There is no doubt that some hedge funds’ 13F filings disclose rich trading ideas, but these filings are generally considered delayed and irrelevant. Nevertheless, the research conducted by Insider Monkey provides evidence that these public filings can offer high-potential trading opportunities despite their supposed limitations (i.e. do not reveal short positions, filed within 45 days from the end of each quarter). That said, hedge funds’ 13G and 13D filings can provide more up-to-date insights on top money managers’ most prominent stances and their positions on certain stocks. With this in mind, let’s proceed with a discussion of three 13G filings submitted with the U.S Securities and Exchange Commission by several hedge funds tracked by our team.
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 53 percentage points, returning 102% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.
In a freshly-filed 13G, Ricky Sandler’s Eminence Capital L.P. reported owning 7.03 million shares of HomeAway Inc. (NASDAQ:AWAY), up by 3.00 million shares from the position disclosed through the 13F filing for the September quarter. The newly-upped stake accounts for 7.3% of the company’s outstanding common stock. Earlier this month, Expedia Inc. (NASDAQ:EXPE) and HomeAway entered into a definitive cash-and-stock agreement, under which Expedia is set to acquire the operator of the nation’s largest vacation-home rental site for approximately $3.9 billion. If the aforementioned acquisition gets approved, each shareholder of HomeAway Inc. (NASDAQ:AWAY) will receive $10.15 in cash and 0.2064 of an Expedia common share per each HomeAway share owned, which yields a return of roughly $35.47 per share at the time of writing. It is anticipated that the deal will result in strong long-term earnings growth should the shareholders of HomeAway approve the acquisition.
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The number of smart money investors within our database that owned HomeAway’s stock at the end of the second quarter stood at 31, compared to 32 at the end of the first quarter. These hedge funds accumulated 19.10% of the company’ shares on June 30, while their investments in HomeAway climbed to $563.58 million from $362.49 million during the three-month period. Brian Bares’ Bares Capital Management cut its position in HomeAway Inc. (NASDAQ:AWAY) by 369,231 shares during the September quarter, remaining with 2.69 million shares.
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Let’s move on to the next page, where we discuss two separate 13Gs, filed by Point72 Asset Management and Partner Fund Management.