Mason Hawkins‘ Southeastern Asset Management is one of the oldest hedge funds in the industry. The reason why the fund has survived (and grown) for over 40 years is fairly obvious; it has managed to deliver superior returns to its investors on a constant basis. However, according to our analysis, the 29 long positions the fund held in companies worth over $1 billion during 2015 generated a weighted average loss of 14.2%. However, our analysis doesn’t include the returns generated by a fund’s positions in currencies, commodities, bonds, or its short bets. In this article we will go through the fund’s top stock picks going into 2016, which it revealed in its 13F filing with the Securities and Exchange Commission (SEC) for the fourth quarter of 2015.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points in our backtests that covered the period between 1999 and 2012 (see the details here).
#5 Scripps Networks Interactive, Inc. (NYSE:SNI)
Shares Owned by Southeastern Asset Management (as of December 31): 13.06 million
Value of Holding (as of December 31): $721.31 million
Though Southeastern Asset Management trimmed its stake in Scripps Networks Interactive, Inc. (NYSE:SNI) by 1% during the fourth quarter, owing to the 10% gain the stock saw, the company jumped two spots and ranked as the fund’s fifth largest equity holding at the end of December. Unlike most stocks, Scripps Networks Interactive, Inc. (NYSE:SNI) is trading in the green year-to-date. For the fourth quarter, analysts expect the company to report EPS of $1.01 on revenue of $836.84 million, compared to EPS of $1.02 on revenue of $658 million it posted for the same quarter the previous year. Billionaire Mario Gabelli‘s GAMCO investors also reduced its stake in Scripps Networks Interactive by 1% to 1.09 million shares during the fourth quarter.
#4 Wynn Resorts, Limited (NASDAQ:WYNN)
Shares Owned by Southeastern Asset Management (as of December 31): 12.58 million
Value of Holding (as of December 31): $870.42 Million
Wynn Resorts, Limited (NASDAQ:WYNN) is the only company in this list in which Southeastern Asset Management increased its stake by 3% during the fourth quarter. Due to the downturn in Macau and the excessive debt on its balance sheet, Wynn Resorts, Limited (NASDAQ:WYNN)’s stock has lost over 65% of its value in the last two years. However, on the back of better-than-expected earnings it reported recently, shares of the company are trading up over 11% year-to-date. While analysts had projected EPS of $0.76 on revenue of $948.37 million for the fourth quarter of 2015, Wynn Resorts, Limited reported EPS of $1.03 on revenue of $946.90 million. On February 17, analysts at Nomura reiterated their ‘Neutral’ rating on the stock, but upped the price target to $70 from $64. Ricky Sandler‘s Eminence Capital reduced its stake in the company by 44% to 786,140 shares during the fourth quarter.