Louis Navellier’s Navellier & Associates enjoyed a solid first quarter, returning 6.4% according to our methodology, from its 254 long positions in equities with a market cap of $1.0 billion or greater. Navellier’s portfolio consisted of 326 long positions entering 2015, in a highly diversified and balanced portfolio. Its top 10 holdings accounted for just 36.44% of the value of its portfolio, and its investments were spread out across numerous sectors, with the healthcare and information technology sectors having the most capital allocated to them, at 23% apiece.
We can glean our first clues as to why Navellier outperformed the market (the S&P 500 returned 0.9% in the first quarter) based on that sector allocation. Nearly half of Navellier’s capital was tied up in two of the highest-performing sectors during the past quarter. According to Morningstar data the healthcare sector returned 4.48% during the quarter as a whole, while the IT sector returned 3.84%. They were the second- and third-best performing sectors, behind only real estate.
Navellier also outperformed the market despite its top pick Micron Technology, Inc. (NASDAQ:MU), which accounts for 4.23% of its portfolio, having a very poor quarter. Micron Technology, Inc. (NASDAQ:MU) was down 23% during the quarter, though after posting a solid earnings report on April 1 the maker of flash memory products is getting support from analysts.
Navellier’s top healthcare stock and second overall pick was the first of its stocks to deliver big returns. That stock is Actavis Plc (NYSE:ACT), which also happened to be the most popular healthcare stock among all funds we track, and it returned 16% during the past quarter. Overall, Actavis Plc (NYSE:ACT) has enjoyed a hugely successful run since its IPO in October 2013, gaining over 100% in 18 months. Navellier has held shares of Actavis Plc (NYSE:ACT) from the very beginning, and continues to profit off of the dynamic stock, whose acquisitions and growth continue to drive its stock price higher and higher. Navellier holds 321,400 shares as of the end of the 2014, a position which accounted for 4.13% of its portfolio.
AmerisourceBergen Corp. (NYSE:ABC) is another healthcare stock that enjoyed an extremely strong quarter. It was also the fourth top pick of Navellier’s, as it held 857,900 shares at the end of 2014, representing 3.86% of its portfolio. AmerisourceBergen Corp. (NYSE:ABC) was not one of the top ten healthcare stocks among the funds in our database, which meant many funds missed out on its 26% returns during the quarter. AmerisourceBergen Corp. (NYSE:ABC) is one of the largest distributors of drugs and healthcare supplies in North America, and its stock has enjoyed phenomenal growth over the past 27 months, ballooning by more than 150%. Panayotis Takis Sparaggis’s Alkeon Capital Management is the largest shareholder among the funds we track, holding 1.62 million shares at the end of 2014.
Anthem Inc (NYSE:ANTM) is yet another healthcare stock in Navellier’s top ten that enjoyed a strong first quarter.Navellier’s position of just under 508,000 shares landed it in ninth spot in its portfolio, representing 3.18% of its overall value. It would now account for much more all things being equal, given the 29% flight its shares took during the first quarter. Anthem Inc (NYSE:ANTM), formerly known as WellPoint Inc., is a health insurance company which has benefitted tremendously from the implementation of the U.S Affordable Care Act, which has resulted in millions of eligible new customers flooding the U.S health insurance market. Larry Robbins’ Glenview Capital was the largest shareholder of Anthem Inc (NYSE:ANTM) at the end of 2014 among the funds we follow, boasting a position of 3.59 milllion shares.
Among Navellier’s other $1 billion+ long positions which accounted for at least 2% of its portfolio value and had strong first quarter returns were Dr Pepper Snapple Group Inc. (NYSE:DPS) with 9% returns, Biogen Inc (NASDAQ:BIIB) which posted gains of 24%, Avago Technologies Ltd (NASDAQ:AVGO) which was up by 26%, Skyworks Solutions Inc. (NASDAQ:SWKS) which blew up by 35%, NXP Semiconductors NV (NASDAQ:NXPI), up by 31%, and Health Net, Inc. (NYSE:HNT), which posted returns of 13%.
Navellier & Associates is one of just 700+ hedge funds in our database at Insider Monkey, and while we follow their individual moves and top stock picks in the hopes of providing some investing insight to investors, we primarily have them in our database to track their 13F filings and their positions in small-cap stocks. That’s because we’ve found a system of imitating hedge funds’ moves that has shown the ability to regularly outperform the market, even as the hedge funds themselves have underperformed it for the past seven years running. That system is to invest in each of their collective top 15 small-cap picks, a method which over 14 years of backtesting, outperformed the market in 11 of those years. Since going live, it has continued to outperform the market each year, posting returns of 132% from the end of August 2012 when it went live, through March 11, 2015, an outperformance of the S&P 500 ETF (SPY) of 79 percentage points (see the details).