Our data culled from the 659 funds in our database which filed 13Fs for the June quarter, and whose portfolios contained at least 5 long positions in companies valued at $1 billion, revealed some startling statistics. Foremost was the fact that an impressive 95% of them delivered positive stock returns with those long positions during the third quarter based on our methodology. In comparison, S&P 500 ETFs returned just 3.3% during the quarter, so that high a percentage of funds posting gains is a noteworthy feat. However, what we don’t see in 13F filings are hedge funds’ holdings that don’t necessarily do as well: the short-side of their portfolios, as well as their low-yield debt positions. Couple that with demanding fees, and you can see why hedge funds consistently underperform the market net of fees, despite being quality stock pickers. That’s why at Insider Monkey, we analyze only the top stock picks of the top hedge funds, to cut through the fees and underperformance.
Connective Capital Management is a California-based hedge fund managed by Rob Romero. Connective’s portfolio had a total worth of over $33.36 million on June 30 and the fund’s stock picks returned 12.13% in the third quarter when looking at its 8 long positions in non-microcap stocks held as of June 30. In this article, we’ll take a look at the performance of four of the fund’s favorite stocks, which are Everyday Health Inc (NYSE:EVDY), ANSYS, Inc. (NASDAQ:ANSS), ChemoCentryx Inc (NASDAQ:CCXI), and Hollysys Automation Technologies Ltd (NASDAQ:HOLI).
Connective Capital Management unloaded almost 44% of its stake in Everyday Health Inc (NYSE:EVDY) during the second quarter, leaving it with 68,565 shares of the company, which had a total value of $541,000. It seems the decision to sell some of the position was a good one, as it lost 2.4% in the third quarter. Heading into the third quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, down by 11% from the first quarter of 2016. When looking at the institutional investors followed by Insider Monkey, D E Shaw holds the number one position in Everyday Health Inc (NYSE:EVDY), while the second largest stake is held by Anand Parekh of Alyeska Investment Group, with a $2.2 million position. Some other members of the smart money that are bullish consist of Cliff Asness’ AQR Capital Management, Israel Englander’s Millennium Management.
Connective Capital Management added ANSYS, Inc. (NASDAQ:ANSS) as a new position in its portfolio in the second quarter, buying 13,030 shares of the company, which were valued at $1.18 million on June 30. The stock posted moderate gains of 2% during the third quarter and is flat in the fourth quarter after a huge decline earlier this month followed by a quick recovery. At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long ANSYS, a 9% fall from the first quarter of 2016. The largest stake in ANSYS, Inc. (NASDAQ:ANSS) was held by Generation Investment Management, which reported holding $323 million worth of stock as of the end of June. It was followed by Select Equity Group with an $89.3 million position. Other investors bullish on the company included Bares Capital Management, Intermede Investment Partners, and Ariel Investments.
We’ll check out two more of the fund’s stock picks on the next page.