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Here’s How Activist Watcher 13D Management’s 13F Holdings Are Doing

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13D Management is a Nebraska-based fund that primarily invests in companies which are a target of shareholder activism. The fund was founded in December 2011 by Kenneth Squire, who also serves as the Chief Investment Strategist of the fund. Prior to starting the fund, Mr. Squire used to run a  subscription-based research company called 13D Monitor. At Insider Monkey we pay special attention to activist investors and the moves they make and since 13D Management acts as a proxy to measure the performance of activist investors as a group, we routinely track the fund’s performance. Our analysis of the fund’s 13F holdings in companies worth at least $1 billion shows that the 33 positions held by 13D Management delivered a weighted average return of 0.05% during the first quarter, which was nearly the same return that the broader market delivered during that period. In this post, we will be going through the top five moves made by the fund during the last quarter of 2015 and analyze how those stocks have performed so far this year.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

Kenneth Squire
Kenneth Squire
13D Management

Cheniere Energy, Inc. (NYSEMKT:LNG)

– Shares Owned by Lone Pine Capital (as of December 31): 168,469 shares

– Value of Holding (as of December 31): $6.27 million

Let’s start with Cheniere Energy, Inc. (NYSEMKT:LNG), in which 13D Management initiated a stake during the fourth quarter itself. Michael Barnes and Arif Inayatullah also initiated a stake in the company during the same period, by purchasing 1 million shares. Cheniere Energy, Inc. (NYSEMKT:LNG)’s stock ended the first quarter down by 9.18%, but due to the gains it has registered so far this month, it is currently trading 2% in green year-to-date. At the end of February, the company announced that it had started shipping the first batch of LNG from the Sabine Pass, which led several analysts to upgrade the stock, including analysts at Goldman Sachs, who on February 23 upgraded the stock to a ‘Buy’ from ‘Neutral’ while keeping their price target on it unchanged at $46. However, in the past few weeks some analysts have raised concerns about Cheniere Energy, Inc.’s ability to continue exporting LNG considering that its break-even LNG pricing is in the range of $7.50-$8.50/MMBtu, whereas the current price of LNG in Europe and Asia is in the $4.20-$4.39/MMBtu range. Furthermore, owing to a potential increase in supply from Australia analysts expect the price of LNG in international markets to drop even further.

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