Hedge funds and other notable investors issue quarterly 13F filings to the SEC (which then releases them to the general public), disclosing many of their long equity positions. We have used this information to find that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). More up-to-date information about a specific fund buying a specific stock comes in the form of 13D and 13G filings, which must be reported shortly after a fund buys 5% of the outstanding shares of a company or makes significant changes to that position. Here are five stocks which hedge funds have reported buying recently:
Lone Pine Capital, managed by billionaire and Tiger Cub Stephen Mandel, reported that it had increased its stake in Lululemon Athletica inc. (NASDAQ:LULU) to 5.6 million shares. This was up from 4.8 million at the beginning of January (find Mandel’s favorite stocks). The athletic wear manufacturer and retailer took a hit in March after it had to recall some poorly made products, but has since recovered to its levels pre-recall. Lululemon Athletica inc. (NASDAQ:LULU) has been achieving high growth on both top and bottom lines (earnings were up 47% between 2011 and 2012), but the market is already pricing in excellent numbers for the next few years with a trailing earnings multiple of 38. This has made Lululemon Athletica inc. (NASDAQ:LULU) a somewhat popular short.
Jeffrey Tannenbaum’s Fir Tree has initiated a position of 21 million shares in Noble Corporation (NYSE:NE), a contract offshore driller, since the beginning of 2013. Check out more stocks Fir Tree owned. The fund now owns over 8% of the total shares outstanding. Noble Corporation (NYSE:NE)’s revenue and earnings also grew strongly last year compared to 2011, though the market is less bullish here than it is at Lululemon Athletica inc. (NASDAQ:LULU) and so the trailing P/E is 18. However, we would note that figure represents a significant premium to some other offshore drillers including ENSCO PLC (NYSE:ESV) and (if we use adjusted earnings figures) Transocean LTD (NYSE:RIG).
Value and activist investor Barry Rosenstein and his team at JANA Partners recently failed in their attempt to force a breakup at Agrium Inc. (USA) (NYSE:AGU) and have now taken a large stake at diversified chemicals company Ashland Inc. (NYSE:ASH). See more stocks JANA owns. Ashland grew its net income nicely in percentage terms during its most recent quarter compared to the same period in the previous fiscal year, but revenue growth was lower and so we’d doubt that earnings can continue to do well. Analyst expectations for the fiscal year ending in September 2014 imply a forward P/E of 10.
Billionaire Steve Cohen’s SAC Capital Advisors owned about 750,000 shares of American Woodmark Corporation (NASDAQ:AMWD) according to a 13G filing (research Cohen’s stock picks). The $470 million market cap manufacturer of kitchen cabinets (on average about 140,000 shares are traded daily, so at a current price of over $30 there is more than $4 million of daily dollar volume) is tied to the housing market, explaining the stocks beta of 1.8 and its 78% rise in the last year as the markets have looked towards rising prices and construction activity. American Woodmark has been beating expectations in recent quarters, though the forward P/E is high at 26.
Disclosure: I own no shares of any stocks mentioned in this article.
