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Axel Capital’s Anna Nikolayevsky Is Betting Big on Lithium Production

Even though the hedge fund industry is supposed to be driven solely by talent and based on meritocracy, women in the industry are pretty rare. One of the reasons is that women are not as attracted to hedge funds as men, but there also a lot of issues that stem from gender inequality and unfair treatment. Nevertheless, there are many women who are employed at top management positions at various investment firms and even some women who launched their own hedge funds. One of the latter is Anna Nikolayevsky, who founded Axel Capital and is currently the fund’s Chief Investment Officer.

Anna Nikolayevsky graduated with a B.S. degree from the NYU’s Stern School of Business and obtained her MBA at Columbia University. She joined Goldman Sachs Large Cap Value Fund, where she covered autos, semiconductors, software and utilities. She also worked at Zweig-DiMenna Associates as an analyst, sourcing and managing long/short equity investments. In 2011, Nikolayevsky was named one of 50 Leading Women in Hedge Funds by Ernst & Young.

In 2002, Nikolayevsky founded Axel Capital, a long/short equity hedge fund that currently has over $82 million in regulatory assets under management. Axel Capital, which is also led by Anastasia Jeanne Venetos-Wahl its Chief Compliance Officer, Chief Financial Officer, and Chief Operating Officer, generated solid annualized returns of 11.3% between 2002 and 2011, posting solid gains of over 20% in both 2008 and 2009. Under Nikolayevsky’s leadership, Axel Capital was awarded a Lipper Award for Best North American Long/Short Equity Fund in 2010. Axel also won the Investor’s Choice award for Emerging Fund of 2015 and for the Emerging Global Equity fund of 2015.

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In its latest 13F filing, Axel Capital disclosed an equity portfolio worth $152.10 million in its latest 13F filing. The largest portion of the portfolio is allocated to the Financial sector, which amassed nearly 45% of the value at the end of September, although this is mainly due to the fund’s large position in SPDR S&P 500 ETF Trust (NYSEARCA:SPY), which is worth around $64 million. The Materials sector has the second-largest share of over 30%, followed by the Technology and Consumer sectors.

Even though Nikolayevsky invested nearly a half of Axel Capital’s 13F portfolio in an S&P 500-tracking ETF, her other stock picks significantly underperformed the Index, according to our calculations. We estimate a fund’s returns by taking into account the performance of the fund’s long positions in companies with a market cap over $1.0 billion. Axel Capital’s picks gained 6.4% in the first six months of 2017, compared to the S&P 500’s 8.20% return. For the 12-month period ended June 30, the fund’s long positions posted a weighted average return of 4.9%, compared to the Index’s growth of 19%.

With this in mind, let’s take a closer look at some of the top positions from Axel Capital’s last 13F filings, in which the fund made changes of over 10% during the third quarter.

Let’s start with Albemarle Corporation (NYSE:ALB), in which Axel Capital trimmed its stake by 15% over the quarter to 104,000 shares worth $14.18 million at the end of September. Albemarle Corporation (NYSE:ALB) is a $15 billion developer of specialty chemicals, whose stock has surged by over 65% over the last 12 months. One of the reasons why Nikolayevsky is betting on Albemarle Corporation is its production of battery-grade lithium that is used in the production of electric vehicles.

Last year, Nikolayevsky spoke at the “Capitalize For Kids” conference in Toronto, where she mentioned that oil prices would be capped at $50 mainly due to changes in the transportation industry. One of the key change is the fast advancement of electric vehicles. “Bottom line here is there’s a lot of capital been committed. Electric vehicles are not a fad. This is a permanent industry shift. Ultimately, it does not matter which company wins or leads to profitability the fastest. They will still take share as a group,” she said.

Aside from Axel Capital, other funds bullish on Albemarle Corporation (NYSE:ALB) are David Cohen and Harold Levy’s Iridian Asset Management, Stephen Mandel’s Lone Pine Capital, and Robert Polak’s Anchor Bolt Capital.

