A New York based hedge fund, Miura Global Management was founded by Pasco Alfaro and Richard Tumure in 2004. With a moderate level of turnover, Miura is focusing on the Services and Technologies sectors and employs a long/short equity strategy. As a part of our strategy, we follow the activity of a variety of hedge funds including Miura. Via 13F filings, let’s take a look at Miura Global’s top stock picks.
Following the activity of a variety of hedge funds might help retail investors succeed and outperform their index-focused peers by as much as 18 percentage points per year. (Learn more details about our strategy here). For those who are interested in pursuing a career in hedge fund management, we have prepared a couple of tips about how to be a hedge fund manager.
However, let’s get back to Miura Global Management’s top picks. The largest stake in the hedge fund’s equity portfolio is held by Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), in which Miura owns 875,000 shares, worth $71.1 million. Since the end of 2012, the position of Miura in Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) declined by 34%, from over 1.3 million shares. The stock of Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has a YTD return of about 1.4% and a trailing P/E of over 35.
In second place, with a stake worth almost $51 million, is eBay Inc (NASDAQ:EBAY). Miura disclosed ownership of one million shares in the company, an unchanged position since the end of 2012. With over 100 hedge funds invested in it, eBay Inc (NASDAQ:EBAY) remains a popular choice among hedge fund managers.
The third-largest stake in Miura’s 13F is The Fresh Market Inc (NASDAQ:TFM),in which the hedge fund reported a $42.3 million stake or 880,000 shares. During the first quarter of 2013, the hedge fund reduced its position by 580,000 shares. The Fresh Market Inc (NASDAQ:TFM) has posted a year-to-date return of slightly below 9% and has a P/E of about 38.
Next on the list is Apple Inc. (NASDAQ:AAPL),represented in the Miura equity portfolio by a 72,000-share position, worth $38.3 million, down from 102,000 shares held in the previous round of 13F filings. Apple Inc. (NASDAQ:AAPL), like eBay, is one of the most popular stocks among hedge funds and should be watched accordingly. The tech giant looks set to have a busy fall with potentially multiple new product releases, though there’s still no confirmation that an iWatch is in the cards.
In fifth is Charter Communications, Inc. (NASDAQ:CHTR) with a $34.3 million position, which involves 450,000 shares, up by 11% on the quarter. The stock of Charter Communications, Inc. (NASDAQ:CHTR) has a year-to-date return above 66%.
To sum up, Miura Global Management’s 13F portfolio involves 30 companies, with the value of the equity portfolio amounting to close to $667.1 million. The focus on the Technology and Services sectors can be observed in the majority of Miura’s holdings, including the top picks we have discused above.
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
You can enter your email below to get our FREE report. In the same report you can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12-24 months. We initially share this idea in October 2018 and the stock already returned more than 150%. We still like this investment.
Free Report Reveals
Warren Buffet's Secret Recipe
Our Price: $199FREE
Wall Street Legend Warns: “A Strange Day Is Coming to America”