Kynikos, the New York-based hedge fund founded by revered short seller Jim Chanos, recently submitted its 13F filing with the SEC for the reporting period of June 30. Although the fund managed regulatory assets worth over $3 billion as of March 30, its latest filing reveals that its long U.S. equity portfolio contained positions worth less than 10% of those assets, being valued at $251.16 million at the end of June. The filing also revealed that during the second quarter, Kynikos’ long equity portfolio had a quarterly turnover rate of 47.14% and that its top-10 holdings accounted for over 58% of the value of its equity portfolio.
In this article, we’ll take a look at five bullish bets made by Jim Chanos and his team during the second quarter and 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).
#5 FireEye Inc (NASDAQ:FEYE)
– Shares Owned by Kynikos (as of June 30): 246,898
– Value of Holding (as of June 30): $4.06 Million
FireEye Inc (NASDAQ:FEYE) was a new entrant to Kynikos’ long U.S. equity portfolio during the second quarter. The cybersecurity company has lost more than 60% of its market capitalization since last June and its stock is currently trading down by 30.57% in 2016. A large part of the stock’s decline over the past few quarters has been due to uncertainty regarding the company’s top-line results. Though FireEye has taken several measures to improve its profitability, including reducing its workforce, its revenue and cash flow projections continue to be dismal. For its most recent quarter, analysts had expected FireEye Inc (NASDAQ:FEYE) to report a loss of $0.39 per share on revenue of $181.76 million, whereas the company declared loss of $0.33 per share on revenue of $175 million. Following the earnings release, several analysts and research firms reduced their price targets on the stock, including analysts at Imperial Capital, who lowered their price target on FireEye to $15 from $25 on August 3, and also reduced their rating on the stock to ‘In-Line’ from ‘Outperform’. Billionaire Jim Simons‘ Renaissance Technologies made a two-fold increase to its stake in FireEye to 1.26 million shares during the second quarter.
#4 Starz (NASDAQ:STRZA)
– Shares Owned by Kynikos (as of June 30): 145,214
– Value of Holding (as of June 30): $4.34 Million
Starz (NASDAQ:STRZA) also made its debut in Kynikos’ portfolio during the second quarter. Like FireEye, Starz’ stock has also declined considerably from the levels it was trading at last summer. However, the decline in the stock has been fairly limited this year, as it currently trades with a year-to-date loss of 8%. Earlier this month, the media and entertainment company extended its deal with actor and rapper Curtis ’50 Cent’ Jackson, who serves as the executive producer of its flagship TV series ‘Power’. Starz (NASDAQ:STRZA) doesn’t pay any dividend to its investors, but its stock is trading at an attractive trailing P/E of 15.46, which is considerable lower than the average trailing P/E of its competitors. Several hedge funds covered by Insider Monkey initiated a stake in Starz during the second quarter, including Tim David‘s Guardian Point Capital, Jeffrey Bronchick’s Cove Street Capital, and Warren Buffett’s Berkshire Hathaway.
On the second page of this article we’ll check out three more stocks that Mr. Chanos is bullish on.