BOSTON (TheStreet) -- Wall Street has been abuzz with the new stock positions of top hedge-fund managers. Although the Dow and S&P 500 stocks they purchased in the fourth quarter are now known, many small-cap picks have gone unnoticed. Here's a look at five small-cap bets recently initiated or expanded by top-performing hedge funds.
5. David Einhorn, who runs long/short Greenlight Capital, started a modest 100,000-share position in Capitol Federal Financial (CFFN) during the fourth quarter. Capitol Federal is a savings-and-loan bank holding company, whose subsidiaries provide residential, construction and consumer lending. It's the largest residential lender in Kansas. Capitol Federal's stock has fallen sharply during the past 12 months, but pays an attractive 22 cent quarterly dividend, converting to an annual yield of 7.6%. Still, the dividend has fallen 3.1%, annually, over five years.
Capitol Federal, which recently changed its ticker, announced a 60-cent welcome dividend, equal to a 5.1% yield on its share price, payable on March 25 to shareholders of record on March 11. Capitol Federal's adjusted fiscal first-quarter earnings dropped 30% to nine cents, missing analysts' consensus target by 17%. Its adjusted top-line figure, at roughly $100 million, beat consensus. Capitol swung to a GAAP net loss of $11 million, or seven cents a share, from a profit of $21 million, or 13 cents, a year earlier. Its gross margin remained steady at 49%, but its operating margin contracted from 35% to 33%. The cash balance multiplied twelvefold to $1.3 billion.
Capitol Federal has a market value of $2 billion and a beta of 0.4, indicating below-average market correlation. Of analysts covering the company, six, or 75%, rate its stock "buy", one rates it "hold" and one ranks it "sell." The stock has a median 12-month target of $13.50. Here is a look at targets and valuation:KBW, Overweight, $14
RBC Capital Markets, Outperform, $14
Stifel Financial, Buy, $14
FBR Capital Markets, Outperform, $13
Barclays, Overweight, $12
Forward Earnings Multiple: 27 (12% Industry Discount)
Trailing Earnings Multiple: 57 (105% Industry Premium)
Cash Flow Multiple: 40 (113% Industry Premium)
Book Value Multiple: 1 (16% Industry Discount)
Sales Multiple: 5.2 (62% Industry Premium)
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV