5 Intriguing Additions To Cheyne Capital’s Portfolio in Q3

Cheyne Capital is Europe’s leading alternative asset and investment management company. It launched its first fund in 2000 and specializes in number of asset classes such as real estate debt, social property impact, corporate credit, convertible bonds and event driven investing. Its current portfolio has a 25% allocation to healthcare and 29% to technology. The top holdings of Cheyne are Alere Inc (NYSE:ALR), LinkedIn Corp (NYSE:LNKD), Monsanto Co. (NYSE:MON) and BHP Billiton (NYSE:BHP). The fund has total assets of $157 million with positions in 30 securities as of September 2016. During Q3, Cheyne Capital initiated new positions in different companies engaged in gardening, pets, bedding and web products. Let’s take a look at these intriguing additions.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Central Garden & Pet Co (NASDAQ:CENT) is engaged in the business of manufacturing and supplying product to the garden and pet industries. The company was founded in 1980 as a distribution company and has come a long way to become an owner of leading brands through successful acquisitions. Recently, the company acquired Segrest which is a large wholesaler of aquarium fish for a cash price of $60 million. Cheyne Capital holds shares worth $3.4 million in this stock. In its most recent second quarter, CENT announced its highest quarterly revenues ($541 million) and highest quarterly earnings in the last decade. The company’s terrific operation performance has reflected in its stock performance with the stock up more than 60% year to date. About 2% of the shares are held by 17 hedge funds that we track. The value of their holdings as at the end of June quarter was $115 million.  

Tempur Sealy International Inc. (NYSE:TPX) is also a new addition to Cheyne Capital’s portfolio in the third quarter. The fund has taken a position of $3 million in TPX. Tempur Sealy International deals in bedding products and caters to customers in United States, Canada, Europe, Asia-Pacific and Latin America. The company has a market value of $2.9 billion. The stock lost more than 19% in the last three months when S&P was down by only 1.4%. In a September press release, the company lowered its third quarter net sales numbers and also expects full year revenues to be down 1%-3% when compared to the last year. However, the company believes that its operational initiatives should drive margin expansion going forward. This should lead to a 20% annual growth in 2016 EPS. While the number of hedge funds as per our records holding long position in this stock increased to 37 from 33 in the March quarter, the value of their holdings declined to $1.15 billion in June from $1.21 billion in the earlier quarter. 

Trupanion Inc. (NASDAQ:TRUP) provides insurance products for pets across United States, Canada and Puerto Rico. TRUP covers around 90% of the actual costs of healthcare in case a pet becomes sick. Cheyne Capital invested $0.98 million to buy 60,000 shares of this stock during the third quarter. The stock has increased by more than 130% in the last one year. It is said that “a dog is a man’s best friend” and with an increasing pet population, demand for pet insurance should also increase. The second quarter of 2016 marked its 35th consecutive quarter of revenue growth. The total number of enrolled pets also increased to 23% y/y to 320,000 as of June 2016. The company’s market value is $472 million. As per our records six hedge funds held shares worth $23 million as at the end of second quarter, which increased by more than 275% q/q.

VimpelCom Ltd (ADR) (NASDAQ:VIP) is an international provider of telecommunications and technological services and operates in fourteen markets including Russia, Algeria, Pakistan, Bangladesh, Ukraine, Kazakhstan, Uzbekistan, and others. This $5.7 billion company has more than 200 million mobile customers. It owns leading brands such as WIND, Bangalink, Kyivstar and Bee in different countries. Cheyne Capital bought 250,000 shares worth $800,000 during the last quarter. The stock has lost close to 70% in the last five years, under performing the NASDAQ which gained more than 99% during the same time. Out of 5 analysts covering VimpelCom Ltd (ADR) (NASDAQ:VIP), 3 analysts are positive on this stock. Shares worth $113 million were held by 10 hedge funds that we track as of June end, when compared to 13 hedge funds holding $123 million worth of shares during the previous quarter.

Web.com Group Inc. (NASDAQ:WEB) provides web domains, hosting, website design and other web services to small businesses.  Cheyne Capital holds around 50,000 WEB shares worth $0.85 million. The company has a market value of $845 million and is presently trading near its 52 week low. Web.com Group Inc. (NASDAQ:WEB) has a subscriber base of 3.4 million as at the end of the second quarter. The company acquired Yodle which is a leading company in local digital marketing during March this year. This acquisition was done to further strengthen WEB’s web services offerings. While the number of hedge funds from our records holding this stock declined to 19 in June quarter from 25 in the earlier one, the value of their holdings appreciated by 4% to $247 million. 

Disclosure:None