In its 13F filing for the reporting period of June 30, billionaire Louis Bacon‘s Moore Global Investments revealed a U.S public equity portfolio worth nearly $4.65 billion. Mr. Bacon established Moore Capital Management in 1989 and using $25,000 he inherited from his family, he launched Moore Global Investments in 1990. While studying for his MBA at Columbia Business School, Mr. Bacon started trading in currencies and later worked as a currency trader at the firm Walter N. Frank & Co. According to Moore Global’s latest 13F filing, the fund had a very high quarterly turnover of 93.32% during the second quarter, as it sold out of its entire stake in 190 stocks, and initiated a stake in 187 stocks in their place. Though 58% of Moore Global’s equity portfolio was well diversified with positions in stocks from different sectors, it was highly dominated by stocks from the financial sector which accounted for the other 42% of the portfolio. Since Mr. Bacon seemed quite bullish on the financial industry going into the third quarter of 2015, in this article we are going to dissect his top three holdings from that sector: Ameriprise Financial, Inc. (NYSE:AMP), AerCap Holdings N.V.(NYSE:AER), and Bank of America Corp (NYSE:BAC).
But before we proceed to do that, let’s first explain why we track hedge fund activity. From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect the hedge funds’ activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small cap stock picks among hedge funds also bested passive index funds by around 60 percentage points over the 35 month period beginning in September 2012, returning 118% (read the details here).
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Moore Global Investments increased its stake in Ameriprise Financial, Inc. (NYSE:AMP) by 588% to 550,000 shares during the April-June period. As of June 30, this stake was worth $68.71 million. Ameriprise Financial, Inc. (NYSE:AMP) is a Minnesota-based diversified financial services company founded in 1894. Since it debuted in the secondary markets in 2005, the company has a history of consistently paying dividends, even during the financial crisis of 2007-2008, which might explain why almost 90% of the shares of the company are owned by institutional investors. On July 23, the company reported its second quarter earnings, which came in above analysts’ consensus estimates. While the Street was expecting EPS of $2.27 on revenue of $3.10 billion, the company declared EPS of $2.33 on revenue of $3.13 billion. Analysts at Deutsche Bank reiterated their ‘Buy’ rating on the stock on July 24, and have a price target of $150 on the stock. Andreas Halvorsen‘s Viking Global initiated a stake in Ameriprise Financial, Inc. (NYSE:AMP) by purchasing over 1.6 million shares of the company during the April-June period.