We track a variety of filings from hedge funds and other notable investors because they each have advantages and disadvantages. The greater comprehensiveness of 13F filings makes it easier for us to develop profitable investment strategies; for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year (learn more about imitating hedge fund small cap picks). However, many investors object to the delay which accompanies 13Fs. Hedge funds also file 13Ds or 13Gs with the SEC shortly after acquiring a 5% stake in a company or changing that position; of course given the 5% figure this generally only occurs for small-cap or occasionally mid-cap stocks, but the move is more current. Here are five stocks that hedge funds have bought recently:
SAC Capital Advisors, which is managed by billionaire Steve Cohen, now owns 3.4 million shares of oil and gas exploration and production company SM Energy Co. (NYSE:SM). Find Cohen’s favorite stocks. SM, which is active in many U.S. shale plays, has a market capitalization of $3.8 billion. The company’s production mix is tilted towards natural gas, which has encountered a difficult pricing environment in the last couple years due to enormous supply growth. As a result SM’s operating income has collapsed. Wall Street analyst expectations imply a forward P/E of 18, but that is likely dependent on a recovery in the nat gas market.
Find three more stocks hedge funds have been buying:
Omega Advisors increased its stake in Polycom Inc (NASDAQ:PLCM) from 5.7 million shares at the end of December to 9.6 million shares, per a recent filing; that fund is managed by billionaire Leon Cooperman (check out more stocks Cooperman liked). The $1.9 billion market cap voice and video conferencing company is down 45% in the last year, with revenue down a bit in 2012 compared to the previous year and costs actually increasing in absolute terms. This resulted in very low net income. The sell-side is expecting Polycom to do better in the next couple years, but we are skeptical of their level of optimism at this time.
Perry Capital has been buying shares of CommonWealth REIT (NYSE:CWH), which has been embroiled in an activist battle following a controversial secondary offering earlier this year (research more stocks Perry has been buying). The real estate investment trust pays a high dividend yield of 4.4%, though this is following a recent cut in its dividend payments. CommonWealth invests in office buildings and related real estate; REITs receive favorable tax status as long as they return a large share of their pretax income to shareholders, which often results in high yields.
A 13G has disclosed that Point State Capital, managed by several former Duquesne Capital portfolio managers, owned 5.5 million shares of iStar Financial Inc. (NYSE:SFI), a $910 million market cap REIT investing in commercial real estate. On average over 1.5 million shares are traded per day, meaning there is plenty of volume for most investors. The stock is up 43% in the last year, even though the company has continued to show quarterly losses. The most recent data shows that 21% of the outstanding shares are held short.
Disclosure: I own no shares of any stocks mentioned in this article.
