Although many investors and analysts have voiced their discontent with the herd-like behavior and weak performance of the hedge fund industry of late, there are some hedge fund managers who have successfully beaten benchmarks in recent years. For instance, Steven A. Cohen’s family office, Point72 Asset Management, has successfully beaten the hedge fund industry in the past two years (Point72 made gross profit of $2.5 billion-to-$3.0 billion in 2014), but the so-called herd-like behavior has impacted his fund’s performance thus far in 2016. While there are numerous hedge fund vehicles out there in the market worthy of the attention of the investment community, the following article will lay out five new bets made by several extremely successful and widely-known hedge fund managers, including Mr. Cohen.
At Insider Monkey, we track around 785 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).
Billionaire Daniel Och Buys Stake in Baxalta Inc. (NYSE:BXLT) After Merger Announcement
Daniel S. Och’s OZ Management LP acquired a new stake of 14.43 million shares of Baxalta Inc. (NYSE:BXLT) during the first quarter of 2016, which was valued at $582.80 million on March 31. The new position was the largest equity holding in OZ Management’s portfolio at the end of March, accounting for nearly 3% of the value of the entire portfolio. In January, the U.S drugmaker announced that it had agreed to be bought by Dublin-based Shire PLC (ADR) (NASDAQ:SHPG) in a deal that could create a global leader in the treatment of rare diseases. The terms of the agreement stipulate that Baxalta shareholders will receive $18.00 in cash and 0.1482 American Depository Shares (ADSs) of Shire for each share of Baxalta. Just recently, Shire said that the $32 billion merger remained on track despite new regulations aimed at curbing inversions, which put the kibosh on another multi-billion-dollar merger in the healthcare space, that being the proposed $160 billion merger between Pfizer Inc. (NYSE:PFE) and Allergan PLC (NYSE:AGN). Eric Mindich’s Eton Park Capital acquired a new stake of 11.93 million shares of Baxalta Inc. (NYSE:BXLT) during the March quarter.
Activist John Paulson Initiates Position in Activision Blizzard Inc. (NASDAQ:ATVI)
John Paulson’s Paulson & Co. reported a new stake of 3.14 million shares of Activision Blizzard Inc. (NASDAQ:ATVI) through the latest round of 13F filings, which was worth $106.26 million on March 31. Soon after the developer and publisher of interactive entertainment released a strong first quarter earnings report, analysts at Pacific Crest Securities upped their price target on Activision Blizzard’s stock to $40 from $36 and reiterated their ‘Overweight’ rating on it. The company’s GAAP net revenue for the first quarter was $1.46 billion, up from $1.28 billion reported a year earlier. Pacific’s analysts believe the video game software company will continue to perform well in the current quarter, thanks to the highly-anticipated release of team-based first-person shooter Overwatch by the end of May, after the game’s brief open beta in early May pulled in nearly ten million players. Shares of Activision Blizzard have gained 32% in the past three months, but are still down by 1% year-to-date. Philippe Laffont’s Coatue Management owns 14.48 million shares of Activision Blizzard Inc. (NASDAQ:ATVI) as of the end of March.
On the next page of this article we’ll lay out three more noteworthy hedge fund moves disclosed through the latest round of 13F filings.