John Horseman’s Horseman Capital Management is the latest hedge fund tracked by Insider Monkey which has submitted its 13F with the U.S. Securities and Exchange Commission for the June 30 reporting period, with the fund’s public equity portfolio being valued at $388.79 million as of that date, representing a 20.87% increase from the end of the first quarter of 2015. The London-based hedge fund employs a concentrated strategy in its investments, with its top ten holdings representing 91.31% of its entire portfolio. With more than $1 billion in assets under management, Horseman Capital Management invests in diverse markets, including Europe and the U.S. In this article, we focus on its top three U.S. stocks, which also all happen to be financial companies. Those stocks are Wells Fargo & Co (NYSE:WFC), Capital One Financial Corp. (NYSE:COF), and Goldman Sachs Group Inc (NYSE:GS).
Professional investors like Horseman spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 139% and beaten the market by more than 80 percentage points since the end of August 2012 (see the details).
At the end of the second quarter of 2015, Horseman Capital Management’s number one U.S. stock pick was Wells Fargo & Co (NYSE:WFC), in which the fund held a total of 1.02 million shares with a market value of $57.60 million, representing 14.82% of its total portfolio value, up from 11.98% three months earlier. The company now ranks as the most valuable bank in the world, with a market cap that is approaching $300 billion, and is now the S&P 500’s seventh-biggest stock after delivering a 12% gain over the past year. However, Wells Fargo & Co (NYSE:WFC) has posted a drop in profit in each of the last two quarters, due to stringent federal government scrutiny, higher expenses, and lower interest rates. Going into the second quarter, Warren Buffett’s Berkshire Hathaway remained the largest shareholder of the company out of the hedge funds tracked by Insider Monkey. The fund held 470.29 million shares with a market value of $25.58 billion after raising its position by 2% during the first quarter. Lansdowne Partners, managed by Alex Snow, came in a distant second with 20.09 million shares with a market value of $1.09 billion, after raising its own stake by 46% during the period. Billionaire Ken Fisher’s Fisher Asset Management was also on the list, holding 18.54 million shares valued at $1.01 billion.