Curtis Macnguyen founded Ivory Capital in 1998 after five years at Siegler, Collery & Co. and after having worked in investment banking before that. Ivory runs a long/short portfolio which attempts to match much of the risk factors between its long and short holdings in order to better focus on what the fund believes will end up driving value. This approach also allows it to focus in particular on avoiding macro risks that it finds particularly concerning, such as inflation. Macnguyen’s conservatism also shows in that it looks for a 30% margin of safety compared to a stock’s intrinsic valuation- a bit high for a value investor- and insists on being able to identify a catalyst rather than assuming that in most cases the market will correct itself.
When we look at Ivory’s 13F portfolio for the third quarter of 2012, we see that the majority of the fund’s capital is invested in the technology, services, and financial sectors with a number of tech names in particular at the top of its portfolio. Read on for a quick look at Ivory’s five largest 13F stock positions by market value as of the end of the third quarter or see the fund’s full list of stock picks.
Yahoo! Inc. (NASDAQ:YHOO). Yahoo was Ivory’s top pick with a position of 9.5 million shares. In its most recent quarterly report revenue was actually down 1% with earnings being abnormally high from the sale of a business unit. Analyst expectations for 2013 imply a P/E multiple of 17, which seems high considering the company’s market position. Yahoo was billionaire Dan Loeb’s Third Point’s largest position, with the fund actually adding shares after its successful activist campaign. Find more of Loeb’s favorite stocks.
American International Group, Inc. (NYSE:AIG). The bailed-out insurer- which recently returned a profit to the Treasury- made our list of the ten most popular stocks among hedge funds in the third quarter of 2012 (see the rest of the top ten list). For an insurance company like AIG we’d be interested in considering both the earnings multiple and the price/book ratio; at about half the book value of its equity and only 10 times forward earnings estimates, we think that the market is putting too conservative a valuation on the stock.
T. Boone Pickens and Macnguyen agreed on an energy stock: