Hedge Funds Have Bought Herbalife, Tempur-Pedic, and More

Senator Investment Group, a hedge fund managed by Doug Silverman, reported a position of more than 5 million shares in Tempur-Pedic International Inc. (NYSE:TPX). See more of Silverman’s stock picks. The mattress company is about set to acquire competitor Sealy Corporation (NYSE:ZZ) after receiving approval from U.S. regulators; with the industry suffering recently, consolidation may push up prices and help Tempur-Pedic and its peers. Tempur-Pedic’s earnings were down by over 50% last quarter compared to the fourth quarter of 2011, as revenues fell and margins shrunk. When we looked at the company we thought that Select Comfort Corp. (NASDAQ:SCSS) was a cheaper stock which should also benefit from reduced competition.

Larry Robbins’s Glenview Capital increased its stake in $3.5 billion market cap engineering and technical services company URS Corp (NYSE:URS) to a total of 4.6 million shares (check out more stocks Robbins is buying). URS trades at 11 times trailing earnings, even though its financial performance in the fourth quarter of 2012 was fairly strong: revenue was up 24% versus a year earlier, and operating income grew by 17% if we add back some special items from Q4 2011. Even after high interest expenses pretax income was up a bit, and given the pricing we would be interested in taking a closer look at the company.

Partner Fund Management has added shares of Health Net, Inc. (NYSE:HNT) and had almost 4 million shares of stock in its portfolio according to the filing. Health Net is a provider of health care plans with a market capitalization of $2.2 billion. Analyst expectations for 2014 have the stock trading at 11 times forward earnings estimates, which is actually a bit higher than where large health insurers trade (though HealthNet does have a large amount of cash and liquid investments on its balance sheet). The stock is down 27% in the last year.

Disclosure: I own no shares of any stocks mentioned in this article.