After a hedge fund or other major investor acquires more than 5% of a company’s outstanding shares or makes major changes to its position, it files a 13D or 13G with the SEC.
While keeping track of these filings doesn’t provide as comprehensive information as the quarterly 13Fs Insider Monkey uses to help us develop investing strategies (for example, we have discovered that the most popular small cap stocks among hedge funds beat the S&P 500 by an average of 18 percentage points per year), they do provide more up to date information about stocks specific hedge funds are buying. Read on for our quick take on three stocks where we have tracked hedge fund buying recently.
Following an agreement with the management of Navistar International Corp (NYSE:NAV) which allows him to increase his stake in the company up to 20% of the total shares outstanding, billionaire Carl Icahn now owns 13 million shares of the manufacturer of vehicles and vehicle parts. Find Icahn’s favorite stocks. This buy gives Icahn about 17% of the company, and he can now nominate two members of the company’s board. After Navistar International Corp (NYSE:NAV)’s new engine design failed to satisfy federal requirements, financials have been in free fall with $5.82 per share in losses from continuing operations in the first six months of the current fiscal year.
Navistar International Corp (NYSE:NAV)’s recent troubles in earnings terms have also been negative for cash flow, with the company using about $600 million in cash in the first half of the year thanks to negative cash flow from operations and a number of investments. 24% of the float is held short as many market players are bearish on the stock. Wall Street analysts expect Navistar International Corp (NYSE:NAV) to be profitable next year, but the forward earnings multiple is still well above pure value territory at 19.
Basswood Capital, a hedge fund managed by Matthew Lindenbaum and his team which tends to focus on financial stocks, now owns 1.1 million shares of Banc of California Inc (NASDAQ:BANC). See Basswood’s stock picks. The fund has significant positions in a number of other regional banks as well (Banc of California Inc (NASDAQ:BANC) is concentrated in southern California) and may be bullish on the industry generally due to consolidation or to expected improvements in the housing and mortgage markets. Banc of California Inc (NASDAQ:BANC) itself has been somewhat acquisitive lately as part of its strategy to build its profile in its core market.