The most up-to-date publicly available information on hedge funds comes from 13D and 13G filings, which take place shortly after a fund or other institutional investor owns over 5% of a stock’s outstanding shares (or makes changes to that position at a later date), in addition to any other public disclosures made by the funds themselves or the company involved. We don’t recommend that every single investment by a hedge fund be copied- that’s not possible anyway- but we think that it’s advantageous to use these investors as free sources of investment ideas that can be used or rejected at will. Here are five stocks that we have seen hedge funds buy recently:
The specifics aren’t clear, but reports from Transocean LTD (NYSE:RIG) are that Carl Icahn has bought a significant number of shares and is looking to buy as much as 3% of the company. This wouldn’t require a 13D or 13G filing- but then again, Transocean is a $20 billion market cap stock and so even a 3% stake would make the company one of Icahn’s largest holdings. Find more of Icahn’s favorite stocks. Wall Street analysts are bullish on Transocean: the stock trades at 10 times consensus earnings for 2013 and the five-year PEG ratio is 0.5. We are a bit concerned, however, that high onshore production will keep oil prices low and reduce demand for the company’s offshore drilling services. Read more of our analysis of Transocean.
Billionaire Paul Singer’s Elliott Management has continued to buy shares of Compuware Corporation (NASDAQ:CPWR) and now owns 9.2 million shares of the stock; the fund had 5.7 million shares in its portfolio at the end of September (check out more stocks Elliott owned). Compuware’s revenue and earnings were down over 10% in its most recent fiscal quarter versus a year earlier, and the trailing P/E is 35. Elliott has publicly offered to purchase the company, though the stock price has overtaken their original offer of $11 per share and this may be due to the possibility of a bidding war emerging for Compuware.
Read on for three more stocks hedge funds have bought: