Neon Liberty Capital Management is a New York-based financial investment advisory firm managed by Satyen Mehta, which uses a value-oriented strategy and bottoms-up analysis to pick its stocks. It was founded in 2002, and focuses on equities in global emerging and frontier markets, especially in services stocks.
The fund recently disclosed its long equity positions as of the end of the second quarter of 2014. After selling its 3.46 million Call options for iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM), worth $142 million, and closing out its position at Noah Education Holdings Ltd. (ADR) (NYSE:NED), the fund’s total equity portfolio is valued at $95 million, down from the $232 million it was worth in the first quarter of the year.
Neon Liberty’s largest equity position is that at Copa Holdings, S.A. (NYSE:CPA), a $6.82 billion market cap provider of airline passenger and cargo service -through two operating subsidiaries: Copa Airlines and Copa Colombia. The stake at Copa Holdings, S.A. (NYSE:CPA) remained unchanged over the quarter; the fund owns 270,732 shares, valued at more than $38.5 million. This position accounts for more than 40% of Neon Liberty’s total equity portfolio’s value.
Other major hedge funds betting on Copa Holdings, S.A. (NYSE:CPA) are Thomas Steyer’s Farallon Capital and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital. These funds last disclosed ownership of 474,970 shares and 300,000 shares, respectively.
CTC Media, Inc. (NASDAQ:CTCM) came in second. Same as in the first quarter, the fund declared holding 1.64 million shares of CTC Media, Inc. (NASDAQ:CTCM), worth $18 million. This $1.5 billion market cap Russian media company boasts industry leading returns on equity and assets and well-above-average margins, while trading at a huge discount to its peers -9.7x P/E vs. and industry average of 44.4x P/E.
On top of Neon Liberty, of CTC Media, Inc. (NASDAQ:CTCM) counts with the support of Jim Simons’ Renaissance Technologies, which last disclosed ownership of 800,600 shares, after doubling its stake in the company over the first quarter of 2014.
Other companies on which Neon Liberty is betting are Petrobras Argentina SA ADR (NYSE:PZE) and Telecom Argentina S.A. (ADR) (NYSE:TEO). These companies occupy the third and fourth positions in the fund’s equity portfolio (in terms of market value), and are worth $12.5 million and $10.5 million, respectively. It seems like Mr. Mehta is long in Argentina, despite the default fears, since these two positions account for more than 24% of his total equity portfolio.
Once again, Jim Simons’ Renaissance Technologies can be counted amongst Petrobras Argentina SA ADR (NYSE:PZE)’s and Telecom Argentina S.A. (ADR) (NYSE:TEO)’s investors. In fact, the fund is the largest hedge fund shareholder of record in both these companies, with 673,033 shares and 2.73 million shares, respectively. Other funds betting on both Petrobras Argentina SA ADR (NYSE:PZE) and Telecom Argentina S.A. (ADR) (NYSE:TEO) are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jonathan Kolatch’s Redwood Capital Management.
Disclosure: Javier Hasse holds no position in any stocks or funds mentioned