Hedge Funds Have Bought Transocean, Wendy’s, and More

Horizon Kinetics has also been adding shares of Rouse Properties Inc (NYSE:RSE), a real estate investment trust that owns shopping malls in the United States. The company has been struggling, with both funds from operations and core funds from operations (alternative financial metrics to earnings that are common when analyzing REITs) down in the third quarter of 2012 versus a year earlier. There is also considerable short interest in Rouse. In addition, unlike at many other REITs, the dividend yield is fairly low at 1.5% based on recent payments and the current share price. We think that investors may be better advised to consider other shopping mall companies.

Gates Capital Management (research more stocks the fund likes) now owns 6 million shares of Starz (NASDAQ:STRZA) or 5.4% of the total shares outstanding, according to a 13G filed with the SEC. Our database of 13F filings shows that Gates had not owned any shares of the stock at the end of September. Starz was spun out from Liberty Media Corp (NASDAQ:LMCA) earlier this month. Hedge funds often like to invest in spinouts because the management of the new company can better focus on improving the business without having to stay in line with a larger company’s strategic decisions (read more about spinouts). In particular Starz may end up an acquisition target. It currently trades at 9 times consensus earnings for 2013.

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