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Petrologistics and More: Billionaire James Dinan’s New Stock Picks

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Six to seven weeks after the end of a quarter, hedge funds and many other investors are required to file 13Fs with the SEC. These filings allow the broader financial community to see many of their long equity positions in U.S. stocks as of the end of the previous quarter. We have found that investment strategies can be derived from the information in 13Fs; for example, the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year (read more about our small cap strategy). We can also examine individual 13Fs to see what billionaires and other top managers were doing in the fourth quarter, including what new stocks they were adding to their portfolio. Here are our thoughts on the five largest new holdings that billionaire James Dinan’s York Capital reported owning (or see the full list of stocks from the fund’s 13F):

One of York’s largest holdings at the end of December was its close to 17 million shares of PetroLogistics LP (NYSE:PDH), up from none three months earlier. The $2.1 billion market cap company converts propane into propylene and then distributes the product to chemical companies. Petrologistics’ stock price is down about 10% from its levels shortly after its May 2012 IPO; in the short time it has been public it has been a good yield opportunity with a dividend yield of over 7% going by recent quarterly payments. Steadfast Capital Management, managed by Robert Pitts, owned 7.6 million shares of Petrologistics according to its own 13F.

YORK CAPITAL MANAGEMENTAnother new pick which was also one of Dinan’s top picks was Realogy Holdings Corp (NYSE;RLGY), a $6.3 billion market cap property management company. Realogy franchises real estate brokerages including Century 21 and Coldwell Banker. It is another recent IPO, having gone public last October, and is up 25% from those levels as investors look to an improving real estate market. Revenue has been up, per the company’s reports, though with a forward P/E of 30 the market is already assuming high growth. Billionaire John Paulson’s Paulson & Co. bought over 13 million shares in Q4 (find Paulson’s favorite stocks).

Read on for three more of Dinan’s stock picks:

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