Top Bets of Parametrica Management – Barron’s Penta No. 1 Fund

The world’s premier investing publication Barron’s recently compiled Barron’s Penta annual hedge fund ranking and the top hedge fund vehicle on this year’s list is a big surprise indeed. I would bet my bottom dollar that most stock market participants know close to nothing about Parametrica Management. This Hong Kong-based investment firm topped Barron’s Penta ranking this year, with the Asian asset manager posting a three-year compound annualized return of almost 30% through the end of 2015. Parametrica Management, founded by Xiongwei Ju in 2009, posted an impressive gain of 45% last year, whereas the entire hedge fund industry lost money on aggregate. The founder of the Hong Kong-based investment firm, which specializes in statistical arbitrage, previously served as a managing director and senior portfolio manager at Israel Englander’s Millennium International Management. Leaving this discussion aside, Insider Monkey decided to have a look at Parametrica Management’s top equity positions as of the end of the first quarter of 2016, as well as discuss the performance of those positions to date.

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#5. Herman Miller Inc. (NASDAQ:MLHR)

– Shares owned by Parametrica Management as of March 31: 15,151

– Value of Parametrica Management’s holding as of March 31: $468,000

Parametrica Management acquired a new stake of 15,151 shares of Herman Miller Inc. (NASDAQ:MLHR) during the first three months of 2016, which was valued at $468,000 on March 31. The shares of the manufacturer of office furniture and related items have gained 10% since the beginning of 2016. Herman Miller reported net sales of $536.5 million for its third quarter of fiscal 2016 that ended February 27, up 3.9% relative to the same quarter of the prior year. The growth in the company’s top line, accompanied by sustained gross margin expansion and controlled operating expenses, fueled the company’s top line growth. Diluted earnings per share grew to $0.46 from $0.35 reported a year ago. The shares of office furniture maker are currently changing hands at around 13.8-times expected earnings, below the forward PE ratio of 16.5 for the S&P 500 gauge. Royce & Associates, founded by Chuck Royce, was the owner of 1.12 million shares of Herman Miller Inc. (NASDAQ:MLHR) at the end of March.

#4. Western Alliance Bancorporation (NYSE:WAL)

– Shares owned by Parametrica Management as of March 31: 14,749

– Value of Parametrica Management’s holding as of March 31: $492,000

The Hong Kong-based asset manager also added a 14,749-share position in Western Alliance Bancorporation (NYSE:WAL) to its portfolio during the January-to-March period. The new position was worth $492,000 at the end of March and accounted for 1.8% of the firm’s entire portfolio. In late April, the bank holding company announced the completion of its acquisition of a domestic select-service hotel franchise finance loan portfolio from General Electric Company (NYSE:GE)’s GE Capital US Holdings, as part of the seller’s strategy to divest its finance arm. Western Alliance paid $1.28 billion for the loan portfolio that had a yield of 4.8%. The company’s interest income for the first quarter of 2016 increased by 39% year-over-year to $154.3 million, primarily due to a $2.48 billion increase in its average loan balance, as well as an increase in the average yield on loans. Western Alliance shares are 5% in the red year-to-date. John Brennan’s Sirios Capital Management reported ownership of 2.61 million shares of Western Alliance Bancorporation (NYSE:WAL) through the latest round of 13Fs.

The second page of this article will reveal the top three equity positions in Parametrica Management’s portfolio at the end of the March quarter.

#3. Insys Therapeutics Inc. (NASDAQ:INSY)

– Shares owned by Parametrica Management as of March 31: 33,562

– Value of Parametrica Management’s holding as of March 31: $537,000

The investment firm founded by Xiongwei Ju initiated a new position in Insys Therapeutics Inc. (NASDAQ:INSY) during the March quarter comprised of 33,562 shares, which were valued at $537,000 on March 31. The medical marijuana company has seen its market value plunge by 55% since the start of 2016. With 25 states across the United States having already approved Medical Marijuana laws and five more states voting on these laws in 2016, investors could anticipate the accessibility and acceptability of cannabis-based drugs to increase at a high pace in the foreseeable future. Insys Therapeutics currently generates revenue from its only marketed product called Subsys, approved for the treatment of breakthrough cancer pain in opioid-tolerant patients. Four analysts have coverage on the specialty pharmaceutical company, with three of them rating the company a “Strong Buy” and one of them rating it a “Hold”. Samuel Isaly’s OrbiMed Advisors disclosed a stake of 4.56 million shares of Insys Therapeutics Inc. (NASDAQ:INSY) in its latest 13F filing.

#2. CNH Industrial NV (NYSE:CNHI)

– Shares owned by Parametrica Management as of March 31: 80,691

– Value of Parametrica Management’s holding as of March 31: $545,000

Barron’s Penta No. 1 Fund increased its exposure to CNH Industrial NV (NYSE:CNHI) by 65,448 shares during the first three months of 2016, ending the March quarter with 80,691 shares. The upped position was worth $545,000 at the end of March and made up nearly 2.0% of the fund’s entire portfolio. The shares of the truck and tractor marker are 8% in the green year-to-date. The company reported net revenues of $5.48 billion for the first quarter of 2016, down from $6.07 billion reported a year ago. Challenging trading conditions in the farming equipment sector, particularly in the row crop industry in the United States, Canada, Mexico, Central and South America, and the Caribbean Islands, stand behind the drop in the company’s top line. CNH Industrial anticipates full-year net sales from industrial activities in the range of $23 billion-to-$24 billion. Mason Hawkins’ Southeastern Asset Management was the largest shareholder of CNH Industrial NV (NYSE:CNHI) at the end of March with a stake of 39.95 million shares.

#1. Live Nation Entertainment Inc. (NYSE:LYV)

– Shares owned by Parametrica Management as of March 31: 28,624

– Value of Parametrica Management’s holding as of March 31: $639,000

Live Nation Entertainment Inc. (NYSE:LYV) was the largest equity holding in Parametrica Management’s portfolio at the end of the March quarter, accounting for 2.3% of the fund’s portfolio. This was yet another new position initiated by the Hong Kong-based investment firm during the first quarter of 2016, comprising 28,624 shares valued at $649,000 on March 31. The operator of live events has seen its shares drop by 4% so far in 2016 despite enjoying a strong first quarter in terms of financial performance. Live Nation Entertainment’s first-quarter top line grew by 8% year-over-year to $1.2 billion on reported basis and 10% on a constant currency basis. The company’s top-line figure was boosted by higher show count and concert fans, as well as higher sponsorship revenue and increased primary and secondary ticket sales at Ticketmaster. A total of 38 asset managers followed by Insider Monkey were invested in the world’s largest concert promoter, amassing 11% of its outstanding common stock. Thomas E. Claugus’ GMT Capital was one of those asset managers, holding a stake of 2.68 million shares of Live Nation Entertainment Inc. (NYSE:LYV) as of March 31.

Disclosure: None