Falcon Edge Capital’s Diversified Stock Picks

Falcon Edge Capital, a hedge fund founded –in 2012- and managed by Richard Gerson and Navroz D. Udwadia, holds an equity portfolio valued at more than $1.5 billion. Although it is quite diversified, its focus is put on services stocks (35%), technology (18%), healthcare (14%) and basic materials (13%). Over the last reported quarter –Q1 2014, the fund declared having started 10 new stock positions, sold out of 7, and added to 6 of its preexisting ones. In this article I will take a look at its largest long equity positions in order to find out if they are worthy of your consideration.

Same as in the previous quarter, and in spite of a 6% reduction in Falcon Edge’s stake in the company, Avis Budget Group Inc. (NASDAQ:CAR) is the fund’s most valuable long equity position. The firm owns 2.667 million shares of this $6.2 billion market cap car and truck rentals and ancillary services provider. The position in Avis Budget Group Inc. (NASDAQ:CAR), worth almost $130 million –according to the last 13F filing, accounts for more than 8% of the fund’s total equity portfolio’s value.

Navroz Udwadia - Falcon Edge Capital

In addition to Mr. Gerson and Mr. Udwadia, more than 50 major hedge funds are long on Avis Budget Group Inc. (NASDAQ:CAR). The largest hedge fund shareholder is, in fact, John Griffin’s Blue Ridge Capital, a fund at which Mr. Gerson was a founding member. Blue Ridge owns 6.65 million shares of the company, valued at approximately $323 million.

Cheniere Energy, Inc. (NYSEMKT:LNG) is second in this list. Although Falcon Edge’s position remained unchanged over the first quarter of 2014, it inched in value, escalating from the fourth to the second-runner-up place. Cheniere Energy, Inc. (NYSEMKT:LNG) is a $16.4 billion market cap, liquid natural gas pipeline company and it enjoys of plenty of hedge fund support. In addition to Falcon Edge’s position (2.11 million shares, worth about $116 million), Michael Lowenstein’s Kenisco Capital owns 8.08 million shares of Cheniere Energy, Inc. (NYSEMKT:LNG), and Eric W. Mandelblatt’s Soroban Capital Partners, 7.79 million shares, after having increased its stake by 74% over Q1.

The third spot is occupied by, Actavis plc (NYSE:ACT), a newcomer at Falcon Edge’s equity portfolio. Over Q1, the fund started a position with 457,000 shares at Actavis plc (NYSE:ACT), a $38.9 billion market cap drug manufacturer. This position, worth more than $94 million, accounts for more than 6% of the fund’s equity portfolio.

Other hedge funds have also bought into Actavis plc (NYSE:ACT) recently. Dan Loeb’s Third Point last disclosed having acquired 2.5 million shares, and Stephen Mandel’s Lone Pine Capital, 2.378 million shares. Once again, John Griffin’s Blue Ridge Capital can be counted amongst the company’s main hedge fund investors.

 

Disclosure: Javier Hasse holds no position in any stocks mentioned.

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