Beddow Capital Management is a California-based hedge fund managed by Ed Beddow and William Tichy. It recently disclosed its equity portfolio for the second quarter of 2014, which included stocks from most sectors of the economy and had a market value of more than $367 million. In this article we will take a look at its top equity (non-ETF) positions for the quarter, Sparton Corporation (NYSE:SPA), International Business Machines Corp. (NYSE:IBM), and Cabelas Inc (NYSE:CAB), in order to elucidate if any of them stand as attractive investment options.
I should highlight that the positions in this list were quite disputed: all of Beddow’s top 5 holdings were worth between $16 million and $17.5 million by the time of the 13F filing. However, the largest bet was placed on Sparton Corporation (NYSE:SPA), a $282.5 million market cap provider of electromechanical devices. After a slight increase in its stake, the fund owns 629,883 shares of Common Stock, worth approximately $17.4 million, which account for 4.75% of its total equity portfolio. This makes it the largest hedge fund shareholder of record, amongst those we track, trailed by Jim Simons’ Renaissance Technologies and Mario Gabelli’s GAMCO Investors, which own 402,949 shares and 111,850 shares, respectively.
Earlier this year, Sparton Corporation (NYSE:SPA) acquired Aubrey Group, Inc. in an all-cash transaction. Aubrey “will add an innovative product development offering to our portfolio, allowing us to provide enhanced services throughout the product lifecycle,” assured Cary B. Wood, President and Chief Executive Officer of Sparton. The acquisition in expected to provide $8 million in additional annual revenue.
Second in line is International Business Machines Corp. (NYSE:IBM), the $190 billion market cap Information Technology (IT) company. Beddow last disclosed a 4% increase in its stake in the company, and now owns 94,650 shares of Common Stock, worth roughly $17.1 million. Once again, Jim Simons’ Renaissance Technologies is the second largest hedge fund shareholder of record at the company, with 1.64 million shares, only outranked by Warren Buffett’s Berkshire Hathaway, which holds 70.17 million shares.
International Business Machines Corp. (NYSE:IBM) is considered to be a safe investment, which even pays out a 2.3% dividend yield. However, upside potential is not as plenty as in smaller companies. Still, there are several businesses with plenty of potential for IBM. Mainframes, for instance, could provide great opportunities, especially in emerging markets. Other non-commoditized products in its portfolio will also help the company to generate wider margins.
Last in this list is Cabelas Inc (NYSE:CAB), a $4.2 billion market cap specialty retailer, and a direct marketer, of hunting, fishing, camping, and related outdoor merchandise. The company saw Beddow boost its exposure by 4% over the second quarter of 2014, to 260,271 shares, worth more than $16.2 million. Ken Fisher’s Fisher Asset Management also holds a big stake in the company, with 1.67 million shares of Common Stock.
Despite of a strong performance by the company’s next-generation stores and sustained growth at its CLUB Visa program, Cabelas Inc (NYSE:CAB) reported lower-than-anticipated results for the first quarter of the year. Nonetheless, hedge funds’ bullishness can be understood, as the company continues to expand its next-gen store base. In early-June the company announced its plans to open three new outlets, which will help mitigate its not-so-good performance in top and bottom-lines.
Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned.
