TCS Capital and Coliseum Capital Piling Up More Shares of These 2 Companies

The fourth quarter is well underway, but most hedge funds and other money managers have not filed their quarterly 13F filings yet. In fact, they are required to submit these public filings by the end of the current week, so market participants will get the chance to take a glimpse at hedge funds’ favorite stock picks. However, some hedge funds have been consistently revealing fresh moves via 13G, 13D, and Form 4 filings, which may offer up-to-date insights about their stances on different companies. Hence, this article will disclose and discuss two moves made by several hedge fund firms observed by the Insider Monkey team.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 48.7% gain) over the last 37 months (see the details here).

As stated by a freshly-filed Form 4 with the SEC, Eric Semler’s TCS Capital Management LLC purchased a 396,676-share block in Angie’s List Inc. (NASDAQ:ANGI) last week at a weighted average price of $7.57, boosting its stake to 6.25 million shares. The newly-upped stake accounts for 10.7% of the company’s outstanding common stock. On October 13, Eric Semler sent a follow-up letter to the company’s Chairman, John H. Chuang, and its Board of Directors, after senting a private letter and holding a dialogue with the Chairman of the Board a few days earlier. The President of TCS Capital highlighted in the follow-up letter the fact that the shares of the company have lost almost 50% since John Chuang embarked on the Chairman position 18 months ago. Most importantly, TCS Capital stressed that despite building a strong brand and significant customer and revenue base, Angie’s List Inc. (NASDAQ:ANGI)’s most value-enhancing alternative at the moment would be a “strategic combination with another industry player” such as IAC/InterActiveCorp (NASDAQ:IACI)’s HomeAdvisor. The investment firm suggested that the fast-growing competition in the home services industry hinders the success and growth of Angie’s List. Furthermore, a potential combination between the two businesses would result in substantial cost savings, but would also put an end to the marketing battle between each other. Revenue synergies may also arise from a potential Angie’s List-HomeAdvisor combination, according to TCS Capital.

Meanwhile, the number of hedge funds within our extensive database with positions in Angie’s List stood at 14 at the end of the second quarter, compared with 15 registered a quarter earlier. These money managing firms accumulated 17.70% of the company’s shares on June 30, while the value of their investments decreased to $63.98 million from $65.48 million quarter-over-quarter. It is also worth pointing out that the company’s stock performance in 2015 is not ruinous at all, considering that its shares are up 21% year-to-date. Andy Redleaf’s Whitebox Advisors owned 1.04 million shares in Angie’s List Inc. (NASDAQ:ANGI) at the end of the June quarter.

Let’s head to the next page of the article, where we discuss Coliseum Capital LLC ‘s position in Accuride Corporation (NYSE:ACW).

Several Form 4 filings submitted with the SEC revealed that Christopher Shackelton and Adam Gray’s Coliseum Capital LLC has been gradually piling up more shares of Accuride Corporation (NYSE:ACW). The investment firm purchased 754,504 shares last week at prices ranging from $2.41 to $2.75, enlarging its stake to 8.22 million shares. Coliseum Capital disclosed a 7.15 million-share position in the manufacturer and supplier of commercial vehicle components through its 13F filing for the June quarter. The shares of the company are 40% in the red year-to-date and it appears that they are currently seeking a bottom. Accuride Corporation (NYSE:ACW)’s third-quarter financial results revealed earlier this month could not put a stop to the downtrend its shares have been riding since the beginning of the year. The company’s net sales decreased 11.2% year-on-year to $163.4 million, mainly owing to lower pricing as a result of reduced material costs, and softening end-market conditions at Brillion Iron Works. It is also worth pointing out that the shares of Accuride are currently trading an attractive forward P/E ratio of 10.44, which compares to 17.65 for the S&P 500. Hence, this might represent a good trading opportunity should analysts’ earnings estimates be accurate.

The stock also lost some of its appeal among the hedge funds tracked by Insider Monkey during the second quarter, with the number of money managers invested in the company dropping to 14 from 20 quarter-over-quarter. Similarly, the value of the money poured into the stock decreased to $43.97 million from $58.69 million. These hedge funds amassed nearly 24% of the company’s shares at the end of June. Peter Schliemann’s Rutabaga Capital Management held its position in Accuride Corporation (NYSE:ACW) unchanged during the second quarter at 2.86 million shares.

Disclosure: None