Billionaire Jorge Paulo Lemann‘s 3G Capital made some major changes in its equity portfolio during the final quarter of 2015 and is reaping rich dividends this year. The equity portfolio of the fund saw a quarterly turnover of 112% during the October-December period and sported stakes in several energy companies at the end of 2015. Most of those stakes were initiated in the fourth quarter, including four of the fund’s top five stock picks, which were all from the energy space. The small rebound in oil and natural gas prices, which ensued a turnaround in the energy sector during the first quarter has translated well for 3G’s equity portfolio this year. Analysis done by Insider Monkey of the fund’s 13F holdings in companies worth at least $1 billion shows that the 35 long positions held by the fund delivered a weighted average return of 7.9% during the first quarter. Since the fund’s major holdings are the ones which have contributed the most to its gains during the quarter, in this post, we are going to take analyze how 3G’s top five stock picks at the end of 2015 performed individually during the first quarter.
We track prominent investors and hedge funds 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 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
Follow Jorge Paulo Lemann's 3G Capital
#5 Diamondback Energy Inc (NASDAQ:FANG)
– Shares Owned by 3G Capital (as of December 31): 800,000
– Value of Holding (as of December 31): $53.52 million
Diamondback Energy Inc (NASDAQ:FANG) has turned out to be one of the best performing oil and natural gas stock in the last few years with its shares appreciating by over 350% since its IPO in October 2012. Though 3G capital initiated its stake in the company only in the last quarter of 2015, it would have also made decent gains because of the 15.36% rise in Diamondback Energy Inc (NASDAQ:FANG)’s stock during the first three months of 2016. Among the funds which reduced their stake in Diamondback Energy Inc (NASDAQ:FANG) significantly during the fourth quarter was Rob Citrone‘s Discovery Capital Management, which brought its holding down by 85% to 208,795 shares. For its fiscal 2016 first quarter, analysts expect the company to report a loss of $0.05 per share on revenue of $90.48 million, compared to EPS of $0.38 on revenue of $101.40 million delivered in the same quarter last year. On March 29, analysts at Goldman Sachs reiterated their ‘Buy’ rating on the stock while lowering their price target on it to $99 from $102.