Halliburton Company (HAL), salesforce.com, inc. (CRM) and Tata Motors Limited (ADR) (TTM): Segantii Capital’s New Favorite Stocks

Simon Sadler‘s Segantii Capital recently filed its 13F form for the reporting period of June 30 with the Securities and Exchange Commission. The market value of the fund’s public equity portfolio significantly decreased to $111.84 million from $457.42 million at the end of the first quarter. The energy sector constituted about 47% of this value. During the quarter a few new positions were added that headed the equity portfolio, including stakes in Halliburton Company (NYSE:HAL), salesforce.com, inc. (NYSE:CRM), and Tata Motors Limited (ADR) (NYSE:TTM).

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The Hong Kong-based Segantii Capital was established in 2007 and focuses on investing in Asian securities across global exchanges. The fund employs a catalyst-driven trading strategy relying on the prowess and experience of its investing team. Other strategies employed include relative value, which includes share class arbitrage, and opportunistic events including IPOs, earnings releases, and calendar-driven events. Sadler has more than 20 years of trading experience in Europe and Asia. Prior to Segantii he had worked at managerial positions at HSBC Securities, Deutsche Securities, and Dresdner Kleinwort Wasserstein Securities.

Simon Sadler
Simon Sadler
Segantii Capital

Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 123% over the last 35 months and outperformed the S&P 500 Index by 65 percentage points (see the details here).

Coming back to the fund’s new additions, the top spot is occupied by Halliburton Company (NYSE:HAL). Owning 1.06 million shares valued at $45.42 million, the position represented more than 40% of the fund’s portfolio and was the largest equity holding. Although up by nearly 8.6% year-to-date, Halliburton Company (NYSE:HAL)’s stock price has slid by more than 37% over the last 12 months owing to an oil supply glut which has been weighing on the company’s profitability. However, by managing its costs in a more efficient manner Halliburton Company (NYSE:HAL) has impressed investors. Evidence of this can be seen in the company’s financial results for the second quarter in which it managed to beat both the top and bottom line estimates. Mario Gabelli‘s GAMCO Investors has reported ownership of over 1.86 million shares of Halliburton as of June 30 through Gabelli Funds and GAMCO Investors Inc.