While keeping track of these filings doesn’t provide as comprehensive information as the quarterly 13Fs Insider Monkey uses to help us develop investing strategies (for example, we have discovered that the most popular small cap stocks among hedge funds beat the S&P 500 by an average of 18 percentage points per year), they do provide more up to date information about stocks specific hedge funds are buying. Read on for our quick take on three stocks where we have tracked hedge fund buying recently.
Following an agreement with the management of Navistar International Corp (NYSE:NAV) which allows him to increase his stake in the company up to 20% of the total shares outstanding, billionaire Carl Icahn now owns 13 million shares of the manufacturer of vehicles and vehicle parts. Find Icahn’s favorite stocks. This buy gives Icahn about 17% of the company, and he can now nominate two members of the company’s board. After Navistar International Corp (NYSE:NAV)’s new engine design failed to satisfy federal requirements, financials have been in free fall with $5.82 per share in losses from continuing operations in the first six months of the current fiscal year.
Basswood Capital, a hedge fund managed by Matthew Lindenbaum and his team which tends to focus on financial stocks, now owns 1.1 million shares of Banc of California Inc (NASDAQ:BANC). See Basswood’s stock picks. The fund has significant positions in a number of other regional banks as well (Banc of California Inc (NASDAQ:BANC) is concentrated in southern California) and may be bullish on the industry generally due to consolidation or to expected improvements in the housing and mortgage markets. Banc of California Inc (NASDAQ:BANC) itself has been somewhat acquisitive lately as part of its strategy to build its profile in its core market.
The stock trades at 15 times expected earnings for 2013 (and analyst forecasts imply that earnings per share will improve over the rest of this year as Banc of California integrates its recent acquisitions). The valuation is also a small premium to the book value of the equity. Given that Basswood is invested in a number of regional banks, investors likely shouldn’t see this as too bullish on this stock specifically and should consider other companies in the industry.
Intralinks Holdings Inc (NYSE:IL), a $530 million market cap cloud-based software company (with over 300,000 shares traded per day on average and a current stock price of $9.70, there is plenty of daily dollar volume), is another stock seeing hedge fund buying recently. Altai Capital Management now owns 6.4% of the company. The sell-side expects Intralinks Holdings Inc (NYSE:IL) to earn 17 cents per share next year, implying a forward P/E of 57. Markets are excited about cloud computing and likely see IntraLinks as a way to play out a high growth thesis or the industry or possibly as a prospective acquisition for larger players jousting for position in the space. However, the current valuation is high enough- and recent revenue growth has been low enough, at about 8%- that buying appears quite speculative at this time.
Investing in Intralinks Holdings Inc (NYSE:IL) or Navistar International Corp (NYSE:NAV) would take a good deal of faith, and so investors should probably avoid those names even given Icahn’s involvement in the latter company. As for Banc of California, we at Insider Monkey would be wary of integration risk and while we would be interested in learning more about the long thesis for regional banks it’s likely that other stocks in the industry would be more appealing.
Disclosure: I own no shares of any stocks mentioned in this article.
