Hedge fund clients pulled out $15 billion from the hedge fund industry in the first quarter of 2016, marking the largest outflow since the second quarter of 2009. In the June quarter of 2009, hedge fund clients and investors pulled out a massive $43 billion from the industry. Meanwhile, analysts at JPMorgan believe that the hedge fund industry will experience a total outflow of more than $25 billion in 2016, as investors, particularly sovereign wealth funds, have become increasingly worried about the performance of hedge funds and their 2-and-20 payment structure. However, Canada’s largest pension scheme, which is the world’s eighth-largest retirement fund, does not plan to review its hedge fund investments, saying that hedge funds have contributed with “significant” value to the fund. Having this in mind, the following article will discuss several informative SEC filings submitted by several widely known hedge funds tracked by Insider Monkey.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Coatue Management Initiates New Stake in Promising Mobile Payments Company
According to a new Schedule 13G filing, Philippe Laffont’s Coatue Management LLC recently acquired a new stake of 1.90 million Class A shares of Square Inc. (NYSE:SQ), which account for 5.99% of the company’s outstanding common stock. The mobile payments company has been receiving more attention from the hedge fund industry in recent months, after the company completed its initial public offering (IPO) in late November at an IPO price of $9.00 per share. The company, co-founded by Twitter Inc. (NYSE:TWTR)’s CEO and co-founder Jack Dorsey, has seen its top-line figures grow at a high rate in the past several years. Square Inc. (NYSE:SQ) generates roughly 94% of its total net revenue from payment processing services, but the company’s software and data product segment, which includes Square Capital, seems well-positioned to grow notably in the upcoming years. Square Capital offers the company’s sellers a cash advance in exchange for a fixed share of their future receivables, but company plans to become a traditional online lender by offering loans to small businesses. Meanwhile, investors should be aware that Starbucks Corporation (NASDAQ:SBUX), a major client of Square, has announced intentions to transition to another payment processor, which will have a significant impact on the company’s top-line results. Daniel S. Och’s OZ Management also recently disclosed a new stake of 1.65 million Class A shares of Square Inc. (NYSE:SQ) (read more details).
Let’s head to the next pages of this article, where we will examine three separate SEC filings.