Jorge Paulo Lemann is a well-known Swiss-Brazilian investor. He is the richest person in both Brazil and Switzerland and is the principal co-founder of 3G Capital, which he formed along with Carlos Alberto Sicupira, Marcel Herrmann Telles and Roberto Thompson Motta in 2004. He obtained his bachelor’s degree in economics from Harvard University and started his finance career as a trainee with Credit Suisse in Geneva. He also co-founded Banco Garantia in 1971.
The value of 3G Capital’s equity portfolio stood at $1.27 billion at the end of the June quarter, according to its latest 13F filing, which also showed that 42% of the portfolio was represented by Energy stocks, followed by Materials and Consumer Discretionary companies, which amassed around 17% each. In this article, we will look at five stocks, in which 3G Capital initiated stakes during the second quarter.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
Charter Communications, Inc. (NASDAQ:CHTR) was 3G Capital’s largest holding at the end of the April-June period. During the quarter, the fund acquired a new stake containing 563,266 shares, worth $128.78 million, which accounted for 10.16% of the portfolio at the end of June. The number of funds from our database long Charter Communications stood at 134 at the end of the second quarter, while the total value of their positions amounted to $18.43 billion and represented 79.30% of the total outstanding shares. Last week, Charter Communications CEO, Tom Rutledge, said at the Communacopia Conference that the integration of Time Warner Cable and Bright House Networks is progressing well. Rutledge further said that the company’s primary objective is to “follow the customers wherever they go”.
3G Capital also acquired an 800,000-share stake in Royal Dutch Shell plc (ADR) (NYSE:RDS.A) during the second quarter, the value of which stood at $44.17 million at the end of June. Royal Dutch Shell had 37 funds tracked by us holding $1.71 billion worth of shares at the end of June, compared to 34 funds holding $915.80 million worth of shares at the end of the March quarter. Given the challenging environment, oil and gas producers have been facing over the last two years, several companies have been selling non-core assets. Recently, Reuters has reported that Royal Dutch was in discussions with A.P. Moller-Maersk to sell a portfolio of its North Sea assets. Reuters, citing sources, noted that the assets could be worth $2 billion.