Billionaire Glenn Russell Dubin’s 5 Best Stock Ideas for Q4

Highbridge Capital Management, led by Glenn Russell Dubin, recently filed its latest 13F with the U.S. Securities and Exchange Commission, revealing a public equity portfolio worth $6.48 billion as of the end of the third quarter. The New York-based firm was founded by Dubin and his college classmate Henry Swieca in 1992. The fund has since developed a diversified investment platform comprising hedge funds, traditional investment management products, as well as credit and equity investments with longer-term holding periods. During the third quarter, Highbridge opened new positions in 735 companies, while it unloaded its stakes in 622 companies. Despite all the movement and stock picks, only five can be at the top of Dubin’s list, and in this article, we’ll look at those top stock picks.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

#5 Oracle Corporation (NYSE:ORCL)

– Shares held (as of September 30): 1.81 million

– Total Value (as of September 30): $65.30 million

Oracle Corporation (NYSE:ORCL) is a new position for Dubin, initiated during the third quarter. The $167.4-billion tech company is focusing on the cloud market, with the addition of new applications and services, to compete with Amazon Web Services. Shares of Oracle Corporation (NYSE:ORCL) have lost 12.7% year-to-date. Oracle was held by a total 57 hedge funds we track at the end of third quarter, compared to 58 funds at the end of the prior quarter. Oracle Corporation (NYSE:ORCL) is also a favorite stock of Boykin Curry’s Eagle Capital Management, which held 43.60 million shares as of the end of September.

#4 Devon Energy Corp (NYSE:DVN)

– Shares held (as of September 30): 1.87 million

– Total Value (as of September 30): $69.36 million

Dubin was bullish on independent energy company Devon Energy Corp (NYSE:DVN), with his fund increasing its holding by 1.10 million shares during the quarter. Despite improved oil production, Devon Energy Corp (NYSE:DVN) swung to a loss of $3.5 billion, or $8.64 per share, in the third quarter, compared to income of $1 billion, or $2.47 per share, in the year-ago period. Total operating revenue was $3.6 billion, a year-over-year decrease of 33%. During the quarter, Devon Energy produced 282,000 barrels of oil per day, representing a 31% year-over-year decrease. During the third quarter, First Eagle Investment Management raised its position in Devon Energy by 19% to 9.65 million shares, while Israel Englander’s Millennium Management boosted stake by over 130% to 5.85 million shares. Shares of Devon Energy Corp (NYSE:DVN) have been struggling since April, and have declined by 25% year-to-date.

On the next page, we’ll be taking a look at Highbridge’s top three stocks.

#3 AbbVie Inc (NYSE:ABBV)

– Shares held (as of September 30): 1.29 million

– Total Value (as of September 30): $70.12 million

AbbVie Inc (NYSE:ABBV) is a $98.6-billion biopharmaceutical company formed in 2013 following its separation from Abbott Laboratories (NYSE:ABT). Dubin sees potential in AbbVie Inc (NYSE:ABBV), as his fund increased its stake in the company by 75% during the quarter. Recently, AbbVie announced a five-year growth plan that impressed investors. The company predicts total sales of about $37 billion in 2020, reflecting roughly 10% average sales growth over the five-year period. For the third quarter, AbbVie Inc (NYSE:ABBV) reported a profit of $1.24 billion, a significant increase from the $506 million it earned in the same quarter of 2014. The company’s sales increased by 8.40% year-over-year to $5.94 billion. AbbVie Inc (NYSE:ABBV)’s largest shareholders among those we track include Larry Robbins’ Glenview Capital and Julian Baker and Felix Baker’s Baker Bros. Advisors, holding 16.17 million shares and 14.37 million shares, respectively.

#2 NorthStar Asset Management Group Inc (NYSE:NSAM)

– Shares held (as of September 30): 4.93 million

– Total Value (as of September 30): $70.83 million

During the third quarter, Dubin added 792,771 more shares to his holding of NorthStar Asset Management Group Inc (NYSE:NSAM), a New York-based global asset management firm focused on strategically managing real estate and other investment platforms. For the third quarter, NorthStar Asset Management Group Inc (NYSE:NSAM) reported income of $41.2 million, versus $18.74 million a year earlier. Revenues arrived at $108.12 million, compared to $83.99 million in the same period of 2014. Last month, NorthStar Asset Management Group Inc (NYSE:NSAM) agreed to acquire an approximate 85% interest in The Townsend Group for roughly $380 million. Townsend is the manager of about $180 billion of real estate assets. It designs customized strategies and builds distinctive portfolios for its world-class institutional investor base. The acquisition is expected to close in early 2016. Robert Pitts’ Steadfast Capital Management and MSDC Management, run by Marc Lisker, Glenn Fuhrman and John Phelan, are the largest shareholders of NorthStar among the investors we track at Insider Monkey.

#1 Exelon Corporation (NYSE:EXC)

– Shares held (as of September 30): 2.51 million

– Total Value (as of September 30): $74.40 million

Dubin was also bullish on Exelon Corporation (NYSE:EXC), boosting his stake by 2.17 million shares during the quarter. Exelon, a $25.47-billion utility services holding company, recently reported better-than-expected third quarter results. The company’s profit was $629 million, down from $993 million in the same year-ago quarter. However, on an adjusted basis, income rose to $757 million, compared to $676 million a year earlier. Exelon Corporation (NYSE:EXC) still seems committed to acquiring Pepco Holdings, despite the company’s bid of $6.8 billion being rejected by regulators in August. Exelon Corporation (NYSE:EXC) was held by a total of 40 hedge funds we track at the end of the third quarter, compared to 30 at the end of June. However, the aggregate value of these investments fell to $954.8 million from $1.1 billion during that time. Another investor that likes Exelon is Clint Carlson’s Carlson Capital, which holds 6.75 million shares as of the end of September.

Disclosure: None