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Horseman Capital Management Enters Q4 With Four Bank Stocks Atop Portfolio

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The broader market sell-off that occurred during the third quarter lowered the valuations of most U.S-listed companies, which became a more attractive destination for the capital held by hedge funds and other investors as a result. Horseman Capital Management’s 13F filing for the September quarter supports this conclusion. The London-based money management firm founded by John Horseman in 2000 increased its holdings in 14 stocks and initiated three new positions during the third quarter. The firm sold out just six of its positions and reduced its holdings in six other stocks. The result was the market value of its portfolio increasing to $393.35 million from $388.79 million quarter-over-quarter. It is highly unlikely that the third quarter performance of the firm’s stock picks lifted the market value of its portfolio, which points to the fact that John Horseman’s firm was buying U.S equities while others were selling. Having this in mind, this article will discuss the top five stock picks of Horseman Capital Management at the end of the third quarter and their performance during the three-month period.

Wells Fargo WFC

Rob Wilson /

We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 102%, over two-times greater returns than the S&P 500 during the same period (see more details).

John Horseman
John Horseman
Horseman Capital Management

#5 TJX Companies Inc. (NYSE:TJX)

Shares Owned by Horseman Capital Management (as of September 30): 527,200 shares

Value of Holding (as of September 30): $37.65 million

TJX Companies Inc. (NYSE:TJX) retained its spot on the list of Horseman Capital Management’s top five stock picks. The London-based investment firm increased its position in the off-price retailer of apparel and home fashion by 23,000 shares during the latest quarter, with the enhanced position accounting for 9.57% of the firm’s portfolio on September 30. It is anticipated that the upcoming holiday season’s sales growth will decline relative to the same season last year, but that off-price stores such as TJX might benefit from lower-than-expected tightening of the labor market. TJX shares gained more than 8% during the third quarter, and are up by 5% year-to-date. Gabriel Plotkin’s Melvin Capital Management added a 1.3 million-share position in TJX Companies Inc. (NYSE:TJX) to its portfolio during the June quarter.

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#4 Goldman Sachs Group Inc. (NYSE:GS)

Shares Owned by Horseman Capital Management (as of September 30): 251,300 shares

Value of Holding (as of September 30): $43.67 million

Goldman Sachs Group Inc. (NYSE:GS) lost one position in the aforementioned list during the recent quarter, primarily owing to its disappointing stock performance. The stock lost 16.49% in the third quarter, but has advanced by more than 3% since the end of September. According to a recent article published by Reuters, the investment bank is seeking engineers, data scientists, operations staff, and customer service employees, in an attempt to strengthen its consumer lending business. To be more specific, Goldman Sachs is reportedly setting up its online lending business, which is believed to be a strong area of growth for the future. Renowned investor Warren Buffett of Berkshire Hathaway reported ownership of 12.63 million shares of Goldman Sachs Group Inc. (NYSE:GS) via his firm’s 13F for the June quarter.

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The three banking stocks which head Horseman Capital’s portfolio will be discussed on the next page.

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