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Billionaire Israel Englander’s Top Q4 Moves

Brooklyn-born Israel “Izzy” Englander founded his successful hedge fund firm Millennium Management in 1989, with just $35 million in capital. The New York-based hedge fund currently has approximately $34 billion in assets under management, which are spread across 180 trading teams that employ different strategies under very strict risk management rules. That business model has been very successful for Mr. Englander and his firm over the years, considering the fund’s net average annual return of more than 14% since inception. While the hedge fund industry as a whole struggled to make money for investors in 2015, Mr. Englander’s main Millennium International fund returned 12.65% last year. However, individual investors tracking 13Fs are mostly interested in the performance of hedge funds’ long positions, which they can emulate. In that regard Mr. Englander’s long positions in companies with a market capitalization above $1 billion delivered a negative weighted average return of 2.0%, primarily due to poor performance during the turbulent third quarter of 2015. Leaving the fund’s performance aside, the following article will discuss several noteworthy moves made by Millennium Management during the fourth quarter of 2015.

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Israel Englander
Israel Englander
Millennium Management

Let’s begin our discussion with NextEra Energy Inc. (NYSE:NEE), which represents Millennium Management’s largest equity position as of the end of the final quarter of 2015. The New York-based hedge fund upped its position in the clean energy company by 71% during the last three months of 2015, to nearly 4.00 million shares, which were valued at $415.10 million. The company’s performance primarily relies on its two subsidiaries, FPL and NEER. The former subsidiary is one of the largest rate-regulated electric utilities in the United States, while the latter is the largest North American generator of renewable energy. NextEra Energy Inc. (NYSE:NEE)’s shares have advanced by 10% since the beginning of 2016 and are up by 8% over the past 12 months. Earlier this month, the company’s Board of Directors declared a quarterly common stock dividend of $0.87 per share, up by 13% year-over-year. The $3.08 annual dividend payment generates a current dividend yield of 2.69%. Jim Simons’ Renaissance Technologies increased its position in NextEra Energy Inc. (NYSE:NEE) by 84% during the December quarter, to 721,300 shares.

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The Brooklyn-born billionaire was also very bullish on Biogen Inc. (NASDAQ:BIIB) during the October-to-December period. Mr. Englander and his team lifted their holding in Biogen by 68% during the December quarter, ending the year with a stake of 1.05 million shares valued at $321.88 million. The shares of the biopharmaceutical company are down by 36% over the past year, after having lost 14% year-to-date. Biogen Inc. (NASDAQ:BIIB)’s net product revenue totaled $9.19 billion for 2015, which marked an increase of 12% year-over-year, which was mainly attributable to an increase of 25.1% in worldwide TECFIDERA revenue. However, the company’s recent disappointing stock performance could be partly explained by softening domestic sales of its top-selling sclerosis drug. Currency exchange headwinds and a decrease in revenue from the sale of several products, including AVONEX and TYSABRI, put some weight on the company’s top-line growth in 2015. Andreas Halvorsen’s Viking Global purchased a new stake of 368,864 shares in Biogen Inc. (NASDAQ:BIIB) during the last quarter of 2015.

Millennium Management boosted its position in KeyCorp (NYSE:KEY) by a whopping 16.20 million shares during the final quarter of 2015, lifting its stake to 19.68 million shares worth $259.62 million on December 31. KeyCorp operates as the bank holding company for KeyBank National Association, which primarily serves individuals and small- to mid-sized businesses. The financial services firm has seen its shares decline by nearly 19% since the beginning of 2016, presumably because of its acquisition of First Niagara Financial Group Inc. (NASDAQ:FNFG) and the broader market selloff in bank stocks. In October 2015, KeyCorp (NYSE:KEY) sealed a merger agreement with FNFG, under which KeyCorp will acquire all outstanding shares of FNFG for $2.30 in cash and 0.680 shares of KeyCorp for each share of FNFG. The merger is anticipated to close during the third quarter of this year. Numerous analysts, including analysts at Barron’s, believe that KeyCorp’s shares are undervalued, and rightly so; the stock trades at a forward P/E multiple of 7.77, well beneath the average of 11.06 for the Financials sector. Robert Pohly’s Samlyn Capital added an 8.39 million-share position in KeyCorp (NYSE:KEY) to its portfolio during the December quarter.

Mr. Englander’s hedge fund firm increased its exposure to Pinnacle West Capital Corporation (NYSE:PNW), lifting its stake in the company by 2.59 million shares during the final three months of 2015, to 3.88 million shares . The newly-upped stake was valued at $250.32 million at the end of 2015. Pinnacle West Capital Corporation is a holding company that generates most of its revenue from its wholly-owned subsidiary APS, which is a vertically-integrated electric utility. The company’s consolidated net income for 2015 totaled $437 million, up from $398 million reported for 2014. The increase was attributable to rate changes, lower operations and maintenance expenses, higher retail sales as a result of consumer growth, and changes in customer usage patterns and related pricing. Pinnacle West Capital Corporation (NYSE:PNW)’s stock has gained almost 6% since the beginning of 2016, which is unsurprising given that some analysts see the utilities sector as a safe haven amid increased volatility like that experienced so far in 2016. Cliff Asness’ AQR Capital Management increased its position in Pinnacle West Capital Corporation (NYSE:PNW) by 5% during the December quarter, to 2.43 million shares.

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While numerous investors have been losing faith in Apple Inc. (NASDAQ:AAPL)’s growth prospects over the past several months, billionaire Englander has been more bullish on the iPhone marker lately. His hedge fund lifted its position in Apple by 1.88 million shares during the fourth quarter, to nearly 2.19 million shares, which were valued at $230.24 million at the end of December. The shares of the Cupertino-based company are down by 27% over the past 12 months due to concerns over slowing iPhone sales and potential oversaturation in the smartphone market. Apple Inc. (NASDAQ:AAPL) did reveal some signs of faltering after disclosing iPhone sales that missed expectations for the latest quarter. Although smartphone sales have been softening in recent years, partly due to economic hardship in emerging economies, this business will most likely keep generating huge revenue in the upcoming years or even decades, depending on what innovation brings to the market and whether or not Apple remains near or at the forefront of it. Activist investor Carl Icahn of Icahn Capital LP owns 45.76 million shares of Apple Inc. (NASDAQ:AAPL) as of December 31.

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Disclosure: None

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