Hilltop Park Sells Off Apple & Tesla, Loads Up On Energy Stocks

Hilltop Park Associates LLC is a New York-based hedge fund firm co-founded by Stanley Shopkorn and Douglas Day, former portfolio managers at Louis Bacon’s Moore Capital. Prior to establishing his own firm in 2008 with roughly $100 million, Mr. Shopkorn managed his own money for five years.

According to a September 2015 article written by the Wall Street Journal, Hilltop Park Associates was among the hedge fund vehicles that sought to capitalize on structural inefficiencies in exchange-traded funds last year. For instance, the New York-based asset manager placed short bets against a cybersecurity-focused ETF, arguing that the valuations of the companies included in the ETF were overvalued relative to the peers not included in the fund, as the construction of the ETF boosted the share prices of its individual components. Hilltop Park Associates oversees a long portfolio worth $24.00 million as of the end of the second quarter, less than half of the $45.40 million its portfolio was worth at the end of the first quarter. Without further ado, let’s have a brief look at some noteworthy moves completed by the New York-based hedge fund vehicle during the June quarter.

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Hilltop Park Associates Discards Tesla Motors Inc. (NASDAQ:TSLA) Stake

Hilltop Park Associates LLC sold off its entire 5,000-share stake in Tesla Motors Inc. (NASDAQ:TSLA) during the April-to-June period. The hedge fund’s Tesla position was worth $1.15 million at the end of March. Just recently, the electric-car maker agreed to acquire solar panel installer SolarCity Corp (NASDAQ:SCTY) in an all-stock transaction valued at $2.6 billion, as Elon Musk aspires to create a vertically integrated renewable energy company that would offer consumers electric vehicles, energy storage, energy efficiency, and solar energy capabilities. Some investors initially thought that the multi-billion-dollar merger looked more like a bailout than a strategic takeover, but worries have alleviated somewhat in recent weeks. Under the terms of the proposed transaction, SolarCity shareholders are set to receive 0.11 shares of Tesla Motors for each share of SolarCity. Tesla shares are 5% in the red year-to-date. Daniel S. Och’s OZ Management owned 180,153 shares of Tesla Motors Inc. (NASDAQ:TSLA) at the end of March.

Hilltop Park Associates Sells Off Apple Inc. (NASDAQ:AAPL) Stake

The New York-based hedge fund vehicle also jettisoned its 50,000-share position in Apple Inc. (NASDAQ:AAPL) during the three-month period ended June 30. This was the largest position in Hilltop Park’s portfolio at the end of the first quarter, accounting for 12.0% of the value of that portfolio, so the complete selloff of the position comes as somewhat of a surprise. Some analysts believe that Apple will have a hard time drawing customers into the company’s stores in the upcoming quarters, as the iPhone maker appears to be moving away from the typical two-year iPhone redesign cycle. The Cupertino-based tech giant is currently preparing to unveil successors to the iPhone 6S and iPhone 6S plus models, so many potential iPhone buyers are putting off buying Apple devices until the new iPhone 7 model comes out this September. Numerous media reports suggest that the design of this year’s models will look similar to that of last year’s models, so the company clearly needs to come up with more radical design changes to successfully combat fast-growing competition from cheaper Chinese competitors producing ever more technologically-advanced devices. Apple shares are up by around 3% in 2016. Ken Fisher’s Fisher Asset Management reported owning 11.31 million shares of Apple Inc. (NASDAQ:AAPL) through the current round of 13F filings for the June quarter.

The next page of this article will discuss three notable moves made by Hilltop Park Associates during the second quarter.

Hilltop Park Associates Buys New Stake in FireEye Inc. (NASDAQ:FEYE)

 – Shares Owned by Hilltop Park Associates LLC (as of June 30): 50,000

 – Value of Hilltop Park Associates LLC’s Holding (as of June 30): $824,000

The hedge fund firm co-founded by Stanley Shopkorn and Douglas Day snapped up a new stake of 50,000 shares of FireEye Inc. (NASDAQ:FEYE) during the second quarter, valued at $824,000 on June 30. The cybersecurity company has lost 31% of its market value since the start of the year, so the firm doubtlessly believes they are getting its shares for a cheap price. Just recently, FireEye announced plans to lay off up to 400 of its 3,400 workers as part of a restructuring plan, citing a slowdown in demand for its online security services. The security technology vendor reported second quarter billings and revenue below both the company’s and analysts’ expectations, which forced the company to cut its outlook. FireEye cut its full-year revenue forecast to a range of $716 million-to-$728 million from the previous forecast of $780 million-to-$810 million. Adam Usdan’s Trellus Management Company has 226,638 shares of FireEye Inc. (NASDAQ:FEYE) among its holdings as of the end of the second quarter.

Hilltop Park Associates Turns Bullish on Hess Corp. (NYSE:HES)

 – Shares Owned by Hilltop Park Associates LLC (as of June 30): 35,000

 – Value of Hilltop Park Associates LLC’s Holding (as of June 30): $2.10 Million

Hilltop Park Associates initiated a 35,000-share position in Hess Corp. (NYSE:HES) during the three months ended June 30, worth $2.10 million at the end of the second quarter. The Hess position was the fourth-largest position in the hedge fund’s portfolio on June 30, constituting 8.8% of its value. The global exploration and production company has seen its market cap increase by 14% since the start of the year. Hess plans to use approximately $2.1 billion on capital and exploratory expenditures for the full 2016 year, down by 48% from 2015. Hess ended the second quarter with $3.1 billion in cash and cash equivalents, while its total liquidity including available committed credit facilities stood at approximately $7.7 billion. The company’s total debt was $6.55 billion at the end of the June quarter. Hess posted total revenue and non-operating income of $1.26 billion for the second quarter, down from $1.94 billion reported for the same period of the prior year. Russell Lucas’ Lucas Capital Management trimmed its stake in Hess Corp. (NYSE:HES) by 35% during the June quarter, to 21,405 shares.

Hilltop Park Associates Acquires Stake in Southwestern Energy Company (NYSE:SWN)

 – Shares Owned by Hilltop Park Associates LLC (as of June 30): 175,000

 – Value of Hilltop Park Associates LLC’s Holding (as of June 30): $2.20 Million

Southwestern Energy Company (NYSE:SWN) was the largest addition to the New York-based asset manager’s portfolio during the June quarter. Hilltop Park Associates snatched up a stake of 175,000 shares during the April-to-June period, which was valued at $2.20 million on June 30. The independent energy company engaged in natural gas and oil exploration, development and production has seen the value of its stock skyrocket by 91% since early-January. In late-July, analysts at Barclays upped their price target on Southwestern Energy to $14 from $8 and reiterated their ‘Underweight’ rating on the stock, citing higher mid-cycle cash flow estimates due to higher production forecasts. Additionally, Barclays’ analysts noted that the company has strengthened its balance sheet and liquidity. The successful implementation of the company’s debt reduction strategy will enable Southwestern Energy to increase its activity in the current quarter and for the remainder of the year. Joe DiMenna’s Zweig-DiMenna Associates owns nearly 342,000 shares of Southwestern Energy Company (NYSE:SWN) as of June 30.

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