The third quarter broader market sell-off had a significant impact on the fortunes of most hedge funds and other money managers. Even so, there are some investors who successfully navigated the summer stock market turmoil and have delivered strong results in 2015. Israel Englander’s Millennium Management is one of the multi-billion dollar hedge fund firms that recorded solid gains through the end of August. According to an article published by the New York Times in September, Millennium Management was up by 9.6% for the year as of that point in time. In fact, Englander’s pooled multi-manager portfolios have registered only one down year since Millennium’s inception back in 1989. It is also worth mentioning that Englander’s hedge fund has generated a net annualized return of more than 14% since its launch. Although Millennium Management employs a wide range of trading strategies, some of which are more short-term focused, it will be worthwhile to take a look at its top five stock picks at the end of the third quarter, which is what we’ll do below.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 102%, nearly 2.1 times greater returns than the S&P 500 during the same period (see more details).
#5 Noble Energy Inc. (NYSE:NBL)
– Shares Owned by Millennium Management (as of September 30): 12.29 Million
– Value of Holding (as of September 30): $370.86 Million
Millennium Management upped its position in Noble Energy Inc. (NYSE:NBL) by 3.56 million shares during the September quarter, which denotes a lift of roughly 40% quarter-over-quarter. The independent energy company has seen its shares decline by 23% in 2015, which is not surprising considering the low natural gas and crude oil prices. However, the company seems to be well-positioned to tackle the current commodity price volatility, considering its cost reduction efforts and strong balance sheet. In a recent public filing with the SEC, Noble Energy outlined that the company is well hedged for the rest of this year, and partially hedged for 2016. The company has a debt-to-book capital of 39% as of September 30. However, Noble Energy’s capital expenditures exceeded its cash flows from operating activities in the nine-month period that ended September 30, despite undertaking a 36% reduction in capital spending year-over-year. Boykin Curry’s Eagle Capital Management reported owning 15.75 million shares of Noble Energy Inc. (NYSE:NBL) via its 13F filing for the third quarter.
#4 PPL Corp (NYSE:PPL)
– Shares Owned by Millennium Management (as of September 30): 11.32 Million
– Value of Holding (as of September 30): $372.47 Million
Israel Englander’s hedge fund lifted its stake in PPL Corp (NYSE:PPL) by 436,766 shares during the three-month period that ended September 30. The shares of the utility holding company are 8% in the red year-to-date and are currently trading at an attractive price-to-earnings ratio of 12.83, which is substantially below the ratio of 22.70 for the S&P 500 Index. Just recently, Deutsche Bank upgraded the stock to ‘Buy’ from ‘Hold’ and raised its price target on it to $36.00 from $34.50, after the company reported stronger-than-expected earnings and increased its earnings guidance. PPL recently asserted that it anticipates compound annual earnings growth of 6% through 2017, up from the previously-anticipated range of 4%-to-6%. First Eagle Investment Management, founded by Jean-Marie Eveillard, cut its position in PPL Corp (NYSE:PPL) by 1.14 million shares during the recent quarter, remaining with 2.88 million shares.