Five Hedge Funds’ Picks that Show Strong Gains

#2 Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)

 – Investors with Long Positions (as of December 31): 52

– Aggregate Value of Investors’ Holdings (as of December 31): $3.25 billion

Despite news about Marriott International Inc (NASDAQ:MAR)’s offer to acquire Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT) during the fourth quarter, the popularity of the latter among hedge funds didn’t increase significantly as it is usually the case when an M&A deal appears on the horizon. Though the number of investors from our database with long positions in the company increased by five during the last quarter of 2015, the total value of their holdings slid by 10%. Almost the entire 21%  gain that Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)’s stock registered during the first quarter was seen in March, after the competition to acquire the company got heated up with the entry of a Chinese consortium of investors led by Anbang Insurance company. The group repeatedly hiked its bid to acquire Starwood last month, forcing Marriott International Inc (NASDAQ:MAR) to increase its bid and reiterate its commitment to buy the company. However, on April 1, Anbang Insurance Group suddenly dropped out and cleared the way for Marriott International Inc (NASDAQ:MAR) to acquire the company. On April 8, the respective shareholders of Marriott International and Starwood officially approved the merger between the two companies.

#1 Kinder Morgan Inc (NYSE:KMI)

 – Investors with Long Positions (as of December 31): 67

– Aggregate Value of Investors’ Holdings (as of December 31): $2.31 billion

After plummeting over 65% last year, shares of energy infrastructure company Kinder Morgan Inc (NYSE:KMI) have finally managed to regain some lost ground this year and advanced by 20.7% during the first quarter. During the fourth quarter, the ownership of the company among funds covered by us inched down by five, however, the aggregate value of their holdings in it appreciated by 26.6%. Warren Buffett‘s Berkshire Hathaway initiated a stake in the company during that period, by purchasing 26.53 million shares. Despite the rise the stock has had this year, most analysts feel that it is still undervalued at current levels. However, they also acknowledge that it can remain undervalued for a long time because Kinder Morgan Inc (NYSE:KMI) recently reduced its dividend significantly and most people who invest their money in the midstream sector look for an attractive annual dividend yield and expect dividend growth. Kinder Morgan is expected to declare its first quarter results early next week and the consensus among analysts include EPS of $0.19 on revenue of $3.76 billion. For the same quarter last year, the company reported EPS of $0.24 on revenue of $3.60 billion.

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