Elite Hedge Funds’ Bullish Moves On These Four Stocks

The latest round of 13F filings kicked off at the beginning of October, but as these public filings are only required to be filed within 45 days of the end of each calendar quarter, one might find their content less informative (although our research has shown this is not the case). However, 13D and 13G filings do contain more up-to-date information on hedge funds’ strong stances on different companies, which essentially represents one of the main reasons the Insider Monkey team tracks and reports on the filings of the most prominent hedge fund investors. With this in mind, this article will discuss four such moves made by several reputable hedge funds monitored by our team.

We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 102%, nearly 2.1 times greater returns than the S&P 500 during the same period (see more details).

In a Schedule 13D filing with the SEC, Gifford Combs’ Dalton Investments LLC disclosed an ownership stake of 2.00 million shares in Eros International plc (NYSE:EROS), which accounts for 6.3% of the company’s outstanding common stock. This denotes an increase of 1.14 million shares from the position it disclosed during the latest round of 13F filings, for the reporting period of September 30. The public filing also disclosed that Dalton Investments poured money into the company’s stock with the belief that it was undervalued, considering its “market position as a leading company in the Indian film entertainment industry”. The Santa Monica-based investment firm also intends to discuss with different parties regarding Eros International plc (NYSE:EROS)’s corporate governance, board composition, operations, and business, among other things.

The shares of the company have been in a slide since mid-October, when an unknown Twitter user started Tweeting about Eros, claiming that the company’s United Arab Emirates sales were not valid and doubting the number of the company’s ErosNow registered users (read more details). The stock is down by 35% year-to-date and Dalton Investment is attempting to generate profits from this outcome. Charles Davidson’s Wexford Capital owns 96,789 shares of Eros International plc (NYSE:EROS) as of September 30.

According to a freshly-submitted 13G filing, Stephen DuBois’s Camber Capital Management LLC added a 2 million-share position in Cardiovascular Systems Inc. (NASDAQ:CSII) to its portfolio, representing 6.16% of the company’s shares. The medical device company that focuses on developing innovative solutions for the treatment of vascular and coronary disease is set to disclose its fiscal year 2016 first quarter financial results and financial outlook after the market close tomorrow, which will surely shed some light on the company’s developments and its future course. In the meantime, Cardiovascular Systems Inc. (NASDAQ:CSII)’s stock is 53% in the red year-to-date.

Even so, the stock gained some popularity among the hedge funds tracked by Insider Monkey during the second quarter, with the number of money managers bullish on the stock increasing to 20 from 14 quarter-over-quarter. However, the value of their investments decreased to $117.28 million from $138.56 million over this time span. These hedge funds had stockpiled 14% of the company’s shares as of June 30.  Mitchell Blutt’s Consonance Capital Management held a 2.48 million-share stake in Cardiovascular Systems Inc. (NASDAQ:CSII) at the end of June.

Let’s head to the next page, where we discuss the freshly-made moves of Eminence Capital and OZ Management.

Another Schedule 13G filed with the SEC revealed that Ricky Sandler’s Eminence Capital L.P. owns 12.01 million shares of Pandora Media Inc. (NYSE:P). This compares to the 10.07 million-share position disclosed through its 13F filing for the second quarter. The freshly-updated stake accounts for 5.6% of the company’s outstanding shares. The shares of the music streaming service are down by 31% year-to-date, mainly “thanks” to its recently-disclosed third quarter results on October 22 (read more details here). Earlier this week, Pandora Media Inc. (NYSE:P) announced the completion of its acquisition of online ticket agency Ticketfly, which is anticipated to “create the definitive music platform for connecting fans, artists and even promoters”.

However, the stock lost some of its charm within the hedge fund industry during the second quarter, as the number of hedge funds with positions in the company decreased to 30 from 37 quarter-over-quarter. Similarly, the value of hedge funds’ stakes in the company decreased to $689.76 million from $752.05 million during the June quarter, though they still amassed 21% of Pandora’s shares on June 30. Brookside Capital acquired a 2.82 million-share stake in Pandora Media Inc. (NYSE:P) during that three-month period.

As stated by a 13G filing, Daniel S. Och’s OZ Management L.P. holds an ownership stake of 11.65 million shares in Endo International plc (NASDAQ:ENDP), which constitutes 5.15% of the company’s common stock. This denotes a lift of 2.81 million shares from the position revealed through the firm’s 13F filing for the June quarter. The shares of the specialty healthcare company have been pressured by the talk of drug pricing and other closely-related issues, and are down by nearly 15% year-to-date. Just recently, Endo International plc (NASDAQ:ENDP) and BioDelivery Sciences International Inc. (NASDAQ:BDSI) announced that the U.S. FDA approved their opioid treatment BELBUCA (buprenorphine HCI), which they are anticipated to start commercializing during the first quarter of 2016.

Meanwhile, the number of hedge funds observed by our team with positions in the healthcare company increased to 67 from 63 during the June quarter, and they accumulated slightly over 27% of its outstanding shares. By the same token, the value of these positions climbed to $4.46 billion from $4.18 billion quarter-over-quarter. Larry Robbins’ Glenview Capital had an 8.84 million-share position in Endo International plc (NASDAQ:ENDP) at the end of the second quarter.

Disclosure: None