Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Ally Financial Inc, AIG, Rock-Tenn Company: Billionaire Richard Perry’s Picks Eclipse S&P 500

Billionaire Richard Perry’s 11 long stock picks for his fund Perry Capital returned 1.8% beating the S&P 500 ETF (SPY) by a full percentage point. Perry is a Goldman Alum having worked in the Risk Arbitrage department decades back. He also worked as an adjunct professor at NYU’s Stern Business School where he got his MBA. In 1998 he co-founded Perry Capital.

Richard Perry

Why is tracking Perry’s fund important? Tracking the activity of hedge funds such as Perry Capital is vital for small investors who try to seek out new promising investment opportunities. However, simply imitating the moves made by billionaires and hedge funds firms does not guarantee great returns because most of their top picks are in large-cap stocks. These equities usually don’t beat the market by a large margin, as they are usually more efficiently priced.  Hence, here at Insider Monkey, we concentrate our efforts on gathering and analyzing information regarding the small-cap picks of more than 700 hedge funds.

Our research has shown that the most popular small-cap stocks among hedge funds beat the market by 95 basis points per month between 1999 and 2012. There aren’t a lot of investment strategies that can beat the market by 10 percentage points a year so we started tracking the performance of hedge fund’s most popular small cap picks since the end of August 2012. These stocks returned more than 137% since then through the end of March 2015 and dominated S&P 500 ETF (SPY)’s 54% gain by more than 82 percentage points (read the details here).

Now on to the picks.

The largest holding in Richard Perry’s Perry Capital is American International Group Inc (NYSE:AIG). In the last quarter of 2014, Perry actually increased the position in American International Group Inc (NYSE:AIG) by 4% from the level of the previous filing to a total of 10.3 million shares at an allocation of $578 million. This represents a 24% position in the 13F portfolio. Perry is the third largest holder among the funds we track. American International Group Inc (NYSE:AIG) finished the quarter down 1.9% and was a tough stock to hold for other funds as well. Yesterday we mentioned Bruce Berkowitz’s fund also having a rough first quarter with the stock.

Ally Financial Inc (NYSE:ALLY) was Perry Capital’s second largest holding with the firm disclosing at year-end 21 million shares listed at $496 million. Perry’s conviction on Ally Financial Inc (NYSE:ALLY) appears to have grown in the last quarter of 2014 as he purchased 46% more shares. The total position in Ally Financial Inc (NYSE:ALLY)  now represents 20.76% of the firm’s overall equity portfolio. Perry Capital’s the third largest holder in the financial services company behind Stephen Feinberg’s Cerberus Capital Management and Dan Loeb’s Third Point. Ally shares edged up 0.4% for the first quarter of 2015.

Nokia Corporation (ADR) (NYSE:NOK) was a laggard in Perry Capital’s portfolio. As of the last filing, the firm disclosed another large bet that the communications giant would turn things around. Perry Capital held at year-end 25.5 million shares of Nokia at an investment allocation of a little over $200 million. Perry’s bullishness grew in the fourth quarter as he increased the stock by 51% from the previous filing. Shares of Nokia Corporation fell 3.5% for the quarter. Perry Capital again is the third largest holder among the funds we track. Other notable names include Rob Citrone’s Discovery Capital Management and Jeffrey Tannenbaum’s Fir Tree.

Perry had a nice pick in KapStone Paper and Packaging Corp. (NYSE:KS). In the last quarter of 2014, Perry decided to adjust the firm’s position by 2%. By the beginning of the year, the firm still held 3.8 million shares of KapStone Paper and Packaging Corp. (NYSE:KS) at a value of $112 million. Perry’s firm is the largest holder of KapStone Paper and Packaging Corp. (NYSE:KS) among the funds we track followed by D.E Shaw, Gilchrist Berg’s Water Street Capital, and David Einhorn’s Greenlight Capital. KapStone Paper and Packaging Corp. (NYSE:KS) was a solid gainer for the first quarter of 2015 with the stock price appreciating 12.3%. Perry has been involved in this name for quite some time and the stock has proven to be a nice investment by gaining over 17% in the last 12 months.

Rock-Tenn Company (NYSE:RKT) was another solid gainer for Perry Capital. As of year-end the firm held 2.8 million shares for an investment allocation of $171.5 million. Perry began trimming the Rock-Tenn Company (NYSE:RKT) position in the fourth quarter of 2014 by 22% and by 2015 the firm held 2.8 million shares at an investment allocation of $171.5 million. Perry Capital is still the second largest holder among the funds we track behind D E Shaw’s 3.6 million share, $221.8 million investment.The stock appreciated nicely in the first quarter by 12.3%.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.