Nelson Obus‘ Wynnefield Capital has initiated a position in Global Power Equipment Group Inc (NYSE:GLPW) by acquiring some 2.19 million shares through its affiliated funds. The stake, which comprises 1.07 million shares that are held directly by the firm and 1.13 million shares held indirectly, amasses about 12% of the $112.30 million company’s outstanding shares. The transactions were carried out between July 17 and July 21
Wynnefield Capital was established in 1992 with the aim of concentrating on small-cap companies which have an industry specific catalyst. Although the firm has quite a few activist stakes to boast, it refrains from hostile takeovers and battles with the boards of directors of companies. Obus was in the news last year with regards to insider trading allegations, which he successfully defended in a two-week trial. Currently the firm has about $309 million in regulatory assets under its management.
An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Wynnefield can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 80 percentage points and returning over 139%, while hedge funds themselves have collectively underperformed the market (read the details here).
Operating in three segments, namely Product Solutions, Nuclear Services, and Energy Service, Global Power Equipment Group Inc (NYSE:GLPW) provides customer-engineered equipment, and modification and maintenance services. The industrial company’s stock fell by over 33% on May 7 when the company announced a delay in the reporting of its first quarter financial results, and an intention to restate its results for the fiscal year 2014 due to accounting errors found by the Audit Committee. In this connection, various law firms are seeking shareholders who acquired Global Power Equipment Group Inc (NYSE:GLPW)’s stock between March and April to appoint them as lead plaintiff. The complaint alleges that the company understated its cost of sales for the fiscal year 2014, that it lacked internal controls over its financial reporting, and hence mislead investors.