Billionaire Howard Marks’ Most Promising Stock Picks

Page 1 of 2

Some of the most valuable information from hedge funds and other notable investors comes in the form of the small-cap and mid-cap stocks which they own. These companies often receive less attention from the media and the investment community, so in theory it should be more likely for them to be mispriced relative to their fundamental value. As it turns out, the most popular small cap picks among hedge funds earn an alpha of 120 basis points per month on average. We expanded on this finding in our August newsletter by listing the most popular stocks in this market cap category and those picks proceeded to return 14% between September and December (read more about our hedge fund small cap strategy).

Of course, blindly following investors isn’t necessarily as smart as using their stock picks as free ideas (similar to the results of an investment screen), taking a brief look at the company, and then deciding whether or not it should be researched further. We looked at billionaire Howard Marks’ Oaktree Capital Management’s most recent 13F filing (see the full list of Oaktree’s stock picks) and found three stocks with market caps between $1 billion and $5 billion that it owned at the time. Oaktree is publicly traded as Oaktree Capital Group LLC (NYSE:OAK).

OAKTREE CAPITAL MANAGEMENTEXCO Resources Inc (NYSE:XCO), an oil and gas exploration and production company focused on U.S. shale plays, was one of Oaktree’s top picks with a position of 37 million shares. EXCO is not profitable on a trailing basis, and many market players do not like its current valuation seeing as 16% of the outstanding shares are held short. Analyst expectations imply a current-year P/E of 20. Wilbur Ross’s Invesco Private Capital had the stock as one of its top holdings at the end of the quarter as well, reporting ownership of 32 million shares (find Invesco’s favorite stocks). We can compare EXCO to Chesapeake Energy Corporation (NYSE:CHK), which had a very stressful 2012 (and is also a short target) but where analysts are slightly more optimistic: the natural gas producer trades at 16 times consensus earnings for this year.

A healthcare stock and a semiconductor company rounded out the list:

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!