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Best Hedge Funds: First Quarter 2012

Insider Monkey looks out for long/short equity hedge funds with the best stock picking ability. The reason is simple. We believe we can outperform those investors who surrender 2% of their savings and 20% of their returns for the privilege of turning hedge fund managers into billionaires. Imitating hedge funds have some disadvantages. We get to see hedge funds’ long positions once a quarter and that’s with a 45 day delay. It is also true that they may not even be holding those shares by the time we are buying them. However, we don’t think that makes a huge difference in terms of performance. We follow hedge fund managers who hold on to stocks for long periods of time, so in some cases we even pay a lower price than what they initially paid. We also don’t have to invest in a hedge fund manager’s 50th best idea. We can just pick the top stock picks of best hedge fund managers and may even be able to beat them in their own game. That’s what Alfred Winslow Jones, the father of the hedge fund industry, did.

FAIRHOLME (FAIRX) Bruce Berkowitz

Here are the best hedge fund managers of the first quarter. Each of these fund manager’s long stock picks in the largest 1000 stocks had a value-weighted return of at least 30%. S&P 500 ETF (SPY) returned 12.7% during the same time period.

1. King Street Capital – Brian Higgins: King Street is the best hedge fund in our database. Their 6 stock picks returned 41.7%. You can see King Street’s (and other hedge funds’ top picks) bu clicking the links provided.

2. Fairholme – Bruce Berkowitz: Bruce Berkowitz is showing investors (and John Paulson) that investing is a marathon. After last year’s terrible performance, his 16 stock picks returned 38.2% during the first quarter.

3. John Hurley – Cavalry Asset Management: Cavalry Asset Management’s 16 technology stock picks gained an average of 37.1% during the first quarter.

4. ESL Investments – Eddie Lampert: Lampert’s top picks pulled back a little bit since we last compiled the list of best hedge funds. However his  8 large-cap stock picks returned 36.9% during the first quarter.

5. Anchorage Advisors – Kevin Michael Ulrich: Anchorage Advisors’ 8 large-cap picks returned 34.9%.

6. Martin Hughes Toscafund Asset Management:  Hughes 5 large-cap picks gained 33.1%.

7. Michael Katz Glenrock Global Partners: Katz’s 13 large-cap picks returned 32.1%.

8. Chou Associates Management: Francis Chou managed to find 17 large-cap stocks that can deliver a 31.9% return in the first three months of 2012.

9. Algebris Investments: Eric Halet and Davide Serra’s fourteen large-cap stock picks gained 31.1% during the first quarter.

10. Centerbridge Partners: Mark Gallogly’s 5 large-cap stock picks returned 31.12%.

11. Litespeed Management: Jamie Zimmerman’s 7 stock picks gained31.06%

12. Round Table Investment Management:  Ian Banwell’s six stock picks returned 30%. Guess what Ian Banwell’s top stock pick was (it wasn’t Apple!).

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