Courage Capital’s Top Q3 Bets: Alphabet Inc (GOOG), Yahoo! Inc. (YHOO) & More

Courage Capital is a Tennessee-based hedge fund founded by Richard C. Patton. According to its latest 13F filing, Courage Capital’s equity portfolio is valued at over $259.35 million as of the end of September. At Insider Monkey, we assess a fund’s performance by taking into account its long equity positions in companies with market caps above $1.0 billion. In this way, Courage’s seven “relevant” positions generated a return of 11.28% last quarter.

It’s no secret that hedge funds have been underperforming the market for years in aggregate, as many in the media are only all too happy to pound home. That could lead the average reader to think that hedge funds are bad stock pickers, which is not actually the case. When we look at the third-quarter returns of the hedge funds in our database which had at least five long positions in companies valued at $1 billion or more, we see their long picks returned 8.3% on average, a full 5.0 percentage points clear of S&P 500 ETFs. However, that long stock-picking prowess is often overshadowed by the hedged portion of their portfolios, in options, bonds, and short positions.

In this article, we’ll take a look at four of its picks, particularly Yahoo! Inc. (NASDAQ:YHOO),  Vereit Inc (NYSE:VER), Alphabet Inc (NASDAQ:GOOG), and Wal-Mart Stores, Inc. (NYSE:WMT).

Courage Capital upped its stake in Yahoo! Inc. (NASDAQ:YHOO) by 5% to 1.8 million shares worth $77.58 million during the third quarter. The position was increased as Yahoo’s stock gained 14.7% between July and September. Overall, 81 funds from our database held shares of Yahoo! Inc. (NASDAQ:YHOO) at the end of June, down by 16 funds over the quarter. Among these funds, Canyon Capital Advisors held the most valuable stake in Yahoo! Inc. (NASDAQ:YHOO), which was worth $697.6 millions at the end of the second quarter. On the second spot was Owl Creek Asset Management which amassed $569.2 million worth of shares. Moreover, Starboard Value LP, Iridian Asset Management, and Hudson Bay Capital Management were also bullish on Yahoo! Inc. (NASDAQ:YHOO).

On the other hand, in Vereit Inc (NYSE:VER), Courage Capital cut its stake by 60% during the third quarter, as the stock inched up by 2.3%. In this way, in its latest 13F filing, the fund reported ownership of 381,500 shares of the company worth $3.96 million. During the second quarter, the number of funds from our database long Vereit Inc (NYSE:VER) declined by two to 29. More specifically, Larry Robbins’s Glenview Capital had the biggest position in Vereit Inc (NYSE:VER), worth close to $154.8 million. On Glenview Capital’s heels was Highfields Capital Management, led by Jonathon Jacobson, holding a $116.7 million position. Some other peers with similar optimism encompass Keith Meister’s Corvex Capital, Jonathan Kolatch’s Redwood Capital Management and Matthew Barrett’s Glendon Capital Management.

As of the end of September, Courage Capital has 4,902 class C shares of Alphabet Inc (NASDAQ:GOOG), which have a total value of $3.81 million. The stock gained 12.3% during the third quarter. Alphabet’s class C stock was included in the equity portfolio of 126 funds from our database at the end of June, down from 142 funds a quarter earlier. Among these funds, Eagle Capital Management was the largest shareholder of Alphabet Inc (NASDAQ:GOOG), with a stake worth $1278.1 millions reported as of the end of June. Trailing Eagle Capital Management was Southeastern Asset Management, which amassed a stake valued at $669.8 millions. Egerton Capital Limited, Lone Pine Capital, and Viking Global also held valuable positions in the company.

Courage Capital also amassed 5,550 shares of Wal-Mart Stores, Inc. (NYSE:WMT) worth $400 million at the end of September. The investment wasn’t particularly profitable as the stock inched down by 0.6% during the third quarter, but the fund has been holding shares of the retailer since 2011.  At the end of the second quarter, 58 funds tracked by Insider Monkey were long this stock, up by 7% from one quarter earlier. Berkshire Hathaway, managed by Warren Buffett, held the most valuable position in Wal-Mart Stores, Inc. (NYSE:WMT), which was worth $2.94 billion at the end of June. The second most bullish fund was Michael Larson’s Bill & Melinda Gates Foundation Trust, with a $847.3 million position. Other members of the smart money that held long positions in Wal-Mart Stores, Inc. (NYSE:WMT) included D. E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management, and Richard S. Pzena’s Pzena Investment Management.

Disclosure: none