New York City-based Okumus Fund Management led by its founder, former Istanbul stock exchange trader Ahmet Okumus, is a hedge fund that focuses on mid and large-cap equities. According to the 13 filing that Okumus made for the March 31 reporting period, it was revealed that the fund holds a public equity portfolio valued at $456.87 million, and with it being majority invested in technology companies, which represented 86% of the fund’s value. The 13F filing also revealed that Okumus had taken new stakes in six stocks, the top three of which we’ll look at in this article. They are EMC Corporation (NYSE:EMC), Ascent Capital Group Inc (NASDAQ:ASCMA), and Darling Ingredients Inc (NYSE:DAR).
We follow hedge funds like Okumus Fund Management because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 142%, outperforming the S&P 500 ETF by nearly 84 percentage points (see more details here).
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In EMC Corporation (NYSE:EMC), Okumus took a stake of 3.80 million shares with a value of $96.92 million in the company, which now represents a very bullish 21.21% of his total public equity portfolio. The Massachusetts-based EMC Corporation has experienced a rough going on the stock exchange so far this year, diving by 8.57% year-to-date. At the end of May, EMC announced that it had bought the privately-held cloud and infrastructure provider Virtustream, and analysts are now expecting more acquisitions to come, believing that EMC’s main business is about to over-mature. In the meanwhile, analysts are saying that EMC Corporation (NYSE:EMC) should sell its 80% stake in publicly traded WMware (NYSE:VMW) in order to unlock some value for its shareholders if it cannot provide a credible plan on how to increase its earnings. Nevertheless, a spin-off of WMware could have long-term implications. Another hedge fund manger that is apparently bullish about EMC is Paul Singer of Elliott Management, who left his stake of 33.50 million shares in EMC untouched during the first quarter.
During the first quarter, Ahmet Okumus built a stake in Ascent Capital Group Inc (NASDAQ:ASCMA) by purchasing 157,163 shares with a value of $6.26 million at the end of the quarter. Ascent Capital Group Inc, which was founded by a three-way merger in 1999 has also been having a rough spring on the NASDAQ, losing 20.46% of its stock value. In May, Ascent Capital Group Inc (NASDAQ:ASCMA) posted its earnings for the first quarter, beating analysts’ expectations by $0.07 in the process, though still reporting a loss of $0.81 per share. Analysts are now estimating a comparable loss for the second quarter. A stake in the company was also created by Francis Chou, who bought 140,000 shares with a value of $5.57 million for his fund Chou Associates Management. The home security alarm company Monitronics International Inc., is a fully owned subsidiary of Ascent Capital Group, with operations in U.S, Canada and Puerto Rico.
The food, fuel and feed ingredients company Darling Ingredients Inc (NYSE:DAR) was also added to the public equity portfolio of Ahmet Okumus during the first quarter. 77,879 shares with a value of $1.09 million as of March 31 was the purchase, a small one in comparison to his top new pick in particular. Darling Ingredients Inc (NYSE:DAR), founded in 1882, is yet another company with struggling shares in 2015, with them down by 15.09% year-to-date. The growth in revenue is appealing however, as Darling Ingredients reported an increase of 133.3% in its revenue for the first quarter compared to the same quarter the year before. Indeed, the earnings for the first quarter were also better than the year before. Analysts however say that the stock is expensive compared to its peers and has too low of a profit margin to be ranked any better than a “Hold” at this time. Hedge fund manager Steve Cohen representing Point72 Asset Managemente apparently not agree or is taking a very long view of the company, as he increased his stake by 218% to 5.08 million shares during the first quarter.
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