At Insider Monkey, we track the smart money’s best and brightest managers—about 450 give or take a few. Based on our research, it’s important to monitor this group off hedge funds, and we’ve shown that historically, retail investors that pay attention to this world have beaten the market handily. We also recently teamed up with MarketWatch to create the Billionaire Hedge Fund Index. In 2012, this index returned 24.3%, beating the S&P 500 ETF (SPY) by 8 percentage points (see the details of our market-beating strategy here).
While the most well known of this bunch include kahunas like David Einhorn, Warren Buffett or George Soros, there are also quite a few names flying under the mainstream media’s radar. One such hedgie is Andrew Sandler and his fund, Sandler Capital Management. According to his latest fourth quarter 13F filing with the SEC, Sandler has an equity portfolio in excess of $1 billion. Let’s take a look at how he was positioning his fund for 2013, by briefly analyzing his top five stock picks.
FEI Company (NASDAQ:FEIC) was Sandler’s 31st largest equity holding at the end of the third quarter, and he upped his position by more than 200% in Q4. This bet, combined with the fact that FEI shares gained 6.8% from the beginning of the second week of October through the end of December, indicates that Sandler’s conviction has paid off. Year-to-date, FEI has already popped another 14.3%, and mid-single-digit upside is still projected from current levels, at least according to the average Wall Street analyst’s price target.
The broad appeal of FEI’s nanoscale imaging instruments, including for usage in corporate, academic and research environments, is the key bullish thesis behind this stock, and the sell-side is expecting annual EPS growth of 16-17% over the next half-decade. At a PEG of 1.36, shares aren’t particularly expensive at the moment, and according to this metric, they’re actually cheaper than 39 of the 50 other companies operating in the scientific & technical instruments industry.
Verisk Analytics, Inc. (NASDAQ:VRSK) and Generac Holdings Inc. (NYSE:GNRC), meanwhile, sit at No.’s 2 and 3 in Sandler’s equity portfolio, up from their third quarter positions of 18th and 26th. Both companies are up at least 4.5% since the start of 2013, and have gained more than 30% over the past twelve months. Verisk, a risk management information company, and Generac, a power generator manufacturer, obviously operate in vastly different sub-industries, but each is a solid value play in a fairly stable macroeconomic environment.
Verisk and Generac each sport price-to-earnings metrics that are at least 20% below peer norms, and each has experienced top and bottom line beats in at least four of the past five quarters. Verisk is expected to continue to benefit from its stable, loyal client base, and Generac controls nearly three-fourths of the residential standby generator market.
Are there any hedgies that are invested in both companies?
