Stockpickr: Top Hedge Fund Stock Picks

Another favorite stock of Keyrock is Layne Christensen(LAYN Quote). From the analysis in the fund's portfolio:

Layne Christensen is an industrial goods company that focuses on supplying drilling and construction services, as well as products in water resources and the mineral exploration business. Its water resources business focuses on a variety of things, including portable water treatment facilities, well construction, pump selection and pipeline construction. As the world finds itself short on clean water, Layne Christensen should be well positioned to take advantage of this growing need. In the coming years, there should be an ever-growing need for water pipelines and water treatment facilities.

This has been evidenced by Layne Christensen's ability to grow revenue: In 2006 it reported revenue of $463 million, which was far above its 2005 revenue of $343 million. In 2007 it earned almost $700 million in revenue, which should correlate to almost $1.50 per share in earnings. Layne Christensen operates in North and South America, as well as Africa, which gives them the opportunity to capitalize on the worldwide need for clean water.

I asked the guys at Keyrock what they thought their edge was in the energy space. Carter told me:

First is our access to information and new ideas. We have an extensive network of people in the energy industry here, including company management, analysts, petroleum engineers, land men and other energy investors with specific expertise. Second would be our trading experience, which helps us mitigate risk. We reduce the risk of our long exposure by selling out-of-the-money calls on energy ETFs such as Oil Services HOLDRs(OIH Quote) and Energy Select Sector SPDR(XLE Quote), as well as owning puts on the same ETFs. We also sell short the same ETFs and go long puts on the underlying equities when we feel there is going to be near-term selling pressure or weakness.

DMO Capital is another fund with its portfolio loaded onto Stockpickr. This is an aggressive growth fund that also trades options around its positions. Click here to see the portfolio on Stockpickr.