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Hedge Funds Have Bought Yelp, Charter And More

Seeking Alpha – Investors can stay on top of hedge fund activity partly by keeping track of 13D and 13G filings, which report significant percentage stakes in public companies. The nature of the filing requirements means that these filings are rare for large-cap companies, and very rare for mega-caps, but it’s arguably more important to know how hedge funds are trading smaller-cap stocks since their investment teams are more likely to uncover a good value in less widely followed names. We have gone through recent filings and here are five stocks that hedge funds have bought recently:

Billionaire Stephen Mandel’s Lone Pine Capital has reported a position of 7.2 million shares in Charter Communications (CHTR), up from about 330,000 shares at the end of September. Lone Pine now owns over 7% of the company’s outstanding shares. See more of Mandel’s stock picks. When we looked at Charter we didn’t find its valuation particularly attractive; earnings multiples were low and the EBITDA multiple was higher than what could be found at similar companies. While the company has been recording revenue growth, net income has been low to negative.

Fellow billionaire Steve Cohen and his team at SAC Capital Advisors filed with the SEC to disclose ownership of 4.1 million shares of Energy XXI Limited (EXXI), an oil and gas exploration and production company (find Cohen’s favorite stocks). Earnings were down sharply last quarter due to lower oil revenues (which caused total sales to be down slightly) and the resulting shift of the production mix towards natural gas, which in turn drove down operating margins. The stock trades at 12 times trailing earnings, which is a lower multiple than natural gas producers and emerging oil players but a substantial premium to most oil majors.

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