Tracking the activity of activist investors might help in picking the right stocks to beat the market. Over the years, activist investing became very popular and has a high resonance as investors launching activist campaigns have established a solid track record of increasing shareholder value at different companies. Another strategy that could help retail investors obtain higher returns by following hedge fund activity is the one that we have developed at Insider Monkey. We determined that by immitating 15 most popular small-cap picks among hedge funds, an investor can beat the market by 1 percentage point per month. Our small-cap strategy returned 132% between August 2012 and March 2015, beating the market by around 79 percentage points.
Engaged held a611,600 shares of Medifast Inc (NYSE:MED) at the end of 2014, the value of the stake amounting to $20.52 million. The investor initiated a stake during the first quarter of last year and in May went activist stating that the company was undervalued at traded at a 40% discount relative to its peers, among which are Weight Watchers International, Inc. (NYSE:WTW) and NutriSystem Inc. (NASDAQ:NTRI). The investor also stated that Medifast Inc (NYSE:MED) would become a takeover target if the markets wouldn’t be able to recognize the company’s intrinsic value. The stock appreciated only by 2% since Engaged went activist. The largest shareholder of Medifast Inc (NYSE:MED) among the funds that we track is Jacob Gottlieb‘s Visium Asset Management, which owns 1.35 million shares. However, Visium’s $45.29 million stake in the company amasses only 0.63% of the equity portfolio, versus Engaged’s position that represents 16.74%.
TriMas Corp (NASDAQ:TRS) is next in line, with Engaged disclosing a $14.13 million stake that contains 451,500 shares. At the end of February, the fund settled with TriMas Corp (NASDAQ:TRS), which agreed to appoint Herbert K. Parker, former chief financial officer and current executive vice president, Operational Excellence at Harman International, to its board of directors. In addition, under the terms of the mutual cooperation agreement with Engaged, TriMas Corp (NASDAQ:TRS) also agreed to appoint Mr. Welling to its board at the investor’s request in 2016. In exchange, Engage agreed to support the company’s slate of candidates at the company’s 2015 Annual Meeting and some other standstill provisions. The investor added the company to its equity portfolio during the third quarter of 2014, initially holding 374,900 shares. Meanwhile, since the end of September, the stock of the manufacturer of engineered and applied products gained around 18%. Among the funds that we track, Dan Friedberg‘s Sagard Capital Partners Management Corp is the largest shareholder of TriMas Corp (NASDAQ:TRS), holding 1.17 million shares, up by 100% on the quarter.
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