Three Stocks with Tremendous Upside from Activist Investors: Hess Corp.(HES), Navistar International Corp (NAV), Famous Dave’s of America, Inc. (DAVE)

Page 1 of 2

How is the mindset of a billionaire different from a Motley Fool reader? You might be surprised to learn that it’s not that different, actually.

T. Boone Pickens recently published an op-ed piece on LinkedIn Today called A Fool and His Money are Soon Parted. The first sentence of the piece reads, “Don’t think that just because I’m a billionaire I throw money away.”

I’ve personally seen T. Boone make investments as small as $500,000 (readers may question this, but I actually have). When you consider a half million dollars in relation to his net worth, it’s similar to any of us making a small trade in our retail brokerage account.

Hess Corp. (NYSE:HES)T. Boone Pickens isn’t the only billionaire who exercises discipline with his money. Consider the case of Carl Icahn and his large investment in Herbalife Ltd. (NYSE:HLF). I recently wrote how Icahn prudently accumulated his Herbalife shares in the mid $20-range and $30-range. We can confirm that Mr. Icahn hasn’t purchased any shares above $40 through his regulatory filings, yet retail investors have piled in at significantly higher prices than Icahn paid himself.

The purpose of these illustrations isn’t because I have a preference for T. Boone Pickens or Carl Icahn with Herbalife (in fact, I actually agree with Ackman).  The lesson here is simple–despite their tremendous wealth, most of the large investors in the stock market continue to make the most money because they follow a strict set of rules. While T. Boone and Icahn have made countless investments over the years, these sharks continue to prowl the seas of the stock market.

I believe Motley Fool readers can participate in the upside by swimming with the sharks. Here are three stocks that are currently being stirred by activist investors.

Famous Dave’s of America, Inc. (NASDAQ:DAVE)

Famous Dave’s of America, Inc. (NASDAQ:DAVE) is a full sit-down restaurant that specializes in barbequed meats and chicken, including beans, corn muffins and sauces. The company owns 53 locations and franchises an additional 134 restaurants in 34 states and 1 Canadian province.

On Feb. 13, Dave’s reported fourth quarter revenue of $36.3 million, which was less than the expected $37.3 million. Comparable restaurant sales for October – December decreased 6.0% for company-owned restaurants and 4.0% on franchised restaurants.

A quick lesson on same-store sales. During my work as an equity research analyst, I evidenced that franchised restaurants consistently performed better than company-owned restaurants. The reason is simple: franchisees have more skin in the game. Therefore, it doesn’t surprise me that Dave’s franchised restaurants outperformed the company-owned by a full 2.00%.

The weak performance at Famous Dave’s of America, Inc. (NASDAQ:DAVE) presents a prime opportunity for an activist investor. Patrick Walsh, a Chicago-based wealth manager, recently purchased 9.9% of Famous Dave’s, which has a market capitalization of $77 million.

On March 4, Famous Dave’s of America, Inc. (NASDAQ:DAVE) disclosed with the SEC that it agreed to add Patrick Walsh to the company’s board of directors.  In addition to having a new board member, Famous Dave’s announced back in December it was re-aligning its core marketing functions.

I recommend buying shares on this collective news.

Hess Corp. (NYSE:HES).

Hess is a $24 billion global energy company that operates in two segments: Exploration & Production (E&P) and Marketing and Refining (M&R).

On March 4, Hess announced in a press release the company’s formal plans to transform into solely an exploration and production business and exit the downstream businesses of retail, energy marketing, and energy trading.

While John Hess, Chairman and CEO, told news outlets that the changes were prompted by internal review, numerous analysts believe that activist investors such as Paul Singer’s Elliot Management prompted the news.

Mr. Singer recently stated that the company is “doing the least possible to maintain the status quo.” I believe we will see more to come from Hess Corp.(NYSE:HES). management as shareholders prod behind the scenes.

Following the series of announcements, multiple firms on Wall Street have raised their price targets on Hess. French investment firm Societe Generale upgraded Hess to Buy from Hold with an $80 price target. New York-based ISI Group also upgraded the stock to Buy with a $77 price target.

Page 1 of 2
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

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

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

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!