Elite Hedge Funds Are Making Moves On These 3 Stocks

There is no doubt that re-balancing represents a key part of portfolio management, as hedge fund managers and other investors have to constantly adjust their holdings so as to maintain a specific level of risk exposure. The recent market volatility and sell-off in most U.S equities has surely pushed some hedge fund investors to undergo just such a re-balancing of their portfolios as a result. Having that in mind, the following article will discuss the moves made by several hedge funds tracked by Insider Monkey on some of their most bullish positions. At the same time, we will take a quick look at the broader hedge fund sentiment on each of the stocks discussed so as to get an idea of whether the smart money industry believes as much in the future prospects of these companies as the following investors do.

In a newly-amended 13G filing with the SEC, Canyon Capital Advisors, founded by Joshua S. Friedman and Mitchell R. Julis, reported an ownership stake of 5.95 million shares in DHT Holdings Inc. (NYSE:DHT), which includes nearly 3.36 million shares due to convertible bond holdings. The 13F filing for the June quarter submitted by the investment firm disclosed a stake of 4.53 million shares, which did not include the aforementioned convertible bonds, which means the fund disposed of about 1.94 million shares. The shares of the operator of crude oil tankers in Bermuda are 11% in the green year-to-date, thanks to the recovering Crude (DBO) tanker rates, which may have prompted the sale. In fact, the Baltic Dirty Tanker Index, which tracks the rates of transporting crude in tankers, has climbed well above 700 points since the end of September, after dropping below the 600 level at the end of August. In the meantime, there were 33 hedge funds monitored by our team with stakes in DHT Holdings Inc. (NYSE:DHT) at the end of the second quarter, compared to 40 registered at the end of the prior one. Similarly, the value of their holdings decreased to $294.11 million from $346.89 million. Most importantly, the hedge funds within our database accumulated 40.80% of the company’s shares on June 30. Christopher Pucillo’s Solus Alternative Asset Management represents one of the largest shareholders of DHT Holdings Inc. (NYSE:DHT) within our database, owning 5.62 million shares.

Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research has shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return 102% over the last three years and outperformed the S&P 500 Index by 53 percentage points (see the details here).

We have two more filings to cover on the following page, including one involving a small restaurant chain.

A Schedule 13G filed with the SEC disclosed that Daniel Lascano’s Lomas Capital Management currently owns 750,513 shares of Habit Restaurants Inc. (NASDAQ:HABT), which account for 5.45% of its outstanding common stock. This represents an increase of 351,842 shares from the position it disclosed in its 13F filing for the June quarter. The burger chain has seen its shares decline by more than 28% since the beginning of the year, so the investment firm seems to be acquiring shares on weakness. Habit Restaurants Inc. (NASDAQ:HABT) reported comparable restaurant sales growth of 8.9% for the second quarter, which marked the company’s 46^th period of positive same-store sales. The number of hedge funds we track with positions in the burger chain increased to 11 on June 30 from eight quarter-over-quarter, amassing 5.40% of the company’s shares. At the same time, the value of the money poured into the stock increased to $43.54 million from $24.55 million. Donald Chiboucis’ Columbus Circle Investors reported owning nearly 375,000 shares of Habit Restaurants Inc. (NASDAQ:HABT) through its latest 13F filing.

Another freshly-amended 13G filing reveals that Bob Peck and Andy Raab’s FPR Partners LLC owns a stake of 5.27 million shares of ViaSat Inc. (NASDAQ:VSAT), which is up by 562,610 shares from the position it revealed during the June round of 13F filings. The newly-disclosed stake accounts for exactly 11.0% of the company’s outstanding common stock. The shares of the global provider of satellite and wireless services have advanced by over 4% since the start of 2015. A recently-announced connectivity partnership between ViaSat Inc. (NASDAQ:VSAT) and Virgin America enables travelers to benefit from a quicker Wi-Fi connection on ten of the aircraft in Virgin’s airbus fleet, and also allows Netflix Inc. (NASDAQ:NFLX) users to watch the best programming available for free. Meanwhile, 14 hedge funds from our extensive database had positions in the stock at the end of the second quarter, compared to 16 reported at the end of the prior one. Even so, these hedge funds accumulated almost half (47.30%) of the company’s shares on June 30. The value of the overall positions increased to $1.36 billion from $1.33 billion quarter-over-quarter. Seth Klarman’s Baupost Group is by far the largest stockholder of ViaSat Inc. (NASDAQ:VSAT) within our database, holding 11.53 million shares.

Disclosure: None