Hedge Funds Have Bought Lear, Trina Solar, and More

Citadel Investment Group, managed by billionaire Ken Griffin, disclosed the equivalent of ownership of 6.2% of Trina Solar Limited (NYSE:TSL) (check out more stocks Griffin likes). Trina manufactures modules for solar power companies, and is based in China- providing two red flags for many investors. The stock is down 47% in the last year, roughly matching the decline in revenue that the company reported in the third quarter of 2012 from its levels in Q3 2011. Trina is also sharply unprofitable and we’d consider it a quite speculative investment by the Citadel team.

Fellow billionaire Glenn Dubin’s Highbridge Capital Management owns 8% of Penn Virginia Corporation (NYSE:PVA), an independent oil and gas exploration and production company. Penn Virginia is unprofitable on a trailing basis, and experienced a decline in revenue in its most recent quarter compared to the same period in the previous year. 15% of the outstanding shares were held short as of the most recent data. We would note that while Penn Virginia has negative earnings it’s arguably fairly valued in terms of cash flow, with an EV/EBITDA multiple of 4.5x.

Steiner Leisure Limited (NASDAQ:STNR), a spa and beauty care products and services company, had Diamond Hill Capital Management report ownership of about 770,000 shares of the stock; Diamond Hill is managed by Ric Dillon. While Steiner’s revenue has been up, when we looked at the company it appeared to us that most if not all of that top-line growth was the result of acquisitions. As a result, even though Steiner does return considerable cash to shareholders through buybacks and its earnings multiples are low (the current price is 12 times consensus earnings for 2013) we’d be wary of considering it a value stock.

Disclosure: I own no shares of any stocks mentioned in this article.