At Insider Monkey, we think that an investor can outperform the market by following the aggregate moves of big hedge funds into the top picks they are bullish on. We track 750 hedge funds, and among them is Indus Capital, managed by David Kowitz and Sheldon Kasowitz, and we are going to take a look at four companies that were in its equity portfolio at the end of the June quarter, all of which delivered positive returns in the third quarter. Those stocks are Tata Motors Limited (ADR) (NYSE:TTM), China Biologic Products Inc (NASDAQ:CBPO), HDFC Bank Limited (ADR) (NYSE:HDB), and Cosan Limited (USA) (NYSE:CZZ).
David Kowitz and Sheldon Kasowitz’ Indus Capital had an equity portfolio worth $1.06 billion at the end of September, up from $1.03 billion at the end of June. The fund’s stocks delivered a weighted average return of 14.50% in the third quarter, based on its 28 long positions in companies that were worth $1 billion or more on June 30. Even though this way of calculating weighted average returns differs from the fund’s actual returns, because it doesn’t include shorts and other non-reported positions, it still provides us with a useful tool when it comes to estimating the fund’s investment expertise on the long side of its portfolio. With this in mind, let’s proceed with a look at the above-mentioned companies and their Q3 performances.
The first stock we are going to analyze today is a manufacturer of motor vehicles, Tata Motors Limited (ADR) (NYSE:TTM), which has advanced by 16.12% since the beginning of the year. Indus Capital lowered its stake in the company in the June quarter by 3%, reporting a position that was worth $54.42 million. In the following quarter, the stock returned 15.4%, but the fund may not have experienced that positive return entirely, since by the end of the quarter it had decreased its stake by 70%, to 455,388 shares, which were worth $18.21 million on September 30.
Heading into the third quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a 20% dip from one quarter earlier. More specifically, Fisher Asset Management was the largest shareholder of Tata Motors Limited (ADR) (NYSE:TTM), with a stake worth $331.5 million reported as of the end of June. Trailing Fisher Asset Management was AQR Capital Management, which amassed a stake valued at $71.2 million. Renaissance Technologies and Capital Growth Management also held valuable positions in the company.
In biopharmaceutical company China Biologic Products Inc (NASDAQ:CBPO), Indus Capital lowered its stake by 7% during the second quarter, reporting a position that amassed 3.59% of its equity portfolio and was worth around $37.13 million. The fund has to be pleased with the investment, despite trimming its stake slightly, seeing as the stock advanced by 17.1% in the following three months. By the end of the third quarter, the fund had further trimmed its stake by 29%, holding a position that was worth $30.53 million, counting 245,237 shares.
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, same as in the first quarter of 2016. One of the largest stakes in China Biologic Products Inc (NASDAQ:CBPO) was held by Soros Fund Management, with a $25.2 million position. Other investors bullish on the company included Renaissance Technologies, York Capital Management, and PEAK6 Capital Management.
We’ll check out two more of the fund’s stock picks on the next page.