Billionaire Jacob Rothschild is a British investment banker and a member of the famous Rothschild banking family. Lord Rothschild serves as the Chairman of the London-listed investment trust RIT Capital Partners, which is widely-known in the finance industry for its exceptional track record and conservative approach to investing. The investment firm has rewarded its investors with a 12.4% return per annum since its inception in 1988, notably higher than broader market benchmarks. Moreover, the share price of RIT Capital Partners has generated a cumulative return of nearly 60% in the past three years (through the end of 2015). Data compiled by Insider Monkey shows that RIT Capital’s eight positions in companies with a market capitalization above $1 billion generated a weighted average loss of 1% in the first quarter of this year. Having this in mind, let’s have a look at five noteworthy positions that comprise the investment trust’s U.S. equity portfolio, as well as discuss the performance of those positions during the first quarter.
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).
5. Activision Blizzard Inc. (NASDAQ:ATVI)
– Shares Owned by RIT Capital Partners (as of December 31): 505,000
– Value of RIT Capital’s Holding (as of December 31): $19.54 Million
– Q1 Return: -11.9%
RIT Capital Partners acquired a new stake of 505,000 shares in Activision Blizzard Inc. (NASDAQ:ATVI) during the final quarter of 2015, which was worth $19.54 million on December 31. The new stake accounted for 5.25% of the investment trust’s U.S. equity portfolio at the end of December. The developer and publisher of online, PC, video game console, handheld, mobile and tablet games has seen product sales, which include the sale of physical products and digital downloads, decline steadily in the past several years. The company’s product sales declined to $2.45 billion in 2015 from $2.79 billion in 2014 and $3.21 billion in 2013. Nonetheless, Activision Blizzard’s sustained decline in physical sales has been more than offset by digital revenue growth due to higher player engagement. Total net revenues increased to $4.66 billion in 2015 from $4.41 billion in 2014. Moreover, analysts believe that the company’s ongoing transition from traditional video games to the digital game-play will lead to improved margins in the upcoming quarters. What’s more, cloud streaming and virtual reality may unlock new sources of revenue and growth for the interactive gaming company. Shares of Activision Blizzard lost nearly 12% during the first quarter of this year and are currently changing hands at around 16.1-times expected earnings, versus the forward P/E multiple of 17.9 for Electronic Arts Inc. (NASDAQ:EA) and 17.8 for Take-Two Interactive Software Inc. (NASDAQ:TTWO). Stephen Mandel’s Lone Pine Capital upped its stake in Activision Blizzard Inc. (NASDAQ:ATVI) by 22% during the fourth quarter of 2015, ending the year with 11.27 million shares.