Five Under-the-Radar Stocks That Trellus Management Likes Long-Term

The third quarter was a nightmare for most investors, but the disappointing three-month period is behind us and investors are now focusing on the much more promising fourth quarter. The bull market has resumed its course, though it is not entirely clear for how long it will last. The current round of 13F filings kicked off at the beginning of October, and most of these public filings reveal high-potential stocks for the upcoming quarters and years. With this in mind, the following article will discuss the top five stock picks of Trellus Management Company LLC at the end of the third quarter. Trellus Management is an equity hedge fund established by Adam Usdan back in 1994, a man who had previously worked at Odyssey Partners as the portfolio manager of its small-mid cap equity portfolios. Let’s proceed with our discussion and attempt to pinpoint great buying opportunities that are buried inside Trellus Management’s most up-to-date 13F filing.

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#5 Anheuser Busch Inbev SA (ADR) (NYSE:BUD)

Shares Owned by Trellus Management (as of September 30): 13,600 shares

Value of Holding (as of September 30): $1.45 million

Anheuser Busch Inbev SA (ADR) (NYSE:BUD) represents a new position in Trellus Management’s portfolio. The beer maker has seen its shares gain 6% year-to-date despite suffering a disappointing third quarter in terms of stock performance. On Friday, the company reported third quarter revenue of $11.38 billion, compared to $12.24 billion posted a year ago. At the same time, the sales growth of its main brands, such as Stella Artois and Corona, lessened some of the worries that its supremacy has been seriously challenged by craft beers. In fact, Anheuser Busch Inbev’s three main brands delivered revenue growth of 15.9% year-over-year. The company also updated its guidance on revenue growth, mentioning that it anticipates the overall revenue growth to exceed the inflation rate. Eric W. Mandelblatt’s Soroban Capital Partners was the top equity holder of Anheuser Busch Inbev SA (ADR) (NYSE:BUD) within our database at the end of the second quarter, holding 7.45 million shares.

#4 Vicor Corp (NASDAQ:VICR)

Shares Owned by Trellus Management (as of September 30): 154,125 shares

Value of Holding (as of September 30): $1.57 million

Trellus Management held its position in Vicor Corp (NASDAQ:VICR) unchanged during the third quarter at 154,125 shares. The shares of the manufacturer of high efficiency power conversion products and systems have been on a steady decline since mid-April and are down by 20% year-to-date. Earlier this week, the company announced its financial results for the third quarter, posting revenues of $48.66 million, which decreased from $58.40 million a year ago. Even so, Vicor managed to deliver a net income of $2.50 million, compared to a net loss of $3.67 million registered last year. The company’s management also expects substantial revenue growth in the upcoming year, thanks to the roll-out of new products and solutions. Richard Mashaal’s RIMA Senvest Management owned nearly 582,000 shares in Vicor Corp (NASDAQ:VICR) on June 30.

Three under-the-radar stocks that Trellus Management thinks highly of are uncovered on the next page.

#3 Vertex Energy Inc. (NASDAQ:VTNR)

Shares Owned by Trellus Management (as of September 30): 821,391 shares

Value of Holding (as of September 30): $1.76 million

Adam Usdan’s investment firm did not change its holdings in Vertex Energy Inc. (NASDAQ:VTNR) during the September quarter, continuing to hold 821,391 shares. The position accounted for 2.58% of the firm’s entire portfolio on September 30. The shares of Vertex Energy are 43% in the red year-to-date and the only news accompanying the company of late has been its quarterly earnings reports. The environmental services company that recycles industrial waste streams and off-specification commercial chemical products is set to release its third quarter earnings report on November 9 after the market close, so market participants will get the chance to assess the potential of the company. Philip Hempleman’s Ardsley Partners acquired a 968,000-share stake in Vertex Energy Inc. (NASDAQ:VTNR) during the June quarter.

#2 American Water Works Company Inc. (NYSE:AWK)

Shares Owned by Trellus Management (as of September 30): 51,600 shares

Value of Holding (as of September 30): $2.84 million

American Water Works Company Inc. (NYSE:AWK) was the second-largest equity holding of Trellus Management at the end of the third quarter, representing 4.17% of the firm’s portfolio. It is worth pointing out that this position did not suffer any adjustments during the three-month period that ended September 30. On Friday, the provider of water and wastewater services announced a quarterly cash dividend of $0.34 per share, which provides a current dividend yield of 2.38%. In the meantime, the stock is currently trading at relatively the same level it was trading at on January 1; however, its trailing P/E ratio of 22.76 does not necessarily suggest that this stock represents a good buying opportunity. Ian Simm’s Impax Asset Management reported ownership of 1.49 million shares in American Water Works Company Inc. (NYSE:AWK) through its 13F filing for the second quarter.

#1 FireEye Inc. (NASDAQ:FEYE)

Shares Owned by Trellus Management (as of September 30): 274,788 shares

Value of Holding (as of September 30): $8.74 million

FireEye Inc. (NASDAQ:FEYE) was by far the largest equity position of Trellus Management at the end of the latest quarter, as it accounts for 12.83% of its portfolio value. However, Adam Usdan’s firm reduced its holding in the provider of cybersecurity solutions by 9,000 shares during the three-month period. The stock has embarked on a sharp downtrend since mid-June and is currently 17% in the red year-to-date. Even so, the company’s business has not weakened at all over the past few months, as cybersecurity worries continue to be prevalent. Just recently, FireEye and Visa Inc. (NYSE:V) announced the launch of Visa Threat Intelligence, which is set to protect the credit card company against critical cyber-attacks that could penetrate its payment systems. Karthik Sarma’s SRS Investment Management owned a 3.3 million-share stake in FireEye Inc. (NASDAQ:FEYE) as of June 30.

Disclosure: None