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Billionaire Leone Boosts Stake in This REIT, Ubben Sells More Shares of Motorola Solutions Inc. (MSI), Plus Two Other Hot Moves

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It is generally believed that individuals seeking to become millionaires (and who isn’t?) need to think and act like millionaires. That’s probably one reason why most retail investors closely follow hedge funds’ moves. As middle-income earners may not have the necessary resources to directly invest into a hedge fund, the least they can do is track their moves. Most retail investors tend to construct their equity portfolios to make money rather than preserve capital, so the practice of examining hedge fund activity may assist them in achieving that goal. For that reason, the following article will discuss four SEC filings submitted by several widely-followed investment firms.

Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

Let’s kick off our discussion by analyzing the SEC filing submitted by Christian Leone’s investment firm. According to the Schedule 13G filing, Luxor Capital Group LP currently owns 4.23 million shares of Altisource Residential Corp (NYSE:RESI), which account for 7.6% of the company’s outstanding common stock. Mr. Leone’s investment firm reported owning 2.54 million Class B shares of Altisource Residential in its 13F filing for the October-to-December period. Altisource Residential Corp (NYSE:RESI) operates as a real estate investment trust (REIT) focusing on single-family rental properties for working class families across the Unites States. The REIT pursues a diversified acquisition strategy that involves the purchase of retail properties either in bulk or on a one-by-one basis, as well as the acquisition and management of sub-performing and non-performing mortgage loans. The company’s portfolio of residential mortgage loans is expected to be converted into single-family rental properties. Earlier this month, analysts at JMP Securities cut its rating on the REIT to ‘Market Perform’ from ‘Market Outperform’ but maintained its $17 price target on the stock. JMP Securities believes that the company’s transition into a 100% single-family rental REIT will impact its cash flow per share and dividend in the near-term. Shares of Altisource Residential have declined by 44% in the past year, after having lost 5% thus far in 2016. Jamie Zimmerman’s Litespeed Management reported ownership of 2.69 million shares of Altisource Residential Corp (NYSE:RESI) through the latest round of 13F filings.

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In a new Schedule 13D filing, Mario Gabelli’s GAMCO Investors and its affiliates reported owning 567,684 shares of PowerSecure International Inc. (NYSE:POWR), which make up 2.52% of the company’s outstanding shares. This represents a new position for Mr. Gabelli’s funds, as GAMCO’s quarterly 13F for the fourth quarter did not contain any shares of the energy services company. PowerSecure International Inc. (NYSE:POWR) is a provider of products and services to electric utilities and their commercial, institutional and industrial customers. On February 24, PowerSecure International announced that it had agreed to be acquired by Atlanta-based electric utility Southern Co (NYSE:SO) for approximately $431 million. Under the terms of the freshly-inked deal, PowerSecure shareholders will receive $18.75 per share in cash, which represents an impressive premium of approximately 90% from the stock’s closing price on February 24. PowerSecure’s shares are currently trading at a discount of less than 1% from the aforementioned all-cash offer however, so GAMCO appears to simply be attempting to squeeze out small gains from its investment in PowerSecure International. The number of hedge fund vehicles with stakes in the energy services company increased to 12 from 10 during the December quarter. Royce & Associates, founded by Chuck Royce, acquired a new stake of 236,000 shares in PowerSecure International Inc. (NYSE:POWR) during the period.

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The concluding page of this article covers two more filings submitted with the SEC by two widely-known hedge funds.

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