Michael Karsch’s Newest Stock Picks:Express Scripts, CVS Caremark, SLM Corp

Karsch Capital Management recently filed its 13F for the second quarter of 2012 with the SEC, allowing reviewers the chance to see a number of the fund’s equity positions. Express Scripts (NASDAQ:ESRX), CVS Caremark (NYSE:CVS), and SLM Corp (NYSE:SLM) are among Michael Karsch’s top stock picks. Much of the fund’s strategy had been discussed on a recent conference call the fund had held to discuss results for the first quarter, helping Insider Monkey look at its holdings and identify investment themes that are being played through Karsch’s large positions. Here are some themes that we see in their second quarter 13F:

Michael Karsch

Express Scripts merger. Karsch continued its strategy of investing in the changing pharmacy benefit management industry. Express Scripts (NASDAQ:ESRX) is set to gain synergies through its merger with Medco Solutions, which in the first quarter had helped it make it onto our list of the ten most popular healthcare stocks among hedge funds. However, as noted in the fund’s Q1 conference call, Karsch also sees the potential for CVS Caremark (NYSE:CVS) to benefit both from consolidation of the pharmacy benefit management industry. During the second quarter the fund slightly reduced its stake in Express Scripts but increased its position in CVS.

Cash to shareholders. Another factor that was mentioned on the conference call as something that the fund looks for is the returning of cash to shareholders, generally through repurchases of shares. Two of the companies that were mentioned in the call on this point were Viacom (NASDAQ:VIA.B) and SLM (NASDAQ:SLM), and over the course of the second quarter Karsch expanded these positions. The fund closed June with about 3 million shares of Viacom, up from 2.2 million shares three months earlier, and its 2.8 million share position in SLM became 4.4 million shares. These companies don’t particularly have much in common- Viacom being a mega media conglomerate and SLM managing education loans- but they do have a good record of repurchases and plenty of cash on hand. SLM is also cheap on a value basis, with a trailing P/E of 10, a forward P/E of 7, and a 3.1% dividend yield.

Tyco. Karsch more than doubled its position in Tyco (NYSE:TYC), bringing the fund’s position from 1 million to 2.6 million shares. According to the 13F filing, it is now the second largest position in the portfolio by market value. The security and fire protection systems company has seen earnings fall in its most recent quarter compared to the same period in the previous year. However, sell-side analysts believe that the stock will recover and deliver growth next year: it trades at a multiple of 14 times 2013 earnings, and 20 times trailing earnings.

eBay. We already covered Karsch’s interest in eBay last month, before we knew that the fund had been so interested in the stock that it had increased its position from 1 million to 1.7 million shares over the course of the second quarter. eBay (NASDAQ:EBAY) has been doing particularly well in its Payments segment, which includes the Paypal business, as it has seen good growth in revenue and earnings. However the company trades at 16 times trailing earnings- not sufficient enough to recommend the stock on a purely value basis, but there is a good deal of industry related potential.

There weren’t a lot of surprises in Karsch’s filing. The fund stuck to its guns on its bullish position in eBay (NASDAQ:EBAY) and on its tactics of engaging with pharmacy benefit management companies and seeking out companies looking to return cash to shareholders. Investors can therefore pick and choose which (if any) of these themes it makes sense to copy and then pursue Karsch’s own choice of instrument accordingly.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

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!