J.C. Penney Company, Inc. (JCP), Lululemon Athletica inc. (LULU) Among The Recent Picks From Two Top Hedge Funds

Shares have been under pressure since the company revealed that it was recalling almost a fifth of its pants inventory because the fabric that was used was a bit too easy to see through. I think that Steve Mandel thought this was not a permanent problem for Lululemon Athletica inc. (NASDAQ:LULU), and this trouble will be solved in the short or medium-term.

Stifel has a target price of $75, which represents a 27.5x multiple on its fiscal 2014 earnings estimate of $2.72. Considering that the average P/E since 2010 is 45x, a forward earnings multiple below 30 looks compelling for a company that still offers premium products and has strong growth potential.

Lone Tree Capital also added to its Workday Inc (NYSE:WDAY) position. The fund increased this position by 259% on April 22 at an average price of $58.71. I advice caution with this stock.

Workday isn´t supposed to break-even until 2016, and the company is almost priced for perfection. The company has 2013 sales projections of $400 million and it is valued at a whooping $10.60 billion, which shows that the market is a true believer in Workday Inc (NYSE:WDAY)’s technological moat.

My view is that these type of technological growth-stocks are very hard to manage for a long-term oriented fundamental investor. You need a team of dedicated analysts to really understand what is going on and how to project the stock´s true potential growth.

My Foolish conclusion

Keep track of what prominent hedge funds have been doing with their portfolios. This is a top source for ideas for both traders and investors. I recommend staying away from troubled companies or technological plays which are priced for perfection. Go with proven companies (Lululemon Athletica inc. (NASDAQ:LULU)) and safer but high-yielding bonds (J.C. Penney´s 2036 bonds).

The article Recent Picks From 2 Top Hedge Funds originally appeared on Fool.com and is written by Victor Selva.

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