Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

David Abrams

With the holidays behind us, a new wave of filings has been set off, revealing hedge funds’ latest moves. Let’s forget about China and the falling oil prices for a moment and see what the hedge fund heavyweights have busied themselves with. In this article we’ll take a look at a stock Warren Buffett has an insatiable appetite for as well as what was on the shopping list of David Abrams and Nathaniel August.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).

David Abrams seems to feel good about college bookstores, having recently boosted his investment in Barnes & Noble Education Inc (NYSE:BNED). According to a filing with the Securities and Exchange Commission, his fund, Abrams Capital Management, has acquired 488,348 shares of Barnes & Noble, at prices between $8.73 and $8.94 per unit. Following these transactions, the fund holds 8.71 million shares which represent approximately 18% of the company’s outstanding shares.

Follow Barnes & Noble Education Inc. (NYSE:BNED)
Trade (NYSE:BNED) Now!

A former colleague of value investor Seth Klarman, Abrams started his fund in 1999 and had more than $8 billion in assets under management at the end of 2013. His equity portfolio carried a market value of $1.4 billion at the end of 2015’s third quarter, with more than half of that represented by tech stocks, while financial stocks accounted for roughly 20%. The Western Union Company (NYSE:WU) is his biggest bet, with Abrams Capital holding 21.6 million shares, while Microsoft Corporation (NASDAQ:MSFT) is just behind that, with Abrams owning 4.98 million shares. Both positions were unchanged during the quarter.

David Abrams
David Abrams
Abrams Capital Management

On the next page we’ll look at the energy company Nathaniel August is so interested in and talk about Buffett’s latest play.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.