Argonaut Capital Management Group is a long term, global macro fund. It seeks high, risk-controlled returns by investing in currencies, commodities, fixed income instruments and equity index futures. It was founded in 1993 by tiger cub David Gerstenhaber, who was actually one of the first tiger cubs. Brian Kessler is the fund’s Chief Financial Officer and Chief Compliance Officer.
Looking at Argonaut Capital’s most recent 13F, filed with the SEC on November 4 for the quarter ended September 30, 2011, since the end of September, the fund’s top stock picks returned slightly less than 9%, in spite of several double digit returns. In comparison, the market returned 10.90% for the same period. Here are their top 15 stock picks:
Apple Inc (AAPL) is Argonaut’s top position.The company has returned 4.96% since the end of the third quarter. AAPL has a forward P/E ratio of 10.33. Its year over year growth estimate is 12.65%. AAPL recently announced its third quarter earnings of $7.05 per diluted share, compared to $4.64 per diluted share in the same quarter last year. Its third quarter revenue was $28.27 billion versus $20.34 billion in the year-ago quarter. At the end of the second quarter, Rob Citrone’s Discovery Capital Management had more than $707 million in AAPL.
Philip Morris International (PM) is Argonaut’s second largest position. This stock has returned 12.55% since the end of the third quarter. It has a forward P/E ratio of 14.61 and its year over year growth estimate is 7.29%. In the third quarter 2011, PM generated $1.35 diluted net EPS compared to 99 cents per diluted net EPS the same quarter last year. PM’s sales were $20.7 billion, up from $16,936 the same quarter last year. Tom Russo’s Gardner Russo & Gardner had more than $542 million in the company at the end of the second quarter.
IShares TR, Russell 2000 (IWM) is the third largest position in the Argonaut portfolio. The position was a hedge. IWM returned 16.02% since the start of the fourth quarter, even with suffering outflows of $354.3 million on Friday, November 4. IShares TR Russell 2000 is one of 231 iShares funds. According to the iShares website, IWM has a P/E ratio of 23.49. It has over $16 billion in net assets. Its top holdings as of November 4 include Healthspring Inc (HS), a favorite pick of David Dreman’s Dreman Value Management, and Netlogic Microsystems Inc (NETL), which is part of Ken Griffin’s Citadel Investment Group portfolio.
TransDigm Group Inc (TDG) is the fourth largest equity position in Argonaut’s portfolio. The position has returned 14.95% since the end of September. It has a forward P/E of 18.03 and a year over year growth estimate of 72.19%. The company will not report its third quarter earnings until November 14. Alan Fournier’s Pennant Capital Management had over $290 million invested in TDG at the end of June, position representing 6.23% of the fund’s portfolio value.
SandRidge Permian (PER) is the fifth largest position in Argonaut’s portfolio. It has returned 16.23% since the end of the third quarter. PER has a 15.56 forward P/E ratio and a year over year growth estimate of 100%. SandRidge Permian is a trust formed by SandRidge Energy Inc (SD) “to own royalty interests in oil and natural gas properties leased by SandRidge in the Central Basin Platform of the Permian Basin in Andrews County, Texas and is entitled to receive proceeds from the sale of production attributable to the royalty interests.” According to a press release issued by SD on November 3, it “closed $621 million SandRidge Permian Trust IPO, received approximately $250 million in initial proceeds upon closing of Mississippian joint venture and announced sale of East Texas properties for $231 million.” Wallace Weitz’s Wallace R. Weitz & Co. had $58,896 million in SD, PER’s parent company, at the end of the second quarter.