Bridger Management’s Top Picks

Bridger Management, led by Roberto Mignone, has filed its 13F with the SEC for the current reporting period. Bridger Management is a New York-based hedge fund which was founded in July 2000. The firm employs a long/short equity approach and concentrates on fundamental, value-oriented stock selection to construct its portfolios. Before launching his own investment house, Mignone was among the founding partners of Blue Ridge Capital alongside John Griffin back in 1996. Going back even further, Mignone had worked at Julian Robertson’s Tiger Management, gaining the respected status of being a “tiger cub” as a result. When Mignone left Blue Ridge Capital to start his own firm, Blake Goodner, healthcare junior analyst, decided to support him in his endeavors. This might be one of the reasons why the fund had allocated around 35% of the money in its portfolio into the healthcare sector, trailing only finance stocks, which accounted for 49% of the portfolio’s value. In this article we are going to take a closer look at the top  picks of the fund, including Post Holdings Inc (NYSE:POST), Laboratory Corp. of America Holdings (NYSE:LH) and Alnylam Pharmaceuticals Inc (NASDAQ:ALNY).

BRIDGER MANAGEMENT

Professional investors like Mignone spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 118% and beaten the market by more than 60 percentage points since the end of August 2012 (see the details).

Roberto Mignone
Roberto Mignone
Bridger Management

The position in Post Holdings Inc (NYSE:POST) in the equity portfolio of Bridger Management was equal to 1.67 million shares with a market value of $89.88 million as of June 30. Over the past two years the share price of the consumer packaged goods firm headquartered in St. Louis, Missouri, has almost doubled, while its net sales have climbed from around $958 million in 2012 to over $2.41 billion in 2014. The second quarter 2015 results for Post Holdings Inc (NYSE:POST) showed that the company managed to beat EPS by $0.20, releasing $0.27 in EPS, while also beating sales estimates by $40 million with $1.21 billion in total revenue. The positive vibes from the latest report not only allowed the company to reach new historic market highs, but raise some $800 million by selling debt at a 7.75% rate, due in 2024. Note that Post Holdings Inc (NYSE:POST) keeps leveraging rapidly and has already reached a 50% debt-to-assets ratio, which looks a bit worrisome. After the first six months of the year, Jason Karp’s Tourbillon Capital Partners held 1.80 million shares of Post Holdings Inc (NYSE:POST) valued at $97.07 million.

As of June 30, Bridger Management owns 649,903 shares of Laboratory Corp. of America Holdings (NYSE:LH) valued at $78.78 million.  This $12.47 billion company is an independent clinical laboratory in the United States. Thus far in 2015 it has returned 16.25%, partially due to better than expected EPS of $2.09 for the second quarter, beating estimates by $0.06, on revenue of $2.22 billion, in line with analysts’ estimates. On August 3, market experts from Canaccord Genuity confirmed their target price for the company at $145, while maintaining their ‘Buy’ rating. The firm’s price target suggests about 16% upside for the stock. Among the other funds that we track, Jacob Gottlieb’s Visium Asset Management held 3.37 million shares of Laboratory Corp. of America Holdings (NYSE:LH), valued at $24.46 million.

Bridger Management acquired some 2,787 shares of Alnylam Pharmaceuticals Inc (NASDAQ:ALNY) during the second quarter. The fund’s total stake in the $9.9 billion market cap company now stands at 623,880 shares with a market value of $74.78 million. Over the last five years the company has failed to post a profit, with its most recent net income margin approaching negative 800%. Some analysts believe that the top medicines from Alnylam Pharmaceuticals Inc (NASDAQ:ALNY)’s product portfolio are still at least three years away from a potential launch. One of the many reasons that keeps this particular company, and many others in the industry as well, in the billion-dollar-plus valuation range is investors’ enthusiasm for their growth potential. Only time will tell whether Alnylam Pharmaceuticals was ever deserving of such an honor. David E. Shaw’s D E Shaw held 204,027 shares of Alnylam Pharmaceuticals Inc (NASDAQ:ALNY) valued at $24,46 million on June 30. During the second quarter the fund increased its stake in the company by some 24%.

Disclosure: None