Numerous closely-watched hedge fund vehicles are currently disclosing their equity positions as of the end of 2015, so individual investors can monitor what moves hedge fund managers made during the fourth quarter by examining the deluge of 13Fs currently pouring in. Nevertheless, investors tend to use various investment strategies, so some investors might not find these filings handy, as they are more useful for long term-oriented investors. But there is another way through which individual investors can monitor hedge fund moves. Other SEC filings, such as 13D, 13G, and Form 4 filings tend to reveal up-to-date moves made by renowned investment firms, and could be used to mimic hedge funds’ moves with a lag of mere days. Having said that, this article will digest four such filings submitted by widely-known managers Paul Singer, James E. Flynn, and others.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Let’s kick off our discussion by analyzing the amended 13D filing submitted by Daniel Lewis’ Orange Capital LLC, which reveals an ownership stake of 30.83 million shares of Bellatrix Exploration Ltd (NYSE:BXE). This denotes a decrease of 1.90 million shares from the stake revealed through the fund’s 13F filing for the September quarter. The 30.83 million-share stake accounts for 16.1% of the company’s outstanding common stock. Most importantly, Daniel Lewis resigned from the company’s Board of Directors as of February 10, 2016.
The shares of the Canadian-based, growth-oriented oil and gas company are down by 66% over the past 12-month period. Earlier this month, Moody’s Investors Services completed a review of six Canadian and two U.S. exploration and production companies, including Bellatrix Exploration Ltd (NYSE:BXE). As a result, Moody’s downgraded the company’s Corporate Family Rating to Caa1 from B1, citing “material decline in Bellatrix’s cash flow expected in 2016 and 2017”. The sustained decline in oil prices is anticipated to weaken the company’s cash flows, so the Canadian E&P company will most likely “be tight on its sole financial covenant in 2016”, which will limit “its ability to draw under the revolver”. Despite that, Bellatrix plans to focus on its Spirit River natural gas play, which is among the lowest supply cost natural gas plays in North America. Jim Simons’ Renaissance Technologies LLC acquired a new stake of 253,000 shares in Bellatrix Exploration Ltd (NYSE:BXE) during the fourth quarter.
The next two pages of this article will discuss three other filings recently submitted with the SEC.