We track 13D and 13G filings from hedge funds, which are filed after a fund acquires a 5% stake in a company (or after making significant changes to their position). While these filings only apply to one company at a time, and so are much less comprehensive than the quarterly 13F filings which we use to develop investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year), they are filed fairly quickly after a fund buys stock. We think that it can be wise not to blindly imitate these purchases but to review which stocks funds like and do further research on any which seem like good values. Here are five stocks which hedge funds have bought recently:
Billionaire Steve Cohen’s SAC Capital Advisors disclosed ownership of more than 2 million shares of Skechers USA Inc (NYSE:SKX), up from about 550,000 shares in the fund’s portfolio at the beginning of January (see Cohen’s stock picks from SAC’s 13F). The footwear company’s sales slid slightly for the year as a whole, though in its most recent quarterly report revenue grew strongly compared to the fourth quarter of 2011. Currently Skechers USA Inc (NYSE:SKX) does look expensive in terms of its trailing earnings; Wall Street analyst forecasts imply a forward P/E of only 15, which would cut down on the amount of growth needed to make it a value stock, but the company has to hit those targets first.
Cohen and his team were also buying Celldex Therapeutics (NASDAQ:CLDX), a $960 million market cap biotechnology company (on average, over 1.7 million shares are traded per day so particularly with a stock price of about $12 there is plenty of dollar volume for most investors). As a development stage drug developer, Celldex Therapeutics (NASDAQ:CLDX) is not expected to earn profits this year or next year, but the stock is up over 150% in the last year as the market becomes more optimistic about the company’s products. We would note that the most recent data shows that 12% of the float is held short.
Adage Capital Management, which is managed by Phil Gross and Robert Atchinson, reported owning a little over 2 million shares of Monolithic Power Systems, Inc. (NASDAQ:MPWR), a designer of semiconductors. Find Adage’s favorite stocks. When we looked at Monolithic Power Systems, Inc. (NASDAQ:MPWR) we saw that revenue and earnings did increase last year compared to 2011 but were still down from 2010 levels. While it’s possible that the company is recovering from a temporary setback, the forward P/E is 18 even with analysts forecasting significant improvements on the bottom line. In addition, cash flow from operations fell in 2012 and came in only narrowly higher than capital expenditures.
Pinnacle Entertainment, Inc (NYSE:PNK), a $920 million market cap operator of casinos and other gaming facilities, had HG Vora Capital Management disclose a position of 3 million shares or just over 5% of the company. Pinnacle Entertainment, Inc (NYSE:PNK)- which has over $10 million in daily dollar volume- is highly exposed to movements in broader market indices with a beta of 1.9 (casinos often have high betas, in part due to high leverage). Earnings numbers took a turn for the worse in Q4, with the company barely reporting positive adjusted earnings per share. Consensus estimates for 2014 imply a forward P/E of 17.
Charles Davidson’s Wexford Capital had over 1 million shares of Repros Therapeutics Inc (NASDAQ:RPRX) in its portfolio according to a 13G filed with the SEC. Check out more stocks Wexford has been buying. Repros Therapeutics Inc (NASDAQ:RPRX) is a particularly small cap stock, with a market capitalization of less than $300 million, but here as well we see that volume is high enough to remove most liquidity concerns. The pharmaceutical company, whose products target hormonal disorders, is another development stage (and therefore unprofitable) business which has had the stock price rise enormously in the last year as investors become more optimistic about its prospects.
Disclosure: I own no shares of any stocks mentioned in this article.