Matthew Mark‘s Jet Capital Investors is a hedge fund that manages around $2.4 billion dollars in assets. The fund was founded in 2002 and has its headquarters in New York City. The strategies that the firm typically implements include merger arbitrage, capital structure arbitrage, and event-oriented trading strategies using investments in equities and bonds around the world. Jet Capital’s disclosed positions from its most recent 13F for the reporting period of March 31 show that 29.26% of firm’s assets are allocated in the Service sector and 23.3% in Utilities. In this article we’ll review the top three Energy sector bets of the hedge fund, which include long positions in NextEra Energy Inc (NYSE:NEE), and Black Hills Corp(NYSE:BKH), and a position of put options underlying shares of Exxon Mobil Corporation (NYSE:XOM).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. 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? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 142% over the last 33 months, which is more than 83 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
During the last quarter, Jet Capital Investors decreased its holding in NextEra Energy Inc (NYSE:NEE) by 11%, leaving 1.78 million shares worth $185.64 million in its equity portfolio. NextEra Energy Inc (NYSE:NEE) is an electric power company in North America with electric generating facilities located in 27 states in the United States and four provinces in Canada. The market capitalization of the energy giant is around $44 billion. Over the last 52 weeks the company has returned 2.63% to its investors in equity gains, while it also pays $3.08 per share annually in dividend payments, which at the current market price of $100.31, equals a 3.07% dividend yield. The main competitive advantage of NextEra Energy Inc (NYSE:NEE)’s business model is the ability to negotiate non-competitive arrangements with municipalities. Such arrangements allowed the company to maintain and grow operating margins during the last ten years. Since the beginning of this year, the share price has decreased by around 10% without any apparent changes in the long-run perspectives. This creates a potentially profitable opportunity to enter the stock, which is supported by the mean analysts’ target price estimates of $117.33. Among the funds that we follow on the daily basis, shares of NextEra Energy Inc (NYSE:NEE) can be found in the portfolios of Israel Englander’s Millennium Management, who increased its position by 45% during the last quarter, and Daniel S. Och’s OZ Management.