The most comprehensive picture of hedge fund activity comes in the form of quarterly 13F filings. While the information in these filings is a bit old by the time it is released, we’ve found that they can still be used to develop profitable investment strategies (for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year). Still, we agree that it can also be useful to follow the more recent updates to hedge fund positions that come with 13D or 13G filings (though these are only filed when an investor owns over 5% of a company’s outstanding shares). Read on for five stocks that hedge funds and other notable investors have bought recently:
Billionaire Steve Cohen’s SAC Capital Advisors increased its holdings of Lamar Advertising Co (NASDAQ:LAMR), which is best known as a billboard advertising company, to a total of 4.2 million shares or 5.3% of the company. Find Cohen’s favorite stocks. Some market players have speculated that Lamar Advertising Co (NASDAQ:LAMR) could convert to a real estate investment trust; since REITs receive favorable tax treatment, this would increase shareholder value. However, another candidate for REIT status has recently indicated that the IRS may revise its definition of “real estate” for these purposes in order to create higher barriers to REIT conversion. Lamar Advertising Co (NASDAQ:LAMR)’s business as is has not been particularly strong.
Cohen and his team have been busy, with another recent filing showing ownership of 1.2 million shares (or 5.3% of) ITT Educational Services, Inc. (NYSE:ESI). While ITT’s market capitalization is only about $630 million, on average over 700,000 shares are traded per day and with a stock price of about $27 that makes for plenty of daily dollar volume in our book. For-profit education is generally skidding on poor business (ITT Educational Services, Inc. (NYSE:ESI) experienced double-digit declines in both revenue and net income in the first quarter of 2013 versus a year earlier) as well as potential government regulation. The stock is down 49% in the last year and is a very popular short target.