Harvard Management Was Right About Alibaba Group Holding Ltd (BABA), Others in Q3

Harvard Management is a Boston-based hedge fund managed by Jane Mendillo. Harvard Management’s equity portfolio has a net worth of $630.85 million as of the end of September, up from $514 million on June 30. The fund’s picks returned 11.43% in the third quarter when looking at its 47 long stakes in companies with a market cap of at least $1 billion on June 30. Four of its top picks were Alibaba Group Holding Ltd (NYSE:BABA), Howard Hughes Corp (NYSE:HHC), America Movil SAB de CV (ADR) (NYSE:AMX), and Credicorp Ltd. (USA) (NYSE:BAP), which we’ll look at in this article.

There were 659 hedge funds in our system whose 13F portfolios on June 30 consisted of at least 5 long positions in billion-dollar companies. Of those 659 funds, an impressive 627 of them delivered positive returns during the third-quarter from their long positions in those stocks, based on the size of those positions on June 30. All told, their long picks in billion-dollar companies averaged 8.3% returns for the quarter, well above the S&P 500 ETFs’ 3.3% figure. Nonetheless, hedge funds continue to disappoint their investors for the most part, as redemptions have hit the industry hard of late. That can be chalked up to their high fees and the underperformance on the short-side of their portfolios, which provide downside protection but have dragged down overall returns. We recommend investors consider hedge funds’ long stock picks for their market-beating potential and will share four of them in this article, which were in the portfolio of Harvard Management on June 30.

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Harvard Management increased its holding in Alibaba Group Holding Ltd (NYSE:BABA) by 16% in the third quarter, amassing a total of 566,564 shares of the company which have an aggregate value of $59.94 million as of September 30. The stock had a monster quarter, returning 33%. It accounted for 9.50% of the value of the fund’s portfolio on September 30, up from 7.55% on June 30.

At the end of the second quarter, 69 of the hedge funds tracked by Insider Monkey were long Alibaba, a 3% uptick from one quarter earlier. Among these funds, Silver Lake Partners held the most valuable stake in Alibaba Group Holding Ltd (NYSE:BABA), which was worth $1.30 billion at the end of the second quarter. On the second spot was Viking Global which amassed $320.6 million worth of shares. Moreover, Discovery Capital Management, Fisher Asset Management, and AQR Capital Management were also bullish on Alibaba Group Holding Ltd (NYSE:BABA).

Harvard Management slashed its holding in Howard Hughes Corp (NYSE:HHC) by 12% in the third quarter, ending the period with a total of 289,000 shares of the company worth $33.09 million. The stock was relatively flat during the third quarter, seeing a 0.2% raise in value. 24 of the hedge funds in our database were bullish on this stock on June 30, down by 8% from the first quarter of 2016. Among these funds, Pershing Square held the most valuable stake in Howard Hughes Corp (NYSE:HHC), which was worth $407.9 million at the end of the second quarter. On the second spot was Horizon Asset Management which amassed $405.3 million worth of shares. Moreover, Cardinal Capital and Brenner West Capital Partners were also bullish on Howard Hughes Corp (NYSE:HHC).

We’ll check out two more of the fund’s stock picks on the next page.