Anthony Scaramucci’s SkyBridge Capital Goes Heavy On Consumer Stocks

SkyBridge Capital was founded in 2005 by Anthony Scaramucci, who currently runs the fund together with Raymond Nolte. Hedge fund seeding plays a major part in SkyBridge Capital’s business, as it boasts investments alongside billionaire John Paulson, Nelson Peltz’s Trian Partners, and Dan Leob’s Third Point. As of June 30, the fund has roughly $12.1 billion in assets under management, with only $378 million of that invested in public equities. Consumer discretionary stocks accounted for approximately 39% of its public equity portfolio’s value at the end of June, while technology stocks were second at 20%. Those figures stood at just 24% and 14% respectively on March 31, as SkyBridge’s portfolio became much less diversified over the course of the quarter.

Given that Messrs. Scaramucci and Nolte made some major investments in consumer stocks heading into the summer, in this article we’ll take a look at its largest positions from that sector on June 30.

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Bullish Call On Best Buy Paying Off

During the second quarter, Anthony Scaramucci and his team initiated a position in Best Buy Co Inc (NYSE:BBY), having purchased 419,146 shares worth $12.8 million at the end of June. In general, hedge fund sentiment towards Best Buy Co Inc (NYSE:BBY) improved slightly in the second quarter, with the number of long positions held by funds that we track inching up to 29 by the end of the quarter from 28 at the start of it. Best Buy recently released its fiscal year 2017 second quarter results, which caught investors by surprise (though not SkyBridge it would seem). Earnings per share jumped by 24% year-over-year to $0.57 on the back of $8.53 billion in sales. The big news, however, was the 23.7% increase in online sales, as the company is trying to capitalize on the shift towards online business. Best Buy Co Inc (NYSE:BBY) has been investing heavily in its website and mobile app in a bid to improve the consumer experience, speed up the checkout process, and offer attractive delivery options. Investors were also pleased to see a $38 million reduction in costs as Best Buy continues to close physical stores. Shares have gained 25% in the third quarter, making the addition a strong one for SkyBridge. Jim Simons‘ Renaissance Technologies reduced its Best Buy stake by 38% to 1.46 million shares during the second quarter.

SkyBridge Sees Great Potential In Coach Inc

Coach Inc (NYSE:COH), the designer of luxury accessories, was also on SkyBridge Capital’s shopping list. According to its latest 13F filing, the fund held 323,853 shares of the company, up by 48% from a quarter earlier, with the position being valued at $13.2 million. So far this year, Coach Inc (NYSE:COH) has been trading mostly in green territory, having advanced by 18% through last Friday’s close. For its most recent quarter, the company posted a 15% increase in net sales to $1.15 billion and adjusted earnings of $0.45 per share, topping analysts’ projections of $0.41 per share.

“Our strong fourth-quarter results — in which we achieved positive North America comparable-store sales and drove increases across key financial metrics — capped a year where we returned the Coach brand to growth. At the same time, we elevated brand perception globally,” commented Victor Luis, CEO of Coach.

At the end of June, 36 of the funds tracked by Insider Monkey held a stake in Coach Inc (NYSE:COH), down from 37 a quarter before. Dmitry Balyasny is also bullish on this stock, having nearly doubled his fund’s holding during the quarter to 2.19 million shares worth $89.4 million.

We’ll check out SkyBridge Capital’s three favorite consumer stocks on the next page.

Tracking Devices On The Rise

Swiss GPS navigation system developer Garmin Ltd. (NASDAQ:GRMN) is another stock that Anthony Scaramucci and his team are bullish on. Over the course of the second quarter, they increased their holding in the company by 58% to 318,458 shares worth $13.5 million. Joel Greenblatt is also optimistic about the prospects of this stock, having boosted his fund’s holding by 80% to 776,840 shares, a position valued at $32.9 million at the end of June. Overall, hedge fund interest in Garmin Ltd. (NASDAQ:GRMN) cooled down a bit during the quarter however, as the number of funds invested in it fell to 17 at the end of June from 21 registered at the end of March. The $9 billion company pays an annual dividend of $2.04 per share, providing investors with an impressive 4.18% yield. Garmin Ltd. (NASDAQ:GRMN) has managed to increase its dividend payments for four consecutive years and has used 77% of its free cash flow to finance its dividend program. In recent years, the company has shifted its focus from GPS navigation systems for cars towards wearables, such as fitness trackers. In its most recent quarter, sales of GPS units fell by 18%, as consumers replaced traditional systems with smartphones, while sales of fitness devices jumped by 34% year-over-year.

Turnaround Play

Viacom, Inc. (NASDAQ:VIA) was another new addition to SkyBridge Capital’s equity portfolio during the June quarter, as the fund amassed 332,205 Class A shares of the entertainment content company. According to the quarterly regulatory filing, the position was worth approximately $13.7 million at the end of June. After ten years in charge of Viacom, Inc. (NASDAQ:VIA), Philippe Dauman’s reign ended in August after a power struggle that saw him lose the backing of the Redstone family, which owns a controlling stake in the company. Viacom controls channels like MTV and Nickelodeon, as well as film studio Paramount Pictures, which has been in poor shape lately, dragging down Viacom’s earnings. To solve the problem, Dauman explored the idea of selling a stake in the studio, but the Redstones opposed the idea and would rather focus on turning the company around. A new CEO is to be instated at the end of September and analysts expect him or her to take some drastic measures to return the studio to profitability. At the end of June, roughly 9% of Viacom, Inc. (NASDAQ:VIA)’s common stock was held by 41 of the funds in our database, down from 42 three months earlier. Donald Yacktman’s fund, Yacktman Asset Management, held the largest position among the funds we follow, consisting of 4.36 million Class B shares worth approximately $181 million.

New Top Pick

Anthony Scaramucci and his team have high hopes for Nu Skin Enterprises, Inc. (NYSE:NUS), the developer of personal care products and nutritional supplements. During the second quarter, they acquired 329,431 shares of the company valued at $15.2 million, making the position SkyBridge Capital’s largest equity bet at the end of June. Cliff Asness is also bullish on this stock, having increased his fund’s investment in it by 14% to 1.08 million shares during the quarter. Nu Skin Enterprises, Inc. (NYSE:NUS) is not a very popular stock among the funds followed by Insider Monkey, with only 17 of them having reported a stake in it at the end of the second quarter, up from 15 recorded at the end of March. Nu Skin Enterprises, Inc. (NYSE:NUS) has a market cap of $3.28 billion and is currently trading at a trailing price-to-earnings (P/E) multiple of 34, higher than the industry average of 24 as per data compiled by Yahoo! Finance. Analysts are estimating a forward P/E ratio of 17, which means they expect a significant increase in the company’s profit over the next year. Nu Skin also pays an annual dividend of $1.41 per share, which provides shareholders with a 2.40% yield. So far this year, the stock has been a solid performer, advancing by 57% through Friday’s close. Nu Skin has been another big third quarter performer for SkyBridge, gaining 27%.

Disclosure: None