SLM Corp (SLM), Teva Pharmaceutical Industries Ltd (ADR) (TEVA): Hmm….This Bostonian Hedge Fund is Bullish Alright

Page 1 of 2

Abrams Capital Management is one of the largest hedge funds in Boston. The fund is run by David Abrams, and has a $5 million minimum requirement. Currently valued at an equity portfolio alone worth $1.1 billion, Abrams’ investment vehicle primarily invests in financial, services and basic materials stocks and tends to favor securities that are undervalued. In accordance with our market-beating strategy, we’re going to take a look at this hedge fund’s favorite stocks for 2013.

David Abrams

With 15 million shares, SLM Corp (NASDAQ: SLM), also known as Sallie Mae, holds the top position in the fund.  If Abrams is looking for value, he got it right with SLM Corp (NASDAQ: SLM), which is priced at 2 times its book value, versus Discover Financial Services (NYSE:DFS) and World Acceptance Corp. (NASDAQ:WRLD), which are priced 2.4x and 3.0x, respectively.  The stock has been trading in an uptrend over the past six months, boosted by a 14% dividend increase from last year, strong technicals, and a recent drop in loan defaults.  The company has also improved administrative costs in regard to loan servicing and processing, which has improved their bottom line from $633 million to $939 million.

Coming in at number two is Lamar Advertising Co (NASDAQ: LAMR). The billboard and transit advertising maker has consistently improved its bottom line by cutting cost of goods sold/revenue to 35% from 36% in 2011. Abrams added Lamar to his portfolio during the second quarter of 2011 and currently owns 5.5 million shares.  But if Abrams was looking for value, he clearly did not find it here. The stock trades at 5 times book value and is valued at an eye-popping 476 times its earnings per share.  Lamar enjoys an obvious advantage given the large barriers to entry in this market, which probably explains why it continues to find buyers.  The stock is attempting to break resistance at $48.00, with the next target at $50.00.

Number three is Nexen Inc. (USA) (NYSE:NXY), which was a new addition to Abrams Capital during the fourth quarter of 2012.  Abrams has a 7.1 million position in the Canadian oil and gas company, which was recently acquired by China’s CNOOC Limited (ADR) (NYSE:CEO) for $27.50 in cash.  Even if Abrams bought the stock on the last day of the year, he still would have made over half a million dollars at the time of the sale.  Not a bad profit for a few days work.

The fourth stock of Abram Capital’s top five is Teva Pharmaceutical Industries Ltd (NYSE: TEVA). The Israeli drug manufacturer has had a very eventful 2013.  It just recently moved over to the NYSE from the NASDAQ in May 2012 and since then, the stock has swung wildly between $45 to $37 per share. This month, Teva Pharmaceutical Industries Ltd (NYSE: TEVA) announced it would no longer sell the sedative Propofol to corrections facilities that use the drug for lethal injections. Shares were also downgraded by Wells Fargo & Co (NYSE:WFC) to a “perform” from “outperform.”

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 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

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!