Stockpickr: Trade Like This Hedge Fund Hotshot

Multimedia Games has been hurt in its core market of casinos in Oklahoma by slower sales and competition from International Game Technology(IGT). However, Wall Street doesn't seem to be taking into account that by the third quarter of 2007, sales of machines to Mexico will begin contributing to earnings, and the potential is for Mexico to far outshine Oklahoma in sales.

A hedge fund manager I spoke to who wished to remain anonymous believes that Multimedia Games' expansion into Mexico would result in an additional dollar a share in earnings per year. Another hedge fund that's been loading up on Multimedia Games is Sowood Capital.

I haven't touched on Klarman's brand-new holdings, which include Encore Wire(WIRE) and Apollo Group(APOL), but it's worth noting that Klarman likes to buy stuff that everyone else has irrationally beaten down. As he has stated: "The Baupost Group seeks situations triggered by urgent, panicked or mindless selling."

For his latest transactions, check out Klarman's portfolio page on Stockpickr. Klarman also has been loading up for the past year on so-called blank-check companies, commonly referred to as SPACs (special purpose acquisition companies). I wrote a post on Stockpickr titled "Why Does Seth Klarman Like Blank Check Companies?" in which I discuss why one would buy SPACs in the first place and which ones look interesting.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Multimedia Games and Wet Seal to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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