As stated by a recent Schedule 13G filing with the SEC, Daniel Och’s OZ Management possesses an equity stake of 1.80 million shares in PennTex Midstream Partners LP (NASDAQ:PTXP), which represents 9.02% of the company’s outstanding common stock. The hedge fund firm led by billionaire Daniel Och has taken a long position in the newly-listed public company, whose operations and activities are primarily focused on owning, operating, acquiring and developing energy infrastructure assets.
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 84 percentage points, returning over 142% (read the details here). Hence a retail investor needs to isolate himself from the herd and take advantage of the best growth opportunities in the market by concentrating on small-cap stocks.
OZ Management is a hedge fund founded by its current Chairman and Chief Executive Officer, Daniel S. Och, in 1994. The fund is a subsidiary of Och-Ziff Capital Management, which is one of the largest hedge fund firms worldwide and is one of the few publicly-traded investment firms. Generally, Daniel Och focuses the fund’s investments across a range of investment vehicles including multi-strategy funds, credit funds, collateralized loan obligations, real estate funds and equity funds. The latest 13F filing of OZ Management reveals that it has a diversified public equity portfolio, though the services sector is quite the largest, at 30.3%. In this article we will also take a glance at the fund’s top positions as of the most recent reporting period, which includes such companies as Actavis plc (NYSE:ACT), Air Products & Chemicals Inc. (NYSE:APD) and Canadian Pacific Railway Limited (NYSE:CP).
But first, let’s cover and discuss Daniel Och’s recently acquired stake in PennTex Midstream Partners LP (NASDAQ:PTXP). PennTex is involved in the collecting and processing of natural gas and other natural gas liquids for distribution to industrial, commercial and residential users. At the beginning of this month, PennTex went public on the NASDAQ through its initial public offering (IPO) of 12.25 million common shares, each priced at $20. The common units of this company began trading on the NASDAQ on June 4 and are now trading at $19.80 a share. Additionally, the company issued 30-day greenshoe options that will allow the underwriters for the offering to acquire up to an additional 1.69 million common shares.
As for the reasons why PennTex went public, Thomas Karam, the CEO of the company, claimed that it was the right time for PennTex to access the market, as it has already built a really strong core of assets and has a high-quality set of organic growth projects to be implemented. He also implied that the company will only benefit from the low-cost capital, which is intended to be used for building the company’s infrastructure and for fueling its growth. It’s quite clear that PennTex has identified and developed a few projects with great potential that require substantial investments. According to PennTex’s CEO, the management of the company is confident in the future growth prospects of the company, so it should be expected that the stock will move higher in the upcoming months and years as a result of the company’s growth.