Roberto Mignone’s Bullish Stock Picks

Roberto Mignone’s Bridger Management  follows a long/short strategy after extensively researching companies. Their analysts do the legwork and dig deep by visiting companies, attending trade shows, and talking to journalists and competitors. Katherine Burton profiled Roberto Mignone in her book “Hedge Hunters”. She explains Mignone’s strategy as follow:

BRIDGER MANAGEMENT

“Mignone’s core positions include roughly thirty long positions, which are each limited to 5 percent of the portfolio initially and never get larger than 10 percent. He has about sixty core short positions, each no bigger than 2 percent at the start. He never allows them to grow bigger than 4 percent. Overall, the gross exposure is 150 to 200 percent, meaning the value of the long and short positions adds up to 1.5 to 2 times the net assets in the fund. The net exposure is between 20 and 60 percent.”

Roberto Mignone graduated from Harvard Business School and joined John Griffin at Blue Ridge Capital. Right before his 29th birthday in July 2000, he launched Bridger Management, which now manages about $2 Billion. He charges a 1.5 percent management fee and 20 percent incentive fee. He believes fund size is a drag on the performance of a long/short fund manager, so he has no desire to run a much bigger fund than what he is currently running.

At the end of December, Mignone’s 13F portfolio reached $2.1 Billion, an increase of around 25% from September.

Company Ticker Return Value (Millions)
GENERAL MOTORS CO GM -1.1% 70
COVIDIEN PLC COV 11.1% 68
DIRECTV GROUP INC DTV 8.9% 67
MARKET VECTORS GOLD MINERS GDX -9.3% 46
ZIMMER HOLDINGS INC ZMH 12.9% 40
CARMAX INC KMX 11.2% 30
COPART INC CPRT 10.1% 30
LPL INVESTMENT HOLDINGS INC LPLA -9.4% 29
RESEARCH IN MOTION LTD RIMM 15.0% 27
PSS WORLD MEDICAL INC PSSI 10.5% 22
SCIENTIFIC GAMES CORP SGMS -1.7% 20
UNIVERSAL DISPLAY CORP PANL 32.0% 18
INSULET CORP PODD 16.1% 18
PRICELINE.COM INC PCLN 14.0% 15
BOOZ ALLEN HAMILTON HOLDING BAH -2.4% 15
ANHEUSER-BUSCH INBEV BUD -1.9% 13
KROGER CO KR 1.5% 13
NETSPEND HOLDINGS INC NTSP 13.1% 11
COGENT COMMUNICATIONS GROUP CCOI -0.4% 10
INSPIRE PHARMACEUTICALS INC ISPH -53.2% 8

The value weighted return of these 20 new stocks is 5.4% since the end of 2010, vs. SPY’s 5.9% return.

General Motors tops the list of Roberto’s Mignone’s new stock picks. Perry Capital’s Richard Perry and Omega Advisor’s Leon Cooperman bought significant amounts of GM as well.

David Tepper added Covidien to his portfolio during third quarter.

Jim Simons’ Renaissaince, Chase Coleman’s Tiger Global, Tom Steyer’s Farallon Capital have Directv (DTV) investments.

Roberto Mignone also joined other hedge fund managers with a small investment in Gold Miners ETF (GDX). Daniel Loeb, Brevan Howard, and Curtis Schenker’s Scoggin also like GDX as an inflation hedge. Earlier today we reported Tom Steyer’s new LPLA position. Roberto Mignone also added LPLA to his portfolio.

LPLA lost 9.4% this year.

Mignone’s best performing new stock picks this year are Universal Display (PANL), Insulet Corp (PODD), and Research In Motion (RIMM). So far, none of the equity hedge funds we follow have significant amounts of these stocks.

Mignone also increased some of his healthcare holdings by at least 60% during fourth quarter: Ironwood Pharmaceuticals (IRWD), Allergan Inc (AGN), Onyx Pharmaceuticals (ONXX), and Cardinal Health Inc (CAH).

We compiled Mignone’s top 25 positions at the end of 2010:

Company Ticker Return Value (Million)
CARDINAL HEALTH INC CAH 8.5% 101
WASTE CONNECTIONS INC WCN 6.2% 96
MORGAN STANLEY MS 11.0% 82
IESI-BFC LTD BIN -4.4% 80
HERTZ GLOBAL HOLDINGS HTZ 13.3% 78
GENERAL MOTORS CO GM -1.1% 70
POPULAR INC BPOP 6.1% 70
HYATT HOTELS CORP H 7.5% 69
COVIDIEN PLC COV 11.1% 68
AVIS BUDGET GROUP INC CAR -0.4% 68
DIRECTV GROUP INC DTV 8.9% 67
STATE STREET CORP STT 1.4% 65
BOSTON SCIENTIFIC CORP BSX -9.1% 59
PALL CORP PLL 11.6% 59
ONYX PHARMACEUTICALS INC ONXX -2.0% 59
GENPACT LTD G -4.3% 56
GOOGLE INC GOOG 5.1% 52
EXPEDIA INC EXPE -15.1% 47
MARKET VECTORS GOLD MINERS GDX -9.3% 46
ISTAR FINANCIAL INC SFI 14.5% 43
CAREFUSION CORP CFN 8.1% 42
ALLERGAN INC AGN 7.6% 41
ZIMMER HOLDINGS INC ZMH 12.9% 40
NATIONAL CINEMEDIA INC NCMI -7.4% 37
MOBILE TELESYSTEMS MBT -5.3% 32

Eight of his eleven top holdings managed to beat the SPY since the end of 2010. Unfortunatel, he had too many stocks that actually had negative returns, so overall his top 25 positions returned 3.7%, underperforming the SPY’s 5.9%. Mignone’s portfolio has more unique names than other Tiger cubs’ portfolios. This is what we like about Mignone; his portfolio is less correlated with hedge fund indices.

Nevertheless, he still has a few “normal” investments. Tom Steyer has IESI BFC in his portfolio. Barry Rosenstein’s Jana Partners has Hertz (HTZ) in its portfolio. Jim Simons, Andreas Halvorsen’s Viking Global, Zweig-DiMenna, and Jonathan Auerbach’s Hound Partners have Google in their portfolios. Fellow Tiger cub Lee Ainslie has Expedia  and David Einhorn has Carefusion investments.

Roberto Mignone’s Bridger Management started selling some of its holdings. United Health (UNH), Activision Blizzard (ATVI), Carefusion (CFN), Princeton Review (REVU), AMR Corp (AMR), and Electronic Arts (ERTS) are among the positions that were trimmed by at least 35%.

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