A newly amended 13G filing with the SEC reveals that Matt Sirovich and Jeremy Mindich’s Scopia Capital currently owns 1.88 million shares in Mellanox Technologies Ltd. (NASDAQ:MLNX), which represent 4.09% of the company’s outstanding common stock. The New York-based hedge fund firm has reduced its position in the company by 1.26 million shares, compared to the stake disclosed in the latest 13F filing.
Hedge funds have been underperforming the market for a long time. However, this was mainly because of the huge fees that hedge funds charge as well as the poor performance of their short positions. Hedge funds’ long positions performed actually better than the market. Small-cap stocks, activist targets, and spin offs were among the bright spots in hedge funds’ portfolios. For instance, the 15 most popular small-cap picks among hedge funds outperformed the market by more than 84 percentage points since the end of August 2012 (read the details here). This strategy also managed to beat the market by double digits annually in our back tests covering the period between 1999 and 2012.
With an equity portfolio worth $4.7 billion, Scopia Capital is a value-driven hedge fund founded by Matt Sirovich and Jeremy Mindich in April 2001. It primarily employs a fundamentals-based investment approach and it has been quite successful in delivering strong performance throughout its existence as the hedge fund firm posted an annualized return of 9.65% from its inception in 2001 to August 2012. Even though Scopia Capital’s returns do not stand out from the crowd, the firm provides a really strong downside protection of the capital it manages. Specifically, the hedge fund has delivered positive performance each year ever since its inception, including 2008 when the S&P 500 plummeted by 37% (Scopia Capital returned 1.81%).
Mellanox Technologies Ltd. (NASDAQ:MLNX) is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage, whose stock is up by 6.30% year-to-date, although it has been losing ground lately, amid weak preliminary results reported by its industry peer, QLogic Corporation (NASDAQ:QLGC).