Tipp Hill Capital Management is a New York City-based fund managed by Richard L. Haydon. The long/short equity strategy fund employs a global, multi-sector focus and holds an equity portfolio worth $92.40 million, as of the end of 2015. Richard Haydon, the Chief Investment Office of Tipp Hill has a vast experience, having served previously as a Senior Portfolio Manager and Managing Director at Neuberger Berman’s Straus Group and as a Partner and Senior Portfolio Manager at Leon Cooperman’s Omega Advisors. According to its last 13F filing, Tipp Hill has a diversified equity portfolio, with the largest share allocated towards transportation stocks. According to our own calculations, based on Tipp Hill’s long positions in companies with a market cap above $1.0 billion, Tipp Hill’s 12 holdings registered a weighted average loss of 15.9% in 2015, which even though is not a good result, is better than the returns registered by many other funds from our database with a similar portfolio composition. In this article we are going to take a look at Tipp Hill’s top five picks that the fund held heading into 2016.
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#5 ON Semiconductor Corp (NASDAQ:ON)
– Shares Owned by Tipp Hill Capital (as of December 31): 700,000
– Value of Holding (as of December 31): $6.86 Million
The holding remained unchanged during the fourth quarter and represented about 7.42% of Tipp Hill’s portfolio at the end of December. Over the last 12 months ON Semiconductor Corp (NASDAQ:ON)’s stock price has slid by more than 18%, while the semiconductor industry has posted an average loss of 3.5%. ON Semiconductor has recently extended its bid for Fairchild Semiconductor Intl Inc (NASDAQ:FCS), but kept the offer at $20 a share. According to Fairchild, the company also has a bid of $21.7 from a Chinese investor group. Among the hedge funds that we track at Insider Monkey, another shareholder of ON Semiconductor is Richard S. Pzena’s Pzena Investment Management, which disclosed holding 11.15 million shares in its 13F filing for the fourth quarter.
#4 American Airlines Group Inc (NASDAQ:AAL)
– Shares Owned by Tipp Hill Capital (as of December 31): 165,000
– Value of Holding (as of December 31): $6.98 Million
Tipp Hill’s stake in American Airlines Group Inc (NASDAQ:AAL) also remained unchanged during the October-December period. The share price of the $24.82 billion airline company has declined by 23% over the last 52 weeks. In its financial results for the fourth quarter, American Airlines Group Inc (NASDAQ:AAL) disclosed EPS of $2, which was $0.03 above the estimates, while revenues of $9.63 billion were in-line with expectations. Overall, American Airlines is set to benefit from capacity cuts at rival airlines, but the company’s exposure to Latin America might be a cause for concern given that Brazil is in recession and the Zika virus has affected travel to the continent. Cliff Asness‘ AQR Capital Management held about 2.18 million shares of American Airlines Group Inc (NASDAQ:AAL) at the end of December.
#3 WMIH CORPORATION (NASDAQ:WMIH)
– Shares Owned by Tipp Hill Capital (as of December 31): 2.82 million
– Value of Holding (as of December 31): $7.31 Million
The stock price of the $511.30 million reinsurance company is up by more than 13% over the last year. The company has been trying to identify and evaluate adequate acquisition opportunities in the financial services industry last year, but still hasn’t made any purchases. David Tepper‘s Appaloosa Management is one of the largest shareholders of WMIH CORPORATION (NASDAQ:WMIH) holding more than 16.90 million shares as of the end of December.
#2 Barrick Gold Corporation (USA) (NYSE:ABX)
– Shares Owned by Tipp Hill Capital (as of December 31): 1.08 million
– Value of Holding (as of December 31): $8 Million
After a 13% reduction during the fourth quarter, Tipp Hill’s position in Barrick Gold Corporation (USA) (NYSE:ABX) represented 8.66% of the fund’s portfolio. During the first six weeks of this year Barrick Gold’s stock surged by nearly 58% on the back of rising gold prices. However, the precious metal’s price had been lying low for so long before the recent rally that Barrick Gold recently marked down the value of its assets by $3 billion. The company also revised down its guidance for gold production in 2015 from a range of 6.2 million to 6.6 million ounces to between 6.1 million to 6.3 million ounces following an equipment failure at the Pueblo Viejo mine in the Dominican Republic. Billionaire Jim Simons’ Renaissance Technologies boosted its stake in Barrick Gold Corporation by 7.61 million shares during the fourth quarter to 25.71 million shares.
#1 Delta Air Lines, Inc. (NYSE:DAL)
– Shares Owned by Tipp Hill Capital (as of December 31): 220,000
– Value of Holding (as of December 31): $11.15 Million
During the last three months of 2015, Tipp Hill’s largest holding remained unchanged. So far this year the stock of one of the top airlines in the world has plummeted by nearly 20% amid an overall market sell-off and as the drop in fuel prices were offset by a slowdown in global growth and the strong dollar. However, going forward the company expects its fuel costs to further dwindle to $1.20 to $1.25 per gallon in 2016 from $1.85 a gallon that it was paying at the end of 2015. Delta Air Lines has been the most popular airline stock among the funds in our database several quarters in a row and with the current round of 13F filings almost finished, we will be able to see soon if the stock maintained its popularity during the fourth quarter. Meanwhile, Lansdowne Partners disclosed holding 26.06 million shares of Delta Air Lines as of the end of December.
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