Hedge funds’ reputation has been impaired mostly due to high fees and the underperformance on the short-side of their portfolios, which provide downside protection but have dragged down overall returns. We recommend investors consider hedge funds’ long stock picks for their market-beating potential. 659 funds in our system which filed for the June 30 13F reporting period held long positions in at least five non-micro-cap stocks, and those funds’ long bets posted 8.3% gains in the third-quarter based on the size of their positions on June 30. That easily topped the performance of S&P 500 ETFs, which returned only 3.3% in the same period.
One of the funds that we follow at Insider Monkey is Tensile Capital, managed by Douglas Dossey and Arthur Young. The fund reported an equity portfolio worth $443.52 million as of the end of September, with almost half invested in tech stocks. According to our calculations, out of the fund’s total long positions, 13 holdings in companies with market caps above $1.0 billion posted a weighted average return of 12.35% in the third quarter. In this article we will take a look at the fund’s exposure to Expeditors International of Washington (NASDAQ:EXPD), On Assignment, Inc. (NYSE:ASGN), InterXion Holding NV (NYSE:INXN), and Xerox Corporation (NYSE:XRX).
Tensile Capital had 761,015 shares of Expeditors International of Washington (NASDAQ:EXPD) worth $39.21 million heading into the fourth quarter. Meanwhile, the stock returned 5.1% during the period. At the end of the second quarter, 20 funds tracked by Insider Monkey were bullish on this stock, down by 13% over the quarter. Among these stocks, Select Equity Group was the largest shareholder of Expeditors International of Washington (NASDAQ:EXPD), with a stake worth $292.5 million reported as of the end of June. Trailing Select Equity Group was International Value Advisers, which amassed a stake valued at $152.1 million. Gotham Asset Management and Royce & Associates also held valuable positions in the company.
Tensile Capital increased its stake in On Assignment, Inc. (NYSE:ASGN) by 3% to 903,178 shares worth $32.77 million during the second quarter. The investor acquired more shares as the stock lost 1.8% between July and September. Overall, there were 18 funds from our database long On Assignment at the end of June, up by one fund over the quarter. More specifically, Daruma Asset Management was the largest chareholder of On Assignment, Inc. (NYSE:ASGN), with a stake worth $45.2 millions reported as of the end of June. Incline Global Management, Royce & Associates, and Brant Point Investment Management also held valuable positions in the company.