Elite Hedge Funds Disclose Big Moves In These Three Stocks

If one aims to piggyback the investing acumen and research prowess of hedge funds, he/she could check the 13G and 13D public filings submitted with the U.S. Securities and Exchange Commission. These filings are used to disclose ownership stakes of more than 5% in U.S-listed companies and must be filed within ten days, so market participants get the chance to see some large bets made by reputable hedge funds and other investors shortly after they happen. Moving on to the primary purpose of this article, we will disclose and discuss three such moves reported through filings by three of the elite hedge funds monitored by Insider Monkey, and will also provide a quick overview of the hedge fund sentiment on each of the stocks covered.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

In a freshly-amended 13D filing with the SEC, Ricky Sandler’s Eminence Capital disclosed owning 4.81 million shares in Men’s Wearhouse Inc. (NYSE:MW), accounting for 9.9% of the company’s outstanding common stock. This denotes an increase of 779,767 shares from the previous position disclosed via an amended 13D filing submitted at the beginning of September. The shares of the men’s clothing retailer have lost 37% since the last time we discussed the company in mid-June, and are down by 13% year-to-date. Men’s Wearhouse Inc. (NYSE:MW)’s mixed second quarter results have put even more weight on the stock. The company’s Jos. A Bank business struggled quite seriously during the second quarter, with its comparable-store sales decreasing by 9.4% year-over-year.

Meanwhile, the hedge fund sentiment towards the stock did not change at all during the June quarter, as the number of hedge fund managers invested in the company remained unchanged at 33. However, the value of their investments increased to $1.16 billion from $1.03 billion quarter-over-quarter. The hedge funds tracked by our team had stockpiled nearly 38% of the company’s shares as of June 30. The stock is trading cheaply at the moment, considering its forward P/E ratio of 9.60, which is well below the median of 18.41 for the companies in the S&P 500. Phill Gross and Robert Atchinson’s Adage Capital Management was very bullish on Men’s Wearhouse Inc. (NYSE:MW) during the second quarter, reporting a stake of 1.62 million shares through its latest 13F filing.

Let’s head to the next page, where we reveal the moves made by two other hedge funds monitored by our team.

According to a newly-amended 13G filing, Edward A. Mule’s Silver Point Capital L.P. has ceased to be an owner of more than 5% of Gray Television Inc. (NYSE:GTN). The public filing disclosed an ownership stake of 75,000 shares, compared to the 1.85 million-share stake reported through the fund’s 13F filing for the June quarter. The television broadcast company has had a great year in terms of stock performance despite experiencing a serious pullback in early-August, with its shares advancing by 18% since the beginning of the year. Just recently, Gray Television Inc. (NYSE:GTN) agreed to acquire the TV and radio stations operated and owned by private company Schurz Communications for approximately $442.5 million. In connection with this deal, the company also announced the sell-off of several television stations in three markets so as to facilitate regulatory approvals for the aforementioned deal.

The number of hedge funds with stakes in the company remained unchanged during the June quarter at 33, while the value of the capital held in the stock by those investors increased to $295.16 million from $268.73 million quarter-over-quarter. These hedge funds amassed slightly over 26% of the company’s shares at the end of June. Ken Heebner’s Capital Growth Management acquired an 820,000-share stake in Gray Television Inc. (NYSE:GTN) during the second quarter.

In a Form 4 filing with the SEC, Rehan Jaffer’s H Partners Management reported selling 1.03 million shares of Six Flags Entertainment Corp (NYSE:SIX) over the past week or so, at prices ranging from $52.19-to-$53.00. After the recent sell-off, H Partners Management holds an ownership stake of 15.39 million shares in the world’s largest regional theme park company. The shares of the company are currently trading near an all-time high of over $51, having been pushed higher by the company’s record third quarter financial results. Six Flags Entertainment Corp (NYSE:SIX) reported diluted earnings per share of $1.64, up by 52% year-over-year. Meanwhile, its top-line figure increased by 6% year-over-year to $575 million.

Coincidentally, 33 hedge funds tracked by our teamalso held this stock in their portfolios at the end of the second quarter, accumulating 24.60% of the company’s shares. The hedge fund sentiment remained flat quarter-over-quarter, whereas the value of these hedge funds’ stakes declined to $1.05 billion from $1.11 billion. Steve Cohen’s Point72 Asset Management owned 612,400 shares of Six Flags Entertainment Corp (NYSE:SIX) as of the end of June.

Disclosure: None