As the first quarter of 2015 has finished we are able to provide you with relevant analysis reflecting the institutional investors’ equity portfolios returns based on the 13F filings among the hedge funds from our database. Insider Monkey tracks more than 700 hedge funds in order to analyze their returns and identify the most profitable stocks. Having set a unique methodology that calculates the returns of the 15 most popular small-cap stocks among a tracked group of hedge funds, Insider Monkey is giving therefore the possibility to discover a market segment that is generally overlooked by the general public. Furthermore, in the last 2.5 years, our small-cap strategy returned 132.0% compared with the S&P 500 ETF (SPY) return of only 52.6% (read more details about why we follow hedge funds’ activity).
Using this methodology we have been able to reflect the general performance of the Joel Greenblatt’s Gotham Asset Management. The fund has about 900 positions in its latest 13F filing, of which 774 positions are represented by companies with a market capitalization of more than $1 billion. These positions moderately outperformed the market, obtaining an average return of 2.6% in the first quarter of 2015, while the S&P 500 Index ETF (SPY) has returned only 0.9 %.
The first three companies from Gotham Asset Management, in which the fund owns largest long positions are Bunge Ltd (NYSE:BG), Gilead Sciences, Inc. (NASDAQ:GILD), and Pilgrim’s Pride Corporation (NASDAQ:PPC). The stocks had an average negative return of 7.78% during the first three months of 2015, but the holdings in them represent a relatively small percentage of approximately 2.3% from the total portfolio value of $12.36 billion, denoting the fact that Joel Greenblatt is diversifying a lot his portfolio; nevertheless it is important to analyze the reasons that stay behind such a poor performance.
Bunge Ltd (NYSE:BG), a $12.2 billion agribusiness and food company, represents the largest holdings in Gotham Asset Management’s equity portfolio. The stake amasses 1.06 million shares, valued at $96.07 million, equal to 0.77% of Gotham’s portfolio value. Bunge Ltd (NYSE:BG)’s stock decreased by 9.07% during the first three months of 2015, impacted by a decline in revenues for the fourth quarter and a net loss caused by a drop in price of soybean meal and oil. With prices expected to stay at a low level, the company’s future revenues and profits are also in danger. Among the funds that we track, the largest shareholder of Bunge Ltd (NYSE:BG) is Ralph V. Whitworth’s Relational Investors, with 4.95 million shares.
Another stock that contributed to Gotham’s low performance is Pilgrim’s Pride Corporation (NASDAQ:PPC), which dropped by 18.39%. The chicken producers have been lately identified as the most shorted stock on US market while Pilgrim’s Pride Corporation (NASDAQ:PPC), being the second largest producer of chicken in the world, has been directly affected by the overseas buyers limiting imports of the US poultry as a consequence of recent infections of bird flu. Gotham owns 2.86 million shares of Pilgrim’s Pride Corporation (NASDAQ:PPC), the stake representing only 0.75% of its equity portfolio. Another large shareholder of the company is Jim Simons‘ Renaissance Technologies, which raised its stake by 72% during the fourth quarter of 2014 to 2.94 million shares. Nevertheless, it should be taken into consideration that demand for chicken is on the rise as the Americans prefer it to any other type of meat, which could explain why investors might be bullish on the stock.
On the other hand, the stock of Gilead Sciences, Inc. (NASDAQ:GILD) has appreciated by 4.11% in the first quarter of 2015 and Gotham increased his position by 52% in the last quarter of 2014 to 1.0 million shares, the $95.15 million stake being the second-largest in the fund’s equity portfolio. Even though the stock of the biotech company appreciated less significantly than other of its peers from the industry, it provides a safer bet due to its size and a track record of earnings growth. Gilead Sciences, Inc. (NASDAQ:GILD) is also one of the most popular healthcare stocks among the funds that we track, with 97 investors disclosing long positions in the latest round of 13F filings, with an aggregate value of over $5.0 billion. Cliff Asness, Samuel Isaly, Julian Robertson are among the shareholders with significant long positions in Gilead Sciences, Inc. (NASDAQ:GILD).
Disclosure: none
