“You can’t expect to hit the jackpot if you don’t put a few nickels in the machine.” ~
Flip Wilson
Flip Wilson was able to put the mantra of hitting a Jackpot in a single line and rightly so. The same can be said of the billionaire hedge fund managers tracked by Insider Monkey, which certainly didn’t get to where they are today without taking some risks and putting some nickels in the proverbial slot machine if you will. Billionaire hedge fund managers hit the jackpot with a few of their pulls of the slot arm in the second quarter, and we’ll take a look at those stocks which turned up 7’s in the second quarter, being Time Warner Cable Inc (NYSE:TWC), Netflix, Inc. (NASDAQ:NFLX), and Mondelez International Inc (NASDAQ:MDLZ).
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At Insider Monkey, we track hedge funds’ and billionaires’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 135% and beating the market by more than 80 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Starting with the second-largest cable telecommunications service in the United States, Time Warner Cable Inc (NYSE:TWC), the shares of the service provider have grown 19.4% in the second quarter, pushing them close to their 52-week high. One of the primary reasons for the exemplary growth in the value of shares is the potential merger offers being received by the company. Comcast Corporation (NASDAQ:CMCSA) announced a takeover bid for Time Warner Cable Inc (NYSE:TWC) in February 2014 for $45 billion, which was later disapproved by regulatory authorities. After the Comcast episode, Charter Communications, Inc. (NASDAQ:CHTR) initiated a three-way merger under which Charter would absorb Time Warner Cable for $55 billion and Bright House for $10.4 billion. The deal is under regulatory approval and Charter is hopeful for a favorable outcome. The smart money is bullish on the stock of Time Warner Cable, as 83 hedge funds that we track at Insider Monkey had positions in the company worth $10.18 billion at the end of the first quarter. Chris Hohn of Childrens Investment Fund held a large position in the company of 15.02 million shares valued at $2.25 billion. 16 billionaire investors in our database held positions in Time Warner Cable at the end of the first quarter.
Netflix, Inc. (NASDAQ:NFLX) is turning out to be a wonder stock, with its shares growing by 57.7% during the second quarter and 92.87% year-to-date. The video streaming service outmatched its own first quarter predictions by adding nearly five million subscribers, with 2.28 million of the additions being U.S. subscribers while 2.6 million were global subscribers. Netflix, Inc. (NASDAQ:NFLX) announced a 7-for-1 stock split involving its shares, which are currently trading at $663.00. The split will be offered in the form of a dividend of six additional shares for every outstanding share. The dividend will be paid on July 14 and the stock will start trading on a post-split price basis starting on July 15. The number of hedge funds in our database holding positions in Netflix jumped to 47 by the end of the first quarter with total holdings amounting to $3.86 billion compared to $3.32 billion in shares held by 44 hedge fund investors on December 31. Philippe Laffont’s Coatue Management was among the largest shareholders of Netflix, Inc. (NASDAQ:NFLX), holding a position valued at $734.69 million through 1.76 million shares. According to our records, seven billionaires had investments in the video streaming service at the end of the first quarter.
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Last but not the least, Mondelez International Inc (NASDAQ:MDLZ) is another stock that offered big returns to its investors in the second quarter, with its shares improving by 14.4%. The food company found a place in the consumer sector stocks of Barclays’ ‘Americas Top Picks List’ announced on June 30, along with other brands like PepsiCo, Inc. (NYSE:PEP). The shares of Mondelez International have grown 11.45% year-to-date and smart money has a bullish outlook on the company. Among the hedge funds that we track at Insider Monkey, 65 held positions in the company, with aggregate holdings of $6.11 billion at the end of the first quarter, a dip in total holdings value from $6.76 billion on December, but an increase in total ownership from the 63 hedge fund investors who held positions at that time. Nelson Peltz’s Trian Partners was the largest shareholder of the company in our database with investments exceeding $1.73 billion from 48.02 million shares of the company. The food manufacturer attracted investments from 14 billionaires by the end of the first quarter.
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