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John Thaler

John Thaler‘s technology focused JAT Capital recently decided to return investor money and turn itself into a family office. Although up in 2015, the fund faced double-digit losses last year and in 2012. When we took a closer look at JAT’s top tech picks, the top two of Twitter Inc (NYSE:TWTRand Yahoo! Inc. (NASDAQ:YHOO) had a disappointing tale to tell in terms of returns this year, while the next two, Tesla Motors Inc (NASDAQ:TSLA) and JD.Com Inc (ADR) (NASDAQ:JD), tried to recover those losses and push JAT’s profitability needle in the right direction.

Tesla Motors Inc (NASDAQ:TSLA), Car, Model S, Sign, Showroom, Brand, Logo, automotive, sales

Hadrian /

Thaler learned the art of investment from Chris Shumway, who was the employee of veteran investor Julian Robertson. Thaler launched his own fund in 2007, after working for 12 years in the financial services industry. The annualized returns of JAT Capital amount to 4.6%. The fund is better known for its small loss of 6.4% in 2008 as compared to the industry’s average of a 19% loss for that year. Moreover, in 2013 the fund managed to post hefty gains of 30.5%. JAT Capital currently has about $3.9 billion in assets under management with the market value of its public equity portfolio standing at $3.72 billion at the end of March. The technology and consumer discretionary sectors each constituted about 47% of this value.

JAT Capital is just one of more than 700 hedge funds that we have in our database, whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most retail investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and our strategy still managed to deliver an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of more than 142%, beating the S&P 500 Total Return Index by greater than 83 percentage points (see the details). Why invest in all of a fund’s stock picks when you can instead invest in only their top returns-generating picks, while avoiding their high fees at the same time?

John Thaler
John Thaler
JAT Capital Management

During the first quarter, JAT Capital increased its stake in Tesla Motors Inc (NASDAQ:TSLA) by 7% to 733,700 shares valued at $138.49 million. The holding represented 3.73% of the fund’s portfolio value. So far this year, the $33.18 billion manufacturer of electric cars has appreciated by a sizable 18%. Ron Baron, founder and CEO of Baron Capital recently proclaimed that he expects a $120 billion valuation for Tesla Motors Inc (NASDAQ:TSLA) in about 10 years. The automotive company plans to realize an annual sales projection of 500,000 units by 2020, with the Model 3 expected to start selling in 2017. Among the funds that we track, Daniel Benton‘s Andor Capital Management is the largest stockholder of Tesla Motors Inc (NASDAQ:TSLA) with about 1.0 million shares valued at $188.77 million.

The most profitable of JAT Capital’s top tech bets is JD.Com Inc (ADR) (NASDAQ:JD), as the stock has appreciated by almost 50% so far this year. Although the Chinese e-commerce company missed the estimates for the bottom line in its latest quarterly financial results, the revenues were ahead of estimates. Dimitry Balyasny‘s Balyasny Asset Management holds about 1.33 million shares of JD.Com Inc (ADR) (NASDAQ:JD) valued at $39.24 million.

JAT Capital’s second-largest equity holding, Twitter Inc (NYSE:TWTR), remained unchanged during the first quarter at 7.26 million shares valued at $363.70 million. The stake represented 1.11% of the company’s outstanding common stock and 9.78% of the fund’s portfolio value. The CEO of the $23.48 billion micro blogging platform, Dick Costolo, recently resigned, and rumors have been floating around that Google might make a move to acquire Twitter Inc (NYSE:TWTR) given its low stock price and a number of search related deals recently signed between the two companies. Although trading nearly sideways so far this year, Twitter Inc (NYSE:TWTR)’s stock has declined by about 14% since its IPO towards the end of 2013. After JAT Capital, Daniel S. Och’s OZ Mangement is the largest stockholder of Twitter Inc (NYSE:TWTR) within our database, holding some 4.50 million shares valued at $225.55 million.

On a more discouraging note, Yahoo! Inc. (NASDAQ:YHOO) has cratered by almost 20% year-to-date. JAT Capital decreased its holding in the company by 1% during the first three months to drop its total stake to 6.71 million shares valued at $297.99 million. It was the fund’s third-largest equity holding and represented 8.02% of its portfolio value. The fund has held a position in Yahoo! Inc. (NASDAQ:YHOO) since the second quarter of 2013. Despite the falling stock price, hedge fund interest in Yahoo! among those that we track, increased during the first quarter as 104 firms had an aggregate investment of $6.48 billion in the company, as compared to 99 funds with $7.59 billion at the end of the previous quarter (the drop in aggregate investment among the funds can largely be attributed to the poor performance of Yahoo’s shares during the first quarter). Och’s OZ Management is the largest stockholder of Yahoo! Inc. (NASDAQ:YHOO) among these, owning some 14.65 million shares valued at $650.88 million. Recently we took a closer look at Yahoo in this article and answered whether Yahoo is a good buy right now.

Disclosure: None

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