Benjamin Graham divided investors into two types: defensive investors and enterprising investors. A few would disagree that hedge funds reside the ‘enterprising’ camp of investors, as they tend to devote time and care for the selection of securities. Of course, that does not imply that each of their stock picks will outperform the broader market, but these investors always get rewarded for their skill and effort. Having this in mind, the following article will discuss three moves disclosed by several hedge funds tracked by Insider Monkey through freshly-submitted 13G and 13D filings.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
According to a Schedule 13G filed with the U.S. Securities and Exchange Commission, Steve Cohen’s Point72 Asset Management holds a stake of nearly 3.80 million shares in Weight Watchers International Inc. (NYSE:WTW). The newly-initiated position accounts for 6.0% of the company’s outstanding common stock. What a timely move made by Steve Cohen and his team; the shares of the weight loss management company closed 35.20% in the green on Friday and have advanced an additional 6.20% thus far in Friday’s post-market trading session. The company disclosed its third-quarter earnings report this Thursday, posting revenues of $273.3 million, which were down 20.8% year-over-year and beat analysts’ expectations of $266.3 million (read more details). Shares of Weight Watchers International Inc. (NYSE:WTW) are down 7% year-to-date, but they have skyrocketed by 227% over the past month following the company’s announcement that Oprah Winfrey acquired a 10% ownership stake and got a seat on its board of directors.
However, the weight-loss assistance company lost its charm among the hedge funds tracked by Insider Monkey during the second quarter, as the number of top money managers invested in the company decreased to nine from 18 quarter-over-quarter. Similarly, the value of their stakes dropped to $18.56 million from $28.73 million during the three-month period. Daniel S. Och’s OZ Management owned 243,600 shares in Weight Watchers International Inc. (NYSE:WTW) on June 30.
Let’s head to the next page, where we disclose the stances of Glenhill Advisors and Pine River Capital Management on two stocks, namely MicroStrategy Incorporated (NASDAQ:MSTR) and Morgans Hotel Group Co. (NASDAQ:MHGC).