Harvard Management alum Jonathan Jacobson co-founded Highfields Capital Management in 1998, with the endowment providing $500 million of the fund’s initial fundraising. We track quarterly 13F filings from Highfields as well as hundreds of other hedge funds and notable investors as part of our work developing investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year. We also like to go through individual managers’ filings; even though the information in this 13F is a bit old, investors may be able to identify interesting stocks which are worth a closer look. Read on for our quick take on Highfields’s five largest holdings from the end of March or see the full list of stocks the fund reported owning.
Jacobson and his team’s top pick from Q1 was News Corp (NASDAQ:NWSA), which has since broken up into Twenty-First Century Fox (NASDAQ:FOX) and News Corp (NASDAQ:NWSA). Spinouts of a business unit tend to create shareholder value, as management of both the spinout and the parent become better able to focus on operations (read more about spinouts) and the News Corp breakup was thought to be a similar situation by many funds. Markets have somewhat bid up the price as a result- Fox’s forward P/E is 18, for example- though that is actually in line with valuations of other large media and entertainment companies.
Highfields reported a position of almost 33 million shares in SLM Corp (NASDAQ:SLM), or “Sallie Mae.” The originator and servicer of student loans has had its stock price rise 45% over the last year, outperforming the market. This increase in price has reduced its dividend yield to 2.6%, though we’d note that the valuation is still fairly low at least in terms of the earnings reported SLM Corp (NASDAQ:SLM)’s recent financial statements. Billionaire Leon Cooperman’s Omega Advisors had close to 15 million shares in its portfolio according to that fund’s own 13F filing (check out Cooperman’s stock picks).