Louis Bacon’s Moore Capital Management has filed its 13F with the SEC for the reporting period of March 31. According to Forbes, Bacon has a real-time net worth of $1.75 billion and is the 391st richest person in the United States. The macro hedge fund manager received less-than-expected returns of 1.65% in 2014 managing Moore Capital Management, a disappointment considering his firms average annual returns of 18.8% through 2012. Bacon, one of the most secretive hedge fund managers in the world is known for his land conservation efforts and he filed a lawsuit on billionaire Peter Nygard because the latter was planning construction on his beachfront property.
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 84 percentage points, returning over 144% (read the details here). Hence a retail investor needs to isolate himself from the herd and take advantage of the best growth opportunities in the market by concentrating on small-cap stocks.
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As per its recent filing, Moore Capital Management has a public equity portfolio worth $4.55 billion, with its top ten stock holdings accounting for 41.89% of that. Bacon is showing a particularly strong taste for Chinese equities at the moment, with Alibaba Group Holding Ltd (NYSE:BABA), Baidu Inc (ADR) (NASDAQ:BIDU), and JD.Com Inc (ADR) (NASDAQ:JD) among the top stock picks of the fund manager. However we’ll bypass China and travel to the fabled land of Dividendium, by looking into Bacon’s investments in some major dividend stocks, including Northstar Realty Finance Corp (NYSE:NRF), McDonald’s Corporation (NYSE:MCD), Procter & Gamble Co (NYSE:PG), and Chatham Lodging Trust (NYSE:CLDT).
Moore Capital Management owns 2.41 million shares of Northstar Realty Finance Corp (NYSE:NRF) valued at $43.60 million. The real estate investment trust (REIT) offers dividend payments of $0.40 producing a yield of 8.84%, highest among the companies profiled in this article. According to a recent announcement made by the REIT, Northstar Realty Finance Corp (NYSE:NRF) will be included in the MSCI U.S. REIT Index (RMZ) effective after the closing of the market on May 29. David T. Hamamoto, CEO of the investment trust, said that this investment would introduce the company to a new institutional shareholder base and promote it amid the investment community. Northstar Realty Finance Corp (NYSE:NRF) has offered annualized returns of 20% since its initial public offering in 2004 and it manages net assets worth $18.5 billion as of December 31, 2014. Steadfast Capital Management and Christian Leone‘s Luxor Capital Group are among the primary investors of Northstar Realty Finance Corp (NYSE:NRF).
McDonald’s Corporation (NYSE:MCD) comes in at number two in the list of top dividend stocks of Moore Capital Management, whose current position in the restaurant company includes 410,000 shares valued at $39.95 million. The fast-food company has a current dividend yield of 3.52% and its shares have grown 2.41% year-to-date. A consumer behavior analysis firm, Placed, reported McDonald’s Corporation (NYSE:MCD) as the second-most visited store chain in the United States in March behind only Wal-Mart Stores, Inc. (NYSE:WMT). The restaurant chain has struggled of late, missing earnings estimates in its last five quarters. However, things are looking up as new CEO Steve Easterbook has announced a series of changes aimed at streamlining operations and improving performance. The CEO discussed the turnaround plan of McDonald’s Corporation (NYSE:MCD) in a video earlier this month stating that cutting long tiers of management and focusing on customers’ needs would be the prime targets of the company. The fast-food company has attracted investments from Southeastern Asset Management and Jonathon Jacobson‘s Highfields Capital Management.
Procter & Gamble Co (NYSE:PG) is another major dividend stock pick of Bacon, who owns 250,000 shares valued at $20.49 million. The packaged goods manufacturer has a dividend yield of 3.36%, boosted by its rough patch during the current year, with shares declining 14.68% year-to-date. Procter & Gamble Co (NYSE:PG) is ready to enter into the 3D bioprinting space with the launch of a major grant competition in Singapore. This competition will be open to research institutions in Singapore and will help the company come up with some profitable ideas in the industry. Earlier this month, Procter & Gamble Co (NYSE:PG) announced that it will close its Puerto Rico plant, eliminating 230 jobs, with the company shifting that plant’s operations to Browns Summit, along with some of those eliminated jobs. Investors with large positions in Procter & Gamble include Warren Buffett‘s Berkshire Hathaway and Donald Yacktman’s Yacktman Asset Management.
Moore Capital Management has increased its investments in Chatham Lodging Trust (NYSE:CLDT) during the first quarter by 175% to 550,000 shares valued at $16.18 million. The luxury hotel trust has dividend yields of 4.22%, with Chatham Lodging Trust (NYSE:CLDT) announcing a monthly dividend of $0.10 per share for May 2015 representing an annualized dividend of $1.20. Chatham Lodging Trust (NYSE:CLDT) reported earnings per share of $0.04 for the first quarter of 2015 against a loss of $0.07 per share in the first quarter of 2014. The firm owns 131 hotels, including high-end and premium hotels, through joint ventures and complete ownership. The REIT has a current rating of “Buy” with 1-year average price target of $33.25, indicating an upside of 17.03% from its current share price. Forward Management and Jeffrey Furber‘s AEW Capital Management are among the investment managers we track owning large positions in the company.
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