Hedge Funds’ Favorite Stocks With Low Price-to-Cash-Flow Ratios

#3 PharMerica Corporation (NYSE:PMC)

– Investors with long positions (as of March 31): 19

– Aggregate value of investors’ holdings (as of March 31): $39.36 million

Moving on, PharMerica Corporation (NYSE:PMC)’s stock plummeted in late-February after the company provided weak guidance for fiscal 2016 while declaring its fourth quarter results. This weak guidance might materialize into weak financial performance going forward, but based on last year’s cash flow the company is still trading at a cheap price-to-cash-flow ratio. Among the funds covered by Insider Monkey, the ownership of PharMerica Corporation (NYSE:PMC) declined by five and the aggregate value of their holdings in it slumped by over 605 during the first quarter. Billionaire Ken Griffin‘s Citadel Investment Group was one of the hedge funds that sold its entire stake in the company during that period. On June 7, analyst at Bank of America initiated their coverage on the stock with a ‘Buy’ rating.

#2 Dean Foods Co (NYSE:DF)

– Investors with long positions (as of March 31): 20

– Aggregate value of investors’ holdings (as of March 31): $200.18 million

Shares of Dean Foods Co (NYSE:DF) have been extremely volatile this year. Unlike most other stocks they started 2016 on a strong note, but declined significantly after a report published by Morgan Stanley analyzing Wal-Mart’s decision to in-source its milk processing called it a negative development for Dean Foods Co (NYSE:DF). Despite that decline Dean Foods Co’s stock is up 4% thus far in 2016 and currently trades at a price-to-cash-flow multiple of only 5.7. The number of hedge funds covered by us long Dean Foods Co (NYSE:DF) inched up by two and the aggregate value of their holdings in the company saw a marginal rise of 4.3% during the first quarter. Hedge funds that boosted their stake in Dean Foods Co during that period included Billionaire Israel Englander‘s Millennium Management, which upped its holding by 74% to 2.67 million shares and was the largest shareholder of the company among funds covered by us at the end of March.

#1 Tower International Inc (NYSE:TOWR)

– Investors with long positions (as of March 31): 21

– Aggregate value of investors’ holdings (as of March 31): $95.88 million

Tower International Inc (NYSE:TOWR) was the most popular low-price-to-cash-flow stock among funds tracked by us heading into the second quarter. During the first quarter, its ownership among funds increased by one and the aggregate value of their holdings in it swelled by 19.75%. Tower International Inc (NYSE:TOWR)’s stock is currently trading down by over 24% year-to-date largely due to the decline it has seen since the company came out with its first quarter numbers in April. While the financial numbers and guidance provided by the company were better than what analysts had expected, the announcement by Tower International that it won’t be selling its European operations didn’t bode well with the investors. Most analysts who track the stock believe that trading at a trailing price-to-earnings multiple of only 2.79 and a price-to-free-cash-flow multiple of only 4.5, the stock is extremely cheap right now. Billionaire David E. Shaw’s firm, D.E. Shaw upped its stake in the company by 31% to 251,624 shares during the first quarter.

Disclosure: None