We track filings by hedge funds and other notable investors in order to get an idea of their activity- including which large cap stocks they like, which smaller-cap stocks might be good topics for further research, and what they think of different industries generally. Of course, investors can’t buy every stock that any particular manager is buying (and relatively up-to-date 13D and 13G filings are rarely filed for large-caps), but looking at filings can still be useful. Here are five stocks that hedge funds have reported a larger position in recently:
Steadfast Capital Management reported owning 8.9 million shares of Pandora Media Inc (NYSE:P). This is an increase of close to 2 million shares since the beginning of October, according to the fund’s 13F for the third quarter of the year (find Steadfast’s favorite stocks). Pandora’s revenues have been growing nicely- up about 60% in its most recent quarter compared to the same period in the previous year- but costs have been rising as well and the company is struggling with profitability. It’s not expected to have positive earnings in its next fiscal year either, and with much of its future depending on Apple Inc. (NASDAQ:AAPL) not developing its own service we think it should be avoided. The stock is widely shorted, indicating that a number of traders expect it to underperform expectations. Read our analysis of Pandora.
John Rogers’ Ariel Investments increased its holdings of Contango Oil & Gas Company (NYSE:MCF) from 1.6 million shares about two months ago to 2.4 million. Ariel now owns nearly 16% of the total shares outstanding (check out more of John Rogers’ stock picks). Contango is an exploration and production company which primarily provides natural gas, natural gas liquids, and condensates. These fuels are seen as growth opportunities, but partly because of massive increases in production prices have remained low. Contango trades at 37 times trailing earnings, and its revenue decline by 33% in the third quarter compared to Q3 2011. We think that we would avoid it; companies like Chesapeake Energy Corporation (NYSE:CHK) might be cheaper ways to play natural gas.