Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Billionaire James Dinan’s New Stock Picks Include News Corp (NWSA), Virgin Media Inc. (VMED)

Several weeks after the end of each quarter, hedge funds such as billionaire James Dinan’s York Capital Management file 13Fs with the SEC to disclose many of their long equity positions as of the end of that quarter. Even though the information in 13Fs may well be out of date by the time it is released, we’ve actually found that it can be used to develop investment strategies; for example, the most popular small cap stocks among hedge funds tend to outperform the S&P 500 by an average of 18 percentage points per year. We also like to look for initial investment ideas among top managers’ new stock picks, doing further research on any interesting names. Read on for our thoughts on five of York’s largest new holdings as of the end of March and compare these picks to previous filings.

Dinan and his team bought 4.9 million shares of Virgin Media Inc. (NASDAQ:VMED), making the stock one of their five largest holdings by market value after not having owned any shares at the beginning of the year. Virgin Media Inc. (NASDAQ:VMED) is in the process of merging with Liberty Global; hedge funds often like to invest in the stock of acquisition targets since the returns on this investment depend on whether the deal closes rather than on changes in the company’s fundamentals, and so have little relationship to the broader economy. Funds can also use high leverage to magnify their returns.

YORK CAPITAL MANAGEMENTCommercial real estate advisory and investment company CBRE Group Inc (NYSE:CBG) was another of York’s new stock picks with the filing disclosing ownership of 6.3 million shares. Given the sensitivity of commercial real estate demand to the overall economy, it’s not surprising that CBRE’s beta is high at 2.3. In the first quarter of 2013, the company experienced a 39% increase in earnings versus a year earlier, due primarily to higher margins but also helped by a 9% gain in revenue. Some future growth is already included in the stock price, however, at a trailing P/E of 23.

Another special situation making for a new pick in the fund’s portfolio is the impending breakup of News Corp (NASDAQ:NWSA); Dinan initiated a position of over 5 million shares during Q1. A number of funds, including billionaire Stephen Mandel’s Lone Pine Capital, were buying News Corp (NASDAQ:NWSA) between January and March (check out Mandel’s stock picks). In theory, the breakup of the company will act similarly to a spinout opportunity, with management of the sibling companies better able to improve operations and therefore create more value for shareholders.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.