Long-Short Equity Fund’s Best Bets: Liberty Media Corp (LMCA), The Walt Disney Company (DIS)

Page 1 of 2

In collaboration with MarketWatch, we at Insider Monkey have created the Billionaire Hedge Fund Index, which tracks the consensus stock picks of the world’s foremost hedge fund managers. In 2012 alone, our index returned 24.3%, outpacing the S&P 500 by 8%. More impressively, our small-cap strategy has historically beaten the market by 18% a year, proving that there are plenty of ways to generate outperformance if you know where to look (see how to use these market-beating strategies here).

Liberty Media Corp

With this in mind, it’s also important to analyze the stock picks of individual hedge funds by using their latest 13F filings with the SEC. Let’s take a look at one hedgie that has flown under the mainstream media’s radar for the most part—John Thaler’s JAT Capital Management. As detailed in our profile of Thaler’s fund, JAT is a long/short equity hedge fund based in New York City with a focus on the technology, media, and telecommunications sectors.

Taking a look at Thaler’s top five stock picks at the end of the fourth quarter, Equinix Inc (NASDAQ:EQIX) is his No. 1 holding, accounting for roughly 13.5% of his equity portfolio. The hedge fund manager boosted his stake in this data center services company by a whopping 65% last quarter. Equinix has had a very impressive run over the past year, returning close to 60% in value, and TheStreet recently upgraded the stock from “hold” to “buy.” On the whole, Wall Street’s average price target on Equinix represents an upside of 15% from current levels, and the sell-side expects EPS growth of 40.2% next year. It’s easy to see why Thaler is bullish on this momentum play.

Liberty Media Corp (NASDAQ:LMCA) and The Walt Disney Company (NYSE:DIS) are the hedgie’s second and third largest holdings, and together, they comprise a little over 17% of his 13F capital. Thaler upped his stake in Disney by an astounding 2,854% last quarter, and cut his Liberty stake by about 10%, and both media giants represent intriguing investment opportunities for the remainder of 2013.

Since completing its Starz spinoff earlier this year, shares of Liberty Media have lost a little over 3%. Around this same time in mid-January, Liberty also boosted its stake in Sirius XM above 50%, and many analysts are predicting a separate spinoff of SIRI in the form of a Reverse Morris Trust. Moving forward, we’re encouraged by hedge funds’ conviction in Liberty, as the number of funds (of those we track) invested in this stock stood at 55 at the end of Q4—tops in the broadcasting industry.

DisneyDisney, meanwhile, saw 47 hedgies invested at the end of last quarter, and aside from Thaler and JAT Capital, top-tier names like Mason Hawkins, Ken Fisher and Stephen Mandel were all long (check out Mandel and Lone Pine Capital’s full equity portfolio). A key strength of Disney is its ability to grow inorganically, most notably through its acquisitions of Marvel Entertainment and Lucasfilm.

The sell-side expects Disney’s bottom line expansion to average 11-12% a year over the next half-decade—nearly twice what its annual rate has been over the past five years. Trading below 14 times forward earnings also indicates that value investors can still be pulled into this stock; ‘growth at a reasonable price’ (GARP) plays are some of the best out there.

Next up we have Ctrip.com International, Ltd. (NASDAQ:CTRP), Thaler’s fourth largest holding.

Why is he so bullish on Ctrip?

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!