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Bennett Lawrence’s Long Positions Beat the Market in Q1; Here are Van Schreiber’s Picks for Q2

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Bennett Lawrence Management is a long/short equity hedge fund founded in 1995 by Van Schreiber, an MBA graduate from New York University. In the current round of 13F filings, Bennett Lawrence revealed an equity portfolio valued at $375.10 million, with a total of 85 positions. The fund has invested 30% of its portfolio in technology, 29% in consumer discretionary, and 17% in healthcare sectors. The long positions with the largest stakes in the portfolio are represented by ServiceNow Inc (NYSE:NOW), Cavium Inc (NASDAQ:CAVM), and Dollar Tree, Inc. (NASDAQ:DLTR). 

ServiceNow Inc (NYSE:NOW)

According to its previous 13F filing, Van Schreiber’s fund had 81 long positions in companies with a market cap greater than $1 billion at the end of 2014. These stocks delivered weighted average returns of 8.1% during the first quarter of the current year and outperformed the S&P 500 Index by more than 7.0 percentage points. We track hedge funds and prominent investors because our research has shown that a select group of their top stock picks outperformed the market historically. Investors would have beaten the market by nearly a percentage point per month between 1999 and 2012 by imitating the 15 most popular small-cap stocks among hedge funds. This is despite the fact that 13F filings are delayed by as much as 45 days from the period of report at the end of each quarter. We have also been tracking the performance of these stock picks in real time since the end of August 2012. These stocks delivered an exceptional cumulative return of 137% since then vs. a gain of only 57% for the S&P 500 ETF (SPY) (find more details here).

The biggest position in Van Schreiber’s portfolio as of the end of the first quarter is represented by ServiceNow Inc (NYSE:NOW), a provider of cloud-based services with a market cap of $11 billion. Bennett Lawrence cut its stake in the company by more than 10% during the quarter to 178,251 shares valued at $14.04 million. ServiceNow Inc (NYSE:NOW) enjoys a strong growth rate, with around 20 new customers each quarter and the average value of a contract grew by approximately $200,000 to around $746,000 last year. The company expects to have around $4.0 billion in revenue and operating margins between 28% and 30% by 2020, according to the company’s analyst day slides. Other funds that have significant positions in ServiceNow Inc (NYSE:NOW) include Criterion Capital, managed by Christopher Lord, Columbus Circle Investors, run by Donald Chiboucis, and Christopher Lyle ’s SCGE Management.

Bennett Lawrence’s stake in Cavium Inc (NASDAQ:CAVM), a company providing highly integrated semiconductor processors for intelligent networking, communications, storage, video and security applications, is valued at more than $11.22 million and amasses 158,500 shares. Cavium Inc (NASDAQ:CAVM)’s stock had a strong first quarter, rising by nearly 15%, while Oppenheimer and William Blair have both reiterated ‘Outperform’ ratings on the stock recently, with Oppenheimer setting a price target of $72.00. Billionaires Chuck Royce and Israel Englander are among the largest shareholders of Cavium Inc (NASDAQ:CAVM) among the funds that we track, alongside 24 other funds that reported long positions as of the end of last year.

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