Billionaire James Dinan founded York Capital Management, a New York-based long/short equity hedge fund, in 1991. Prior to founding York, Mr. Dinan worked at merger arbitrage firm Kellner DiLeo & Co., and before that as an investment banker at Donaldson, Lufkin & Jenrette (DLJ). At the time of its inception, York Capital had $3.6 million in investors’ money, which Mr. Dinan was able to raise primarily from his colleagues at DLJ. Since then the firm has grown significantly and now boasts around $27 billion in assets under management (AUM). York Capital Management recently filed its 13F with the SEC for the reporting period of June 30. According to the filing, York’s U.S public equity portfolio declined in value to $11.80 billion at the end of June from over $14.56 billion at the end of March. Although the fund had a diversified portfolio with representation from all sectors, stocks from the healthcare sector lead the pack, accounting for 20% of the portfolio’s value. In this article we are going to focus on the top three new stock picks of the fund, which accounted for over 12.5% of York Capital’s portfolio at the end of June.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 118%, more than two times greater returns than the S&P 500 during the same period (see more details).
Follow James Dinan's York Capital Management
York Capital Management initiated a stake in Perrigo Company plc Ordinary Shares (NYSE:PRGO) during the second quarter, buying over 3.3 million shares of the company. As of June 30, this stake was worth almost $612.6 million and represented York’s largest equity holding. Shares of the Ireland-based over-the-counter drug maker ended up with gains of 11.7% for the second quarter, majorly due to the spike they had on April 8 when Mylan NV (NASDAQ:MYL) offered to buy Perrigo Company plc Ordinary Shares (NYSE:PRGO) for $29 billion in a hostile bid. Perrigo reported better-than\-expected second quarter earnings on August 5. While the Street was expecting it to report EPS of $1.96 on revenue of $1.52 billion, the company reported EPS of $2.18 on revenue of $1.53 billion. On July 28, Perrigo Company plc Ordinary Shares (NYSE:PRGO) announced that it would be acquiring Germany-based Naturwohl Pharma GmbH along with its leading dietary supplement brand, Yokebe. Daniel S. Och‘s OZ Management also initiated a stake in Perrigo Company plc Ordinary Shares (NYSE:PRGO) during the April-June period, purchasing over 3 million shares of the company.
Diversified healthcare company Baxter International Inc (NYSE:BAX) represented York Capital’s third-largest equity holding at the end of June. The fund initiated its stake in the company by purchasing over 8.22 million shares of it during the second quarter, which were valued at $570.47 million as of June 30. Baxter International Inc (NYSE:BAX) completed the spinoff of its bleeding disorder drug business into a separate publicly-traded company, Baxalta Inc (NYSE:BXLT), on July 1. Baxter International Inc (NYSE:BAX) reported an earnings and revenue beat for the second quarter on July 29. EPS for the quarter came in at $1.00 on revenue of $3.90 billion, compared to analyst estimates of
EPS of $0.94 on revenue of $2.40 billion. Having disclosed initiating a stake in Baxter International Inc (NYSE:BAX) by purchasing 3.95 million shares of the company during the second quarter, billionaire Dan Loeb’s Third Point issued an amended 13D filing on August 7 in which it reported owning 52.50 million shares or 9.6% of the outstanding shares of the company. Third Point’s stake in the company is activist in nature, with the fund seeking to get two seats on the company’s Board and make changes to its leadership.
Williams Companies Inc (NYSE:WMB) was York Capital Management’s third top new stock pick for the quarter The fund bought 5.76 million shares of the company during the quarter, which were worth slightly above $330.58 million as of June 30. In June, the Oklahoma-based energy infrastructure company rejected Energy Transfer Equity LP (NYSE:ETE)’s $53 billion buyout offer, following which it announced that it will open itself up to strategic alternatives such as a merger, sale, or the acquisition of the rest of its MLP, Williams Partners LP (NYSE:WPZ). On August 12, analysts at Argus reiterated their ‘Buy’ rating on the stock, while reducing their price target to $49.98 from $63 , nearly the same levels where the stock currently trades at. Among the hedge funds we cover in our database, Keith Meister‘s Corvex Capital was the largest shareholder of the company, owning over 41.68 million shares at the end of June.
Disclosure: None
