Every weekend I put together what I think are the most interesting do-it-yourself portfolios on Stockpickr and send them on to Jim Cramer, who likes to peruse them. So I think it might be helpful to readers if I start featuring these portfolios here once a week.
What's interesting to me is how many hedge funds have been entering their portfolios into Stockpickr. Most of them are small or emerging funds that are simply excited about the stocks they've been buying and want to share their analysis. I've sampled a few of them here.
For instance, there's Keyrock Energy Partners, a Dallas-based fund focused on small-cap and micro-cap energy plays.
for its portfolio, plus targets and analysis.
I've known the Keyrock guys since their recent launch in the fourth quarter of 2006, and since that time the fund is up 24% -- despite the slip in the price of oil. When I saw the portfolio on Stockpickr, I emailed them and asked why they had put it there. Stephen Carter of Keyrock replied:
We give complete transparency to our investors anyway. They can see our positions whenever they want to see them. We enjoy talking about our ideas to our investors, and we even encourage them to interact with us as often as possible. We feel it is the least we can do, considering they are the ones entrusting us with their money. ... Stockpickr turned out to be a great way for us to discuss our positions with a community of investors and also learn new ideas. It also saves us time vs. plowing through Securities and Exchange Commission filings of the other great managers out there.
One of Keyrock's recent picks is
. Here's what the guys have to say about it:
Parallel Petroleum is an independent oil and gas exploration and production company located in Midland, Texas. Parallel has added natural gas resource plays to compliment its already-producing oil project in the Permian Basin in western Texas. Parallel has shown the ability to acquire and execute production growth of 160% and reserve growth at a 67% compound annual growth rate (CAGR). With the acquisition of acreage in the Barnett Shale and New Mexico Wolfcamp project, it has given itself a great reserve base and great upside potential with a successful drilling program. In its third-quarter 2006 results it gave operational data from the Wolfcamp project, stating that two of the three operational areas seem to be outperforming what was anticipated of them initially. ... We have a price target of $40.
Another favorite stock of Keyrock is
. 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) - Get VanEck Vectors Oil Services ETF Report and Energy Select Sector SPDR (XLE) - Get Energy Select Sector SPDR Fund Report, 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.
to see the portfolio on Stockpickr.
One of DMO Capital's positions is
( LTR). Here's the fund's reasoning behind holding this name:
It has cash on the balance sheet; a weak dollar will help hotel sales; it's the holding company of other public companies Boardwalk Pipeline Partners (BWP) , CNA Financial (CNA) - Get CNA Financial Corporation Report, Carolina Group (CG) - Get Carlyle Group L.P. Report and Diamond Offshore Drilling (DO) - Get Diamond Offshore Drilling, Inc. Report. We see strength in all aspects of cash flow and value Loews earnings per share at $4.25 on a discounted basis, while only including earnings from Boardwalk Pipeline Partners, CNA Financial, Carolina Group and Diamond Offshore Drilling, and excluding earnings from hotel operations, Bulova and other cash-generating endeavors. Also, on Jan. 30, 2007, Diamond Offshore Drilling announced a special dividend of $4 per share payable on March 1, 2007, to shareholders of record Feb. 14, 2007.
In addition, it looks like DMO Capital is anticipating
( HET) will get bought out by a higher price than private equity firm Apollo Management's $90 a share offer. Here are DMO's comments on Stockpickr:
Apollo buys out of $90 a share. Updated Feb. 2, 2007: Harrah's filed an extension until Feb. 28, 2007, to make its decision on who is buying it out. Since Goldman is helping the deal now, we assume the offer will be north of $90 and have been planning accordingly (buying January 2008 call options aggressively). In the world of mergers and acquisitions, cash flow is king and Harrah's has cash flow.
recently posted an interesting pick on Stockpickr to take advantage of increasing fears about pollution and global warming. The company,
, trades on the Alternative Investments Market (AIM) portion of the London Stock Exchange, but also has an ADR in the U.S. under the symbol CXCHF. Here are Freeway's comments on Climate Exchange:
This is a company traded on the AIM in Britain, the leading carbon credit exchange in the world. Global warming is happening. It will continue to be a key policy issue. It is not going away. Goldman Sachs owns a large chunk of this company, and Morgan Stanley is spending billions -- not millions -- to prepare for the blossoming carbon credit industry.
Another Freeway pick is stem-cell company
. Here's what the fund has to say about that name:
As stem-cell science accelerates and becomes more mainstream -- a Democratic Congress and Senate certainly helps -- people are more likely to have their children's stem cells removed and saved from their umbilical cords. Thermogenesis is the 'arms dealer' in terms of equipment for that industry. Thermogenesis is to stem cells as Cisco is to the Internet.
Here are a few more interesting portfolios set up by users:
Ardent, in particular, analyzes some positions I've never even heard of, including
( AEA) (which also appears in our
portfolio) and others.
If you have a portfolio on Stockpickr with some good analysis, please
and I'll take a look at it.
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
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