Hedge Funds Have Bought Navistar International Corp (NAV) and More

The stock trades at 15 times expected earnings for 2013 (and analyst forecasts imply that earnings per share will improve over the rest of this year as Banc of California integrates its recent acquisitions). The valuation is also a small premium to the book value of the equity. Given that Basswood is invested in a number of regional banks, investors likely shouldn’t see this as too bullish on this stock specifically and should consider other companies in the industry.

Intralinks Holdings Inc (NYSE:IL), a $530 million market cap cloud-based software company (with over 300,000 shares traded per day on average and a current stock price of $9.70, there is plenty of daily dollar volume), is another stock seeing hedge fund buying recently. Altai Capital Management now owns 6.4% of the company. The sell-side expects Intralinks Holdings Inc (NYSE:IL) to earn 17 cents per share next year, implying a forward P/E of 57. Markets are excited about cloud computing and likely see IntraLinks as a way to play out a high growth thesis or the industry or possibly as a prospective acquisition for larger players jousting for position in the space. However, the current valuation is high enough- and recent revenue growth has been low enough, at about 8%- that buying appears quite speculative at this time.

Investing in Intralinks Holdings Inc (NYSE:IL) or Navistar International Corp (NYSE:NAV) would take a good deal of faith, and so investors should probably avoid those names even given Icahn’s involvement in the latter company. As for Banc of California, we at Insider Monkey would be wary of integration risk and while we would be interested in learning more about the long thesis for regional banks it’s likely that other stocks in the industry would be more appealing.

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