Maverick Capital is a Dallas, Texas-based long/short equity hedge fund founded by ‘Tiger Cub’ Lee Ainslie in 1993. Apart from making investments in the equity markets, the fund also invests in venture-backed biotech and technology companies. Prior to founding Maverick, Mr. Ainslie worked for hedge fund legend Julian Robertson’s Tiger Management. Over the last ten years the fund has managed to post an average annual return of 7.7%. Maverick Capital’s recently submitted 13F filing with the SEC reveals that its U.S equity portfolio was worth over $5.8 billion at the end of September. The filing also revealed that stocks from the information technology sector accounted for 29% of that value. Since Mr. Ainslie is renowned as a value investor with a penchant for investing in technology companies, in this article we will focus on Maverick Capital’s top five stock picks going into the fourth quarter.
But let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 53 percentage points, returning 102% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.
#5 Sabre Corp (NASDAQ:SABR)
– Shares Owned by Maverick Capital (as of September 30): 11.025 Million
– Value of Holding (as of September 30): $300 Million
Shares of Sabre Corp (NASDAQ:SABR) have had a phenomenal run this year, gaining 14.55% during the third quarter and currently trading up by 44.35% year-to-date. The gains the stock made during the third quarter along with Maverick Capital’s 13% hike to its position in Sabre Corp (NASDAQ:SABR) pushed the stock up seven spots in Ainslie’s portfolio, to fifth. However, this spectacular run in its stock price hasn’t been helping Sabre Corp to increase its popularity among hedge funds. The number of funds covered by Insider Monkey that owned a stake in Sabre Corp dropped to 34 from 35 during the third quarter. On November 25, the company announced that it will be buying Trust Group of Cos., a revenue management, central reservations, and hotel marketing firm, for $154 million. Billioanire Israel Englander‘s Millennium Management increased its stake in Sabre Corp by 228% to over 1.5 million shares during the July-to-September period.
#4 Commscope Holding Company Inc (NASDAQ:COMM)
– Shares Owned by Maverick Capital (as of September 30): 12.35 Million
– Value of Holding (as of September 30): $371 Million
Maverick Capital increased its stake in Commscope Holding Company Inc (NASDAQ:COMM) by 710,519 shares during the third quarter. After a spectacular rise in January, shares of Commscope Holding Company Inc (NASDAQ:COMM) remained range-bound throughout much of 2015, but took a big hit recently after the company reported its third quarter results. Nonetheless, shares still trade up by 25% year-to-date. While the EPS of $0.53 that the company reported for the third quarter was above analyst expectations of $0.50, the revenue of $972.60 million was more than $97 million lower than the $1.07 billion that analysts had expected. Of the 41 hedge funds covered by us that reported owning a stake in the company as of the end of September, Bob Peck and Andy Raab‘s FPR Partners was a fund that also initiated a stake in Commscope Holding Company Inc during the third quarter.