Billionaires Halvorsen and Loeb Buying Shares of These 2 Companies, Plus 2 Other Bullish Moves

Just recently, iconic investor Warren Buffett said that investors should not mimic his investment picks or those of other highly-successful money managers. The Oracle of Omaha clearly asserted that imitating successful money managers is not necessarily a great investment strategy. Instead, the billionaire investor recommended that investors buy equities on a consistent basis over a lifetime, which is what he has been successfully doing over the past several decades. Nonetheless, there aren’t many investors who can afford the luxury of losing thousands of dollars before generating positive returns, so active stock portfolio management seems to be the right strategy for retail investors starting from a smaller investment base. But how can individual investors pick high-potential stocks? One way of finding some attractive stocks is to look through hedge funds’ 13G, 13D, and Form 4 filings, which reveal up-to-date hedge fund moves in some of their highest conviction picks. These SEC filings could definitely serve as a handy tool in analyzing and selecting securities that investors are expecting big things from, so individual investors should keep a close eye on these public filings. For that reason, this article will discuss four fresh filings submitted with the SEC by several renowned hedge fund firms.

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According to a Form 4 filing, Dan Loeb’s Third Point LLC purchased 10,000 shares of Sothebys (NYSE:BID) on Monday at a cost of $21.93 per share, lifting its stake to 6.66 million shares. The freshly-upped stake accounts for 10.75% of the company’s outstanding common stock. It should be mentioned that Third Point has had an activist stance on the auction house operator since 2013, with Mr. Loeb’s firm gaining three seats on the company’s Board in 2014. The shares of the global art business are down by 45% over the past 12 months despite that, presumably because of a slowing art market. Privately-owned auction house Christie’s International PLC represents Sotheby’s main competitor in the global art market, and the two companies together registered auction sales of $12.3 billion in 2015, down from $12.9 billion in 2014. Sotheby’s net auction sales in 2015 totaled $5.02 billion, down from $5.15 billion in 2014. The auction house did however generate more revenue in 2015 relative to 2014 despite experiencing lower auction sales. Sothebys (NYSE:BID) revenue in 2015 reached $961.49 million, up from $938.05 million in 2014 and $853.68 million in 2013. On the other hand, the company’s reported net income decreased by 63% year-over-year to $43.7 million, mainly due to a $65.7 million non-cash income tax charge associated with the repatriation of foreign earnings.

Just recently, Barrington Research downgraded Sothebys to ‘Market Perform’ from ‘Outperform’, citing a slowing art market, and the departure of the some of the company’s top talent, among other things. The shares of Sothebys are trading at 11.73-times expected earnings, below the forward P/E ratio of 16.15 for the companies included in the S&P 500 Index. The smart money sentiment towards the stock was negative in the December quarter, as the number of money managers in our system with stakes in the company declined to 24 from 31 quarter-over-quarter. Richard McGuire’s Marcato Capital Management cut its stake in Sothebys (NYSE:BID) by 6% to 6.22 million shares during the fourth quarter.

The next two pages of this article discuss three separate SEC filings submitted by highly-scrutinized hedge fund vehicles.

In a Schedule 13G filing, Andreas Halvorsen’s Viking Global reported owning 2.44 million shares of Kite Pharma Inc. (NASDAQ:KITE), which constitute 5.0% of the company’s outstanding shares. This represents an increase from the stake of 2.21 million shares disclosed in the fund’s 13F filing for the October-to-December period. The clinical-stage biopharmaceutical company that develops engineered autologous cell therapy products for the treatment of cancer has seen its shares decline by 23% since the beginning of the year, so Halvorsen’s firm has taken the opportunity to beef up its holding.

Kite Pharma’s engineered autologous cell therapy, simply known as eACT, is a transformational approach to the treatment of cancer. This therapy involves the genetic engineering of T-cells, which are designed to identify and destroy cancer cells. In December 2015, Kite Pharma Inc. (NASDAQ:KITE) received breakthrough therapy designation status for its lead product candidate, called KTE-C19, for the treatment of patients with refractory diffuse large B cell lymphoma (DLBCL), primary mediastinal B cell lymphoma (PMBCL), and transformed follicular lymphoma (TFL). Nonetheless, there are mounting safety concerns around this engineered autologous cell therapy among investors, which has put significant weight on Kite’s shares. The number of hedge funds in our system with stakes in the company increased to 27 from 22 during the December quarter. Ken Griffin’s Citadel Advisors LLC owns 559,319 shares of Kite Pharma Inc. (NASDAQ:KITE) as of the end of 2015.

As revealed by a separate Form 4 filing, Eric Semler’s TCS Capital Management purchased 369,686 class A shares of Central European Media Enterprises Ltd. (NASDAQ:CETV) last week at prices of between $2.39 and $2.56 per share. After the recent purchases, TCS Capital owns 16.92 million class A shares of the media and entertainment company, representing 12.46% of its outstanding common stock. The company primarily operates in Central and Eastern Europe and has broadcast operations in six countries in the region, broadcasting 36 television channels. Central European Media Enterprises Ltd. (NASDAQ:CETV)’s consolidated net revenue reached $605.84 million in 2015, down from $680.79 million reported for 2014. However, its consolidated net revenue grew by 6% year-over-year at constant exchange rates, primarily due to an increase in television advertising revenue. In November 2015, Eric Semler sent a letter to the company’s Chairman and Board, urging the Board to hire a financial advisor to explore a possible sale. TCS Capital said that the company’s disappointing stock performance has been linked to Time Warner Inc. (NYSE:TWX)’s equity and debt ownership in the company, and Central European Media’s failure to refinance its debt. However, the television broadcaster recently entered into a new multi-million dollar term loan to repay and discharge its 15.0% Senior Notes due 2017. The stock is down by 10% over the past 52 weeks, after having declined by 6% year-to-date. Rob Citrone’s Discovery Capital Management reported owning 4.70 million shares of Central European Media Enterprises Ltd. (NASDAQ:CETV) through the latest round of 13F filings.

According to a new Schedule 13D filing, J. Carlo Cannell’s Cannell Capital currently owns 1.39 million shares of Rightside Group Ltd (NASDAQ:NAME), which make up 7.32% of the company’s outstanding common stock. This is up from the stake of 1.32 million shares revealed in the fund’s latest 13F filing. More importantly, Carlo Cannell recently sent a letter to the company’s Chairman of the Board, expressing his discontent with the company’s operational focus. Before diving into the content of the letter, Rightside Group is a provider of domain name registration and other related value-added service subscriptions. Rightside Group is also an accredited registry for new generic Top Level Domains (GTLDs), some of which include .democrat, .dance, and .navy, to name just a few. The shares of the company have advanced by 17% over the past year.

Carlo Cannell and his team believe that the new GLTDs represent an opportunity in “the emerging market for second generation domain names”; however, they also believe that Rightside Group Ltd (NASDAQ:NAME) is not making the most of its domain name registrar. As a result, the manager of Cannell Capital submitted “both a plan and a request” to the company’s Board, which stipulates the termination of more than 20% of its “weaker staff”, the unification of all of its products under the eNom.com brand, the refinancing of all debt, and the addition of two new board members, “with a suggestion, but not a requirement that two incumbents resign”. A total of 17 smart money investors monitored by our team were invested in the company at the end of the fourth quarter, amassing 13.50% of its outstanding shares. Daniel S. Och’s OZ Management acquired a new stake of 213,637 shares in Rightside Group Ltd (NASDAQ:NAME) during the fourth quarter.

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