Billionaire Louis Bacon Bets Big on Finance,, Inc. (AMZN)

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Louis Bacon founded Moore Global Investments in 1989 and has been running the fund ever since. Moore Global employs a global macroeconomic approach to investment and manages more than $50 billion worth of assets. At the end of the second quarter, the fund held $2.55 billion worth of investments in public equity, with nearly half of that in the financial sector. Louis Bacon and his team have made a big shift towards financial stocks, as part of a major portfolio overhaul. Four of the fund’s 5 largest equity bets comprise major players in the financial sector.

At Insider Monkey, we measure a hedge fund’s performance by calculating the weighted average returns of each fund’s long stock positions in companies with over $1 billion in market cap. According to this metric, Louis Bacon’s Moore Global managed a 3.6% return from 149 positions that qualify under our rule. So let’s have a look at how Mr. Bacon shaped up his portfolio in a bid to boost his fund’s performance.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).


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Dividend Is Golden

US banking giant JPMorgan Chase & Co. (NYSE:JPM) has found itself among Moore Global Investments’ top five equity positions at the end of June. During the second quarter, the fund acquired 925,000 shares reportedly worth $57.5 million. Hedge fund interest towards JPMorgan Chase & Co. (NYSE:JPM) was slightly up at the end of June, compared to the end of March, as the number of funds from our database invested in the stock rose by two to 99.  Lansdowne Partners is also betting big on this stock, as it held 23.5 million shares worth $1.46 billion. JPMorgan Chase & Co. (NYSE:JPM) pays an annual dividend of $1.92 per share, providing investors with a 2.84% yield, which is one of the highest among banking companies. The stock is currently trading at a trailing Price to Earnings (P/E) multiple of 11, lower than the industry average of 16. JPMorgan Chase & Co’s earnings multiple is also the smallest among the stocks that form the Dow Jones Industrial Average Index.

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Still Bullish On Fidelity National Information Services

Fidelity National Information Services Inc (NYSE:FIS) is still a major position in the fund’s portfolio, as Bacon and his team have slightly increased it during the quarter. According to its latest 13F filing, Moore Global held 825,132 shares worth $60.8 million at the end of June. At the end of the second quarter, roughly 12.5% of Fidelity National Information Services Inc (NYSE:FIS)’s common stock was held by 47 of the funds followed by Insider Monkey, down from 49 a quarter earlier. Billionaire Ken Griffin is also optimistic about the prospects of this company, as his fund, Citadel Investment Group, had its stake increased by 4470% to 5.25 million shares valued at $386 million. Last year, Fidelity National Information acquired SunGuard, one of its competitors, for $9.1 billion in a bid to spur growth. Fidelity National Information Services Inc (NYSE:FIS) also saw its debt load balloon to more than $11 billion and the management has decided to focus on reducing the debt level, with analysts expecting it to shed roughly $1.2 billion worth of debt by the end of 2017.

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