Ian P. Murray, the manager of Lanexa Global Management, is a respected hedge fund manager, and one of the many ‘Tiger Cubs’ who worked under Julian Robertson at Tiger Management in the past. According to his fund’s 13F filing with the U.S. Securities and Exchange Commission for the reporting period of June 30, his hedge fund has a public equity portfolio valued at $52.99 million, and is primarily invested in the technology sector. The fund’s 13F reveals that it had a total of 11 new purchases and sold out of 13 stocks during the second quarter. The performance of some of the stocks that it sold out of has shown that the hedge fund made a smart move, as some of these stocks have delivered disappointing second quarter results which have carried into the third quarter. In this article, we focus on three of the stocks in which the hedge fund sold out of, and analyze whether the timing was right to run far away from these tech stocks. The stocks are Yahoo! Inc. (NASDAQ:YHOO), Twitter Inc (NYSE:TWTR), and SanDisk Corporation (NASDAQ:SNDK).
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 123% and beating the market by more than 66 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Now let’s consider three of the stocks in which Lanexa Global Management sold out of completely, starting with Yahoo! Inc. (NASDAQ:YHOO). Going into the second quarter, the fund held a total of 50,000 shares of the company, with a market value of $2.22 million, having opened a new position in the stock during the first quarter. The hedge fund, however, decided to sell all of its shares in the stock during the second quarter. While there were hopes that the stock would perform well in the first quarter, it ended up disappointing, losing 12.03%. In the second quarter, Yahoo! Inc. (NASDAQ:YHOO) again lost 11.58%, and has lost 27.4% year-to-date. In its earnings results for the second quarter, the company disappointed as well, posting earnings per share of $0.16, missing the $0.18 in earnings per share expected by Wall Street analysts. Out of the hedge funds tracked by Insider Monkey, OZ Management, led by billionaire Daniel S. Och, had the largest position, holding 14.65 million shares valued at $650.88 million, after increasing its stake by 63%, a figure that represented 2.1% of its portfolio. Another billionaire fund that held a position in the stock going into the second quarter was D. E. Shaw, founded by David E. Shaw, which owned 12.43 million shares with a market value of $552.52 million.