Editor’s Note: Related tickers: American International Group Inc (NYSE:AIG), The E.W. Scripps Company (NYSE:SSP), NRG Energy Inc (NYSE:NRG), Hanesbrands Inc. (NYSE:HBI), Taro Pharmaceutical Industries Ltd. (NYSE:TARO)
The New York-based hedge fund BlueMountain Capital Management has recently disclosed its first quarter equity holdings in a 13F filing with the SEC, as is consistent with the rest of its peers. Using the original 13F, seen here, let’s take a look at BlueMountain’s top five stock picks heading into the second quarter.
A top trio
According to the 13F, American International Group Inc (NYSE:AIG) is the largest equity holding of the fund. BlueMountain increased its stake to 1,646,244 shares, worth $63.9 million, from 1,295,701 shares worth $45.7 million disclosed in the prior quarter’s 13F. American International Group Inc (NYSE:AIG) has a year-to-date return of 26%, the seventh highest in the insurance industry, well above the average return of 19.6%. American International Group Inc (NYSE:AIG) has a forward P/E of 10.7x as well, and sports one of the lowest book multiples (0.87x) in the entire financial sector.
Next on the list is The E.W. Scripps Company (NYSE:SSP); the fund reported ownership of 4,254,106 shares, up from 3,871,184 shares in the prior quarter. The value of the stake also increased to $51.2 million from $41.8 million. The market capitalization of The E.W. Scripps Company (NYSE:SSP) is $778.05 million, the third largest newspaper publisher listed on the NYSE. The stock has a forward P/E of 13.1x and a year-to-date return of above 27%.
NRG Energy Inc (NYSE:NRG) is also close to BlueMountain’s heart, with the fund disclosing a position of 1,879,414 shares worth $49.8 million. In the prior quarter’s 13F, the fund reported a holding 1,702,374 shares worth $39.1 million. Out of the funds we track, more than 30 were invested in NRG Energy Inc (NYSE:NRG) heading into 2013, so it’s no slouch in the smart money’s eyes. NRG Energy Inc (NYSE:NRG) is trading at a forward P/E of 20.7x, and the company engages in the power generation and sale of electricity in the U.S., so this stock can serve as a broader play on the bullish domestic energy environment.
The best of the rest
Hanesbrands Inc. (NYSE:HBI) is also described as a top five holding in the BlueMountain 13F. The filing states that the fund holds 1,007,125 shares of the company worth $45.9 million at the end of the first quarter. One quarter earlier, BlueMountain held 1,241,285 shares of worth $44.5 million. The company’s EPS surged to $0.51 in the first quarter of 2013, from a loss of $0.25 posted in the same quarter one year earlier. A continued momentum play is likely what this fund sees in Hanesbrands Inc. (NYSE:HBI), as shares aren’t particularly cheap, but they do sport a year-to-date return of more than 43%.
Last but certainly not least we have Taro Pharmaceutical Industries Ltd. (NYSE:TARO), with 651,747 shares worth $38.2 million listed in the 13F.
The holding increased from 643,664 shares worth $31.2 million, described in the prior 13F. Among all Israel-based companies, Taro Pharmaceutical Industries Ltd. (NYSE:TARO) has the third-largest market cap, which amounts to $2.80 billion. Shares are up 28% on the back of a bullish pharma environment in general, and this isn’t a bad way to continue to ride the wave, so to speak. Shares of Taro Pharmaceutical Industries Ltd. (NYSE:TARO) trade at a bargain bin PEG ratio of 0.68.
Final thoughts
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Disclosure: none
