Billionaire Christian Leone Boosts Stake in This TV Station Operator, Nelson Peltz Lifts Stake in Struggling Pentair plc. (PNR), Plus 2 Other Moves

Fresh statistics reveal that the 50 most popular stocks among hedge funds lost 10% in 2015, which practically means that individual investors should have avoided to invest in what hedge funds owned last year. Analysts at Goldman Sachs call this basket of 50 most-owned stocks, “VIP”, which has outperformed the S&P 500 gauge in 64% of all quarters since 2001. One could just look at 2015 as an anomaly, so it does pay off to track what hedge funds own and what moves they carry out. One efficient way of monitoring what hedge funds do is to track their 13G, 13D, and Form 4 filings. These filings usually reveal up-to-date moves and insights about hedge funds’ stances on certain companies, and they seem to be a perfect tool investors could use to mimic hedge funds’ moves. Having said that, the following article will discuss several SEC filings submitted by billionaires Christian Leone, Nelson Peltz, and other hedge fund managers.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details here).

According to a Schedule 13G filing, Christian Leone’s Luxor Capital Group currently owns 1.77 million shares of Nexstar Broadcasting Group Inc. (NASDAQ:NXST), which account for 5.8% of the company’s outstanding common stock. This is up from the stake of 1.11 million shares owned on December 31, as revealed in the fund’s most recent 13F. On January 27, TV station operator Nextstar Broadcasting announced that it had agreed to purchase Media General Inc. (NYSE:MEG) in a cash-and-stock deal. Under the terms of the deal, Media General shareholders will receive $10.55 in cash and 0.1249 of a share of Nexstar Class A common stock for each share of Media General owned. The combined company will be one of the nation’s largest local TV station operators with 171 stations across the country. Nexstar Broadcasting Group Inc. (NASDAQ:NXST) intends to divest some TV stations to obtain FCC approval, while the deal is anticipated to close by the end of the third quarter or at the beginning of the fourth quarter of this year. Media General Inc. (NYSE:MEG) initially intended to merge with Meredith Corporation (NYSE:MDP), which recently withdrew its agreement in exchange for a $60 million breakup payment. Meanwhile, Nexstar shares are 30% in the red year-to-date and trade at a forward P/E of only 9.34, which is below the average of 15.75 for the S&P 500 Index. A total of 34 hedge funds tracked by Insider Monkey were invested in the TV station operator at the end of December 2015, amassing 36% of its outstanding stock. Daniel Lewis’ Orange Capital upped its stake in Nexstar Broadcasting Group Inc. (NASDAQ:NXST) by 14% during the December quarter to 1.20 million shares.

Let’s head to the next two pages of this article, where we discuss three other SEC filings submitted by several widely-known hedge fund managers.

In a freshly-amended 13D filing, renowned activist Nelson Peltz’s Trian Partners reported owning 14.34 million shares of Pentair plc. (NYSE:PNR), which constitute 7.95% of the company’s outstanding shares. This compares with 13.68 million shares Trian disclosed in its 13F filing for the final quarter of 2015. The diversified industrial manufacturing company primarily operates through four business segments: Valves & Controls, Flow & Filtration Solutions, Water Quality Systems, and Technical Solutions. The company generated net sales of $6.45 billion in 2015, down from $7.04 billion in 2014. Pentair plc. (NYSE:PNR)’s Valves & Controls segment, which manufactures and markets valves, fittings, automation and controls and actuators for the energy and industrial markets, was hit the most last year due to weaker-than-expected oil and gas industry shipments and orders, slowing global capital spending and sustained sales decline in the mining industry. Meanwhile, the company’s management expects full-year 2016 sales of $6.6 billion, which represent an increase of 2% on a reported basis and a decrease of 2%-to-3% on a core sales basis. Pentair’s shares are currently trading around 11 times expected 2017 earnings, versus a multiple of 14.8 for the Industrial sector. The number of hedge funds from our system with stakes in Pentair dropped to 19 from 23 during the December quarter. Larry Robbins’ Glenview Capital trimmed its stake in Pentair plc. (NYSE:PNR) by 36% during the fourth quarter to 3.57 million shares.

Jeffrey Ubben’s ValueAct Capital ceased to be the beneficial owner of more than 5% of Agrium Inc. (USA) (NYSE:AGU)’s common stock on February 22, as revealed in a newly-amended 13D filing. The SEC filing reveals that ValueAct Capital owns 6.77 million shares of Agrium, which represent 4.9% of the company’s total outstanding shares. This marks a decrease of 3.23 million shares from the stake disclosed by the fund’s 13F filing for the fourth quarter of 2015. The shares of the Canadian fertilizer company have lost 29% over the past 12 months, mostly due to lower crop nutrient prices. Fertilizer prices have been pressured by a relatively strong dollar, high global inventories of grains and oilseeds, and low crop prices. To be more specific, the prices of crops have been hit by yet another year of high crop yields, which in turn led to increased inventories. Agrium Inc. (USA) (NYSE:AGU)’s sales totaled $14.80 billion in 2015, down from $16.04 billion reported for the previous year. Moreover, the company’s management anticipates macroeconomic headwinds and sustained low crop prices in 2016, so there still might be more pain ahead for the company. The number of smart money investors from our database with positions in the company increased to 22 from 20 during the fourth quarter. D.E. Shaw & Co. L.P., founded by billionaire David E. Shaw, owns 1.49 million shares of Agrium Inc. (USA) (NYSE:AGU) as of December 31.

As disclosed in a Form 4 filing, Baker Bros. Advisors, managed by Julian and Felix Bakers, has bought 1.00 million shares of Seattle Genetics Inc. (NASDAQ:SGEN) since last Thursday at prices that ranged from $29.20 to $30.48 per share and lifted its stake to 39.67 million shares (excluding the shares held directly by Felix J. Baker and Julian C. Baker). The freshly-upped stake accounts for 28.3% of the company’s outstanding stock. It is worth mentioning that the healthcare-focused hedge fund has purchased more shares of Seattle Genetics since the beginning of the year, as revealed in several other Form 4 filings; the fund owned 37.29 million shares of Seattle Genetics on December 31, 2015. The shares of the biotechnology company focusing on developing therapies for the treatment of cancer are down 34% since the beginning of the year. The company’s marketed product ADCETRIS (brentuximab vedotin), approved for the treatment of relapsed Hodgkin lymphoma and relapsed systemic anaplastic large cell lymphoma, has been a major source of growth for Seattle Genetics in recent years. Seattle Genetics Inc. (NASDAQ:SGEN)’s 2015 total revenue reached $226.05 million, up from $178.20 million in 2014 and $144.67 million in 2013. The increase was exclusively attributable to an increase of 27% in ADCETRIC net product sales. However, the company’s expenses increased substantially in 2015, mainly due to higher investments in its growing pipeline of pre-clinical and clinical-stage programs. The hedge fund sentiment towards the stock was negative in the fourth quarter, as the number of money managers from our system with stakes in the company declined to 16 from 21 quarter-over-quarter. Jeremy Green’s Redmile Group reported owning 1.37 million shares of Seattle Genetics Inc. (NASDAQ:SGEN) through the latest round of 13Fs.

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