Columbus Circle Investors’ Boldest Q2 Moves

Founded in 1975, Columbus Circle Investors is one of the oldest institutional money management firms that we track at Insider Monkey. The fund, whose Sr. Managing Director is Clifford G. Fox, CFA, recently submitted its 13F filing with the Securities and Exchange Commission for the reporting period ended June 30, revealing a U.S. equity portfolio worth $9.97 billion, down from $11.22 billion on March 31.

According to the filing, the fund initiated a stake in 66 stocks during the second quarter, while closing out of 78 holdings. The filing also revealed that the information technology sector was the one most favored by the fund, with stocks from that sector accounting for 32% of the value of the fund’s equity portfolio. Information technology was followed by the consumer discretionary and healthcare sectors, which each accounted for 22% of the portfolio’s value. In this article we will take a closer look at some of the boldest moves made by the fund as it prepared for the second-half of 2016

At Insider Monkey, we track around 765 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).

Kraft Heinz Co (NASDAQ:KHC)

– Shares Owned by Columbus Circle Investors (as of June 30): 887,964

– Value of Columbus Circle Investors’ Holding (as of June 30): $78.57 Million

Kraft Heinz Co (NASDAQ:KHC) was a new entrant into Columbus Circle Investors’ equity portfolio during the second quarter. Shares of the food and beverage company remained range-bound for almost nine months after the completion of the Kraft Foods and Heinz merger, however, due to the rally they have seen over the past four months, they are currently trading with year-to-date gains of over 15%. Kraft Heinz Co (NASDAQ:KHC) currently pays a quarterly dividend of $0.57 per share, which translates into an annual dividend yield of 2.70%. Some analysts think that the stock is currently overvalued, trading at 28-times its 2016 earnings estimates. On the other hand, analysts at Susquehanna reiterated their ‘Buy’ rating and $98 price target on the stock on July 17, with the price target representing potential upside of 15.10%. Among the hedge funds that reduced their stake in Kraft Heinz during the second quarter was Stephen J. Errico‘s Locust Wood Capital Advisers, which lowered its holding by 44% to 245,814 shares.

Newell Brands Inc (NYSE:NWL)

– Shares Owned by Columbus Circle Investors (as of June 30): 1.62 Million

– Value of Columbus Circle Investors’ Holding (as of June 30): $78.95 Million

Columbus Circle Investors boosted its stake in consumer goods company Newell Brands Inc (NYSE:NWL) by 128% during the second quarter. Newell Brands’ stock spiked recently after the company reported its second quarter earnings and is currently trading up by 23.02% year-to-date. While analysts had expected the company to report EPS of $0.72 on revenue of $3.76 billion for the quarter, Newell Brands declared EPS of $0.78 on revenue of $3.86 billion. Following the earnings release, several analysts reiterated their ‘Buy’ ratings on the stock, including analysts at Deutsche Bank, who apart from reiterating their rating on August 1, also upped their price target on the stock to $60 from $52. Ken Fisher‘s Fisher Asset Management initiated a stake in Newell Brands Inc (NYSE:NWL) during the second quarter, purchasing 45,431 shares of the company.

We’ll reveal three of Columbus Circle’s biggest second quarter moves on the next page.

Pioneer Natural Resources (NYSE:PXD)

– Shares Owned by Columbus Circle Investors (as of June 30): 522,843

– Value of Columbus Circle Investors’ Holding (as of June 30): $79.05 Million

Moving on, Pioneer Natural Resources (NYSE:PXD) was another stock in which Columbus Circle Investors boosted its stake significantly during the second quarter, by 689%. Shares of the independent oil and natural gas exploration and production company have appreciated by 28.21% so far in 2016, owing largely to the revival in energy commodity prices. For its second quarter, the company reported a loss of $0.22 per share on revenue of $786 million, a mixed performance in light of analysts’ estimates of a loss of $0.34 per share on revenue of $805.59 million. According to analysts who track the company, the margin available to Pioneer Natural Resources (NYSE:PXD) for capital expenditure can grow to $19.18 per barrel of oil equivalent (BOE) in the next few years, from $9.46 at present, if the company’s production at the Permian Basin continues to grow at 32.5% per annum. On August 2, analysts at Barclays upgraded the stock to ‘Overweight’ from ‘Equal Weight’ and also raised their price target on it to $175 from $152. Russell Lucas‘ Lucas Capital Management lowered its stake in Pioneer by 46% to 9,140 shares during the second quarter.

Panera Bread Co (NASDAQ:PNRA)

– Shares Owned by Columbus Circle Investors (as of June 30): 409,650

– Value of Columbus Circle Investors’ Holding (as of June 30): $86.82 Million

Panera Bread Co (NASDAQ:PNRA) has continued its multi-year bull run this year, rising by over 10% so far in 2016. Over the last five years the stock has delivered greater than 300% returns and is currently trading close to its lifetime high of $224.15, a day after the release of its fiscal year 2016 third quarter earnings release on July 27. Though the company managed to beat analysts’ estimates of EPS of $1.74 on revenue of $696.46 million by declaring EPS of $1.78 on revenue of $698.90 million, several analysts are concerned about the moderate sales growth that the company has been exhibiting over the past few quarters, as well as its non-existent margin growth. Taking those factors into account, some analysts feel that trading at a forward P/E of 27.59 and a price-to-sales multiple of 1.88 makes Panera Bread Co (NASDAQ:PNRA)’s stock overvalued at the moment. While Columbus Circle Investors made a ten-fold increase to its stake in the company during the second quarter, Charles Paquelet‘s Skylands Capital lowered its stake in the stock by 15% to 17,000 shares during the same period.

Thermo Fisher Scientific Inc. (NYSE:TMO)

– Shares Owned by Columbus Circle Investors (as of June 30): 668,109

– Value of Columbus Circle Investors’ Holding (as of June 30): $98.72 Million

The 363% increase that Columbus Circle Investors made to its stake in Thermo Fisher Scientific Inc. (NYSE:TMO) during the second quarter helped the position jump from the 118th-most valuable spot in the fund’s equity portfolio at the end of March to the 25th-most valuable at the end of June. Thermo Fisher Scientific Inc. (NYSE:TMO)’s stock has also performed well this year, rising by 9.51% in 2016, and is currently trading very close to its lifetime high of $160.68. The company reported its second quarter earnings on July 28, declaring EPS of $2.03 on revenue of $4.54 billion for the quarter. For the same quarter of the previous year, Thermo Fisher pulled in EPS of $1.84 on revenue of $4.27 billion. The stock currently sports an average rating of ‘Buy’ and an average price target of $171.13 from the 19 leading analysts and research firms on Wall Street who track it. Billionaire Larry Robbins‘ Glenview Capital lowered its stake in Thermo Fisher by 40% to 3.6 million shares during the second quarter.

Disclosure: None