BlueCrest Capital Management, founded by billionaire Williams Reeves and Michael Platt in 2000, is one of the largest hedge fund firm in Europe. According to its last submitted Form ADV, it managed regulatory assets worth almost $60 billion, as of March 30. The firm recently submitted its 13F filing with SEC for the reporting period ending June 30, revealing a long US equity portfolio worth $2.41 billion. The filing revealed that during the second quarter BlueCrest’s equity portfolio had a quarterly turnover 102.64% and that its top-10 equity holdings at the end of that period amassed 30.80% of the value of its equity portfolio. An interesting information that emerged from the fund’s recent filing was that it became increasingly bullish on the energy sector during the second quarter. While at the end of March energy stocks accounted for only 9% of the value of the BlueCrest’s equity portfolio, at the end of June, 18% of the fund’s portfolio value was amassed by them. In this post, we will take a look at BlueCrest’s top-five stock picks while entering the third quarter, four of which belong from the energy sector.
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points in our backtests that covered the period between 1999 and 2012 (see the details here).
#5 Royal Dutch Shell plc (ADR) (NYSE:RDS.A)
– Shares Owned by BlueCrest Capital Management (as of June 30): 231,822
– Value of Holding (as of June 30): $12.80 Million
BlueCrest Capital Management boosted its stake in Royal Dutch Shell plc (ADR) (NYSE:RDS.A) by 286% during the second quarter. Another hedge fund covered by us that increased its stake in the company during that period was Phill Gross and Robert Atchinson’s Adage Capital Management, which upped its holding by 76% to 1.32 million shares. Royal Dutch Shell plc (ADR) (NYSE:RDS.A)’s stock has lost 13% of its value so far in the current quarter, however, it is still trading up 4.39% year-to-date. The European oil giant currently pays a quarterly dividend of $0.94 per share, which based on the last trading price of its stock translates into a lucrative annual dividend yield of 7.83%. According to some analysts who track the stock, at current oil prices Royal Dutch Shell plc has a leeway of only one year to fund its current dividend because the company has been using a combination of debt and asset sales for it and after a year the rising debt will put too much pressure on its balance sheet. During the second quarter, the ownership of Royal Dutch Shell plc among funds covered by us increased by three to 37 and the aggregate value of their holdings in it jumped by 87% to 41.71 billion.
#4 BP plc (ADR) (NYSE:BP)
– Shares Owned by BlueCrest Capital Management (as of June 30): 377,562
– Value of Holding (as of June 30): $13.41 Million
BP plc (ADR) (NYSE:BP) jumped several spots in BlueCrest Capital Management’s equity portfolio during the second quarter owing to a over ten-fold increase that the fund made to its stake in the company during that period. The company has lost over 55% of its market capitalization since mid-2014, though its stock is currently trading up by 7.35% for 2016. Like Royal Dutch Shell, BP plc (ADR) (NYSE:BP)’s stock also sports a lucrative dividend yield at present, of 7.14%, and several analysts fear that the rising debt burden on the company will force it to slash its quarterly divined soon unless there is an improvement in the macros or it ramps up its disinvestment program. On September 15, Reuters reported that at least three companies are set to bid for BP plc’s 50% stake in Chinese petrochemicals joint venture SECCO, whose sale is expected to bring the company more than $2 billion in proceeds. The number of hedge funds covered by us long BP plc increased by six to 40 during the second quarter and the aggregate value of their holdings in it skyrocketed by 156.6% to $1.76 billion during that time.