Barry Wittlin’s WCG Management appears to be more bullish on the U.S equity markets again following a big downturn in the fund’s exposure to equities to close the year. The value of the fund’s equity portfolio doubled during the first quarter of 2015 to $215.15 million from $107.33 million at the end of 2014. That figure to close 2014 was a drop of nearly 50% from the $204.33 million the fund’s equity portfolio held at the end of the third quarter of 2014. Among a large amount of turnover, the fund’s biggest move was a large new position in McDonald’s Corporation (NYSE:MCD).
WCG Management is just one of more than 700 hedge funds that we have in our database, whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most smaller investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of more than 137%, beating the S&P 500 Total Return Index by 82 percentage points (see the details).
Wittlin founded the New York-based WCG Management in 2007 after previously serving as the Senior Vice President and Head of Strategic Risk Trading for Global Markets & Investment Banking at Bank of America Merrill Lynch, with whom he had worked since 1996. His experience trading currencies and derivatives has carried over to his fund, which allocates only a small portion of its assets under management towards the equities markets. The fund`s equity portfolio is extremely top-heavy, with the top 10 of 19 total long positions as of March 31 accounting for 90.58% of the fund’s portfolio.
WCG’s new position in McDonald’s Corporation (NYSE:MCD) is now the second largest in the fund’s equity portfolio. The fund purchased 247,250 shares of the iconic fast food chain, which had a value of just under $24.24 million at the end of the first quarter. The move into McDonald’s Corporation (NYSE:MCD) by WCG isn’t a huge surprise given that the fund has shown an affinity for dividend stocks and McDonald’s is one of the most stable dividend stocks around. Aside from that, there is some bullish sentiment on the stock from billionaire Larry Robbins, who expressed optimism towards the company’s direction and prospects under new management through his fund Glenview Capital’s most recent investor letter. Robbins had no position in McDonald’s Corporation (NYSE:MCD) as of the end of 2014, and has yet to file a 13F for the latest reporting period.
Autodesk, Inc. (NASDAQ:ADSK) jumps from eleventh to third position in WCG’s equity portfolio after the fund increased its holding by 333% during the first quarter. The position as of March 31 consists of 366,833 shares valued at $21.60 million. We recently ranked Autodesk, Inc. (NASDAQ:ADSK) as the fourth-most likely takeover target that hedge funds were betting on, with it being a possible takeover target of Adobe Systems Incorporated (NASDAQ:ADBE). Overall fund ownership out of the funds we track stood at 39 at the end of 2014, with a total of $2.50 billion invested in the design software producer. Billionaire Stephen Mandel was the top shareholder of those investors. Shares of Autodesk, Inc. (NASDAQ:ADSK) dipped 2.36% in the first quarter.
The CF Industries Holdings, Inc. (NYSE:CF) holding in WCG’s equity portfolio also made a big jump, from eighth to fourth after the position was increased by 201% during the first quarter to 75,136 shares valued at $21.49 million. The top cash returns stock according to Goldman Sachs, CF Industries Holdings, Inc. (NYSE:CF) has a cash return of over 22% thanks to a solid dividend yield of 1.94% and a robust share buyback program that included the repurchasing of $2 billion worth of stock in 2014. Operating in both the nitrogen and phosphate segments, CF Industries Holdings, Inc. (NYSE:CF) returned 4.61% during the first quarter, underperforming its industry peers due to weak financial results. The quantitative fund D E Shaw held the largest position in CF Industries out of the funds in our database.
Visa Inc (NYSE:V) is yet another company WCG was bullish on during the first quarter, increasing its position in the credit services company by 161%. In fact of WCG’s current top 11 holdings, all of them were added to during the first quarter. WCG’s Visa Inc (NYSE:V) position now contains 277,000 shares with a value of $18.22 million. Visa was essentially flat for the quarter, returning -0.03%, a quarter during which it underwent a 4:1 stock split, a move which prompted Apple Inc. (NASDAQ:AAPL) inclusion in the Dow Jones Industrial Index to balance out its tech weighting. Visa Inc (NYSE:V) announces its fiscal second quarter results after the close of the market today, with analysts expecting earnings to be flat from the previous year. Billionaires Ken Fisher and Warren Buffett will be two keen observers of the results, having the two largest positions in Visa in our database.
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