According to a recent filing with the Securities and Exchange Commission David Kowitz and Sheldon Kasowitz’s Indus Capital has increased its stake in Jamba, Inc. (NASDAQ:JMBA) to about 1.3 million shares from 675,900 shares held earlier by the $6.99 billion alternative investment management firm. The current stake represents about 8.13% of the $253 million restaurant retailer of better-for-you food and beverage offerings.
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Prior to launching Indus Capital in 2000, Kowitz and Kasowitz worked together at Soros Fund Management since 1995. Headquartered in New York, Indus has offices in London, Hong Kong, Tokyo, San Francisco and Stamford. The firm believes that the geographical spread of employees creates a dispassionate approach to investment. The long/short fund aims to deliver high risk-adjusted returns by investing in bull markets while preserving capital in the tough ones. At the end of March, the market value of Indus’ public equity portfolio stood at $507.76 million with the technology sector forming 44% of this value. The top two equity holdings included Alibaba Group Holding Ltd (NYSE:BABA) and Sunedison Inc (NYSE:SUNE).
But why do we track the hedge fund activities? From one point of view we can argue that hedge funds are consistently under performing when it comes to net returns over the last three years, when compared S&P 500. But that doesn’t mean that we completely neglect the hedge fund activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. A small-cap approach, which includes 15 small-cap stock picks of best hedge fund managers, consistently outperformed the S&P 500 since August 2012. These stocks have returned 144% so far since its launch in August 2012, whereas S&P 500 managed to return less than 60% (see the details). This is the primary reason behind our emphasis on the hedge fund activities and sentiments.
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Indus initiated a position in Jamba, Inc. (NASDAQ:JMBA) during the first quarter. The company’s stock is up by 4.64% year-to-date amid first quarter financial results that missed the estimates on both the top and bottom lines. The restructuring efforts at Jamba, Inc. (NASDAQ:JMBA) are in full swing as the company is moving to an asset light model by refranchising its stores. Recently, nine stores in California were refranchised to Blended Star Norcal. By the end of the third fiscal quarter the company is expecting to close another six to seven transactions involving 90-100 stores, with aggregate value amounting to somewhere between $22 million to $25 million. Glenn W. Welling‘s Engaged Capital is the largest stockholder of Jamba, Inc. (NASDAQ:JMBA) within our database with some 1.58 million shares valued at $23.27 million.
With increasing its position in Jamba, Indus has raised the value of the holding to more than $20 million, which is far from the value of its top holdings. The investor’s positions in Alibaba Group Holding Ltd (NYSE:BABA) and Sunedison had a more substantial impact on its returns with Sunedison Inc (NYSE:SUNE)’s stock jumping by 61.4% since the beginning of the year and Alibaba declining by more than 17%.
Since its IPO in September last year Alibaba Group Holding Ltd (NYSE:BABA)‘s stock has slid by about 8.6%. After slashing its stake by 30% during the December-March quarter, Indus’ holding in the e-commerce giant amounts to 769,800 shares valued at $64.08 million. According to the Wall Street Journal, Alibaba Group Holding Ltd (NYSE:BABA) is trying to place a bet on the Indian e-commerce industry by jointly investing about $500 million in Snapdeal.com with Foxconn Technology. This would give the two companies a joint stake of about 10%. However, Indian regulatory approval still awaits. Among the billionaires that we track, 14 had an aggregate investment of $2.86 billion in Alibaba Group Holding Ltd (NYSE:BABA) at the end of March, as compared to 15 billionaires with $4.45 at the end of the previous quarter. Rob Citrone’s Discovery Capital Management is the largest stockholder among those with 8.77 million shares valued at $730.36 million.
During the first quarter Indus cut its stake in Sunedison Inc (NYSE:SUNE) by 24% to 5.59 million shares valued at $134.21 million. Being the fund’s largest holding, the stake represented 26.43% of Indus’ portfolio value. The decision to cut the position could have been one of Indus’ profit-taking moves since the stock gained 24% in the first three months of the year alone. The operator of clean power generation assets is expanding as it recently announced plans to acquire Central America’s largest renewable energy firm, GME, and also Continuum Wind Energy, which operates wind plants in the Indian states of Maharashtra and Gujrat. David Einhorn‘s Greenlight Capital is the largest stockholder of Sunedison Inc (NYSE:SUNE), among the funds that we track, owning some 24.95 million shares valued at $598.89 million.
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