Does Smart Money Share This Retiring Hedge Fund Manager’s Views on 5 Long-Term Bets?

Andrew Feinberg, who managed New York City-based hedge fund CJA Partners, shut down his fund last month after 15 years in the industry. However, before retiring, Feinberg, who is also a columnist at Kiplinger’s Personal Finance, has given one last bout of advice for his followers. In his latest column, Feinberg said he sold over 80% of CJA Partners’ holdings, but that he is still bullish on several others, which he decided to keep in his family accounts. In this article we have decided to take a closer look at Feinberg’s long-term picks and see whether his peers share his views.

“So what did I learn from my plight? First, that I took a big risk when I created a portfolio that was wildly different from Standard & Poor’s 500-stock index. That was especially problematic in 2014, when hardly anyone beat the index. Magnifying the problem was my decision to put too much money into my favorite ideas. I totally bought into the notion that it was foolish to invest in my 60th-best idea. What I overlooked was how bad things could get if I was wrong about my second-best, third-best and fifth-best ideas at the same time,” Feinberg said.

The investor added that he will also invest a chunk of his family portfolio in index funds, while the rest will be put into companies that “should do at least okay no matter how the world changes”. In this way, Feinberg mentioned Adamis Pharmaceuticals Corp (NASDAQ:ADMP), Bank of America Corp (NYSE:BAC), and Facebook Inc (NASDAQ:FB) among the stocks he intends to keep holding.

“[…] I’m buying the kinds of companies owned by Warren Buffett, who has long recommended owning stocks you’d be happy to hold even if the markets were closed for five years. But, as wise as that advice is, I generally ignored it because it would keep me out of stocks that could double in two years. No longer.”

Even though most investors don’t pay enough attention to the stocks in which hedge fund managers prefer to invest their money in, they highly value their opinions and often keep track of their recommendations. However, many managers are very secretive and don’t like talking about their favorite picks very often. In this way, one of the possible ways to follow hedge funds’ activities is to monitor their quarterly 13F filings, which, even though they are disclosed with a delay and contain only a part of their entire portfolios, can still provide valuable information. At Insider Monkey, we do just that, and by analyzing the 13F filings of over 700 hedge funds, we have identified many profitable opportunities. However, we have determined that the best approach is to imitate hedge funds’ top small-cap ideas, with our strategy being focused on tracking the 15 most popular small-cap stocks among hedge funds. In the last three years, this strategy, which we have been sharing in our newsletters, returned 118% and has outperformed the S&P 500 ETF (SPY) by some 60 percentage points (see more details here).

Adamis Pharmaceuticals Corp (NASDAQ:ADMP) was among Feinberg’s long-term picks and is the only healthcare company and the only micro-cap stock from the list. Adamis Pharmaceuticals Corp (NASDAQ:ADMP) is a $50 million biopharmaceutical company whose stock has slumped by over 30% year-to-date. However, some hedge funds view this company as having significant potential. At the end of June, three funds from our database reported stakes in the company worth $7.52 million. Adamis Pharmaceuticals Corp (NASDAQ:ADMP) has been one of the favorite stocks of Michael Castor‘s Sio Capital Management, which owns 1.22 million shares as of the end of June, up by 4% during the quarter.

Next in line are two banking stocks, namely Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C). Taking into account their size and performance, other hedge fund managers agree with Feinberg on these two, as they held 4.30% of Bank of America Corp (NYSE:BAC)’s outstanding stock and 7.10% of Citigroup Inc (NYSE:C)’s at the end of June. Overall, 95 funds from our database reported long positions in the company, but while this number fell by six during the second quarter, the aggregate value of their holdings surged to $7.73 billion from $5.62 billion. Smart money appreciates Citigroup even more, as the stock ranked fourth among the most popular picks of the funds we follow, after 126 investors reported stakes worth $11.82 billion, flat over the quarter. Bruce Berkowitz’ Fairholme is the top shareholder of Bank of America Corp (NYSE:BAC) in our database, holding 75.49 million shares as of the end of June, while Boykin Curry’s Eagle Capital Management owns the most shares of Citigroup Inc (NYSE:C), reporting a 24.37 million-share stake in its latest 13F.

Hedge funds from our database also share Feinberg’s opinion on Facebook Inc (NASDAQ:FB), which was the third-most popular stock at the end of June as 133 investors reported stakes with an aggregate value of $8.86 billion, representing 3.70% of the company. Stephen Mandel‘s Lone Pine Capital reported holding 9.76 million shares as of the end of the second quarter, which makes it the largest shareholder among the funds we track.

Finally, Feinberg also says that he is betting on Howard Hughes Corp (NYSE:HHC) and the industry couldn’t agree more, as 30 funds from our database reported long positions representing nearly 30% of the company as of the end of June. However, while the number of investors with long positions in Howard Hughes Corp (NYSE:HHC) remained flat over the quarter, the total value of their holdings slipped to $1.67 billion from $1.87 billion. Murray Stahl’s Horizon Asset Management and activist Bill Ackman’s Pershing Square are also bullish on Howard Hughes Corp (NYSE:HHC), holding 4.75 million shares and 3.57 million shares respectively.

Disclosure: None