Michael Zimmerman’s Prentice Capital Is Betting on These Stocks

Michael Zimmerman left Steven Cohen‘s SAC Capital Advisors in 2005 to found his own investment firm - Prentice Capital Management LP – in New York. At SAC he traded retail and consumer stocks for 5 years. He has continued to focus on these markets after founding his own firm. Zimmerman’s main fund, Prentice Capital Partners, invests in public stocks and corporate debt, a strategy that proved to be not very successful, at least in Zimmerman’s case. In 2008, the fund registered an 88% loss. Zimmerman decided to start fresh and created a new hedge fund - Prentice Capital Management. It is a long/short fund that invests only in publicly traded stocks. Zimmerman tends to focus on undervalued companies that can gain in value by making changes in the management, strategy or capital structure of the company.

KKR Financial Holdings LLC (NYSE:KFN)

Prentice Capital Management has recently filed its first 13F report with the Securities and Exchange Commission. According to the filing, the fund’s top equity investment is KKR Financial Holdings LLC (NYSE:KFN) with 1.9 million shares valued at $23.1 million. The company has a market cap of $2.5 billion and pays an annual dividend of $0.91, which represents a yield of 7.6%. The stock has a Price to Earnings (P/E) ratio of 9.2, far below the industry average of 43.5. For the fourth quarter of 2013, KKR Financial posted revenues of $139.5 million – a 4% year-over-year increase – and earnings of $0.30 per share, down from $0.38 reported for the same period in 2012.

Not far behind is Gaiam, Inc. (NASDAQ:GAIA), a lifestyle media company. Zimmerman has acquired 2.6 million shares reportedly worth $16.9 million. So far this year the stock has been trending sideways in the $6-$7 range. Gaiam, Inc. has a market cap of $148 million and does not pay a dividend. Shares are traded at a P/E ratio of 16.0,  significantly lower than the industry average of 98.6. Gaiam, Inc. (NASDAQ:GAIA) is yet to announce 2013, Q4 financial results, with analysts expecting revenues of $53.7 million and a loss per share of $0.02. During the previous quarter, the company registered revenues of $52.8 million and EPS of $0.01.

Another notable presence in the portfolio of Prentice Capital is Pacific Sunwear of California, Inc. (NASDAQ:PSUN). The fund holds 3.9 million shares reportedly worth $12.9 million. The company has a market cap of $205 million and does not pay a dividend. The stock has a beta of 2.65, which makes it a very volatile one. For the quarter ended November 2, 2013, Pacific Sunwear posted sales of $206 million, down from $215 million reported for the same period in 2012, and earnings of $0.23 per diluted share. For the current quarter the company projects revenues between $211 and $214 million, and a loss per share of $0.18 to $0.21.

Next up is J.C. Penney Company, Inc. (NYSE:JCP). Zimmerman has bought 1.2 million shares worth approximately $11 million. The company has a market cap of $2.2 billion and does not pay a dividend. The stock price has been declining since the start of 2012 amid efforts of the management to turn the company around. For the quarter ending February 1, 2014, J.C. Penney posted revenues of $3.8 billion, a 2.6% year-over-year decrease, and earnings of $0.32 per share.

Ending the top 5 is an asset management company, Resource America Inc (NASDAQ:REXI), which focuses on three segments: Financial Fund Management, Real Estate and Equipment Finance. Prentice Capital holds 970,000 shares valued at a little over $9 million. The company has a market cap of $191 million and pays an annual dividend of $0.15, which represents a 1.6% yield. For the three months ended December 31, 2013, Resource America posted revenues of $26.9 million and a loss of $0.01 per share.

Disclosure: none

Recommended reading:

Free Stock Research Report: Allegion PLC (ALLE)

Brian Sheehy and Iszo Capital’s Top Stock Picks

Free Stock Research Report: AerCap Holdings NV (AER)

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 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!