The deadline for submitting 13F filings for the first quarter of 2016 was May 16, which means retail investors can now have a look at the equity portfolios of every major hedge fund vehicle, as of March 31. While some believe these quarterly 13F filings are not overly informative and useful for the investment community because they are filed with up to a 45-day delay, it does pay off to at least have a look at what hedge funds are doing. One only has to look at how the market reacted to Warren Buffett’s new position in Apple Inc. (NASDAQ:AAPL) to comprehend the weight that is given to the investment decisions of some of these money managers (with the caveat that Mr. Buffett is probably the most acclaimed investor in the world). Having this in mind, Insider Monkey has pinpointed five prominent new positions added to the equity portfolios of four world-class hedge fund managers tracked by Insider Monkey during the first quarter of the year.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Billionaire Jim Simons Purchases New Stake in Freshly-Acquired SanDisk
Jim Simons’ Renaissance Technologies LLC acquired a new stake of 1.77 million shares of SanDisk Corporation (NASDAQ:SNDK) during the first quarter, which was valued at $135.02 million on March 31. In October 2015, the manufacturer of storage solutions agreed to be acquired by Western Digital Corp (NASDAQ:WDC), an acquisition that was successfully completed on May 12. Under the terms of the deal, SanDisk shareholders received $67.50 per share in cash and 0.2387 shares of Western Digital. The multi-billion-dollar cash-and-stock deal was crucial to Western Digital, as the acquirer’s core business that involves selling platter-based hard disk drives has been pressured by tough competition from makers of solid-state drives (SSDs). The acquisition is set to increase Western Digital’s market share in the SSD market to approximately 14%, making the acquirer the second-largest player in the industry after Samsung. Thomas Steyer’s Farallon Capital was the owner of 6.05 million shares of SanDisk Corporation (NASDAQ:SNDK) at the end of March.
Billionaire Dan Loeb Acquires 3 Million-Share Stake in Lowe’s Companies
In the first quarter of 2016, Dan Loeb’s Third Point LLC added a 3.00 million-share position in Lowe’s Companies Inc. (NYSE:LOW) to its portfolio. The new position, worth $227.25 million on March 31, accounted for roughly 2.1% of Third Point’s equity portfolio at the end of the quarter. Just recently, the leading home improvement company received final regulatory approval to acquire RONA, a Canadian retailer and distributor of hardware, building materials and home renovation products. The $2.3 billion deal received approval under the Investment Canada Act and clearance from the Competition Bureau, so the deal is anticipated to be completed by the end of May. The transaction is set to accelerate the expansion of Lowe’s Companies in the Canadian market, as the acquirer’s store count will increase to 538 from a mere 42 stores. Shares of Lowe’s have gained 13% in the past three months and are up by 1% year-to-date. Edgar Wachenheim’s Greenhaven Associates owns 8.85 million shares of Lowe’s Companies Inc. (NYSE:LOW) as of the end of the first quarter.
Head to the next page to see three more of the biggest hedge fund purchases in the first quarter.