J.C. Penney Company, Inc. (JCP), Lexmark International Inc (LXK) & More: Hedge Funds Have Been Busy

Several weeks after the end of each fiscal quarter, the SEC requires hedge funds and many other major investors to file 13Fs which disclose many of their long equity positions in U.S. stocks as of the end of that quarter. While the information in these filings can be valuable- we have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy)– we do also track more up to date information from 13D and 13G filings. These filings come shortly after an investor buys 5% of a company’s outstanding shares, and can therefore provide initial ideas from these investment managers for further research. Here are five stocks which hedge funds have bought recently:

Billionaire George Soros (check out more stocks Soros has been buying) reported a position of over 17 million shares in J.C. Penney Company, Inc. (NYSE:JCP), the troubled retailer backed by Bill Ackman’s Pershing Square. Revenue fell 25% in J.C. Penney Company, Inc. (NYSE:JCP)’s most recent fiscal year compared to the previous one, with resulting operating losses of about $1 billion; the CEO recently left the company following what has been a failed turnaround. Wall Street analysts are forecasting continued net losses this year and next year, though consensus is that the company will improve over that time frame. Soros’s involvement is interesting, but we still wouldn’t consider J.C. Penney Company, Inc. (NYSE:JCP) a buy right now.

Blue Mountain Capital Management, which is managed by Andrew Feldstein and Stephen Siderow, had not owned any shares on Lexmark International Inc (NYSE:LXK) at the beginning of 2013 but has since purchased 3.6 million shares, giving it 5.6% of the company. Find Blue Mountain’s favorite stocks from the beginning of this year. Lexmark rose after its Q1 results beat expectations, even though revenue was down 11% versus a year earlier and EPS fell by 36%. The sell-side is bullish, with the stock trading at 8 times forward earnings estimates, though we would be skeptical of their optimism. We would note that Lexmark International Inc (NYSE:LXK) pays a dividend yield of 4.7% at current prices and dividend levels.

Billionaire Ken Griffin’s Citadel Investment Group has bought additional shares of Halcon Resources Corp (NYSE:HK), giving the fund a total of over 18 million shares in its portfolio. See Griffin’s stock picks. Halcon Resources Corp (NYSE:HK) is a $2.5 billion market cap oil and gas exploration and production company; despite the fact that its production mix is about 70% oil (which currently has a more favorable market environment than natural gas), it experienced an operating loss in 2012 due to higher costs. The forward earnings multiple is only 9, but we think that we would prefer to look at other shale E&P companies such as Continental Resources, Inc. (NYSE:CLR) and Kodiak Oil & Gas Corp (USA) (NYSE:KOG).

Citadel has been buying another exploration and production company with a focus on shale plays, disclosing ownership of 1.9 million shares of Carrizo Oil & Gas, Inc. (NASDAQ:CRZO). This was up from only about 15,000 shares at the end of December. 80% of the company’s revenue comes from oil, and Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) has managed better results in the last year than Halcon with net income increasing 51% in 2012. At its current price the stock carries trailing and forward P/Es of 18 and 10, respectively, showing that analysts are bullish on the business’s prospects.

ZHONGPIN INC. (NASDAQ:HOGS), a Chinese meat products company, rounds out our list as Brian Taylor’s Pine River Capital Management now owns 3.3 million shares. ZHONGPIN INC. (NASDAQ:HOGS) is an acquisition target, and is currently trading at considerably less than the proposed transaction price; the transaction is expected to close within the next few months, though the closing date has been pushed back from Q1. We have estimated an unlevered return of about 5% if the transaction does go through. It would be important to look into any factors which might scrap the acquisition, though that return is high for a merger arb situation if a deal does happen in the near future.

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