Greenwich, Connecticut-based long/short equity hedge fund Tudor Investment Corp doesn’t need an introduction in the world of finance. Founded by the iconic trader Paul Tudor Jones in 1980, the fund has one of the best multi-decade performance track records among hedge funds. In 2013, Forbes magazine listed Mr. Jones as one of the 40 Highest-Earning hedge fund managers and as of September 2015, his net worth is estimated to be $4.7 billion. Tudor Investment Corp is also known on the Street for charging a higher fee than other hedge funds in the same league. Whereas most other hedge funds abide by the ‘2-20’ rule, Tudor Investment Corp charges its investors 4% of assets under management annually and 23% of the profit. The fund recently filed its 13F with the SEC for the reporting quarter ending September 30. According to the filing, Tudor Investment Corp’s U.S equity portfolio at the end of September was worth nearly $2.96 billion, compared to over $3.4 billion that it was worth at the end of June. In this article we are going to take a closer look at the fund’s top five equity holdings going into the fourth quarter and analyze why the fund is betting heavily on these companies.
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated ten percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. the S&P 500’s 49% gain) over the last 38 months (see the details here).
#5 Broadcom Corporation (NASDAQ:BRCM)
– Shares Owned by Tudor Investment Corp (as of September 30): 672,500 shares
– Value of Holding (as of September 30): $34.59 Million
Let’s start with Tudor Investment Corp’s fifth-largest equity holding, Broadcom Corporation (NASDAQ:BRCM). During the third quarter, when the stock of the company remained largely flat, Tudor Investment Corp reduced its stake in Broadcom Corporation (NASDAQ:BRCM) by 64,143 shares. Owing mostly to the terrific surge it saw at the end of May, Broadcom Corporation’s stock currently trades with year-to-date gains of 21.86%. On October 26 the company reported its third quarter numbers, declaring EPS of $0.77 on revenue of $2.19 billion, compared to EPS of $0.91 on revenue of 2.26 billion it reported for the same quarter of last year. On November 18 analysts at FBR & Co. reiterated their ‘Buy’ rating on the stock. Andreas Halvorsen‘s Viking Global initiated a huge stake in Broadcom by purchasing over 23.5 million shares of the company during the third quarter and became the largest shareholder of it among the funds we track in the process.
#4 Time Warner Cable Inc (NYSE:TWC)
– Shares Owned by Tudor Investment Corp (as of September 30): 200,000 shares
– Value of Holding (as of September 30): $35.87 Million
Time Warner Cable Inc (NYSE:TWC) is another stock in Tudor Investment Corp’s portfolio that saw a massive rally at the end of May. Owing largely to that, it currently trades with year-to-date gains of 21%. Similar to what it did with its stake in Broadcom Corporation, Tudor Investment Corp also reduced its stake in Time Warner Cable Inc (NYSE:TWC), by 6% during the July-September period. On November 18 the company announced that it received a perfect score of 100% on the 2016 Corporate Equality Index (CEI), which is administered by the Human Rights Campaign Foundation. Time Warner Cable Inc reported EPS of $1.62 on revenue of $5.92 billion for the third quarter. On November 10 analysts at SunTrust initiated coverage on the stock with a ‘Neutral’ rating and $202 price target. Billionaire John Paulson‘s Paulson & Co was the largest shareholder of the company at the end of September among the funds covered by Insider Monkey.