Netflix, Inc., Amazon.com, Inc. (AMZN), Tesla Motors Inc (TSLA): Arbiter Partners’ Top Picks and Puts

Isaac seems to be using put options to ease the pain of shorting growth stocks like Netflix, Inc. (NASDAQ:NFLX),  Amazon.com, Inc. (NASDAQ:AMZN), and Tesla Motors Inc (NASDAQ:TSLA). We usually don’t know when these stocks with sky-high valuations come down to earth so shorting them is very tricky. Most value investors choose to short a basket of growth stocks. Isaac seems to be going in the opposite direction. Amazon’s forward P/E is a sky-high 163, while Netflix’s is 76. Tesla’s forward P/E is a more optimistic 46. Its price/sales ratio is 7.5 whereas BMW has a P/S ratio of 0.95.

We’ll take a look now at Mr. Isaac’s top long positions heading into 2015. At the head of the list was his investment in Capital Senior Living Corporation (NYSE:CSU), which amounted to 1.83 million shares valued at $45.59 million at the end of 2014. The position was increased slightly, by 2%, during the fourth quarter. That position is also the largest among the hedge funds we track and amounts to 6% of Capital Senior Living’s outstanding common stock. Billionaire Jim Simons’ quant fund Renaissance Technologies having the second largest position, at just under 800,000 shares.

Capital Senior Living Corporation (NYSE:CSU) recently purchased two high-occupancy senior living communities, adding them to a portfolio of over 100 communities that already made it the largest operator of residential housing for seniors in the United States. Capital Senior Living has consistently improved its revenue and adjusted EBITDAR over the past five years, at a rate of 17.9% annually, while it’s adjusted cash flow from operations per share has improved  by 23.5% annually over the same period. The company believes it is well-positioned to further increase shareholder value in the future thanks to a strong balance sheet, an improving economy and housing market, and the ability to make further accretive acquisitions.

Mr. Isaac’s second-most valuable long position was in Greif, Inc. (NYSE:GEF), a packaging company which Mr. Isaac described as one with a nice long-term track record during a 2012 interview with Barron’s. Mr. Isaac maintained a 906,700 share position at the end of 2014, valued at $44.67 million. That was an increase to the position of 6% during the fourth quarter, and nearly 50% over the course of 2014, as Mr. Isaac continues to show faith in Greif.

Greif, Inc. (NYSE:GEF) insiders are showing the same bullish sentiment towards the stock, as several purchases have been made by company insiders over the past few weeks after more than two-and-a-half years of no insider purchasing activity. This follows a dip in shares of more than 21% over the past calendar year, and could indicate insiders believe the bottom has been reached and the company is now undervalued.

Disclosure: None