Hedge Funds Are Buying and Selling These Stocks Recently
Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
13D and 13G filings with the SEC allow observers and individual investors to track large positions being taken by hedge funds, including some of the best known and most successful investors today. Here are what five hedge funds have been up to recently:
Southeastern Asset Management reduced its stake in TW Telecom (NASDAQ: TWTC) to a little over 16 million shares, giving Southeastern 10.7% of the shares outstanding. At the end of March the fund had nearly 27 million shares, so this is a substantial reduction. With TWTC up 29% year to date, the fund is likely locking in recent gains on its investment or rebalancing its portfolio (check out Southeastern Asset Management's portfolio). TWTC, which provides business ethernet and other telecom services to businesses, currently trades at a P/E of 59 and an enterprise value of nearly 10 times trailing EBITDA with no dividend, so it is far from a value investment. Its growth, however, has been very steady with Q1 of 2012 being the 30th consecutive quarter of revenue growth. Jim Simons’s Renaissance Technologies was another major hedge fund holder of the stock at the end of March, with 1.4 million shares.
Third Avenue Management engaged in three significant sales. First, they reduced their stake in Investment Technology Group (ITG) to about 1.3 million shares or about 3.5% of the shares outstanding. Their position in PH Glatfelter (GLT) was decreased to about 1.6 million shares, about 3.7% of the company. Finally, Third Avenue now owns about 4.8% of Electronics for Imaging (EFII) as a result of bringing the number of shares in its portfolio down to about 2.2 million. Third Avenue had owned 3.3 million, 2.5 million, and 2.4 million shares respectively of these companies on March 31 (see Third Avenue’s other holdings). Of these, the largest sale was of ITG, which has been reduced by 31% since that time.
Steve Cohen’s SAC Capital Advisors (see more of Steve Cohen's stock picks) invested additional capital in Wellcare Health Plans (NYSE: WCG) and now owns approximately 2.2 million shares of the company, which comes out to 5% of the shares outstanding. This is roughly double the 1.1 million shares it owned at the end of March. Wellcare is a provider of public health insurance programs such as Medicare and Medicaid and receives its revenue from federal and state government agencies in relation to the number of members in its network. Renaissance Technologies is also a top hedge fund holder of WCG, with 1.1 million shares. The stock trades very cheaply, with a trailing P/E of less than 10 and a trailing EBITDA multiple of 2.5, even after rising 22% so far in 2012. The company has nearly $39 of cash on its balance sheet per share, which places it in a good liquidity position but means it is not investing much in bringing in future earnings.
Luxor Capital owned 6.8 million shares of Nordion (NDZ). This is down from 10.1 million at the end of March, but the fund still owned about 11% of the shares outstanding (here are other recent Luxor holdings). Nordion was surprisingly popular among hedge funds at the end of the first quarter. Hedge funds collectively owned around 40% of the stock’s outstanding shares. Scopia Capital and Valiant Capital are among the hedge funds with more than 5% stakes in the company.
Finally, Artis Capital Management decreased its position in PLX Technology (PLXT) to about 650,000 shares. Artis had owned 3.9 million shares at the end of March and was likely selling out of its position after good earnings pushed the stock up 58% in the second quarter. In April, Integrated Device Technology Inc. (NASDAQ: IDTI) offered to buy PLXT for $3.50 per share in cash and 0.525 shares of IDTI; the deal has already been approved by both companies. This is now a merger arbitrage play. On Wednesday, PLXT closed at $5.75 and IDTI closed at $5.05. If the PLXT shares are exchanged today, PLXT shareholders will receive $6.15 per share. By buying 2,000 shares of PLXT today at $5.75 and short selling 1,050 shares of IDTI at $6.05, they can make $0.40 per share by the time the deal closes. That’s a return of nearly 7%.
This article is written by Matt Doiron and edited by Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
