The glorious performance that Millennium Management, a hedge fund founded by billionaire Israel ‘Izzy’ Englander, has exhibited over the past more than two decades is something that rivals in the industry envy. Since its inception in 1989, the fund has generated an average annual return of 14% and has had only one down year in 2008, when it lost 3%.
However, this performance took a hit last year, when the fund returned only 3.3%, which was significantly lower than the return of the S&P 500 and also much lower than what Millennium Management had delivered in the preceding three years. If that performance hit wasn’t enough, at the beginning of 2017 the fund got another shock when its fixed income head, Michael Gelband, who was touted to be the successor of Mr. Englander, resigned abruptly. Though the fund doesn’t face any leadership crisis at present as Mr. Englander has already stated that he wants to stay in the business at least till he is 80 years old, Millennium will sooner have to start working on building a core team that can manage its operations, considering that its one of the largest hedge funds in the world today.
As of February 1, 2017, Millennium Management employs more than 2,100 and manages assets worth nearly $34.77 billion. The latest 13F filing submitted by the fund shows that its U.S. long equity portfolio was worth $47.55 billion at the end of December, which means that it was using considerable leverage in its long positions at the end of 2016. The filing also revealed that during the fourth quarter the fund’s equity portfolio registered a quarterly turnover of 51% and that its top 10 holdings at the end of that period amassed 6.40% of its portfolio value. In the rest of this post, we will take a look at the five major moves in the last three months of 2016.
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Procter & Gamble Co (NYSE:PG)
– Shares Held By Millennium Management (as of December 31): 0
– Value of The Holding (as of December 31): 0
During the fourth quarter, Millennium Management sold its entire stake in Procter & Gamble Co (NYSE:PG), which at the end of September 2016 was its largest equity holding and contained 72.58 million shares. Apart from selling all the common stock it owned, the fund also liquidated all the Put options underlying 27.80 million shares shares. However, it continued to own Call options underlying 50,000 shares valued at $4.20 million at the end of December. Shares of the branded consumer goods giant have rallied by 9.3% so far in 2017 and are currently trading close to their 52-week high. Some of those gains have come in the last few days after activist Nelson Peltz’ Trian Partners revealed a $3 billion stake in the company. Despite this recent rally, the stock still sports a forward yield of almost 3% at current price.
On the next two pages, we will take a look at four stocks in which Millennium Management boosted its stake significantly during the fourth quarter