Founded in 2000 with about $4 million in assets, Zimmerman’s Litespeed management held $1.06 billion worth of asset in its portfolio towards the end of 2014. The fund follows an event driven strategy seeking to capitalize on events such as mergers, cash tender offers, leverage buy-outs and restructurings such as bankruptcies, recapitalizations, spinoffs and liquidations. Zimmerman has a strong aversion for risk and therefore her fund uses almost no leverage and hedges her bets in a way so that potential losses do not exceed 1.5% to 2% of the firm’s portfolio value. Zimmerman, a competitive athlete (Litespeed being her preferred bicycle brand) herself, fuels the high energy and curiosity that runs through her fund. As of the fourth quarter the fund held 24 positions, with 32% of the portfolio invested in materials and another 25% in the consumer discretionary sector. Among the fund’s top three holdings were FMC Corp (NYSE:FMC), General Motors Company (NYSE:GM) and American Realty Capital Properties Inc (NASDAQ:ARCP).
While on the outset it may seem that an every day investor’s best chance to maximise his/her returns is to invest in a hedge fund, considering the extensive research that these firms carry out. However, our research has revealed that for the last 5 years an average hedge fund pocketed 4% of the total profits while their clients only got 52%. A strategy to avoid these overbearing fees, could be tracking hedge funds in order to uncover their most profitable picks, which we share through our newsletters. From August 2012 through March, 2015 our small-cap strategy returned 132.0%, while the S&P 500 ETF (SPY) returned only 52.6% during the same period.
With 2.4 million shares valued at $137.35 million, FMC Corp (NYSE:FMC) constituted 12.93% of Litespeed’s equity portfolio. It was Zimmerman’s largest holding at the end of the fourth quarter. Among over 700 hedge funds that we track, Litespeed’s stake in the company was the second largest, with Robert Joseph Caruso’s Select Equity Group being the first as it held some 4.34 million shares valued at $247.77 million. FMC Corp (NYSE:FMC) is a diversified chemical company serving agricultural, consumer and industrial markets globally with innovative solutions, applications and market-leading product.
Although down by about 23% over the last 52 weeks owing to a weak outlook for farm spending, FMC Corp (NYSE:FMC) has a significant upside potential in the future. The recent acquisition of Cheminova and divestiture of their alkali chemicals division has increased the agriculture chemicals business to 75% of sales. This shows the company’s renewed focus on the higher margin chemical businesses rather than the lower margin commodity businesses.
Marred by safety recalls worth nearly $4.0 billion during 2014, General Motors Company (NYSE:GM) is still up by about 8.6% over the last year. The firm’s board recently authorized a share buy-back program to the tune of 5 billion shares that is to be completed before the end of 2016. Litespeed held about 2.6 million shares of the automotive company valued at $90.49 million by the end of the fourth quarter. Warren Buffet’s Berkshire Hathaway holds the largest stake in the company among hedge funds with 41 million shares valued at $1.43 billion. General Motors Company (NYSE:GM) is also one of the favorite automotive picks among money managers.
Moving on to Litespeed’s third largest holding, American Realty Capital Properties Inc (NASDAQ:ARCP), which constituted about 8.52% of the portfolio value and comprised of 9.57 million shares valued at $86.6 million. Keith Meister’s Corvex Capital revealed an activist stake consisting of 70.64 million shares in the real estate investment trust (REIT) as of this month. The fund also requested a seat on the company’s board in order to assist the company in choosing a new CEO and Chairman for the company, but the request has been denied so far. American Realty Capital Properties Inc (NASDAQ:ARCP) fell out of investor’s favor in October amid accounting discrepancies. The recent release of restated financial statement has added some momentum back in the the company’s stock price.
Home Loan Servicing Solutions Ltd (NASDAQ:HLSS) was formed to acquire mortgage servicing assets consisting of mortgage servicing rights, rights to fees and other income from servicing mortgage loans, and associated servicing advances. Perella Weinberg Partners’ Xerion strategy and Israel Englander’s Millennium Management held about 469,100 shares valued at $9.16 million and 363,800 shares valued at $7.1 million respectively at the end of the fourth quarter. Home Loan Servicing Solutions Ltd (NASDAQ:HLSS) is down by about 14% over the last 52 weeks, following a steep decline in January this year when California was looking to suspend the company’s and its affiliates’ mortgage license claiming that they had failed to provide documentation showing that they complied with the state homeowner protection laws. Home Loan Servicing Solutions Ltd (NASDAQ:HLSS) was later let off the hook with a $2.5 million fine.
