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NorthStar Asset Management (NSAM) & Star Gas Partners (SGU): Small-Cap Picks From Locust Wood Capital Advisers’ Latest 13F

Stephen J. Errico founded Locust Wood Capital in 2002 after working as adviser at Lehman Brothers, Paine Webber and Morgan Stanley. The fund succeeded to increase its capital from $29 million in 2002 to $980 million in 2015. The fund’s primary strategy is determining mispriced companies which are going through significant change of corporate structure. As of the end of March, Locust Wood’s favorite small cap picks are NorthStar Asset Management Group Inc (NYSE:NSAM)Star Gas Partners, L.P. (NYSE:SGU), QEP Midstream Partners LP (NYSE:QEPM) and KapStone Paper and Packaging Corp. (NYSE:KS).

QEP Resources Inc (NYSE:QEP)

There are more than 700 hedge funds in our research database and we are focused on the small-cap picks of these funds. Small cap stocks are not as much popular as large cap stocks so they are less efficiently priced. Hedge funds have huge research budgets and they achieve better results on small cap stocks. In addition, since we started our small cap the strategy in August 2012, our quarterly top 15 stock picks in this strategy generated a cumulative return of over 137%, outperforming the S&P 500 ETF (SPY) by over 80 percentage points during the same period (read more details here).

Stephen J. Errico’s stake in NorthStar Asset Management Group Inc (NYSE:NSAM) is the largest position, represented by a small cap company in his equity portfolio, with a value of $31.55 million and contains 1.35 million shares. NorthStar Asset Management Group Inc (NYSE:NSAM) provides real estate management services worldwide. Recently the company has announced its next quarterly dividend payment of $0.10 per share, payable on May 22, which gives it a yield of 1.88%. The company is planning to buy back around $400 million worth of stock over the next twelve months, which constitutes 10% of the company’s float with current share prices. Among the funds we track, Robert Pitts’ Steadfast Capital Management, Marc Lisker’s MSDC Management, Ken Griffin’s Citadel Investment Group and David Einhorn’s Greenlight Capital are just a few who held long positions in the company at the end of 2014.

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