already passed since the end of the quarter. Although there is a strong anti-hedge fund sentiment in the media, these investment vehicles still generate significant risk-adjusted returns for their investors. Therefore, it is worth looking at how hedge funds are trading the shares of different companies in order to get a general view of the potential of those companies. 13G, 13D and Form 4 filings represent another way of tracking hedge funds’ moves, which offer fresh insights about the opportunities or challenges encountered by certain companies. For that reason, the following article will discuss three freshly-submitted filings with the SEC by several widely-known hedge funds tracked by Insider Monkey.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated ten percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks have beaten the market by 53 percentage points (102% return vs. the S&P 500’s 48.7% gain) over the last 38 months (see the details here).

In a Schedule 13G filed with the SEC, Daniel S. Och’s OZ Management reported owning 25.73 million class A ordinary shares of 21Vianet Group Inc. (NASDAQ:VNET), accounting for 5.6% of the company’s outstanding stock. This denotes an increase of 8.71 million class A shares from the position held at the end of the third quarter (OZ Management owned 2.43 million American depository shares on September 30, each representing six class A ordinary shares). The carrier-neutral internet data center services provider, which operates in China, has seen its stock advance by 30% since the beginning of the year. On Tuesday, 21Vianet Group Inc. (NASDAQ:VNET) reported its financial results for the third quarter, posting net revenues of RMB924.1 million ($145.4 million), which were up by 18.7% year-over-year. The company posted a net loss of RMB57.9 million ($9.1 million), compared with a net income of RMB37.9 million ($5.93 million) reported a year ago. 21Vianet anticipates even higher revenues for the fourth quarter, which are expected to come in the range of RMB969 million-to-RMB1.0 billion ($151.86 million-to-$156.53 million) . That would mark an increase of 15% year-over-year at the mid-point.

21Vianet Group has lost some of its charm among the smart money investors observed by Insider Monkey, as the number of hedge funds invested in the stock declined to 15 from 17 during the third quarter. Even so, the value of their investments grew to $208.57 million from $168.61 million quarter-over-quarter. These 15 investors owned slightly more than 13% of the company’s common stock on September 30. Lei Zhang’s Hillhouse Capital Management holds a 2.13 million-share position in 21Vianet Group Inc. (NASDAQ:VNET) as of September 30.

Daniel S. Och
Daniel S. Och
OZ Management

The next page of this article reveals two separate moves made by Armistice Capital and JANA Partners.

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