Billionaire Halvorsen Reveals Another New Energy Play, Mandel Buys Lululemon Athletica Inc. (LULU), Plus Two Other Bullish Moves

Apparently, the hedge fund industry as a whole does not believe that a long-term bear market for U.S equities is forthcoming, as they have been net buyers of stocks during the last four trading weeks. According to Bank of America Merrill Lynch, the smart money industry had not bought equities so heavily since September of 2010. Although it is hard to predict which hedge fund firms will outperform the industry and the broader market in 2016, individual investors should still keep a close eye on hedge fund moves, especially amid increased volatility and lower valuations. Having said that, this article will examine four 13G filings submitted by widely-known money managers Andreas Halvorsen, Stephen Mandel, Peter S. Park, and Jason Karp. Two of these billionaires are among the top-ten most successful hedge fund managers in the history of the hedge fund industry (the list is based on the amount of money earned by their funds since inception).

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

According to a Schedule 13G filing, Viking Global, managed by Andreas Halvorsen, acquired a new stake of 11.59 million shares in Range Resources Corp. (NYSE:RRC), which makes up 6.8% of the company’s total shares. Some may raise their eyebrows at this fact, but I can clearly affirm that the billionaire investor is bullish on the oil and natural gas industry. Just recently, the Insider Monkey team discussed Viking Global’s new stakes in Southwestern Energy Company (NYSE:SWN) and Cabot Oil & Gas Corporation (NYSE:COG). The Texas-based independent natural gas, natural gas liquids (NGLs) and oil company operates properties in the Appalachian and Midcontinent regions of the United States. Although Range Resources Corp. (NYSE:RRC) has total debt of $3.59 billion and only $490,000 in cash as of September 30, the company’s available borrowing capacity under its bank credit facility, its net cash generated from operating activities, and its oil derivatives contracts in place are sufficient to meet its near-term financial obligations and liquidity needs. The company had a portion of its production volumes for the remainder of 2015, and for 2016 and 2017 hedged as of the end of September, but the low crude oil and natural gas prices will still result in lower revenue due to the company’s unhedged volumes. Moreover, a sustained low commodity price environment reduces the prices for which RRC can hedge its future production volumes. The shares of RRC have declined by 41% over the last year, but they appear to be in a bottoming out phase at the moment. The hedge fund sentiment towards the stock was weak during the third quarter, considering that the number of top money managers with positions in the company dropped to 31 from 42 quarter-over-quarter. Steven Cohen’s Point72 Asset Management reported owning 796,700 shares of Range Resources Corp. (NYSE:RRC) through its 13F for the third quarter.

Let’s head to the next two pages of this article, where we discuss the other three filings submitted by the aforementioned investors.

In a separate 13G filing, Stephen Mandel’s Lone Pine Capital LLC reported acquiring a 6.45 million-share stake in Lululemon Athletica Inc. (NASDAQ:LULU), which accounts for 5.0% of the company’s outstanding shares. The retailer of technical athletic apparel has seen its shares decline by 11% over the past year, but numerous financial hubs are bullish on the company. Just recently, Guggenheim reiterated its ‘Buy’ rating on the stock, maintained its price target of $70 and even called the retailer a top pick for 2016, citing innovation in its product lineup. The financial hub also believes that Lululemon Athletica Inc. (NASDAQ:LULU) will no longer face inventory and gross margin issues. The retailer reported net revenue of $1.36 billion for the first nine months of 2015, up by 14% year-over-year. However, the company’s gross profit as a share of net revenue dropped by 320 basis points to 47.4%. It is also hard to overlook the company’s price-to-earnings multiples, so Lululemon will have to constantly surprise the market with attractive same-store sales growth and bottom-line growth figures to justify its high valuation. For instance, the stock trades at a forward P/E ratio of 27.21, which is substantially above the ratio of 15.38 for the S&P 500 Index. 32 hedge funds tracked by Insider Monkey were invested in the retailer at the end of the third quarter, compared to 35 registered at the end of the prior quarter. Ken Griffin’s Citadel Advisors LLC upped its position in Lululemon Athletica Inc. (NASDAQ:LULU) by 64% during the third quarter to 3.31 million shares.

As revealed by a Schedule 13G, Park West Asset Management LLC currently owns 2.92 million shares of Intralinks Holdings Inc. (NYSE:IL), which constitute 5.0% of the company’s shares. This compares to 2.06 million shares owned by Park West on September 30. The technology provider of Software-as-a-Service solutions for secure enterprise content collaboration has seen its shares drop by 23% over the past 12 months. The company’s cloud-based solutions, which allow businesses to securely manage, search and exchange sensitive information, have witnessed increased demand over the past several quarters. Intralinks Holdings Inc. (NYSE:IL)’s revenue for the first three quarters of 2015 totaled $204.87 million, compared to $188.40 million reported for the same period of 2014. However, the company’s net loss widened quite significantly year-over-year to $24.40 million from $15.40 million. Its gross margin also decreased to 72.1% from 72.8%. Even so, analysts anticipate that the company will generate earnings per share of $0.13 for fiscal year 2016, so investors could consider the company a long-term investment with the potential for eye-catching top- and bottom-line growth rates. A total of 26 smart money investors from our system had stakes in the company at the end of September, accumulating 26.30% of its shares. Jim Simons’ Renaissance Technologies owns 2.47 million shares of Intralinks Holdings Inc. (NYSE:IL) as of the end of the third quarter.

To conclude our discussion, let’s take a thorough look at the 13G filing submitted by Jason Karp’s hedge fund firm. Tourbillon Capital Partners L.P. reported owning 2.33 million shares of Radius Health Inc. (NASDAQ:RDUS), which represent 5.4% of the company’s outstanding common stock. This is up by 1.33 million shares from the stake Tourbillon disclosed owning as of the end of September. The shares of the science-driven biopharmaceutical company are down by 24% over the past year, which might have created clear entry points for some investors. The company mainly focuses on developing therapeutics for patients with advanced osteoporosis, which causes bones to become brittle and fragile due to loss of tissue, as well as other endocrine-mediated diseases such as hormone responsive cancers. Radius Health Inc. (NASDAQ:RDUS)’s lead product candidate is abaloparatide, which is a bone anabolic for the reduction of fracture risk in postmenopausal women with severe osteoporosis. The company’s clinical product portfolio also comprises the investigational drug RAD1901, which is a selective estrogen receptor degrader, and RAD140, a non-steroidal selective androgen receptor modulator. The number of hedgies from our system with stakes in the biopharmaceutical company remained flat during the third quarter at 23.

Disclosure: None