CQS Cayman LP is a multi-strategy credit-oriented hedge fund, founded back in 1999 by its current Senior Portfolio Manager, Chief Executive and Senior Investment Officer, Sir Michael Hintze. It is based in London, with additional offices in New York, Sydney, and Hong Kong. Sir Michael Hintze was born in China to Russian parents, but he grew up in Australia, where he was a Captain in the country’s army. He cut his teeth at Salomon Brothers, and later on sharpened his investment acumen at CSFB and Goldman Sachs. A couple of years ago, Sir Michael Hintze was asked to serve on the International Advisory Panel for the Australian government’s Financial Services Inquiry, and afterward as a Member of the Market Practitioners’ Panel of the UK’s Fair and Effective Markets Review. He is a member of many boards of various institutions of importance, and he is also renowned for his charity work. Sir Michael Hintze, earned his B.S. in Physics and Pure Mathematics and a B.E. in Electrical Engineering both from the University of Sydney, and M.Sc. in Acoustics from the University of New South Wales, and an M.B.A. from Harvard Business School and received a DBA (honoris) from the University of New South Wales.
Throughout the years, CQS Cayman LP gained competence in the credit sector, covering asset backed securities, corporate credit, loans, structured credit, and convertibles. Among the fund’s many investors can be found insurance companies, private banks, pension funds, and sovereign wealth funds. The fund’s investment strategy must be pretty bright, as it has delivered some pretty good returns in recent years.
Its Asset Backed Securities fund delivered an annualized return of an impressive 18% since its launch in 2006 through March 2018, and its flagship Directional Opportunities fund brought back 15.6% annualized since its formation in 2005 through March 2018. Its Diversified fund also delivered a positive return of 7.63% annualized since its inception in 2007 through March 2018.
In 2015 the fund had both positive and negative performance. Its Directional Opportunities fund lost 7.9%, its Diversified fund was down 2.6%, and its Asset Backed Securities lost 2.4%. On the other hand, some other funds CQS Cayman LP manages performed well. Its Credit Multi-Asset fund generated a return of 3.6%, its Global Convertible Arbitrage fund returned 7.5% and its Long-Only Convertibles fund brought back 5%.
The next year was more favorable for the fund, as its Directional Opportunities fund delivered a fantastic 22.7%, between January through October 31, 2016, while its Diversified fund and Asset Backed Securities also had great returns in the same period, amounting to 9.9% and 6.1%, respectively. In 2017, through September, CQS Cayman LP’s Credit Multi-Asset fund gained 4.4%, its Diversified fund was up 5%, and Asset Backed Securities delivered a strong 8.5%. The fund had around $12.7 billion in assets under management last year.
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At the end of the third quarter, CQS Cayman LP’s 13F portfolio was valued at $2.12 billion. During the quarter the fund made many changes to it, it added 28 new positions, raised its stakes in 33, lowered in 28, held the same position from the previous quarter in 22, and completely dumped 32 stocks. On the next page, you can find out more about these changes.
The two largest positions in CQS Cayman LP’s portfolio at the end of the third quarter were in DISCOVERY COMMUNICATIONS INC. (NASDAQ:DISCA) in which the fund raised its stake by 26% to 3.39 million shares, worth around $100.38 million, and in Alphabet Inc Class A (NASDAQ:GOOGL), in which the fund also boosted its stake by 32%, to 53,969 shares, valued at $65.14 million. Alphabet Inc. is the 4th most popular stock among hedge funds at the end of the second quarter (see the list of 25 most popular stocks among hedge funds).
The biggest new addition to the fund’s equity portfolio was Williams Companies Inc (NYSE: WMB), as the fund acquired 1.39 million shares outstanding, worth around $37.79 million. This was followed by its investment in Arconic Inc (NYSE:ARNC) with the fund obtaining 975,000 shares of the company, that were valued at $21.46 million at the end of the third quarter. Arconic Inc (NYSE:ARNC) is a lightweight metals manufacturer, running its business in three sectors: Transportation and Construction Solutions, Global Rolled Products, and Engineered Products. Year to date the company’s share price is down by 24.17%. Williams Companies Inc (NYSE: WMB) is an energy company with its main business being natural gas processing. Over the past 12 months, the company’s share price was lowered by 10%.
During the third quarter, the fund significantly raised its stake in Altaba Inc (NASDAQ:AABA), an investment company that developed thanks to the Verizon Communications Inc.’s (NYSE: VZ) acquisition of Yahoo! Inc’s Internet business. CQS Cayman LP boosted its stake in it by 5,373%, to 66,107 shares, worth around $4.50 million. Over the past 6 months, the stock is down by 17.71%.
CQS Cayman LP is seriously losing its interest in Under Armour Inc Class C (NYSE:UA) as it has reduced its stake in it by 86%, to 50,784 shares, worth around $1.08 million. Recently, the fund reported on the third quarter financial results, and its revenue grew by 2% to $1.4 billion. Over the past 12 months, the company’s stock price gained 88.72%. Among the biggest positions the fund decided to drop during the third quarter were Dell Technologies Inc (NYSE:DVMT) and Biogen Inc (NASDAQ:BIIB), saying goodbye to its positions that counted 319,984 shares outstanding, worth around $27.06 million, and 25,750 shares, valued at $7.47 million, respectively.
Disclosure: None. This article was originally published on Insider Monkey.