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Charles Davidson’s and Joseph Jacobs’ Wexford Capital’s Return, AUM, and Holdings

Back in 1994, Charles E. Davidson and Joseph Jacobs, experienced investors with proficiency in distressed situation investments, co-founded their own investment management firm, called Wexford Capital. The fund is based in Greenwich, Connecticut, while providing an additional office in West Palm Beach, Florida. At the end of December 2016, it held $2.8 billion in assets under management. Prior to launching Wexford Capital, Charles Davidson, who is the fund’s current Chief Investment Officer and Chairman, was employed at Steinhardt Partners L.P. where he was in charge of all fixed income arbitrage, private equity, distressed/bankruptcy and special situation investments of the several billion dollars worth hedge fund. Prior to his employment at Steinhardt Partners, Charles Davidson worked at Goldman Sachs  Co, where he was running proprietary trading and corporate bond trading sectors. Presently, he serves as the portfolio manager for the Wexford Catalyst Funds, Wexford Spectrum Funds, and the Wexford Credit Opportunities. He earned his B.A. and then M.B.A. in Economics from the University of California (Los Angeles).

Wexford Capital’s second co-founder, Joseph M. Jacobs is actually the president of the fund. Prior to co-founding Wexford Capital, Joseph Jacobs worked at Bear Stearns & Co., Inc as a Senior Managing Director, mainly focusing on restructurings and bankruptcies. He was in charge of all the company’s real estate investments. Before joining Bear Stearns & Co., Inc Joseph Jacobs was a commercial lending officer at Citibank, N.A. He graduated from the Wharton School of the University of Pennsylvania with a B.S. in Economic, and from Harvard Business Scholl with an M.B.A. Presently, aside from being Wexford Capital’s president, he is in charge of supervising Wexford Private Equity Funds’ investment moves.

Charles Davidson - Wexford Capital

Even though Wexford Capital is known as a hedge fund with a particular specialty related to distressed situation investments, due to the vast experience of its co-founders in this sphere, the fund also provides professional investment services across a variety of industries, such as real estate, transportation, energy/natural resources, and technology/telecommunications. Wexford Capital runs three hedge funds that have more than $2 billion in assets under management, those being – the multi-strategy credit-oriented Wexford Credit Opportunities Fund, Wexford Catalyst Fund, which is oriented towards energy, industrials, and natural resources, and the opportunistic/global macro Wexford Spectrum Fund. The fund also runs a few private equity funds, and has made north of $6.5 billion in private equity investments. As for the fund’s return figures, we managed to find these:

Its Wexford Spectrum delivered an annualized return of 14.42% (with the volatility of 10.50%) since its launching in 1997 through May 2011. For the three months ended June 30, 2008, its Wexford Offshore Credit Opts. Ltd. fund delivered 1.28%, Wexford Credit Opp. LP brought back 1.27%, Wexford Offshore Catalyst Fund Ltd. and Wexford Catalyst LP gained 7.89% individually, and Wexford Spectrum Fund LP Class A delivered 6.91%. It is also interesting that Wexford Capital’s non-microcap stock picks have returned 21% over the 12 month period, which ended June 2017.

Its Wexford Catalyst Fund, L.P. returned 10.68% in 2013, 20.58% in 2014, followed by a loss in 2015 of 13.59%. It came back in 2016 very strong delivering 33.98%, and then 6.82% in 2018. Last year through October in gained 7.12%. Wexford Catalyst Fund, L.P. had a total return of 269.97%, for a compound annual return of 9.92%. Its worst drawdown stood at 23.89. Moving on to Wexford Spectrum Fund, L.P., which gained 14.96% in 2013, followed by 10.41% in 2014, and a loss of 8.14% in 2015. In 2016, it gained 12.98%, and in 2017, 7.84%. In 2018 (through October), Wexford Spectrum Fund, L.P. kept its positive performance, delivering a return of 5.71%. Its total return amounted to 910.13%, for a compound annual return of 11.36%, while its worst drawdown was of 19.09.

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Continuing with Wexford Capital’s equity portfolio, which was valued at $1.17 billion at the end of December 2018, representing a decrease of 25% from one quarter earlier when it carried a value of $1.57 billion. During the quarter the fund dumped more than 90 stocks, while also establishing new positions in 35 companies, hence at the end of the quarter, its portfolio counted around 76 long positions. Wexford Capital held the second largest stake in Marathon Petroleum Corp (NYSE:MPC) which is a company that offers a variety of petroleum services, such as refining, transportation, and marketing. Its headquarters is in Findlay, Ohio. Marathon Petroleum has a market cap of $39.75 billion, and it is one of the 30 Most Popular Stocks Among Hedge Funds. After the fund had raised its stake in the company by 96% it was worth $174.75 million, on the account of 2.96 shares, amassing 14.9% of the fund’s portfolio.

On the next page, you can read more about similar positions and most important investment moves the fund made during the fourth quarter of 2018.

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