I don't just blindly follow the activists into a situation. When I was a broker, I never just blindly followed the research department, either. That being said, there are some very smart activists who have been very successful in unlocking shareholder value. Following their SEC filings is an important part of my regular ongoing search for ideas.
There are several value-oriented hedge funds that I pay attention to on a regular basis as well. If Charles Brandes and John Paulson both own a lot of Boston Scientific (BSX), I want to understand why. I might want to piggyback the position or at least make plans to buy it in a selloff. I pay attention to what investors like Tweedy Brown, Bob Rodriguez and others are doing. I may not like any of their latest purchases; then again, I have found an occasional long-term multi-bagger by staying on top of their positions.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Jackson Hewitt Tax Services and Darling International 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. This was originally published on RealMoney on Feb. 3, 2009. For more information about subscribing to RealMoney, please click here.
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