Today, shareholders of Keurig Green Mountain, (GMCR) woke up to a nice 75% pop in the value of their shares. A private equity firm is taking the company private for $13.9 billion or $92 a share. That’s made GMCR one of the biggest one day movers for an S&P 500 stock this year.
Most interesting, you could have participated in this huge winner.
Just last month, at “The Invest for Kids Chicago” hedge fund conference, Ricky Sandler of the $6.5 billion hedge fund, Eminence Capital, made a detailed presentation on why he thought Keurig Green Mountain was worth $85 to $100 a share. The stock was selling for around $50 at the time and Eminence owned $195,000,000 worth — the largest hedge fund owner of the stock.
Apparently the private equity firm JAB Capital agreed with Sandler. They paid a price at the mid-point of his valuation.
Now, if you were paying attention to this conference and bought the stock, clearly you could have made a lot of money. We attend or read the transcripts from every major hedge fund conference on the planet. These ideas are not often covered in the mainstream press or online media, and therefore are ripe for finding hidden investment gems like GMCR.
Today’s news is just one of many examples of stock takeovers that can be predicted by the presence of an influential investor. For example, just last month, at BillionairesPortfolio.com we predicted the takeover of MedAssets, thanks to the work and presence of activist investor Starboard Value (you can see those details here).
Of course, today’s star performer was Ricky Sandler and Eminence Capital. With that, here are the top 5 best ideas from Eminence Capital.
1) Zynga (ZNGA) – Another top idea Sadler presented at “The Invest for Kids Chicago” conference was Zynga. Sadler say Zynga is undervalued because it has $500 million in real estate (its San Francisco Headquarters) and a $1.15 in cash per share, meaning the market is valuing its underlying business for almost nothing. Sandler said if the stock were valued similar to its peer, King Digital, Zynga should be worth $5 a share or a double from its share price today.
2) AIG (AIG) – Another top idea of Eminence Capital is AIG. Eminence owns more than $350 million of AIG stock through a mix of shares and options, more than 5% of its portfolio. Billionaires Carl Icahn and John Paulson also own huge stakes in AIG and Icahn has said AIG could be worth as much as $100 a share or a 50% return from its share price today.
3) GNC (GNC) – GNC is the third largest position in Eminence Capital’s portfolio. It owns 6% of GNC. The stock is extremely undervalued as it has a forward P/E of 9, price to free cash flow of 11, and almost a 3% dividend. These valuation metrics put GNC in that “buyout candidate” territory, just like Keurig Green Mountain.
4) Men’s Wearhouse (MW) – Eminence Capital owns more than 8% of Men’s Wearhouse and has held onto the stock even as it’s been crushed. Men’s Wearhouse has dropped from $65 to $20 this year, making the stock very cheap. It has a price to sales of just .28. It sells below its book value. And it has a forward P/E of just 8 (about that of the S&P 500).
5) Autodesk (ADSK) – Eminence Capital’s top position is Autodesk. They own almost $300 million worth, making it nearly 5% of their portfolio. Autodesk is up 44% over the last 2 months, as it has been rumored to be another takeover candidate. A top $4 billion activist hedge fund, Sachem Head, owns 5.7% of the stock and launched an activist campaign on the company last month.
Billionairesportfolio.com, run by two veterans of the hedge fund industry, helps self-directed investors invest alongside the world’s best billionaire investors.
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11/30/15
Goldman Sachs just released its most loved stocks list among the hedge fund community. Goldman narrows the thousands of stocks represented in the most recent quarterly 13F filings down to their “most important” 25. At Billionairesportfolio.com, we’ve narrowed that list down to the five stocks owned by billionaire hedge fund managers with the most potential upside.
Below are the five stocks:
1) Charter Communications (CHTR) – Charter is one of the top ten most owned stocks by hedge funds. Billionaire hedge fund managers Stephen Mandel of Lone Pine Capital and John Paulson own large stakes in Charter. Mandel owns more than $1 billion worth of Charter. At the recent Robin Hood Investment Conference, one of Paulson’s portfolio managers said Charter could be worth as much as $325 a share, nearly 75% higher than current levels.
2) Yahoo (YHOO) – Yahoo is another popular stock owned by billionaire hedge fund managers. Billionaire David Einhorn and Starboard Value, a top $5 billion activist hedge fund, both own big stakes in Yahoo. The average analyst price target for Yahoo is $49 or a 50% potential return from its current share price.
3) General Motors (GM) – Another popular billionaire owned stock in the Goldman Sachs VIP (very important position) list is GM. Billionaire hedge fund manager David Tepper owns GM. If fact, GM is David Tepper’s largest equity position in his hedge fund. The average analyst price target for GM is $50 or almost a 50% return from its current share price.
4) AIG (AIG) – Billionaires Carl Icahn and John Paulson are two of the largest holders of AIG. Both billionaires have pushed for AIG to break up and spin off business units. Icahn recently said that if AIG breaks into three companies the company could be worth more than $100 a share. That would be a 56% return from its current share price.
5) Apple (AAPL) – Billionaires Carl Icahn and David Einhorn both hold Apple as their largest position. Icahn owns almost $6 billion of Apple. Piper Jaffrey recently put a $179 target price on Apple or a 51% return from its current share price.
Billionairesportfolio.com, run by two veterans of the hedge fund industry, helps self-directed investors invest alongside the world’s best billionaire investors.
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Related: Stocks, Stock Market, Economy, Billionaires, Trump, Markets, Investing, Finance, Commodities
According to the Rob Copeland of the Wall Street Journal today, top hedge fund managers are beating the S&P by a huge margin this year.
The article notes that three billionaire hedge fund managers, David Tepper, Larry Robbins and John Paulson, are all up 10% or more after fees in 2015. That compares to a 3% return for the S&P 500.
Of that trio, Paulson is up an eye popping 19% year-to-date. That’s more than six times the return of the S&P 500. He’s done it by betting correctly on stocks like Time Warner Cable and Salix Pharmaceuticals, both of which were acquired for large premiums.
At Billionairesportfolio.com we have been piggybacking the highest conviction stocks, ETFs and options of the world’s best billionaire hedge fund managers since 2012, and we’ve witnessed first-hand, the power of following the best ideas of the world’s greatest billionaire investors. Earlier this year, we followed Perceptive Advisors, a multi-billion dollar biotech specialist hedge fund, into Sarepta Therapeutics (SRPT). That stock is up 155% since early February.
Given the value of following the biggest and best, and given the hot hand that billionaires Tepper, Robbins and Paulson have had this year, let’s take a look at their most recent stocks picks:
1) Billionaire Larry Robbins of Glenview Capital has made huge returns on healthcare stocks this year, including a $200 million gain in one day when Humana announced that it was exploring a possible sale, and subsequently exploded higher in value. Robbins has two new healthcare picks, both of which he has said could double, Abbvie (ABBV) and Brookdale Senior Living (BKD).
2) Billionaire John Paulson, an M&A specialist with an incredible track record of buying stocks right before they get acquired, has initiated a new stake in AIG (AIG). He also recently added to his position in T-Mobile (TMUS), a stock that has constantly been rumored as a takeover target.
3) Billionaire David Tepper who recently made a bold bet on the broad stock market, buying a billion dollar worth of call options on the Nasdaq 100 (QQQ) and the S&P 500 (SPY), has added two new notable stocks to his portfolio recently, Micron Technology (MU) and Jet Blue Airways (JBLU).
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