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.
Animal hospital and veterinary research company VCA Antech Inc (NASDAQ:WOOF) had Ricky Sandler’s Eminence Capital disclose ownership of 4.8 million shares of the stock, compared to 3.4 million shares in its most recent 13F (check out more stocks Sandler has been buying). The company hasn’t been achieving much growth recently, with net income rising only 2% last quarter compared to the first quarter of 2012. With the stock valued at 15 times forward earnings estimates, it seems that Sandler and other investors expect growth rates to pick up a bit going forward. We think we might be more interested in cheaper “human” hospital stocks.
Brahman Capital, which is managed by Peter Hochfelder, reported an increase in its stake in Endo Health Solutions Inc (NASDAQ:ENDP) to 6.3 million shares or 5.7% of the pharmaceutical company. This is up from 2.7 million shares at the beginning of April (research more stocks Brahman owns). Endo’s earnings multiples are low- its forward P/E is only 10- but the explanation for this is that analyst consensus is for earnings per share to generally decline over the next year. The company could then continue to see lower net income beyond that point, and in fact its revenue numbers have been down.
Rounding out our list of recent hedge fund purchases is a 13G showing Baker Brothers Advisors- managed by Julian and Felix Baker- with close to 4 million shares of Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). See more of Baker Brothers’s stock picks. This gives the fund ownership of 14% of the $345 million market cap biotechnology company (Vanda also has plenty of daily dollar volume). The company’s products focus on treatments for nervous system disorders including schizophrenia. While unprofitable, Vanda has risen over 200% in price over the last year as investors have become more optimistic on the marketability of its products.
Disclosure: I own no shares of any stocks mentioned in this article.
