Founded by John Zaro in 1999, Bourgeon Capital is a Connecticut-based long/short equity hedge fund. The fund is currently co-managed by Mr. Zaro along with Michael Keohane, who joined the fund in 2002 after working at billionaire Steve Cohen’s erstwhile hedge fund SAC Capital. According to Bourgeon Capital’s most recent ADV, it managed regulatory assets worth $262.7 million at the end of June. The fund recently submitted its 13F filing with the SEC for the reporting period of September 30, revealing a long U.S. equity portfolio worth $156.06 million. The filing also revealed that Bourgeon Capital’s equity portfolio had a quarterly turnover of 30.43% during the third-quarter and that the fund’s exposure was greatest towards the tech sector, stocks from which accounted for one-fourth of its portfolio’s value.
Considering Bourgeon’s fondness for tech stocks, in this article, we are going to take a look at its top-5 picks from that space and will discuss how these stocks have been performing of late.
At Insider Monkey, we track around 750 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).
#5 Apple Inc. (NASDAQ:AAPL)
– Shares Owned by Bourgeon Capital (as of September 30): 40,240
– Value of the Holding (as of September 30): $4.54 million
Bourgeon Capital increased its stake in Apple Inc. (NASDAQ:AAPL) by 20% during the third quarter, which helped push the hardware giant up to being the fifth -largest tech position held by the fund at the end of September. Shares of Apple Inc. (NASDAQ:AAPL) have taken a hit recently, after the company came out with its fiscal fourth-quarter numbers. Nevertheless, the stock is still trading in the green for the year, up by 1.42%. For its fourth-quarter, analysts had expected Apple to report EPS of $1.66 on revenue of $46.88 billion. While Apple managed to beat their earnings estimate by $0.01, its revenue of $46.85 billion was a tad lower than expectations. The US Patents and Trademark Office (USPTO) recently approved and published a patent filed by the company in 2014, which shows that Apple is working on bringing a radical change to the design of its bestselling product, the iPhone. The patent has led analysts and tech experts to believe that the next generation iPhone will have a flexible screen that will be both bendable and foldable.
– Related Reading: iSurprise: 7 Amazing Apple Patents for the Next iPhone
#4 Paypal Holdings Inc (NASDAQ:PYPL)
– Shares Owned by Bourgeon Capital (as of September 30): 112,800
– Value of the Holding (as of September 30): $4.62 million
Paypal Holdings Inc (NASDAQ:PYPL) has been a part of Bourgeon Capital’s equity portfolio ever since it was spun-off from parent eBay Inc (NASDAQ:EBAY) last year. During the third-quarter, the fund inched up its stake in the electronic payment processing company by 20%. Other hedge funds that also increased their stakes in Paypal Holdings Inc (NASDAQ:PYPL) marginally during that period included Paul Cantor, Joseph Weiss, and Will Wurm’s Beech Hill Partners and billionaire Ken Fisher‘s Fisher Asset Management. Paypal’s stock recently made its lifetime high of $44.52 after the company reported its third-quarter results, and is currently trading up by 14% year-to-date. In the past few weeks, analysts have raised concerns over the company’s balance sheet, arguing that over 75% of its EBITDA is still derived from parent eBay and its subprime credit book. According to them, the company’s credit book is of extremely low quality and with eBay planning to end or renegotiate its existing operating agreement with PayPal when it comes up for expiration, the latter’s stock could witness a severe fall going forward.
On the next page we’ll check out the top-3 tech stock picks of the fund.