Do individual investors want to invest like George Soros, Carl Icahn or Barry Rosenstein? The answer would most probably be affirmative, but how is it possible to track hedge fund managers’ spontaneous and up-to-date moves? Some long term-focused investors may rely on quarterly 13Fs submitted by hedge funds to find high-potential stocks, but there appears to be a more efficient way of monitoring hedge funds’ moves. Numerous 13G, 13D and Form 4 filings are submitted with the SEC on a daily basis, which makes it very convenient for individual investors to mimic hedge fund moves in high-conviction stocks. Even skeptical investors about hedge funds’ ability to generate attractive returns could use these filings as a broader analysis process. Having said that, the following article will discuss three SEC filings submitted by hedge funds run by Barry Rosenstein, and two other billionaire investors.
Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).
According to a Schedule 13D filing, activist hedge fund JANA Partners LLC initiated a new stake of 5.89 million shares in TeamHealth Holdings Inc. (NYSE:TMH), which accounts for 8.0% of the company’s outstanding common stock. The “activist” filing discloses that JANA Partners believes that the shares of the supplier of outsourced healthcare professional staffing and administrative services are undervalued and represent an attractive investment opportunity. More importantly, JANA believes that TeamHealth Holdings Inc. (NYSE:TMH) “has made missteps in critical areas including capital allocation, strategy and governance”, as well as believes that the company would benefit from new additions to the Board of Directors. For that reason, Barry Rosenstein’s JANA recently informed the company of its plans to nominate Edwin M. Crawford, Nancy M. Schlichting and Scott Ostfeld for election to the company’s Board at the 2016 annual meeting of stockholders. In November 2015, the healthcare staffing company completed the acquisition of acute hospital medicine and post-acute provider IPC Healthcare for $80.25 per share in cash, in an attempt to expand its post-acute care and services business. The shares of TeamHealth Holdings are up by more than 16% in today’s trading session following the release of JANA’s 13D filing, which has pushed the stock into positive territory for the year. There were 25 hedge funds monitored by Insider Monkey that had stakes in the company at the end of the fourth quarter of 2015, which in aggregate accumulated 8.30% of the company’s total outstanding shares. Alan Fournier’s Pennant Capital Management owns 2.91 million shares of TeamHealth Holdings Inc. (NYSE:TMH) as of December 31.
Let’s head to the next page of this article, which reveal two other moves disclosed by two widely-known hedge funds.