Richard L. Haydon‘s Tip Hill Capital Management recently revealed its equity holdings as of the end of the first quarter in a filing with the Securities and Exchange Commission. Before establishing Tip Hill in July 2009, Hayden was a Partner and Senior Portfolio Manager at Straus Group. He has also served at Leon Cooperman’s Omega Advisors. Tip Hill has a two-pronged investment strategy: a value-oriented long/short approach and investments driven by catalysts such as M&A, spin-offs or management changes. The former strategy focuses on companies with strong free cash flow generation among other factors and has an investment horizon of one to three years and a target return of 50% within two years, while investments under the latter approach last less than a year with an annual return target of 20-30%.
Let us take a closer look at some of the top holdings of the fund formerly known as Yield Capital Partners (Y/Cap Management) until May 2014. Among the fund’s prominent holdings at the end of the first quarter were its stakes in Delta Air Lines, Inc. (NYSE:DAL), Alibaba Group Holding Ltd (NYSE:BABA), Yahoo! Inc. (NASDAQ:YHOO), JPMorgan Chase & Co. (NYSE:JPM), and Micron Technology, Inc. (NASDAQ:MU).
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Tip Hill held some 200,000 shares of Delta Air Lines, Inc. (NYSE:DAL) valued at $8.99 million at the end of the first quarter. The $37.98 billion company represents about 7.13% of the fund’s portfolio value. A tough year so far has led to the stock declining by 5.33% year-to-date. Along with American and United Air Lines, Delta Air Lines, Inc. (NYSE:DAL) has put up a front against the Middle Eastern Airlines: Etihad, Emirates and Qatar Airways, which it thinks are taking business away on account of unfair subsidies from their respective oil rich countries. Delta Air Lines, Inc. (NYSE:DAL)’s revenue for the first quarter was in line with the estimates and stood at $9.39 billion. An earnings per share (EPS) of $0.45 for the quarter beat estimates by $0.01. Among the funds that we track, Paul Ruddock and Steve Heinz’s Lansdowne Partners held the largest holding in Delta Air Lines, Inc. (NYSE:DAL) at the end of the fourth quarter.
Tip Hill initiated a stake in the e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) during the first quarter, with some 50,000 shares valued at $4.16 million. The stock is down by about 18.32% year-to-date on account of varied factors ranging from weakness in the Chinese economy to increased competition from rival JD.com, and even the expiration of shareholders’ lockup period. There is a good chance that the drag of all these factors on Alibaba Group Holding Ltd (NYSE:BABA)’s stock will prove to be short-term and Tip Hill is betting on just that. Other funds betting on the same side as Haydon are Dan Loeb‘s Third Point and Rob Citrone’s Discovery Capital Management.
Tip Hill’s Yahoo! Inc. (NASDAQ:YHOO)’ holding amounted to 184,000 shares valued at $8.18 million. It represented 6.48% of the fund’s portfolio value and was the third largest equity holding. Yahoo! Inc. (NASDAQ:YHOO) not only posted disappointing results for the first quarter, but provided a weak guidance for the second quarter as well. The $0.15 EPS for the quarter were $0.03 below the estimates and revenues of $1.04 billion came in $20 million lighter than expected. Display ad revenue fell 7% to $381 million and search revenue fell 3% to $432 million for the quarter as compared to the same quarter last year. According to some analysts, Yahoo! Inc. (NASDAQ:YHOO) is undergoing a transformation to increase the contribution of its core business in the company’s top line and this will take at least a few more quarters. D E Shaw, founded by David Shaw, held about 13.54 million shares of Yahoo! valued at $683.75 million at the end of the fourth quarter.
Another newly initiated stake during the first quarter was in JPMorgan Chase & Co. (NYSE:JPM), with it consisting of 120,000 shares valued at $7.27 million. The investment bank looks to be in better shape following its first quarter financial results. Return-on-equity rose to 14% from 11% during the same quarter last year. Besides uncertain legal and regulatory costs the bank is also facing competition from payment start-ups like Square and LendingClub Corp (NYSE:LC). Another fund that is betting on JPMorgan Chase & Co. (NYSE:JPM)’s success is Ken Fisher’s Fisher Asset Management.
Micron Technology, Inc. (NASDAQ:MU) has slid by 16.41% year-to-date despite delivering better than expected financial results for its second fiscal quarter, the reason being the weak guidance provided by the company for the next quarter. The 3D NAND technology that Micron Technology, Inc. (NASDAQ:MU) has developed with Intel Corporation (NASDAQ:INTC) could prove to be just the catalyst that the company needs to stage a comeback later this year. Tip Hill increased its holding in Micron by 12% during the first quarter to 250,000 shares valued at $6.78 million. David Einhorn’s Greenlight Capital held a huge stake in Micron Technology, Inc. (NASDAQ:MU) amounting to 31.26 million shares valued at $1.09 billion at the end of last year.
Disclosure: None
