While the primary purpose of our database of hedge funds’ 13F filings is to help us develop investing strategies (for example, we have discovered that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year), we can also go through these filings to find a top manager’s favorite stocks in a number of areas. For example, since it has been a while since the most recent round of 13Fs (in most cases they disclose many of a fund’s long equity positions as of the end of March) we can look for stocks that a fund has owned over the long term. Investors can then do more research on any names which seem interesting. Read on for our quick take on billionaire Glenn Dubin’s Highbridge Capital Management’s five largest holdings from its most recent filing which it also owned at least $100 million of at the end of March 2011 (or see the full list of Dubin’s stock picks).
The fund reported a position of about 27 million shares on Cosan Limited(USA) (NYSE:CZZ), which had also been a top pick two years earlier. Cosan Limited(USA) (NYSE:CZZ) is a Brazilian company which primarily produces a number of products from sugarcane, including sugar and ethanol. At its current market capitalization of $4.3 billion, Cosan is valued at 24 times its trailing earnings. However, Wall Street analysts are bullish on the company’s prospects with their forecasts for future earnings growth implying a forward P/E of only 9 and a very low five-year PEG ratio.
Dubin and his team increased their stake in DISH Network Corp (NASDAQ:DISH) to a total of 6.8 million shares. In its last quarterly report DISH Network Corp (NASDAQ:DISH) experienced a small decline in revenue compared to the first quarter of 2012, with net income dropping by over 40%. While the company’s EV/EBITDA multiple of 8.5x is not out of line for the industry, it does seem a bit high on an absolute basis if the business is not growing. Omega Advisors, managed by billionaire Leon Cooperman, had 3.2 million shares in its portfolio according to its own 13F (find Cooperman’s favorite stocks).
Hertz Global Holdings, Inc. (NYSE:HTZ) has been another of Highbridge’s long term stock picks with the most recent filing disclosing ownership of almost 9 million shares. Like Cosan, its trailing earnings are fairly low compared to the valuation but recent growth has been impressive: revenue has been up over 20% from its levels a year ago. Analyst expectations for continued high growth result in a five-year PEG ratio of 0.5, even with the stock having risen over 130% in the last year. We’d note that Hertz Global Holdings, Inc. (NYSE:HTZ) carries a beta of 2.8.