Filings Show Elite Hedge Funds Are Investing In These 2 Stocks

As most U.S equities endure wild swings amid high uncertainty around several global macro issues, hedge fund investors who worry about suffering losses tend to re-balance their portfolios. In fact, most of them are constantly re-balancing portfolios so as to maintain the risk profile over a long-term spectrum. The following article will discuss the latest moves in a duo of stocks made by a few reputable hedge funds tracked by Insider Monkey.

As stated by an amendment to a 13D filing with the SEC, Adage Capital Management, founded by Phillip Gross and Robert Atchinson, currently owns 7.61 million shares of Olin Corporation (NYSE:OLN), representing 4.61% of its common stock. This denotes an increase of 3.30 million shares since we covered the investment firm’s position in Olin back in September. It is also worth pointing out that the company issued 87.48 million shares of common stock on October 5 in relation to a freshly-closed merger, so Adage Capital Management ceased to beneficially own more than 5% despite boosting its stake. Earlier this month, Olin Corporation (NYSE:OLN) announced the completion of its previously-announced merger of Dow Chemical Co (NYSE:DOW)’s U.S. Chlor-Alkali and Vinyl, Global Chlorinated Organics, and Global Epoxy Businesses with Olin. At the same time, two new directors were appointed to the company’s Board of Directors in connection with the merger. Meanwhile, there were 24 hedge fund managers that we track invested in the stock at the end of the second quarter, which accumulated 13.00% of the company’s shares. The value of their investments increased significantly to $271.50 million during the second quarter, from $165.63 million. Just recently, Steven Cohen’s Point72 Asset Management disclosed an ownership stake of 5.49 million shares in Olin Corporation (NYSE:OLN).

Hedge funds have been underperforming the market for a very long time. However, this was mainly because of the huge fees that hedge funds charge as well as the poor performance of their short books. Hedge funds’ long positions actually performed better than the market. Small-cap stocks, activist targets, and spin-offs were among the bright spots in hedge funds’ portfolios. For instance, the 15 most popular small-cap stocks among hedge funds outperformed the market by more than 53 percentage points since the end of August 2012, returning 102% (read the details here). This strategy also managed to beat the market by double digits annually in our back tests covering the 1999-2012 period.

Check out the other notable purchase by an elite investor on the following page.

The other freshly-amended 13D filed with the SEC disclosed that Clint Carlson’s Carlson Capital holds a stake of 2.05 million shares in Vitamin Shoppe Inc. (NYSE:VSI), representing 6.94% of the company’s common stock. This marks a lift of 185,709 shares from the position the fund disclosed in its 13F filing for the June quarter. The shares of the multi-channel specialty retailer of nutritional products have been on a steady decline this year, losing more than 33% year-to-date. The company’s same-store sales growth has been weakening over the past few years, which has put some weight on the stock performance. At the same time, Vitamin Shoppe Inc. (NYSE:VSI) has been finding it troublesome to integrate its acquisition of vitamins, minerals and supplements (VMS) manufacturer FDC Vitamins LLC, which was purchased in June of last year for roughly $85 million. Even so, Vitamin Shoppe received some attention from the hedge fund industry during the second quarter, as the number of investors in our database which were invested in the stock increased to 20 from 15 quarter-over-quarter. Similarly, the value of their investments increased to $273.22 million from $179.84 million. Jamie Zimmerman’s Litespeed Management added a 781,810-share position in Vitamin Shoppe Inc. (NYSE:VSI) to its portfolio during the second quarter.

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