Phill Gross and Robert Atchinson’s Adage Capital Partners continues to be bullish on Constellium NV (NYSE:CSTM), raising its stake to 5.36 million shares according to a recent filing with the SEC. The fund currently has a 5.15% passive stake after the latest purchase, which was an addition of 201,000 shares on top of the 5.15 million share position it first opened last quarter. In addition to Constellium, we’ll take a look at the fund’s top picks for the fourth quarter, which included Puma Biotechnology Inc (NYSE:PBYI), Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT).
Adage Capital Partners was founded in 2001 by Gross and Atchinson, both former Harvard Management Company (HMC) money managers. In fact their fund was started with $3.8 billion in seed money from HMC, which represented a major commitment of nearly 25% of the endowment’s assets at that time. The commitment has paid off, as the fund has outperfomed the S&P 500 index by an average of 3 percentage points annually. The fund maintains a large, diversified portfolio invested across a dozen different sectors, with healthcare stocks leading the way representing 19% of Adage’s portfolio.
Constellium NV (NYSE:CSTM) is not one of those. The Netherlands’-based company is instead involved in the production of aluminum products for use in the aerospace, automotive, and packaging industries (cans). The company recently announced a 22.5 million Euro expansion to its Decin, Czech Republic plant, to meet increasing demand for its hard alloy bars, which are sold to auto manafucturers throughout Europe. The company expects the expansion to increase its production capacity at the plant by 20% in terms of metric tons produced, to 72,500 by 2018.
Constellium NV (NYSE:CSTM)’s stock suffered a steep slump of more than 50% in the latter part of the year, from a high of $32.20 in the middle of July, to less than $16.00 by late November. That offered a great entry point for Adage which has rebounded 21.42% so far this year, partly on its acquisition of Alabama-based Wise Metals Intermediate Holdings LLC in early January.
Adage Capital’s top pick heading into 2015 was Puma Biotechnology Inc (NYSE:PBYI), one of the biggest success stories among mid-cap stocks in 2014, as shares gained 82.27% on the year. July 23 was an historic day for the stock, as it gained nearly 300% in a single day following positive trial results for its breast cancer treatment, neratinib.
Adage, the largest shareholder of the company at the end of the second quarter of 2014 with 5.69 million shares, made over $1 billion that day. The leap also shot Puma Biotechnology Inc (NYSE:PBYI) from being its ninth-most valuable position to its most valuable by the end of third quarter, despite the stake remaining unchanged. The position remained flat in the fourth quarter, with the 5.69 million shares now worth $1.08 billion. Adage is still the largest shareholder of Puma Biotechnology Inc (NYSE:PBYI), followed by Samuel Isaly’s Orbimed Advisors having the next largest position among tracked funds with 250,900 shares.
Adage Capital’s next two picks need little introduction, as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) rounded out the fund’s top three. The fund has been a longtime investor in both technology companies, which also happen to be among the top dividend stocks, having been invested in each of them for more than a decade. The fund has benefited not only from those dividends, but in the case of Apple, from shares that have greatly appreciated over that time.
At the end of 2014, Adage held 9.01 million shares of Apple Inc. (NASDAQ:AAPL) worth $994.24 million, down by 115,000 shares from the previous quarter, while in Microsoft Corporation (NASDAQ:MSFT) the fund held 12.38 million shares, worth $575.01 million, representing a decrease of 417,400 shares from the previous quarter. While Apple remained on the second spot, Microsoft moved up one position during the fourth quarter, surpassing Shire PLC (ADR) (NASDAQ:SHPG), in which Adage opened a large stake during the third quarter, but closed it during the fourth after a potential merger with AbbVie Inc (NYSE:ABBV) dissipated, causing shares to sink.