Richard L. Haydon‘s Tip Hill Capital Management recently revealed its equity holdings as of the end of the first quarter in a filing with the Securities and Exchange Commission. Before establishing Tip Hill in July 2009, Hayden was a Partner and Senior Portfolio Manager at Straus Group. He has also served at Leon Cooperman’s Omega Advisors. Tip Hill has a two-pronged investment strategy: a value-oriented long/short approach and investments driven by catalysts such as M&A, spin-offs or management changes. The former strategy focuses on companies with strong free cash flow generation among other factors and has an investment horizon of one to three years and a target return of 50% within two years, while investments under the latter approach last less than a year with an annual return target of 20-30%.
Let us take a closer look at some of the top holdings of the fund formerly known as Yield Capital Partners (Y/Cap Management) until May 2014. Among the fund’s prominent holdings at the end of the first quarter were its stakes in Delta Air Lines, Inc. (NYSE:DAL), Alibaba Group Holding Ltd (NYSE:BABA), Yahoo! Inc. (NASDAQ:YHOO), JPMorgan Chase & Co. (NYSE:JPM), and Micron Technology, Inc. (NASDAQ:MU).
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Tip Hill held some 200,000 shares of Delta Air Lines, Inc. (NYSE:DAL) valued at $8.99 million at the end of the first quarter. The $37.98 billion company represents about 7.13% of the fund’s portfolio value. A tough year so far has led to the stock declining by 5.33% year-to-date. Along with American and United Air Lines, Delta Air Lines, Inc. (NYSE:DAL) has put up a front against the Middle Eastern Airlines: Etihad, Emirates and Qatar Airways, which it thinks are taking business away on account of unfair subsidies from their respective oil rich countries. Delta Air Lines, Inc. (NYSE:DAL)’s revenue for the first quarter was in line with the estimates and stood at $9.39 billion. An earnings per share (EPS) of $0.45 for the quarter beat estimates by $0.01. Among the funds that we track, Paul Ruddock and Steve Heinz’s Lansdowne Partners held the largest holding in Delta Air Lines, Inc. (NYSE:DAL) at the end of the fourth quarter.
Tip Hill initiated a stake in the e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) during the first quarter, with some 50,000 shares valued at $4.16 million. The stock is down by about 18.32% year-to-date on account of varied factors ranging from weakness in the Chinese economy to increased competition from rival JD.com, and even the expiration of shareholders’ lockup period. There is a good chance that the drag of all these factors on Alibaba Group Holding Ltd (NYSE:BABA)’s stock will prove to be short-term and Tip Hill is betting on just that. Other funds betting on the same side as Haydon are Dan Loeb‘s Third Point and Rob Citrone’s Discovery Capital Management.