Though billionaire James Dinan‘s York Capital Management manages regulatory assets worth over $25 billion, its latest 13F filing reveals that less than 16% of it or only $4 billion was invested in US equities at the end of second quarter. The New York-based hedge fund that will be celebrating its silver jubilee this year manages a well diversified equity portfolio with exposure towards most industry sectors.
According to its latest filing, York Capital Management ‘s equity portfolio had a high quarterly turnover of 71.67% during the second quarter and its top 10 equity holdings accounted for over 57% of the value of its equity portfolio at the end of June. The filing also revealed that the fund initiated stakes in 22 stocks during the April-June period. In this post, we will take a look at the top-five new equity holdings of the fund and will discuss how these stocks have performed lately.
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points in our backtests that covered the period between 1999 and 2012 (see the details here).
#5 St. Jude Medical, Inc. (NYSE:STJ)
– Shares Owned by York Capital Management (as of June 30): 1.39 Million
– Value of Holding (as of June 30): $108.53 Million
Let’s start with St. Jude Medical, Inc. (NYSE:STJ), whose stock has seen a 27.45% appreciation this year owing majorly to the spike it saw in late-April after Abbott Labs announced it will be acquiring the company for $25 billion in a cash-and stock deal. The medical devices company currently pays a quarterly dividend of $0.31 per share, which based on its last trading price translates into a forward yield of 1.56%. Earlier this month, the company filed a lawsuit against Muddy Waters, MedSec Holdings and three other individuals for a report published by Muddy Waters on August 25 which alleged that 50% of St. Jude Medical, Inc. (NYSE:STJ)’s business was at high risk due to the vulnerability of its devices to hacking. After this report was published, St. Jude Medical, Inc.’s stock dropped over 10% on August 26, forcing NASDAQ to suspend trading in it for some time. During the second quarter, the ownership of St. Jude Medical, Inc. (NYSE:STJ) among hedge funds covered by us increased by 18 to 54 and the aggregate value of their holdings in it more than doubled to $1.92 billion.
#4 LinkedIn Corp (NYSE:LNKD)
– Shares Owned by York Capital Management (as of June 30): 650,121
– Value of Holding (as of June 30): $123.03 Million
Shares of professional social networking company LinkedIn Corp (NYSE:LNKD) have had an amazing ride this year. First, they suffered a 50% drop in February after the company reported its fourth-quarter numbers and then they saw a nearly 40% spike in June after Microsoft announced that it will acquire LinkedIn Corp for $196 per share. Currently, the stock trades down 15.44% year-to-date and very close to Microsoft’s acquisition price. For its fiscal 2016 second quarter, LinkedIn Corp (NYSE:LNKD) reported EPS of $1.13 on revenue of $932.71 million, beating analysts’ estimates of EPS of $0.78 on revenue of $898.30 million. Last month, TechCrunch reported that the company had sued 100 unnamed individuals for using bots to acquire user profiles from its platform. The popularity of LinkedIn Corp among hedge funds tracked by us saw a notable increase during the April-June period with its ownership among them increasing by 25 to 66 and the aggregate value of their holdings in it jumping by 194% to $4.06 billion.
#3 Shire PLC (ADR) (NASDAQ:SHPG)
– Shares Owned by York Capital Management (as of June 30): 932,085
– Value of Holding (as of June 30): $171.58 Million
Moving on, despite the fact that it is currently trading almost flat for 2016, Shire PLC (ADR) (NASDAQ:SHPG) has been one of the best performing large-cap biotech stocks this year. In June, the company completed its $32 billion merger with Baxalta which it had announced at the beginning of 2016. To repay the bridge loans it had taken to fund this acquisition, on September 20, Shire PLC announced that it has priced its public offering of $12.1 billion of senior notes, which are expected to be issued on September 23 subject to customary closing conditions. Last month, the Street was buzzing with rumors that Shire PLC (ADR) (NASDAQ:SHPG) has bid $800 million for acquiring California-based drug maker Raptor Pharmaceuticals. However, none of those two entities have commented on this rumor so far. On Tuesday, analysts at Jefferies Group reiterated their ‘Buy’ rating and $262 price target on Shire PLC’s ADR, which represents a potential upside of 27% from its current trading price. At the end of June, there were 64 hedge funds covered by us that were long Shire PLC with the aggregate value of their holdings in it amounting to $3.77 billion.
#2 Monsanto Company (NYSE:MON)
– Shares Owned by York Capital Management (as of June 30): 2.28 Million
– Value of Holding (as of June 30): $235.92 Million
Monsanto Company (NYSE:MON) was York Capital Management’s third largest equity holding at the end of the second quarter. Other hedge funds that initiated a stake in the company during the April-June period included Nancy Havens-Hasty‘s Havens Advisors and Jason Karp‘s Tourbillon Capital Partners. Shares of the agriculture product giant tumbled heavily last year and are yet to recoup most of those losses as they trade with a meager year-to-date gain of only 3.45% currently. On September 14, Bayer announced that it had agreed to acquire Monsanto Company for $128 per share in cash or almost $66 billion. However, rather than pushing Monsanto Company (NYSE:MON)’s stock upwards, this announcement has had a negative impact on the stock so far because most analysts and investors are skeptical about the deal going through due to numerous regulatory and antitrust hurdles. In order to merge, the companies will have to go through antitrust reviews in nearly 30 jurisdictions worldwide. On September 15, analysts at Sanford C. Bernstein reiterated their ‘Sell’ rating on the stock. The number of hedge funds covered by us that were long Monsanto Company rose by 26 to 87 during the second quarter, while the aggregate value of their holdings in it jumped 117.22% to $5.32 billion.
#1 Medivation Inc (NASDAQ:MDVN)
– Shares Owned by York Capital Management (as of June 30): 5.07 Million
– Value of Holding (as of June 30): $305.91 Million
Medivation Inc (NASDAQ:MDVN) was the largest new position in York Capital Management’s equity portfolio at the end of June. Having appreciated by 68.6% so far in 2016, it is also the top stock covered in this article when it comes to year-to-date gains. While Medivation Inc’s stock was already trading with decent gains for the year till last month, a large part of the gain it sports currently came on August 22 when pharma giant Pfizer Inc. announced that it will be acquiring the company for $81.50 per share. Following Pfizer’s announcement, several leading analysts on Wall Street lowered their rating on Medivation Inc (NASDAQ:MDVN)’s stock, including Brean Capital and Stifel Nicolaus, which both lowered it to ‘Neutral’ from ‘Buy’. For its fiscal 2016 third quarter, analysts expect Medivation to report EPS of $0.38 on revenue of $238.37 million. For the same quarter of last year, the company reported EPS of $0.35 on revenue of $260.67 million. During the April-June period, the ownership of Medivation Inc (NASDAQ:MDVN) among funds covered by us increased by 16 to 65 and the aggregate value of their holdings in it rose by $1.27 billion to $2.83 billion.