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Four Guru Stocks Up on a Down Day: GMCR, MW, IRM, S

March 10, 2011 | About:
The S&P 500 dropped nearly 2% on Thursday on a poor initial jobless claims report, negative news from China and Japan and, later in the day, reports of unrest in Saudi Arabia. Pronounced negative days like this can be great indicators of near term outperformance for those stocks that bucked the trend and had significant rallies, especially on high volume.

While looking through the biggest gainers list I noticed four stocks with significant guru ownership that were among the best gainers. While betting on short-term outperformance can be very risky, if you had any of these companies on your radar already, it may not be too late to get on board.

Green Mountain Coffee Roasters (GMCR): Green Mountain jumped 41% today on news that Starbucks (SBUX) would be using Green Mountain’s Keurig machine system to sell single serve coffee and tea. Sales should begin this fall in this $4 billion market. Investors were worried Starbucks might roll out its own single serve system, but ultimately they decided to team up with Green Mountain. Trading volume was 10 times the company’s average.

Steven Cohen owns nearly 1% of the company. Other owners are Pioneer Investments, Mario Gabelli, Stanley Druckenmiller, as well as tiny positions for Jeremy Grantham and George Soros.

Men’s Wearhouse (MW): Steven Cohen also won big with Men’s Wearhouse on Thursday. Shares rose 7% and the stock was the biggest gainer on the NYSE. Men’s Wearhouse reported better than expected earnings, rather I should say less than expected losses. They lost $0.27 per share in the 4th quarter. Their huge revenue gain is what caused shares to spike and analysts are now more upbeat about the coming year. Shares are near their 52 week high. I looked through their conference call and management sounds like they’ve hit on some good promotions and they’ve increased margins. I’m never happy to hear management talk about stakeholders, though, and this company repeats it incessantly.

In addition to Cohen, Ken Fisher, Chuck Royce, and James Barrow are significant shareholders.

IronMountain (IRM): Iron Mountain shares jumped more than 5% as Elliot Management’s Paul Singer pushes for the company to convert to a REIT. They proposed four nominees to Iron Mountain’s board today. Iron Mountain, which is being advised by J.P. Morgan, released a statement saying they are evaluating the proposal and will respond in due course. Wally Weitz bought into Iron Mountain in the 4th quarter and discussed the purchase in his quarterly letter. The idea of the company converting into REIT was not on his mind, though. Chris Davis is the biggest owner, controlling nearly 20% of the outstanding shares. Bruce Kovner, Arnold Van Den Berg, Paul Tudor Jones, and Jim Simons also own shares.

Sprint (S): David Einhorn famously touted Sprint over the last few months and the stock makes up almost 5% of his portfolio. Sprint jumped more than 4% today on tie-up rumors with T-Mobile. This doesn’t make sense for a number of reasons in my opinion, but apparently T-Mobile parent, Deutsche Telekom, and Sprint have been talking with each other for years and recent talks have been more serious. After the close there was some interesting news coming out of Clearwire (CLWR). Their CEO resigned along with two other top executives, and the CFO is moving to an operational role. Sprint owns 54% of Clearwire and it will be interesting to see how this plays out over the next few days. Sprint and Clearwire have had serious disagreements about the network expansion and funding.

13 gurus own Sprint shares. Dodge & Cox is the biggest owner, with 7.5% of the company. The name makes up 5% of France Chou’s portfolio as well. The stock has risen 10% since the start of the year.

Disclosure: No positions

About the author:

Steven Kiel
Steven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at steven.kiel@arquitos.com or through the firm's website at www.arquitos.com.

Visit Steven Kiel's Website


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