Selz Capital’s Top Q3 Bets: Kinder Morgan Inc (KMI) Macquarie Infrastructure Company, LLC (MIC) & More

History shows that hedge funds are great stock pickers, but currently, the $3 trillion hedge funds industry is facing an investor exodus due to disappointing returns, high fees and insider trading scandals. However, our research reveals an interesting flip-side to this gloomy picture. Hedge funds’ long sides of portfolios always tend to beat the market. For example, 627 hedge funds out of 660 tracked by Insider Monkey returned 8.3% in the third quarter. These returns are way more than the actual returns, which are always squeezed due to losses from short positions and hedged returns.

Selz Capital, a New York-based hedge fund founded by Bernard Selz in 2004, has also generated solid gains from the long side of its portfolio. According to our calculations, the firm returned 10.80% from 28 of its long bets in companies which have a market cap of at least $1 billion. As of the end of the third quarter, Selz’s equity portfolio is valued at over $429.43 million, compared to $351.72 million a quarter earlier. Let’s take a look at some of the Selz’s top bets, which include Macquarie Infrastructure Company, LLC (NYSE:MIC), Magellan Midstream Partners, L.P. (NYSE:MMP), Air Lease Corp (NYSE:AL), and Kinder Morgan Inc (NYSE:KMI).

The fund left its stake in Macquarie Infrastructure Company, LLC (NYSE:MIC) unchanged at 1.01 million shares during the third quarter, however, as the stock gained 14.2% in the same period, the value of the position climbed to $84.23 million from $74.93 million. During the second quarter, the number of funds from our database long Macquarie Infrastructure Company declined by four to 47. Among these funds, MSDC Management amassed the largest stake, which was valued at $215.7 million at the end of June. It was followed by Brenner West Capital Partners, with a $160.9 million holding. Other funds bullish on Macquarie Infrastructure Company LLC (NYSE:MIC), included Newbrook Capital Advisers and Tiger Legatus Capital.

Magellan Midstream Partners, L.P. (NYSE:MMP) is another company in which Selz Capital left its stake unchanged at 434,650 shares amid a 5.8% decline registered by the stock during the third quarter. In this way, the value of the holding declined to $30.75 million from $33.03 million. A total of 16 funds tracked by Insider Monkey were bullish on Magellan Midstream Partners heading into the third quarter, down by 6% over the quarter. Osterweis Capital Management held the most valuable stake in Magellan Midstream Partners, L.P. (NYSE:MMP), which was worth $67.4 million at the end of the second quarter. PEAK6 Capital Management, Driehaus Capital, and Mariner Investment Group were also bullish on Magellan Midstream Partners, L.P. (NYSE:MMP).

Selz Capital upped its position in Air Lease Corp (NYSE:AL) by 3% to 1.03 million shares worth $29.43 million during the third quarter. Meanwhile, the stock advanced by 6.9% during the same period. The number of funds tracked by us bullish on Air Lease Corp declined by 26% to 29 during the second quarter. The largest stake in Air Lease Corp (NYSE:AL), among these funds, was held by Osterweis Capital Management, which reported holding $60.6 million worth of stock as of the end of June. It was followed by Royce & Associates with a $50.2 million position. Other investors bullish on the company included Basswood Capital and D E Shaw.

Then there’s Kinder Morgan Inc (NYSE:KMI), whose stock surged by 24.3% between July and September, which sent the value of Selz Capital’s position to $22.16 million from $17.94 million, as the fund left the holding unchanged at 958,211 shares. Selz Capital was one of 53 funds from our database that held shares of Kinder Morgan at the end of June, down by five funds over the quarter. The largest position was held by Berkshire Hathaway, which reported ownership of $496.7 million worth of stock as of the end of June. On the second spot was FPR Partners which amassed $274 million worth of shares. Moreover, Zimmer Partners, Renaissance Technologies, and D E Shaw were also bullish on Kinder Morgan Inc (NYSE:KMI).

Disclosure: none