Lansdowne Partners is a U.K.-based hedge fund founded by Sir Paul Ruddock and Steve Heinz in 1998, making it one of the oldest in Europe. Currently run by CEO Alex Snow, Lansdowne Partners is widely considered to be one of the most successful hedge funds in the world. Confidence in Lansdowne’s performance is so strong that Morgan Stanley Investment Management owns a 19% stake in the company, which it bought in 2006. The firm recently disclosed its long equity positions in U.S-traded stocks with the SEC, as of the end of the fourth quarter. Lansdowne’s U.S equity portfolio was valued at roughly $14.56 billion, and had a focus on consumer discretionary, information technology and financial stocks. During the fourth quarter, the fund’s 43 long positions in companies with market caps above $1.0 billion delivered a weighted average return of 8.3%, based on the size of those positions at the beginning of the quarter. For 2015, the firm’s qualifying stock picks posted a strong weighted average return of 15.2%, making it one of the top-30 best performing funds in our database using that metric. In this article, we’ll take a look at Lansdowne Partners’ top picks heading into 2016.
At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).
#5. Amazon.com, Inc. (NASDAQ:AMZN)
– Shares Owned by Lansdowne Partners (as of December 31): 1.86 Million
– Value of Holding (as of December 31): $1.25 Billion
Amazon.com, Inc. (NASDAQ:AMZN) jumped three spots in Lansdowne’s portfolio over the fourth quarter, coming in as its fifth-most valuable stake by the end of the quarter, driven by both a 2% increase to the fund’s position and a 32% surge in the stock during the quarter. However, the shares have given up a lot of those gains so far in 2016, having lost almost 18% year-to-date. Another investment firm that is probably not very happy about this decline is Chase Coleman’s Tiger Global Management, which disclosed ownership of 3.19 million shares as of the end of December. Earlier this week, Amazon.com, Inc. (NASDAQ:AMZN) announced that it had acquired the rights to Woody Allen’s latest film for $15 million; while the news might not seem overly important, it marks a big challenge to the director’s usual distributor, Sony Pictures Classic, and may herald the dawn of a new era where studios have to accept helping Amazon distribute the content it produces.
#4. Delta Air Lines, Inc. (NYSE:DAL)
– Shares Owned by Lansdowne Partners (as of December 31): 26.06 Million
– Value of Holding (as of December 31): $1.32 Billion
Following a 2% reduction in Lansdowne’s stake, and in spite of the 13% gain the stock registered over the fourth quarter, Delta Air Lines, Inc. (NYSE:DAL) fell two spots in the firm’s portfolio. However, the fund continued to be the largest shareholder of the stock in our system as of December 31, trailed by Paul Reeder and Edward Shapiro’s PAR Capital Management, which holds 15.31 million shares. As with most large-caps, Delta Air Lines, Inc. (NYSE:DAL) has seen its stock tumble in 2016, by over 5%. On Wednesday, Moody’s assured that the company is “well equipped to weather a recovery in jet fuel costs, supported by its significant debt reduction and ongoing stability in operations.” Earlier this month, the firm upgraded the airliner’s senior unsecured rating to Baa3 from Ba3.
On the next page, we will take a look at Lansdowne Partners’ top-three stakes heading into 2016.