In a new Form 4 filing with the SEC, the hedge fund Okumus Fund Management, overseen by Ahmet Okumus, disclosed the sale of some 1.60 million shares of Web.com Group Inc. (NASDAQ:WWWW), remaining with an ownership stake of 14.50 million shares. Furthermore, another Form 4 filing showed that Nelson Obus’ Wynnefield Capital acquired 15,903 shares in Global Power Equipment Group Inc. (NYSE:GLPW), boosting its stake to 2.42 million shares.
Professional investors like Ahmed Okumus and Nelson Obus spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 123% and beaten the market by more than 66 percentage points since the end of August 2012, and by 4.6 percentage points in the first quarter of this year (see more details).
We’ll start out by analyzing the company which has seen a sell-off from Okumus Fund Management. Web.com Group Inc. (NASDAQ:WWWW) is a provider of Internet services and online marketing solutions catering to small and medium-sized businesses. The shares of Web.com have recently reached a new high this year, growing by over 29% year-to-date. Just a few days ago, the company posted its strong financial results for the second quarter of the current year. The provider of Web services posted a GAAP revenue of $135.7 million for the second quarter of 2015, compared to a revenue figure of $138.2 million reported in the same quarter a year ago. Moreover, the GAAP net income generated by the company came to $4.6 million or $0.09 per diluted share for the quarter, compared to a GAAP net loss of $0.8 million or $0.02 per diluted share posted a year ago. Web.com also managed to boost its number of net subscribers, which reached a figure of 3.32 million at the end of the second quarter, up 21,000 from the end of the previous quarter. It’s also worth mentioning that that the company used $30.0 million of cash to pay down a part of its debt, which will definitely enhance the financial flexibility of the Internet services provider. Craig C. Albert’s Sheffield Asset Management is among the largest shareholders in Web.com Group Inc. (NASDAQ:WWWW) within our database, holding an equity stake of nearly 3 million shares.
Okumus Fund Management is an employee owned hedge fund established by Ahmet Okumus in 1997. Ahmet Okumus considers himself a deep value investor who is constantly seeking for stocks trading at a deep discount to his estimations of fair value. Moreover, Ahmet Okumus is well-known for his contrarian approach to investing, and he often attempts to profi from market over-reactions to negative news. According to its most recent 13F filing, Okumus Fund Management oversees a public equity portfolio worth $456.87 million as of March 31, 2015.
Follow Ahmet Okumus's Okumus Fund Management
Wynnefield Capital, the other hedge fund we are discussing in this article, is a value-oriented hedge fund that usually takes activist positions in small-cap companies co-established by Nelson Obus and Joshua Landes in 1992. The investment firm is primarily looking for under-followed, unrecognized and undervalued companies that have minimal balance sheet risk and potential for micro or macro change. Wynnefield Capital does not engage in “Greenmail” situations when making its investments, but rather attempts to closely work with managements and outside directors to unlock shareholder value. Meanwhile, Wynefield Capital manages a public equity portfolio with a market value of $226.25 million, while the fund’s top ten holdings account for 77.76% of its entire portfolio.
Follow Nelson Obus And Joshua Landes's Wynnefield Capital
Global Power Equipment Group Inc. (NYSE:GLPW) represents a relatively new position for Wynnefield Capital, which was initiated just a few weeks ago (see more details). Global Power is a leading provider of custom-engineered auxiliary equipment and maintenance support services for the global power generation industry. It’s commonly known that the energy demand has been constantly increasing all around the world lately, which in turn leads to higher demand for power generation products and services. However, it seems that the increasing energy demand is not reflected at all in the share price of Global Power, as the stock has dropped by over 48% since the beginning of this year. On May 7, the company announced that it would delay to report its first quarter financial results and that it would restate its results for the last fiscal year due to accounting errors discovered by the Audit Committee, which immediately resulted in a 33% drop in the company’s share price by the end of the trading session on that day. Furthermore, a massive number of law firms have initiated lawsuits against Global Power in relation to these accounting errors, which might actually result in huge costs for the company. However, as soon as all these accounting issues and lawsuits are resolved, is highly probable that the stock will achieve a turnaround. The hedge fund Royce & Associates, managed by Chuck Royce, is the largest shareholder in Global Power Equipment Group Inc. (NYSE:GLPW) within our database, owning an ownership stake of 1.98 million shares.
Disclosure: None
