One of the most common objections to incorporating 13F filings into an investment process is that the information in these filings is a bit out of date; the most recent round of filings discloses many of a hedge fund’s or other major investor’s long equity positions as of the end of March. However, we’ve actually fund that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year. In addition, even though 13Fs are old we can compare them to those from years ago to see which stocks investors have liked over a long time frame and so are more likely to still own. Here are five stocks which billionaire Michael Price’s MFP Investors owned at least $10 million of both in its most recent filing and in the one from the first quarter of 2011 (or see the full list of the fund’s stock picks over time):
One of MFP’s long term favorite stocks has been Citigroup Inc (NYSE:C), with about 800,000 shares in its portfolio per the most recent filing. Citigroup Inc (NYSE:C), which had been one of the ten most popular stocks among hedge funds during Q1 (check out the full top ten list), remains priced at a discount to the book value of its equity (the P/B ratio is 0.8) even after rising 90% over the last year. Earnings have not been particularly high recently, but they have been rising and Wall Street analyst forecasts for next year imply a forward P/E of 9.
At the end of Q1 Price and his team owned a little less than 510,000 shares of McGraw Hill Financial Inc (NYSE:MHFI) which had just sold off its education unit to Apollo Global. The company is now focused on providing financial information including through its Standard & Poors and Capital IQ business units. Parent companies are often thought to improve their operations following spinouts as management becomes more focused on the core business. McGraw Hill Financial Inc (NYSE:MHFI) is valued at 16 times consensus earnings for 2014, with a five-year PEG ratio of 0.9 as analysts expect future EPS growth.
The fund kept its stake in GulfMark Offshore, Inc. (NYSE:GLF), a $1.3 billion market cap offshore oilfield drilling and equipment services company, about constant at about 620,000 shares in the first three months of 2013. GulfMark Offshore, Inc. (NYSE:GLF) had been underperfoming expectations in 2012, but its reported results for Q1 were above consensus and with the sell-side expecting business to improve next year the forward P/E is 12. The company is dependent on improving its bottom line considerably to hit that target, however, and investors might prefer to consider other offshore exposed companies.