Hedge Funds Bought Brinker, Navistar, and More

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When hedge funds or other major investors acquire more than 5% of the outstanding shares of a stock, or make significant changes to their position, they must file fairly quickly with the SEC, which discloses the filings to the public. This allows investors a relatively fresh look at what stocks managers think are good buys, though the disclosure requirements tend to mean that only large positions in mid cap or small cap stocks are reported. Investors can then look at these stocks and decide if they are in fact good values or are better left alone. Here are five stocks that hedge funds have bought recently:

CITADEL INVESTMENT GROUP

Billionaire Ken Griffin’s Citadel Investment Group (check out Griffin’s favorite stocks) reported owning just over 4 million shares of Brinker International, Inc. (NYSE:EAT), which owns the Chilis and Maggiano’s Little Italy restaurant brands. This was up from 80,000 shares at the beginning of October, so we know that the fund has been buying over the last two months. Brinker had made it onto our list of the most popular restaurant stocks among hedge funds for the third quarter, a list dominated by quick service restaurants. With Brinker carrying a trailing P/E of 16, and earnings up 18% last quarter versus a year earlier (though revenue growth was much weaker) it and other table service restaurants such as Darden Restaurants, Inc. (NYSE:DRI) might be good values.

MHR Fund Management, which is managed by former Carl Icahn employee Mark Rachesky, increased its stake in Navistar International Corp (NYSE:NAV) to 12 million shares. Icahn, a billionaire activist investor (see Icahn’s stock picks), had bought up shares of Navistar and of Oshkosh Corporation (NYSE:OSK) believing that he could create shareholder value by merging the two. Navistar is barely profitable on a trailing basis, and the stock is down 42% in the last year as business has suffered. We think we would avoid it. Read more about Icahn, Rachesky, Navistar, and Oshkosh.

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