Billionaire Paul Tudor Jones is one of the most successful traders in history, and widely-known as being an exceptional macro trader. Mr. Jones founded his hedge fund Tudor Investment in 1980 and has generated net annual returns of 19% since its inception. Reportedly, he predicted the Black Monday of 1987 and bet on a plunge in the U.S stock market, which rewarded him with gains of 125.9% net-of-fees in his main fund back in 1987. The billionaire investor also earned 87.4% in 1990, when the market plummeted in Japan. His Connecticut-based hedge fund employs both fundamental and quantitative analysis when seeking and developing investment theses, which have proved to be very successful and profitable over the years. To prove the truth of these words, data compiled by Insider Monkey reveals that Tudor Investment’s 1,033 long positions in companies as of September 30 which had a market capitalization above $1 billion generated a weighted average return of 6.9% in the fourth quarter, while his picks returned 5.0% in 2015 as a whole, based on the size of the qualifying positions at the beginning of each quarter. With that in mind, this article will reveal and discuss the most notable moves made by Paul Tudor Jones during the final quarter of 2015.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Let’s kick off our discussion with Tudor Investment’s second-largest equity position and fourth-largest holding as of the end of December 2015. The Connecticut-based hedge fund upped its position in Ultimate Software Group Inc. (NASDAQ:ULTI) by 177,786 shares during the December quarter, to 253,623 shares, which were valued at $49.59 million. The shares of the cloud provider of people management solutions are down by 2% over the past 12 months, after having plunged by nearly 18% since the beginning of 2016. Analysts at FBR & Co. believe that the recent slump in the company’s share price is mainly attributable to macroeconomic worries and fears that “the choppy information-technology (IT) spending environment will lead to a slowdown in demand for enterprise software”. Meanwhile, Ultimate Software Group Inc. (NASDAQ:ULTI)’s fundamentals do not seem to be deteriorating. The company’s 2015 total recurring revenue, which constitutes subscription revenue from its cloud offering, grew by 23% year-over-year to $516.2 million, while its total revenue increased by 22% to $618.1 million. The company’s management anticipates its recurring revenue to grow by another 26% in 2016. Matthew A. Weatherbie’s Weatherbie Capital owns 159,854 shares of Ultimate Software Group Inc. (NASDAQ:ULTI) as of the end of 2015.
Tudor Investment initiated a new position of 1.54 million shares in CSRA Inc. (NYSE:CSRA) during the December quarter, which was worth $46.07 million on December 31. In November, CSRA completed its Separation from Computer Sciences Corp. (NYSE:CSC) and merged with Fairfax-based SRA International, emerging as a leading provider of IT solutions serving U.S government customers. The shares of CSRA have lost 12% since they started trading on the New York Stock Exchange at the end of November. Earlier this year, RBC Capital Markets initiated coverage on CSRA Inc. (NYSE:CSRA) with an ‘Outperform’ rating and a price target of $37, saying that CSRA has best-in-class margins and the highest share of fixed-price contracts among Federal IT firms. Barry Rosenstein’s JANA Partners reported owning 4.14 million shares of CSRA Inc. (NYSE:CSRA) through its 13F filing for the fourth quarter.