Small and Wildly Successful Hedge Funds Love These 10 Stocks

Before you go, we thought you'd like these...
Before you go close icon

The Street reports that a handful of small, actively managed mutual funds are boasting returns "north of 22%" this year -- more than double the S&P 500 return.

This feat is typically achieved by investing in "lesser-known or undervalued companies." And interestingly, many of these high-return funds only have 12-15 stock holdings, implying they pick their targets with care.

So, who are these firms, and what are their blockbuster investments? The Street was kind enough to compile a list of top picks, which we recreate below.

Business section: Investing ideas
To find the names, Editor Frank Byrt screened the Morningstar database for small, actively managed equity funds with returns of about 20% for their newest top-performing stocks. 

We list the chosen names along with YTD performance and one-year and five-year EPS estimates. 

What do you think? Are there any winners here, and will they continue to price in more upside? (Click here to access free, interactive tools to analyze these ideas.)

1. Celgene (NAS: CELG) : Develops, and commercializes various therapies to treat cancer and immune-inflammatory related diseases. Market cap of $33.17B. Current price at $75.9. Performance YTD at 11.83%. EPS growth this year at 51.89%. EPS growth next year at 17.18%. EPS growth next 5 years at 24.76%. The stock has gained 42.08% over the last year.

2. CommVault Systems: Provides data and information management software applications and related services primarily in North America, Europe, Australia, and Asia. Market cap of $2.23B. Current price at $51.15. Performance YTD at 18.24%. EPS growth this year at 10.97%. EPS growth next year at 15.46%. EPS growth next 5 years at 20.14%. The stock has gained 45.06% over the last year.

3. Dynavax Technologies (NAS: DVAX) : A clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious diseases. Market cap of $699.63M. Current price at $4.56. Performance YTD at 35.24%. EPS growth this year at 44.1%. EPS growth next year at 65%. The stock has had a couple of great days, gaining 6.4% over the last week.

4. E*TRADE Financial (NAS: ETFC) : Provides online brokerage and related products and services primarily to individual retail investors in the United States. Market cap of $3.15B. Current price at $11.27. Performance YTD at 38.69%. EPS growth this year at 501.25%. EPS growth next year at 41.18%. EPS growth next 5 years at 15.5%. The stock has had a couple of great days, gaining 14.17% over the last week.

5. First Bancorp: Operates as the holding company for FirstBank Puerto Rico that provides a range of financial services and products to retail, commercial, and institutional clients in Puerto Rico, the United States, and the British Virgin Islands. Market cap of $782.19M. Current price at $3.93. Performance YTD at 9.17%. EPS growth this year at 120.23%. EPS growth next year at 225%. EPS growth next 5 years at 5%. The stock has lost 9.07% over the last year.

6. Nuance Communications (NAS: NUAN) : Provides voice and language solutions for businesses and consumers worldwide. Market cap of $8.06B. Current price at $26.62. Performance YTD at 3.93%. EPS growth this year at 282.12%. EPS growth next year at 10.69%. EPS growth next 5 years at 14.61%. The stock has gained 52.03% over the last year.

7. NXP Semiconductors (NAS: NXPI) : Provides mixed signal solutions and semiconductor components primarily in Japan, Europe, South Korea, Rest of Asia Pacific, and the Americas. Market cap of $6.50B. Current price at $26.19. Performance YTD at 70.92%. EPS growth next year at 60.74%. EPS growth next 5 years at 28.33%. The stock has lost 2.49% over the last year.

8. Rackspace Hosting: Operates in the hosting and cloud computing industry. Market cap of $7.45B. Current price at $57.59. Performance YTD at 31.18%. EPS growth this year at 59.29%. EPS growth next year at 42.68%. EPS growth next 5 years at 30.26%. The stock has had a couple of great days, gaining 5.2% over the last week.

9. The Charles Schwab: Provides securities brokerage, banking, and related financial services to individuals and institutional clients. Market cap of $19.48B. Current price at $15.4. Performance YTD at 36.66%. EPS growth this year at 84.89%. EPS growth next year at 23.53%. EPS growth next 5 years at 13.3%. The stock has had a couple of great days, gaining 8.42% over the last week.

10. Zynga: Develops, markets, and operates online social games on the Internet, social networking sites, and mobile platforms. Market cap of $9.47B. Current price at $13.28. Performance YTD at 38.47%. EPS growth next year at 34.62%. EPS growth next 5 years at 23.06%. The stock has had a good month, gaining 10.42%.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from The Street and Finviz.

At the time this article was published Motley Fool newsletter services have recommended buying shares of Rackspace Hosting, Nuance Communications, The Charles Schwab, and NXP Semiconductors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners