Blue Ridge Capital is a renowned New York-based hedge fund founded by ‘Tiger Cub’ John Griffin in 1996. Prior to founding Blue Ridge, Mr. Griffin worked directly under hedge fund legend Julian Robertson at Tiger Management. Blue Ridge Capital generally targets ‘absolute returns’ and focuses on individual companies rather than industry sectors when making investment decisions. The fund recently submitted its 13F filing with the SEC for the reporting period of September 30. The filing disclosed that at the end of September Blue Ridge Capital’s U.S equity portfolio was worth almost $8.7 billion and a major chunk of that, 31%, was invested in stocks from the information technology sector. The filing also revealed that during the turbulent July-to-September period, Blue Ridge Capital’s equity portfolio had a fairly limited quarter-over-quarter turnover of 35.42%, showing the investor remained confident in the long-term prospects of many of his stock picks. In this article we are going to analyze in detail the top five of those stocks which the fund was betting on going into the fourth quarter.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
#5 W. R. Grace & Co (NYSE:GRA)
– Shares Owned by Blue Ridge Capital (as of September 30): 3.19 Million
– Value of Holding (as of September 30): $296.83 Million
Shares of W. R. Grace & Co (NYSE:GRA) have mostly remained range-bound in 2015 and currently trade up by 2.81% year-to-date. This perhaps also explains why Blue Ridge Capital didn’t made any changes to its stake in the company during the third quarter. W. R. Grace reported its third quarter results on October 22, declaring EPS of $1.37 on revenue of $790.10 million. On November 2, analysts at Jefferies Group reiterated their ‘Buy’ rating on the stock, while upping their price target on it to $120 from $113. David Cohen and Harold Levy‘s Iridian Asset Management was the largest shareholder of the company in our database at the end of September.
#4 Autodesk, Inc. (NASDAQ:ADSK)
– Shares Owned by Blue Ridge Capital (as of September 30): 6.92 Million
– Value of Holding (as of September 30): $305.45 Million
Blue Ridge Capital hit the bull’s eye by initiating a stake in Autodesk, Inc. (NASDAQ:ADSK) during the third quarter. The almost 12% decline that shares of Autodesk, Inc. (NASDAQ:ADSK) suffered during the quarter coupled with the decline it suffered during the first half of the year had it trading down by more than 25% year-to-date at the end of September. However, since the beginning of October, the stock has seen a massive rally of more than 40%, resulting in it now trading up by nearly 5% year-to-date. On November 19 Autodesk reported its third quarter earnings, beating analyst estimates of EPS of $0.08 on revenue of $591.33 million by declaring EPS of $0.14 on revenue of $600 million. Philippe Laffont‘s Coatue Management also initiated a stake in Autodesk, Inc. during the third quarter by purchasing around 1.4 million shares of the company.