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Axel Capital Management’s Top Stock Picks

Axel Capital Management was founded by Anna Nikolayevsky, who is also the fund’s Chief Investment Officer. She previously worked as an analyst at Goldman Sachs Asset Management and Zweig-DiMenna Associates Inc, enabling her to pick the optimal strategy for Axel Capital Management. The fund’s strategy is based on researching mid- to large-cap companies with a top-down and bottom-up approach, focusing on free cash flow. The strategy has proven to work pretty well, since the fund earned Lipper Award for the Best North American Long/Short Equity Fund in 2010, followed by Investor’s Choice awards for Emerging Fund and Emerging Global Equity fund in 2015.

The fund has been returning positively during the last several years, with an exception of a two-year loss, and with a highest peak of 35.9% in 2014. Axel Capital Management also returned 27.5% in 2015, -28.3% in 2016 and -9.9% in 2017. As of  October 2018, the fund also registered a gain of 8.3% in 2018. With an annualized return of 4.3%, the fund seems to be struggling to attract investors.

Anna Nikolayevsky Axel Capital

Anna Nikolayevsky of Axel Capital

Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. Our long strategy is based on the consensus picks of the 100 best performing hedge funds. This strategy was launched 5 years ago and generated a cumulative return of 115%. You can think of it as a mutual fund that returned 16.2% annually over the last 5 years, vs. 11.1% annual gain for the S&P 500 ETF (SPY). Basically we outperform the S&P 500 Index by 5 percentage points annually by identifying the top stock picks of the best hedge fund managers (see the details here).

Our short strategy is based on shorting hedge fund hotels that are likely to experience large hedge fund sales during market weaknesses. We launched this strategy in February 2017. It’s been almost 2.5 years and the stock picks of this strategy lost a cumulative 24.7% vs. a cumulative gain of 30.8% for the S&P 500 ETF. This is an absolutely mind blowing performance. The annualized return of our short picks is -11.2%, vs. 11.8% annualized gain for the S&P 500 Index during the same period. The annual alpha of this strategy is 23 percentage points. Jim Chanos doesn’t generate this kind of performance. The best thing about this short strategy is that it provides an excellent hedge during market meltdowns. For example, in Q4 of 2018 when the S&P 500 Index lost nearly 14%, this strategy’s picks lost 25% protecting our premium subscribers from large losses.

Our newsletters are successful because we follow hedge fund managers like Anna Nikolayevsky to identify the best and worst hedge fund stock picks. In this article we are going to take a look at Axel Capital Management’s top stock picks.

As for the first quarter of 2019, the fifth most valuable position in Axel Capital Management’s portfolio was NextEra Energy Inc (NYSE:NEE). The company was in total of 36 hedge fund’s portfolios at the end of Q1 2019, which is a slight decrease, compared to the previous quarter, when 37 hedge funds were interested in the company. The company’s top shareholder for this period was AQR Capital Management, holding $251.9 million worth of stock. Insider Monkey tracked other hedge funds such as OZ Management, Polaris Capital Management, and GLG Partners being  bullish on the company during Q1, as you can read more about it here.

At the fourth place in the fund’s portfolio was McCormick & Co Inc (NYSE:MKC), a manufacture company of flavoring products, seasonings and spices. As for the first quarter this year, a total of 25 hedge funds were investing in the company, which is around 25% less compared to the previous quarter. The company’s largest shareholder in this period was AQR Capital Management, holding shares of total value of $53.66 million. Soros Fund Management, Point72 Asset Management and Adage Capital Management were also among the company’s top shareholders for Q1 2019.

The third largest stock position in the fund’s latest 13F fillings was The Aes Corporation (NYSE:AES). The company’s position in the fund’s portfolio remained unchanged compared to the previous quarter. However, some other shareholders decided to quit investing in the company during Q1 2019. There were 24 hedge funds investing in the company at the end of the first quarter 2019, which is 17% less compared to the last quarter of 2018. The company’s largest shareholder for Q1 2019 was again AQR Capital Management, holding a stake worth $191.2 million. Among other funds that kept interest in the company were Adage Capital Management, Two Sigma Advisors, and ValueAct Capital (see more detail here).

At the second place in Axel Capital Management’s portfolio for the first quarter of 2019 was Firstenergy Corp (NYSE:FE). At the end of the first quarter, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, which is 5% higher compared to the previous quarter. The largest shareholder of Firstenergy Corp was Zimmer Partners, with a stake worth $1228.4 million. Renaissance Technologies, Luminus Management, and Fir Tree were also among other funds fond of the company at the first quarter of 2019.

Finally, the most valuable position in Axel Capital Management’s portfolio for the Q1 2019 was Spdr S & P 500 Etf Trust (NYSE:SPY). The fund boosted its stake in this company during Q1 2019 by 13%, comprising 51.3% of its equity portfolio. Hedge funds usually hedge their short positions by long positions in sector ETFs or ETFs tracking large-, mid-, or small-cap stocks.

Disclosure: None.

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