RIMA Senvest Grows Even More Bullish On Top Holdings

New York-based long/short equity hedge fund RIMA Senvest Management recently disclosed its U.S equity holdings as of the end of the first quarter via a 13F filing submitted with the Securities and Exchange Commission. Founded in 1997 by Richard Mashaal, RIMA Senvest Management employs a contrarian, value-based investment strategy for analyzing investment opportunities. According to the fund’s latest 13F filing, its U.S equity portfolio was worth $1.19 billion at the end of March, with 38% of that value being invested in IT stocks. The filing also revealed that RIMA Senvest Management’s equity portfolio experienced a quarterly turnover of 47.76% during the first quarter and that the fund boosted its stake in all of its top five equity holdings from the end of December, which also happened to remain its top five equity holdings at the end of March, though their order has changed. Since the fund became increasingly bullish on its major holdings heading into the second quarter, in this article we’ll take a look at those five stocks and discuss their performance so far in 2016.

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#5 Radware Ltd. (NASDAQ:RDWR)

 – Shares Owned by RIMA Senvest Management (as of March 31): 5.42 million

 – Value of Holding (as of March 31): $64.08 million

Let’s begin with RIMA Senvest Management’s fifth-largest holding, Radware Ltd. (NASDAQ:RDWR), in which the fund increased its stake by 29% during the first quarter. Shares of the cyber security company are currently trading down by nearly 20% year-to-date, owing largely to a steep decline they incurred in February after the company reported dismal fourth quarter financial results. For the first quarter, the company again reported results that were below Street’s expectation. While analysts had expected Radware Ltd. (NASDAQ:RDWR) to report EPS of $0.07 on revenue of $49.58 million, it reported EPS of $0.05 on revenue of $48.40 million. With ownership of almost 4.00 million shares of Radware Ltd., Eric Bannasch‘s Cadian Capital trailed RIMA Senvest Management as the largest shareholder of the company on March 31 among the funds in our database.

#4 Depomed Inc (NASDAQ:DEPO)

 – Shares Owned by RIMA Senvest Management (as of March 31): 4.98 million

 – Value of Holding (as of March 31): $69.33 million

Although Depomed Inc (NASDAQ:DEPO)’s stock is down by more than 40% from the highs it made in 2015, it is still up by over 300% from the price at which RIMA Senvest initiated a stake in the company during the fourth quarter of 2011. The fund’s move to increase its stake in the company by 21% in the first quarter, amid a 23% drop in Depomed Inc (NASDAQ:DEPO)’s shares has worked out pretty well, as the stock has appreciated by almost 50% so far in the second quarter. A large part of those gains came after the company reported its first quarter results, declaring EPS of $0.12 on revenue of $104.60 million for the quarter, a significant improvement from the $0.13 loss per share on revenue of $31.70 million that it delivered for the first quarter of 2015. Speaking at the recently concluded Ira Sohn conference, Starboard Value’s Jeffrey Smith mentioned that Depomed’s lack of scale is causing the company to allocate capital poorly and called for the entire Board of the company to be replaced. Last month, the fund sent a letter to the company’s Board asking it to consider a potential sale. At the end of March, Starboard Value held 2.95 million shares of Depomed, which it acquired during the first quarter.

We’ll look at the top three picks of RIMA Senvest on the next page.

#3 Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM)

 – Shares Owned by RIMA Senvest Management (as of March 31): 6.62 million

 – Value of Holding (as of March 31): $80.28 million

Despite RIMA Senvest increasing its stake in the company by 9% during the first quarter, Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM) lost its spot as the fund’s largest equity holding, dropping to third as of March 31. Shares of the semiconductor manufacturer have recently been trending up, narrowing their year-to-date loss to 6.3%. For the first quarter, the company moved away from its unconventional practice of reporting earnings by GAAP standards, reporting depreciation and amortization in non-GAAP numbers for the first time, which was appreciated by analysts. On May 31, the company reported that it has received binding commitments from institutional investors to invest $100 million in its Series G bonds. The proceeds from this bond offering will be used to repay the $78 million loans it has with Israeli banks. Paul Marshall and Ian Wace’s Marshall Wace LLP initiated a stake in Tower Semiconductor Ltd. during the first quarter, purchasing 589,128 shares of the company.

#2 Northstar Realty Finance Corp (NYSE:NRF)

 – Shares Owned by RIMA Senvest Management (as of March 31): 6.18 million

 – Value of Holding (as of March 31): $81.13 million

Moving on, RIMA Senvest upped its stake in Northstar Realty Finance Corp (NYSE:NRF) by 47% during the first quarter. After falling significantly at the beginning of the year, Northstar Realty Finance Corp (NYSE:NRF)’s stock has been trading in the $12-to-$14 range for the past three months. Despite the company reporting better than expected first quarter results last month, its stock has failed to break through that range and currently trades down by 19.16% year-to-date. On May 6, Northstar Realty Finance Corp, its manager NorthStar Asset Management Group Inc (NYSE:NSAM) (in which RIMA Senvest is also invested), and private equity firm Colony Capital announced that they are working on a tri-party, all-stock deal which will combine all three entities. On June 1, analysts at FBR & Co. downgraded Northstar Realty Finance’s stock to ‘Market Perform’ from ‘Outperform’ and also lowered their price target on it to $12.75 from $18.00. Thomas Ellis and Todd Hammer’s North Run Capital also increased its stake in the company during the first quarter, by 8% to 2.65 million shares.

#1 Deckers Outdoor Corp (NYSE:DECK)

 – Shares Owned by RIMA Senvest Management (as of March 31): 1.5 million

 – Value of Holding (as of March 31): $89.61 million

Finally, the 27% rise in Deckers Outdoor Corp (NYSE:DECK)’s stock during the first quarter coupled with RIMA Senvest increasing its stake in the company by 7% during the period propelled Deckers Outdoor Corp (NYSE:DECK) to the top spot in the fund’s equity portfolio as of the end of March. Although Deckers Outdoor’s stock gave up a large part of its first quarter gains in May, it is still trading up by over 12% year-to-date. On May 26, the company reported its first quarter financial figures, declaring EPS of $0.11 on revenue of $378.60 million, topping analysts’ expectations of EPS of $0.06 on revenue of $362.54 million. Following the earnings release, analysts at Brean Capital reiterated their ‘Buy’ rating on the stock on May 27, but lowered their price target on it to $58 from $67. Other funds that upped their stake in the company during the first quarter included Chuck Royce‘s Royce & Associates, which increased its holding by 18% to 1.03 million shares.

Disclosure: None