James Dinan’s York Capital Management has filed its 13F for the reporting period of March 31, with the fund’s public equity portfolio being valued at $14.56 billion as of the reporting period. According to Forbes, Dinan has a net worth of $2.4 billion and ranks 276th on the list of billionaires in the United States. The fund’s public equity portfolio is diversified across a broad range of sectors, with consumer staples and finance ranking as the top two in terms of capital allocation, while American Airlines Group Inc (NASDAQ:AAL) and Kraft Foods Group Inc (NASDAQ:KRFT) are the top long positions of the fund. In this article, we’ll look specifically at Dinan’s top small-cap stock picks, which include Scorpio Tankers Inc. (NYSE:STNG), Dycom Industries, Inc. (NYSE:DY), Eaton Vance Corp (NYSE:EV), and Globalstar, Inc. (NYSEMKT:GSAT).
An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects. It is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 84 percentage points and returning over 144%, while hedge funds themselves have collectively underperformed the market (read the details here).
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Scorpio Tankers Inc. (NYSE:STNG) comes in at number one on the list of top small-cap picks of Dinan, who owns 14.81 million shares of the seaborne transportation company for petroleum products, with the position valued at $139.48 million. Scorpio Tankers has a market cap of $1.63 billion and despite the dismal performance of the petro industry, the shares of Scorpio Tankers Inc. (NYSE:STNG) are up 8.61% year-to-date. The transportation company added more ships to its current fleet and according to its latest announcement, purchased four more LR2 product tankers at a price tag of $60 million each. Daruma Asset Management and Marc Lasry‘s Avenue Capital have stockholdings in the sea transportation company.
The current stake of York Capital Management in Dycom Industries, Inc. (NYSE:DY) includes 2.82 million shares with a market value of $137.68 million. The specialty contracting service has a market cap of $2.01 billion and its shares have grown an impressive 65.9% year-to-date, partially on the strength of Dycom Industries, Inc. (NYSE:DY)’s market crushing earnings of $0.58 for the first quarter, squashing estimates of $0.37. Dycom Industries, Inc. (NYSE:DY) is gaining investor support because of its short-term momentum and analysts have upgraded their earnings estimates for the current quarter, lifting them to $0.78 from $0.58 a month ago. Peconic Partners LLC and Michael O’Keefe‘s 12th Street Asset Management are among the major stockholders of Dycom Industries, Inc. (NYSE:DY) hoping it can achieve those loftier earnings estimates.