Hedge funds and other major investors shouldn’t be followed blindly, but we think that it can be useful to see what stocks these investment managers like and treat them as suggestions- much like the results of a stock screen. Investors can take a quick look at their picks and decide whether or not they are worthy of further analysis. We have gone through recent 13D and 13G filings (which disclose large positions, or changes to large positions, relatively recently after they occur) from our database of notable investors and here is our quick take on five stocks that hedge funds have bought recently:
Billionaire Steve Cohen’s SAC Capital Advisors has disclosed that it owns 6.3 million shares of Starz (NASDAQ:STRZA), which represents nearly 6% of the total shares outstanding. See more of Cohen’s stock picks. The company’s premium subscription TV channels include Starz and Encore. Some commentators have suggested that the newly independent Starz will be an attractive acquisition target; peers HBO and Showtime are owned by Time Warner Inc. (NYSE:TWX) and CBS Corporation (NYSE:CBS), respectively. The current market price represents a multiple of 9 to analyst earnings consensus for 2013. Gates Capital Management recently reported a large position in Starz as well.
Iridian Asset Management, a fund which is co-managed by David Cohen and Harold Levy, has continued adding to its position in specialty chemicals company W.R. Grace & Co. (NYSE:GRA), whose primary products are catalysts used to produce transportation fuels. The current stake of 4.5 million shares- a 67% increase from the end of September, which in turn represented significant buying in Q3- should make the stock one of Iridian’s top holdings. Find more of Iridian’s favorite stocks. W.R. Grace reported lower sales and net income in the third quarter of 2012 than a year earlier, and the stock currently trades at 21 times trailing earnings. We don’t think that it is a good buy right now.
Iridian was also buying another stock tied to energy: