Sleep on This Play

Rehan Jaffer manages H Partners Management, an activist hedge fund that holds a small number of small-cap stocks. Jaffer's top holdings include Six Flags Entertainment (SIX), W.R. Grace (GRA), and Boyd Gaming (BYD) (you can read our discussion of Jaffer's portfolio here). Jaffer's strategy, which he developed while working with Dan Loeb at Third Point, is to gain management's ear by taking large stakes in a given company.

The fund's third largest holding as of June 30, Sealy (ZZ) has struggled since its IPO in 2006. The company's shares fell flat and by 2008, the company had suspended its dividend. According to its 13F regulatory filing, H Partners held 15.5 million shares of Sealy at the end of June, and the fund has been building this position steadily over the past year and a half. On Aug. 21, the fund reported that it had upped its total holdings by 1.8 million shares to 17.28 million shares. Sealy's stock has lost 90% of its value since its IPO, and the company is saddled with $760 million in debt. It market cap is only $227 million....397 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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