7 High Conviction Stock Purchases Made By Lee Ainslie’s Maverick Capital Hedge Fund

Lee Ainslie is a pure long/short equity investor. He doesn’t trade bonds, currencies, commodities or options. He buys what he thinks will beat the market and he sells what he thinks will underperform. It’s as simple as that. He’s beaten the S&P 500 index on average by about 6-7 percentage points annually but with 50% less volatility. This leads us to think he has close to a 10% annual alpha, although we haven’t seen his monthly returns to calculate his actual alpha. During the last 10 years Maverick Capital returned 7.7% and this year it’s outperforming the S&P 500 by more than 4 percentage points.

MAVERICK CAPITAL

Lee Ainslie underperformed 3 times in the past 10 years; in 2003, 2005 and 2009. In all three cases, his short positions hurt his performance. Last year, Maverick returned 23.6%, compared to 26.5% for the S&P 500 index.

Lee Ainslie, a graduate of UNC, met Julian Robertson when he was managing $700 million with seven other analysts. Ainslie joined Tiger in 1990, worked three years there and then launched Maverick in October 1993 at the behest and support of Sam Wyly. Ainslie was 29 years old.

Maverick, on average, has a net market exposure of around 49%. Ainslie discusses his investment strategy in detail in Katherine Burton’s “Hedge Hunters”.  The median market cap in his portfolio is $9 Billion and his fund can liquidate 75% of holding within one week without significantly moving the stock prices. This paragraph from “Hedge Hunters” reveals how they make their investments:

“Ainslie and his team are firm believers in finding out as much as they can about a company. In particular, they want to understand how sustainable earnings growth is and how much free cash flow the company will continue to produce and for how long. Maverick Capital analysts spend much time talking to competitors, suppliers, and customers, as well as to corporate executives. The analysts and sector heads think strategically about the business and the industry, looking out two or three years, identifying the winners and the losers.”

There are rumors out there right now that some hedge funds will be prosecuted because of aggressive use of expert networks that sometimes cross the line and provide illegal inside information. We’ll see whether Maverick will be prosecuted.

During the third quarter of 2010, Maverick added several companies to its portfolio. You can see Maverick’s 10 largest positions and 10 largest new positions. Usually larger companies will have the largest positions in a hedge fund’s portfolio simply because they’re more liquid, meaning more money can be invested in these stocks quickly without causing a big market impact. However, these stocks aren’t the best performers. Insider Monkey, your source for free insider trading data, developed a proprietary ranking methodology to determine the highest conviction stocks purchased by hedge funds. Here are the 7 new high conviction stock purchases by Lee Ainslie’s Maverick Capital:

ABERCROMBIE & FITCH CO ANF $266M
BED BATH & BEYOND INC BBBY $255M
GOODRICH CORP GR $127M
LIFE TECHNOLOGIES CORP LIFE $122M
COCA COLA ENTERPRISES INC CCE $126M
KIRKLANDS INC KIRK $15M
OWENS CORNING NEW OC $45M

Abercrombie & Fitch (ANF): A director of the company bought more than 7,000 shares at $35.51 in August. The stock is up 35% in three months.

Coca Cola Enterprises Inc (CCE): An officer of the company purchased 5,000 shares at the beginning of November at $24.28. The shares are up more than 2% in three weeks.

Kirkland’s Inc (KIRK): This stock is down more than 50% since May. Maverick’s average price for this position is $13.86, 15% more than the current price.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!