Richard Mashaal’s top picks for his hedge fund Rima Senvest Management crushed the market in the first quarter of 2015. In the latest filing, its 17 long positions in stocks with a market cap of $1 billion or more gained 10.2% for the first quarter of 2015. Mashaal is known to be a contrarian value investor that likes “ugly” stock charts and aim for opportunities he believes will double or triple in price over one to three years. See more of his insights in this Bloomberg Video here.
Following funds like Rima Senvest Management is important because we want investors to take advantage of their best ideas without paying an arm and a leg. Our research has shown that, on average, hedge funds and billionaires aren’t very good at picking large-cap stocks but extremely talented at picking underfollowed small-cap stocks. The 50 most popular large-cap stocks among hedge funds actually underperformed the S&P 500 Total Return Index by an average of 7 basis points per month between 1999 and 2012.
Our back tests also revealed that the 15 most popular small-cap stocks among hedge funds beat the same S&P 500 Total Return Index by an average of 95 basis points per month. That’s an outperformance of almost a percentage point per month. We have been sharing the list of these top 15 small-cap stocks in real time since the end of August 2012. These stocks delivered an astonishing 134.1% gain through March 25th, vs. 54.2% gain for the S&P 500 ETF (SPY) (read the details here).
Google Inc (NASDAQ:GOOG) doesn’t typically fit the profile of a contrarian pick, but its potential could be too tempting to pass up. In the last quarter of 2014, Mashaal bought 61,501 Class C shares of Google Inc (NASDAQ:GOOG) for the firm for an investment of $32 million and representing a 2.3% in the firm’s 13F portfolio. Value investors seem to be loving this stock as we recently reported Warren Buffett disciple Mohnish Pabrai and “Tiger Cub” Lee Ainslie’s Maverick Capital involved in the name. Shares of Google Inc (NASDAQ:GOOG) added 4.1% in the first quarter of 2015.
Fiat Chrysler Automobiles NV (NYSE:FCAU) is another one of Mashaal’s new picks. He bought for the fund 4.5 million shares at an investment of $54 million which represents a 3.78% of the 13F portfolio. We mentioned Fiat Chrysler Automobiles NV (NYSE:FCAU) recently when we covered Mohnish Pabrai’s fund. Fiat Chrysler Automobiles NV (NYSE:FCAU) stock price appreciated by over 40% for the first quarter of 2015.