Billionaire Eric Sprott’s Sprott Asset Management is a Toronto-based hedge fund, which has recently filed its 13F with the Securities and Exchange Commission, disclosing its equity portfolio at the end of the second quarter. According to the filing, the fund’s equity portfolio contains 141 positions worth over $1.32 billion. Sprott has a strong focus on the financial sector, as well as on basic materials, and technology sectors, with stocks from these sectors accounting for 39%, and 15% of the total value, respectively. In this article we are going to analyze Sprott Inc’s top three long positions heading into the third quarter: Catamaran Corp (USA) (NASDAQ:CTRX), Apple Inc. (NASDAQ:AAPL), and CGI Technologies and Solutions Inc (NYSE:GIB). In January, as a part of its transition strategy, Eric Sprott stepped down from his portfolio management duties and began to focus on his role as Chairman and Chief Investment Officer.
We follow hedge funds like Sprott Asset Management because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 123%, outperforming the S&P 500 ETF by nearly 70 percentage points (see more details here).
Pieter Beens / Shutterstock.com
The fund opened a new stake in Catamaran Corp (USA) (NASDAQ:CTRX) during the second quarter. The fund held 1.0 million shares of the company, with a value of $61.08 million at the end of the period. This was equivalent to 4.63% of its total portfolio holdings and vaulted Catamaran Corp (NASDAQ:CTRX) to the top spot of the fund’s portfolio. Catamaran Corporation provides pharmacy benefit management (PBM) services and healthcare information technology (HCIT) solutions to the healthcare benefits management industry in North America. At the beginning of April, UnitedHealth Group Inc. (NYSE:UNH) announced the merger of Catamaran Corp (USA) (NASDAQ:CTRX) with its existing pharmacy benefits management company, OptumRx. UnitedHealth anticipates the $12.80 billion transaction to conclude this month. Another fund tracked by us, with a position in Catamaran Corp (USA) (NASDAQ:CTRX) is John Croghan and Richard Fradin’s Rail-Splitter Capital Management, which holds around 143,400 shares as of June 30.
Apple Inc. (NASDAQ:AAPL) stood on the second spot in Sprott Inc’s equity portfolio at the end of June after the fund made an additional purchase of 112,100 shares during the quarter, thereby increasing its total holding to 314,755 shares, worth almost $39.49 million. Recently, Apple Inc. (NASDAQ:AAPL) reported its financial results for the third quarter of fiscal 2015, the market was clearly disappointed as observed by the stock’s immediate 7% drop in after-hours trading. The main factor that led to the stock’s decline have been weaker than expected iPhone sales, which came at 47.5 million units, up by 35% on the year, but below the estimate of 50 million units. The company with $687.21 billion market cap posted a revenue of $49.6 billion and profit of $1.85 per share in its third quarter, significantly up from $37.4 billion and $1.28 per share a year earlier. Other investors bullish on Apple, include Carl Icahn’s Icahn Capital with 52.76 million shares and Ken Fisher’s Fisher Asset Management 10.81 million shares.
Moving on to the fund’s third-largest holding, represented by CGI Technologies and Solutions Inc (NYSE:GIB), in which the fund reduced its stake to 915,370 shares, valued at $35.77 million. CGI Technologies and Solutions Inc (NYSE:GIB) is the world’s fifth-largest independent information technology and business process services company. The Canada-based company, with a market cap of $10.41 billion, announced its third-quarter earnings results a couple of days ago, posting EPS of $0.80, missing the Wall Street estimate of $0.81. Its revenue amounted to $2.60 billion for the quarter, also below the expectations of $2.63 billion. CGI Technologies noted that its slight decline in revenue could be attributed to lower work volume and foreign currency rate fluctuations. Among other prominent stockholders of this company, are Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, which owned around 140,920 shares worth $5.97 million at the end of March.
Disclosure: none
