Bruce Silver‘s Silver Capital Management LLC has submitted its 13F filing with the Securities and Exchange Commission (SEC), revealing a US equity portfolio worth $18.61 million at the end of March. Though the New York-based fund currently manages around $180 million of investors’ money, its equity portfolio has historically been only a fraction of the total assets it manages. According to the filing, during the first quarter Silver Capital Management LLC initiated a stake in 24 stocks, raised and reduced its holdings in seven and four stocks, respectively, and closed its entire stakes in 14 companies. The filing also revealed that the fund reduced its stake in all of its four largest holdings during the first quarter, but despite that those four stocks accounted for over 27% of the value of its equity portfolio at the end of that period. In this post, we are going to discuss the fund’s top five equity picks going into the second quarter.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
#5 McKesson Corporation (NYSE:MCK)
– Shares Owned by Silver Capital Management LLC (as of March 31): 6,780
– Value of Holding (as of March 31): $1.06 million
Let’s begin with McKesson Corporation (NYSE:MCK), which was added to Silver Capital Management LLC’s equity portfolio during the first quarter. Shares of the medical supplies distribution company started 2016 on a dismal note, falling by over 20% during the first quarter and amid a small rally in April, are currently trading 16% in green year-to-date. On February 25, the company announced that it has agreed to acquire two privately held medical firms that focus on oncology for a combined value of $1.2 billion. A week after that announcement, McKesson Corporation (NYSE:MCK) revealed that it will be acquiring Ontario-based Rexall Health from Katz Group for $2.2 billion. This deal is expected to get completed by the end of this year and will be marginally accretive to the company’s fiscal 2017 earnings. For the fourth quarter of its fiscal 2016, McKesson Corporation posted EPS of $2.44, missing the estimate of $3.14 by a wide margin, while its revenue of $46.68 billion was slightly below the expected $46.83 billion. Martin D. Sass’ MD Sass is another shareholder of McKesson Corporation, owning 447,926 shares as of the end of March.