In FMC Corp (NYSE:FMC), Nikolayevsky’s fund initiated a position during the third quarter, having amassed 116,000 shares valued at $10.36 million. FMC Corp (NYSE:FMC)’s stock is 60% in the green year-to-date. The company is another producer of chemicals that operates in two segments: Agricultural Solutions and Lithium. In its last 10-Q report, FMC Corp (NYSE:FMC) said that it plans to continue to expand its lithium hydroxide operations and its strategic intent is to spin it off as a standalone, publicly-traded company. In the second quarter, FMC Corp (NYSE:FMC) generated revenue of $656.80 million, of which $74 million came from its FMC Lithium operations.

One of the largest shareholders of FMC Corp (NYSE:FMC) is Larry Robbins’ Glenview Capital, which held nearly 13 million shares at the end of June.

On the next page, we will continue the discussion of Axel Capital’s stock picks, focusing on the fund’s top tech bets.

Air Products & Chemicals, Inc. (NYSE:APD) represents another new position in Axel Capital’s equity portfolio, as the fund added 68,000 shares worth $10.28 million during the third quarter. The share price of Air Products & Chemicals, Inc. (NYSE:APD) has increased by 6.23% since the beginning of the year and currently sports a dividend yield of 2.50%; the company is a dividend aristocrat, having raised its dividend for 34 years in a row. Air Products & Chemicals is the world’s largest supplier of hydrogen and supplies other industrial gases to energy, electronics, chemicals, metals, and manufacturing industries. Last month, the company won a contract to supply oxygen to LG Chem, the largest chemical company in South Korea. The oxygen will be used for production of materials used in secondary batteries.

Other shareholders of Air Products & Chemicals, Inc. (NYSE:APD) include David Gallo’s Valinor Management, Steve Cohen’s Point72 Asset Management, and Jim Simons’ Renaissance Technologies.

In NVIDIA Corporation (NASDAQ:NVDA), Axel Capital had cut its holding by 60% between July and September and disclosed ownership of 40,000 shares worth $7.15 million in its latest 13F filing. The position was added to the fund’s 13F portfolio during the second quarter, and the stock gained 28% since the beginning of July; It is up by 74% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) has been growing on the back of cryptocurrency mining boom, as its graphic processing units (GPUs) are used in mining currencies. The company’s CEO, Jen-Hsun Huang, said during the second-quarter earnings call that “cryptocurrency and blockchain are here to stay”. In addition, NVIDIA Corporation (NASDAQ:NVDA) has recently entered into an agreement with the Chinese retail giant JD.Com Inc (ADR) (NASDAQ:JD) to develop robots using NVIDIA’s Jetson platform to provide AI-based navigation intelligence.

At the end of the second quarter, there were 45 funds in our database bullish on NVIDIA Corporation (NASDAQ:NVDA), including Renaissance Technologies, Philippe Laffont’s Coatue Management, and Jonathon Jacobson’s Highfields Capital Management.

Amazon.com, Inc. (NASDAQ:AMZN) is another stock that saw Axel Capital reduce its position. During the third quarter, the fund trimmed its exposure to the online retail giant by 3,000 shares and held 7,000 shares worth $6.73 million at the end of September. Amazon.com, Inc. (NASDAQ:AMZN)’s stock has appreciated by over 32% since the beginning of 2017, but Axel initiated its position during the second quarter. Amazon.com, Inc. (NASDAQ:AMZN) has had several major developments so far this year, the biggest of them probably being the takeover of the supermarket chain Whole Foods. Last week, it was reported that the company had approached the French supermarket operator Leclerc, as it continues to expand its logistics network and partner with or acquire supermarket chains in Europe. It had previously been reported that Amazon also approached other French supermarkets and that it could also be interested in buying the French supermarket operator Carrefour.

In the meantime, Amazon.com, Inc. (NASDAQ:AMZN) is one of the most popular stocks among the hedge funds in our database, with 132 investors having disclosed a position in the company as of the end of June.

Disclosure: none