Dawson Capital Management (formerly known as Dawson-Herman Capital Management) is a Connecticut-based investment firm that was co-founded by Jonathan Dawson and Russell Herman in 1981. Mr. Dawson and Mr. Herman split at the end of 2009 after the major losses Southport Millennium II fund suffered in 2008. Dawson Capital Management is a fundamental research-driven company that typically invests in communications, technology, media, consumer, healthcare, and energy sectors and growth stocks. Mr. Dawson is a graduate of Princeton University (AB, 1966), Stanford University (MBA, 1968) and Fordham University (JD, 1974).
Below are the trading activities of Dawson Capital as of 1Q2011:
Mr. Dawson held 80 securities on his 13F portfolio as of 3/31/2011 valued at approximately $400 million. He invested almost 4% of his portfolio in Qualcomm (QCOM) and bought 300K shares. Unluckily, QCOM generated a negative return of 8% since the end of March. We see John Hurley’s Cavalry Asset Management trimming its QCOM holdings by 34% in the first quarter of the year. Likewise, Pasco Alfaro’s Miura Global Management sold 34% of its QCOM holdings in the first quarter. Alan Fournier’s Pennant Capital Management kept buying QCOM in the first quarter, as it had more than 5% of its total portfolio invested in this company.
The greatest return Mr. Dawson made since the end of March was with CF Industries (CF). The company managed to bring in 23% despite all the recent market downturn. Many funds were bullish for CF in the first quarter,. But John Burbank’s Passport Capital really was; it increased its CF holdings by 729%. Mr. Burbank made more than $16 million from CF in about 4.5 months. Mr. Dawson made $3.5 million.
Many funds were fearful about Apple (AAPL) in the first quarter and trimmed their holdings; they probably thought that the stock had become a little overheated as it went up to $340-$360 a share from $240-$260 a share just in the third quarter of 2010. After retreating a little following the sell pressure in the market, AAPL shares have tested $400 at the end of July. Mr. Dawson was one of these fund managers who decided that it was time to trim AAPL and sold 28% of his holdings in the first quarter. AAPL returned 8% since the end of March.
Mr. Dawson was unlucky with his new stock picks as he had an average loss of approximately 15% from the newly added companies. The biggest percentage loss of Mr. Dawson was with Brigham Exploration (BEXP) as the stock lost 23% in value since the end of March. Mr. Dawson lost around $2 million from this security.
Nevertheless, there were a couple of companies that were real good bets on behalf of Mr. Dawson in the first quarter of 2011. Macy’s (M) , for example, brought in more than $500K for the fund. Mr. Dawson doubled its M holdings in the first quarter of the year. Most funds were bullish for M in the first quarter: David Tepper’s Appaloosa Capital and Patrick McCormack’s Tiger Consumer Management increased their M holdings in double digits. Another lucrative bet for Mr. Dawson was Sirius XM Radio (SIRI), where he made more than $250K. The stock returned almost 13% since the end of March. Pasco Alfaro’s Miura Global Management added SIRI as a new holding onto its portfolio and bought 14.6 million new shares. He made more than $2.5 million in about 4.5 months. John Taylor’s JAT Capital probably regrets that it trimmed 80% of its SIRI holdings in the first quarter.
Overall, Mr. Dawson’s performance has not beaten the index as his fund generated a negative return of approximately 10.6% since the end of March, vs. -10.5% for the SPY.