Freshford Capital Management is a decade-old New York-based hedge fund. It was founded by its current president and portfolio manager, Michael G. Doheny, on October 1, 2008, in Rye Brook where it still has its headquarters. Prior to founding Freshford Capital Management, Mr. Doheny cut his teeth at Kensico Capital for eight years. Mr. Doheny’s ownership stake in Freshford Capital Management is between 50% and 75%.
Freshford’s 13F portfolio is relatively large, being valued at $633.98 million. The fund primarily invests in the public equity and hedging markets in the United States. It utilizes a long/short investment strategy, which has brought back some positive returns in previous years. Freshford Capital Management is mostly interested in investing in companies with smaller market caps that operate in two sectors: technology and services. It seeks out businesses that it believes are currently underpriced, and takes long position in them, while it takes short positions in businesses it thinks are overpriced. Its picks have turned out to be wise, as the fund delivered a return of 16.06% last year, and had an average return of 9.72% between 2015 and 2017, placing it 85th on Barron’s 2018 list of the top 100 Hedge Funds. According to Freshford Capital Management’s Form ADV filed on March 3, 2018, it has around $873.13 million in regulatory assets under management.
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During the second quarter Freshford Capital Management made several changes to its equity portfolio. It made three new additions to it, raised its positions in ten companies, lowered its stakes in four, and sold out of five holdings. More details about these changes can be found on the next page.
Freshford Capital Management found three intriguing companies which it added to its portfolio during Q2. The biggest new position out of those three was in Charter Communications Inc (CHTR), as the fund bought 97,804 shares, obtaining a position worth around $28.68 million. Freshford bucked the broader trend in this case, as investors from our database were losing interest in Charter during Q2; 56 of them were long the stock at the end of the quarter, down by 23 from the end of the first quarter.
The fund’s second-biggest new investment was in Perspecta Inc. (PRSP), as it acquired 1.06 million shares which amounted to around $21.68 million in value as of June 30. This company offers IT services to U.S government customers in intelligence, defense, healthcare, civilian and local markets. Perspecta was one of the most popular new stocks in Q2, being bought by 50 hedge funds.
Two large positions that Freshford Capital held at the end of the second quarter were in Akamai Technologies Inc (AKAM) and Shutterfly Inc (SFLY), occupying 11.59% and 11.18% of its 13F portfolio, respectively. In Akamai Technologies Inc (AKAM), the fund held just over 1 million shares at the end of June, valued at $73.54 million. In Shutterfly Inc (SFLY), the fund lowered its position by 16% during the second quarter to 787,573 shares, worth around $70.91 million.
Freshford Capital Management got more optimistic about Activision Blizzard Inc. (ATVI) during the second quarter, raising its investment in it by 56% to 371,367 shares worth $28.34 million. Smart money investors from our database were also getting more bullish on this stock, seeing as there were 66 hedge funds long the company at the end of June, up by seven from a quarter earlier. Another company in which the fund decided to boost its stake quite a bit during the second quarter was Olin Corp (OLN), a big manufacturer of chemical products. Freshford raised its stake in Olin by 40%, to 291,245 shares, worth around $8.37 million.
On the other hand, the fund was losing interest in Liberty Broadband Corp (LBRDA), as it cut its stake by 54% to 196,112 shares as of the end of June, while it completely sold out its positions in Echostar Corp (SATS) and Calavo Growers Inc (CVGW). At the end of the first quarter, the fund held 362,566 Echostar shares worth around $19.13 million, as well as 105,719 Calavo Growers shares, valued at $9.75 million.
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