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Can Highland Capital’s Small-Cap Picks Like High Dividend Stock Ocean Rig UDW Inc (ORIG) Outperform the Market?

Media General Inc (NYSE:MEG) comes in at number two on the list of small-cap investments of Highland Capital. The investment manager’s current position in the multimedia company includes 6.86 million shares valued at $113.08 million and it forms 2.32% of Dondero’s overall public equity portfolio. The media company works in 48 different markets and operates/services 71 TV stations throughout the country. The Richmond, Virginia-based media firm offers digital marketing solutions including content marketing, mobile and display advertising solutions, and social intelligence services. Dondero controls 5.26% of the overall outstanding shares of Media General Inc (NYSE:MEG), which has a market cap of $2.21 billion. For investors following major hedge fund managers, it could be a relief to know that Warren Buffett has included Media General in his portfolio. His current stake in the company includes 4.65 million shares with a market value of $76.62 million. Media General is up by just under 2% in 2015.

Highland Capital increased its position in Ocean Rig UDW Inc (NASDAQ:ORIG) by 51% during the first quarter and currently holds 11.33 million shares valued at $74.70 million. The offshore drilling contractor, with a market cap of $986.25 million, announced the closing of an offering of 28.57 million shares at $7.00 per share on June 8. The company received a total of $193.9 million out of the offering after deducting expenses and fees. Ocean Rig UDW Inc (NASDAQ:ORIG) announced net income of $41.1 million for the first quarter of 2015 against a net loss of $1.5 million in the prior year period. The net revenue of Ocean Rig was $402.08 million for the reported period against net revenue of $360.76 million for the first quarter of 2014. Shares of Ocean Rig have dropped by more than 38% year-to-date, which has partially contributed to a surprisingly high dividend yield of 13.26%. However, Barclays recently initiated coverage of Ocean Rig UDW Inc (NASDAQ:ORIG) with an ‘Underweight’ rating and price target of $5, potential downside of over 12%, suggesting the drop off is not done yet and putting a damper on that impressive dividend yield. Phill Gross and Robert Atchinson’s Adage Capital Partners has the second-largest equity position in Ocean Rig after Highland, which owns the largest.

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