A Look at Top 13F Picks of One of the Best-Performing Hedge Funds of 2015

2015 was the most volatile year for the Chinese equity markets in almost a decade. In the period between February and July, the Shanghai Composite rallied by over 60%, only to lose all of those gains in the next few months. Though this extreme movement in Chinese equities rattled most investors who primarily invest in the Asia-Pacific region, there were a few hedge funds which used this volatile period to deliver superior returns for their investors. Among them was Simon Sadler’s Segantii Capital, a Hong Kong-based long/short equity hedge fund. According to Bloomberg’s recently released list of the best performing hedge funds of 2015, Segantii Capital’s flagship fund, Segantii Asia-Pacific Equity Multi Strategy, ended 2015 with gains of 29.7%. However, Insider Monkey’s analysis of Segantii Capital’s 13F holdings in companies worth over $1 billion shows that the 113 long positions held by the fund in companies with market caps above $1.0 billion delivered a weighted average loss of 10.7% in 2015. This discrepancy is mainlt because we don’t include a fund’s investments  in other asset classes, its short positions or its investment in other markets apart from the US, while calculating its returns. Nonetheless, our estimate acts as a good measure of a fund’s stock-picking skills in US equities. Having said that, in this post we will be analyzing Segantii Capital’s top five equity holdings going into 2016 as revealed by its latest 13F Filing submitted with the SEC.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. Our researched showed that imitating 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 Anadarko Petroleum Corporation (NYSE:APC)

– Shares Owned by Segantii Capital (as of December 31): 403,594

– Value of Holding (as of December 31): $19.53 million

Anadarko Petroleum Corporation (NYSE:APC) was a new addition to Segantii Capital’s equity portfolio during the fourth quarter. The slump in crude oil prices has taken a heavy toll on Anadarko Petroleum Corporation (NYSE:APC)’s stock in the past few quarters. However, in anticipation of the company’s fourth quarter results it started moving up recently and currently trades down 21.7% year-to-date. While the company managed to soothe investors’ nerves by reporting a loss of $0.59 per share for the fourth quarter versus expectations of a per share loss of $1.09, its revenue at $2.05 billion was below the consensus estimate of $2.22 billion. On February 24, Anadarko Petroleum Corporation announced it has closed or signed agreements to sell approximately $1.3 billion of assets since the beginning of 2016, which analysts are seeing as a positive move considering the large amount of debt it has on its balance sheet. John Labanowski‘s Brenham Capital Management also initiated a stake in the company (by purchasing 1.4 million shares) during the fourth quarter.

#4 Tata Motors Limited (ADR) (NYSE:TTM)

– Shares Owned by Segantii Capital (as of December 31): 805,319

– Value of Holding (as of December 31): $23.81 million

Tata Motors Limited (ADR) (NYSE:TTM) is the only stock in this list in which Segantii Capital reduced its stake by 29% during the fourth quarter. After losing over 30% of its market capitalization last year, Tata Motors Limited (ADR) (NYSE:TTM)’s stock has slid by around 25% so far this year. However, these declines have made the stock extremely cheap at current levels as it trades at a forward price-to-earnings multiple of only 4.94. Though the growth of the auto manufacturer has been below par in its domestic market, analysts feel that as long as its luxury brands Jaguar and Land Rover continue to do well the shareholders of the company don’t need to worry. On February 16, analysts at Goldman Sachs upgraded the stock to ‘Neutral’ from ‘Sell’. Billionaire Cliff Asness‘ AQR Capital Management also reduced its stake in Tata Motors Limited by 26% to 3.4 million shares during the October-December period.