Three Big Moves Made by Several Multi-Billion Dollar Hedge Funds

Individual investors may find the stock picking process rather scary and troublesome, considering that there are thousands of listed companies on the major U.S exchanges. Although some filtering may significantly reduce the number of actively traded stocks, this process still requires time and skill that most individual investors do not have. After all, it seems close to impossible to beat the professionals who have limitless resources to conduct research on certain companies. Instead, one can closely examine hedge funds’ up-to-date moves by tracking their 13D and 13G filings, which offer more strong insights for active traders and investors. Having said that, the following article will examine three fresh 13G filings submitted by several multi-billion dollar hedge funds monitored by Insider Monkey.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated ten percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. the S&P 500’s 48.7% gain) over the last 38 months (see the details here).

In a Schedule 13G filed with the SEC, Tiger Global Management, founded by Chase Coleman, reported owning 9.90 million shares of Vipshop Holdings Ltd – ADR (NYSE:VIPS), which add up to 49.50 million American Depository Shares (ADSs). This compares with the position comprised of 17.44 million ADSs reported through the firm’s 13F filing for the September quarter. Meanwhile, the freshly-upped position accounts for 9.96% of the Chinese e-commerce company’s outstanding stock. The shares of Vipshop tanked last week after the release of its preliminary third quarter financial results, and are now down by 26% for the year. Vipshop reported total net revenue of $1.36 billion for the quarter, which grew by 63% year-over-year, but missed the company’s third quarter guidance. Its net income increased by 90% to roughly $50 million, but investors still worry about the effect of China’s economic slowdown on the company.

Let’s take a quick look at the hedge fund sentiment on the stock, which actually proves the point made above. The number of hedge funds tracked by Insider Monkey with positions in Vipshop Holdings Ltd – ADR (NYSE:VIPS) declined to 40 from 54 during the third quarter, while the value of their investments shrank to $1.43 billion from $2.19 billion. These top money managers accumulated 14.70% of the company’s shares on September 30. George Soros’ Soros Fund Management upped its position in Vipshop Holdings Ltd – ADR (NYSE:VIPS) by 1.13 million ADSs during the September quarter, ending the three-month period with 5.88 million ADSs.

The next page of the article discusses the freshly-made moves of Point72 Asset Management and Glenview Capital Management.

According to a separate 13G filing, Steve Cohen’s Point72 Asset Management has lifted its position in Summit Materials Inc. (NYSE:SUM) by 549,393 shares since the end of the third quarter. The public filing reveals that Cohen’s family office owns 2.50 million shares in the aggregates-focused, construction materials company, representing 5.1% of its outstanding common stock. The shares of the cement maker have gained almost 10% since the company’s Initial Public Offering on March 11. Summit is among the largest suppliers of aggregates by volume in the United States, so the company is worth paying attention to considering the strengthening housing market. Even so, its top- and bottom-lines may be too sensitive to national and global economic conditions, and specifically to changes in construction spending. Summit Materials Inc. (NYSE:SUM)’s third quarter net revenue came to $426.29 million, compared to $248.14 million reported in the same quarter last year. Meanwhile, its net income grew to $33.87 million from $28.12 million.

The cement maker became more popular among the hedge funds monitored by Insider Monkey during the third quarter, with the number of smart money investors with stakes in the company increasing to 30 from 21 quarter-over-quarter. The value of the money poured into the stock grew to $341.78 million from $204.69 million during the three-month period. These hedge funds owned 17.60% of the company’s shares on September 30. Billionaire Leon Cooperman of Omega Advisors increased his exposure to Summit Materials Inc. (NYSE:SUM) by 333,900 shares during the September quarter and holds 933,900 shares as of September 30.

As stated by a 13G filing, Larry Robbins’ Glenview Capital Management holds a 5.35 million-share position in Laboratory Corp. of America Holdings (NYSE:LH), which denotes an increase of 485,579 shares from the position revealed through the latest round of 13F filings. The updated position represents 5.29% of the healthcare diagnostics company’s outstanding shares. Laboratory Corp’s stock is up by 11% year-to-date and is currently trading at a trailing P/E ratio of 26.61, which is slightly above the 22.70 average for the S&P 500. However, analysts have great expectations for the company’s earnings potential, which can easily be noticed by looking at its forward P/E ratio of 13.65 (the forward P/E ratio of the S&P benchmark stands at 17.25). Reportedly, Laboratory Corp. of America Holdings (NYSE:LH) intends to purchase the U.K-based life sciences testing company LGC (Laboratory of the Government Chemist), in an attempt to expand its services offerings.

In the meantime, Laboratory Corp. lost its charm within the hedge fund industry during the September quarter, as the number of hedge funds that we track which were invested in the company decreased to 43 from 52. Even so, these investment management firms stockpiled 21.40% of the company’s outstanding shares on September 30. Laboratory Corp. of America Holdings (NYSE:LH) was one of the biggest new equity holdings of Andreas Halvorsen’s Viking Global in the third quarter (read more details).

Disclosure: None