Watching what the professionals buy (or sell!) can sometimes be a useful source of investing ideas. If nothing else, it can prompt investors to do a little further research. The K2 Global Equities Fund (Hedge Fund) (ASX:KII) (known by Google Finance as K2 GLB EQU TMF UNITS) recently revealed in its February monthly report that 4 Australian companies were among its largest holdings. Here's my take on whether these businesses are worth a closer look by Foolish investors:
Medical Developments International Ltd (ASX: MVP)
A $300-million drug developer, Medical Development's Penthrox drug is a non-addictive opiate alternative that has been gaining approvals throughout the world. Profits at the most recent half-year were just $0.4 million, although sales are just getting started. Expensive, but could prove worth the price as sales ramp up.
Money3 Corporation Limited (ASX:MNY)
Valued at $250 million, Money3 is an unsecured (read: higher risk) finance lender that has been growing revenues and profits strongly in recent years. While the business has been growing strongly, dividends have been reduced in recent times and Money3 also has competition in the second-hand car loan space from the likes of Carsales.
Updater Inc (ASX: UPD)
A USA-based technology company that is revolutionising the way people move house, it's tough to recommend Updater to a Foolish audience. While the company does have a cash balance equivalent to just under half its $120 million market capitalisation, it is burning cash at a prodigious rate, and break-even appears a couple of years away.
Think Childcare Ltd (ASX: TNK)
A $100-million childcare operator, Think Childcare is a guppy compared to the likes of G8 Education Ltd (ASX: GEM). The company appears to be using a similar strategy of acquisitions to grow its business, although its costs are higher and management appears to focus more on delivering a high quality educational experience. With some prudent financial management, Think could become much bigger over the next 5 years.
