Tracking the activity of hedge funds is a great way to identify profitable investments that will help you beat the market, especially when it comes to their small-cap picks. Here at Insider Monkey, we gather information regarding stock picks made by these investment firms and analyze their equity portfolios. Our small-cap strategy outperformed the market by more than 75 percentage points since its inception 2.5 years ago.
In fact, these small-cap equities – which we share in our newsletter – not only managed to outperform the market, but actually returned a cumulative of 135% since the end of August 2012. Since following the stock picks of major hedge funds can deliver crucial information, in the following article we will take a closer look at billionaire James Dinan’s York Capital Management top long-term holdings, which the investor owned for at least a year and are represented by American Airlines Group Inc (NASDAQ:AAL), DISH Network Corp (NASDAQ:DISH), and Actavis plc (NYSE:ACT).
York Capital Management was founded in 1991 by James Dinan, an investment banker previously employed by Donaldson, Lufkin & Jenrette. Mr. Dinan put the $3.6 billion in seed money to good use, building up an equity portfolio, which was valued at around $11.1 billion at the end of the fourth quarter. In addition to merger arbitrage plays, the New York-based firm invests in equities that are expected to deliver great returns.
According to its latest 13F filing with the U.S. Securities and Exchange Commission, York Capital Management’s largest long-term bet at the end of 2014 was American Airlines Group Inc (NASDAQ:AAL), a stock the investor has been betting on since the fourth quarter of 2013. The fund’s stake in the company amounts to 12.18 million shares, valued at $653.61 million, and representing 5.88% of its equity portfolio. Despite holding this stock for over a year now, Mr. Dinan’s firm trimmed its exposure by 21% last quarter. The stock has been very profitable, gaining around 96% since the beginning of 2014, and it reached a 52-week high of $56.20 in January, 2015. American Airlines Group Inc (NASDAQ:AAL) is one of those stock James Dinan and other hedge funds love due to their great returns. In fact, it was one of the most popular airline stocks among billionaires at the end of 2014, with a total of 13 managers betting on the company and holding $1.95 billion worth of stock. James Dondero’s Highland Capital Management, for example, owns 7.39 million shares, while George Soros’ Soros Fund Management holds a stake of 3.27 million shares.
Last quarter, York Capital Management increased its exposure to DISH Network Corp (NASDAQ:DISH) by 272,400 shares. Following this 5% increase to one of its top long-term picks, the investment firm now owns around 5.21 million shares, valued at $379.56 million at the time of the 13F filing. Furthermore, Mr. Dinan’s firm has held a position in the company since the third quarter of 2012, when it acquired an initial stake of 994,600 shares. DISH Network saw its share price rise by 26.37% in 2014. Furthermore, since June, 2013 the stock gained approximately 73%, hence generating excellent returns for York Capital. Mr. Dinan is not the only manager bullish on DISH Network Corp (NASDAQ:DISH), as a total of 74 hedge funds that we track are betting on this stock. The largest shareholder among these institutional investors is Boykin Curry’s Eagle Capital Management, which holds a stake of 9.24 million shares as of last quarter.
Actavis plc (NYSE:ACT) is another of York Capital Management’s largest long-term bets, with a holding of 1.35 million shares, valued at $348.64 million at the end of 2014. Mr. Dinan has been bullish on this stock since the second quarter of 2013, when his fund reported holding 1.29 million shares. After gaining 55.87% throughout 2014, Actavis plc (NYSE:ACT)’s stock has already climbed around 15% year-to-date, and is very popular among investment firms. In fact, it ranks as the third most popular stock among the hedge funds we track, with a total of 131 entities betting on the company, and holding in aggregate $13.99 billion worth of its shares. Andreas Halvorsen’s Viking Global is particularly bullish on Actavis plc (NYSE:ACT), which ranks among its top five picks for the last quarter, with a stake of 4.58 million shares. Dan Loeb’s Third Point is also betting on this stock, with a stake of 3.45 million shares as of the end of 2014. Furthermore, twenty-three analysts gave Actavis plc (NYSE:ACT) an average recommendation of “Buy” and set the stock’s price target at $310.68. So far this year, the company has not disappointed shareholders, as it hit its 52-week high of $299.88 on Thursday, and was trading at $297.13 as of mid-day Friday.