According to London-based LCH Investments NV, Ray Dalio of Bridgewater Associates is the manager of the hedge fund that has generated the highest amount of money in the history of the hedge fund industry, overtaking billionaire George Soros last year. Dalio’s Bridgewater Pure Alpha fund made $45 billion last year, while the widely-known Quantum Endowment Fund earned $42.8 billion. It is important to note that the 20 most profitable hedge funds jointly earned $304.8 billion over the past ten years, which provides evidence that hedge fund managers do have the ability and skills to make money even amid extremely challenging environments. For that reason, the following article will discuss four filings submitted with the SEC by billionaire David Einhorn and three smaller-scale hedge fund managers.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
As revealed by a freshly-amended 13D filing, Willem Mesdag’s Red Mountain Capital currently owns 1.78 million shares of iRobot Corporation (NASDAQ:IRBT), which account for 6.1% of the company’s outstanding common stock. The size of the position is unchanged from the fund’s 13F for the third quarter. The 13D was filed in connection to Red Mountain’s recent talks with the robotics company’s management. Earlier this week, Red Mountain sent a letter to iRobot’s Chairman and Chief Executive Officer, offering a settlement proposal that stipulates the immediate appointment of Larry Peiros and Willem Mesdag to the company’s Board, an increase in the size of the company’s Board to nine members from eight, and the formation of a Capital Allocation Committee. This settlement proposal “would avoid an unnecessary election contest at the Company’s upcoming annual meeting” and could eventually assist the company in strengthening its market leader position in the home robotics industry. Furthermore, Red Mountain believes that iRobot Corporation (NASDAQ:IRBT)’s underperformance can be primarily explained by the company’s sustained commitment to its unprofitable Defense and Security and Remote Presence businesses and the company’s capital allocation decisions with regard to R&D expenses and cash accumulation. Most importantly, Willem Mesdag and his team have formulated a clear plan that they believe would enable the robotics company to maximize long-term shareholder value, which includes refocusing resources on the high-growth Home Robots business and the consumer end-market, discontinuing the Remote Presence business, and exploring strategic alternatives for the Defense and Security business. iRobot’s shares have gained 1% over the past year and trade at rather expensive price-to-earnings multiples. A mere ten hedge funds tracked by Insider Monkey were invested in the company at the end of the third quarter. Royce & Associates, founded by Chuck Royce, owns 166,000 shares of iRobot Corporation (NASDAQ:IRBT) as of the end of the third quarter.
Let’s head to the next pages of this article, where we discuss three other filings recently submitted with the SEC.