In January, we covered Napier Park Global Capital, founded and managed by Jim O’Brien and Jonathan Dorfman, being awarded the title of 2015 Hedge Fund Manager of the Year by Risk Magazine. The hedge fund didn’t make us wait long to live up to the billing bestowed upon it by that title. According to our estimates, the 34 long equity positions Napier Park had on March 31 in companies with a market cap over $1 billion delivered strong weighted average returns of 12.79% during the second quarter of 2015, pushing the picks of the fund using this metric to 14.1% year-to-date. Note that these calculations exclude bonds and options and are only estimates based on previously held positions. The actual returns may be very different from our approximations. The results of the hedge fund look even more magnificent if we compare them with the performance of the most typical proxy for the US stock market, the S&P 500. The stocks comprising the index traded mostly sideways during the second quarter, closing with a mere 0.28% profit. In this article we would like to shed some light on some of the top performing investments of Jim O’Brien and Jonathan Dorfman during the most recent quarter, which are represented by Healthequity Inc (NASDAQ:HQY), Allergan PLC(NYSE:AGN) and Lions Gate Entertainment Corp (USA) (NYSE:LGF).
We don’t just track the latest moves of funds and stocks at Insider Monkey. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 139%, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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The total position of Napier Park Global Capital in Healthequity Inc (NASDAQ:HQY) included 4.03 million shares worth $100.75 million at the end of March. This $1.89 billion company is engaged in technology-based services platforms that allow consumers to make healthcare saving and spending decisions. So far this year, the stock of Healthequity Inc (NASDAQ:HQY) has returned around 28.92%, with the majority of that coming in the second quarter, at 28.25%, after gaining a boost from a strong earnings report. According to the company’s latest earnings call, it beat EPS estimates by $0.01, closing the first quarter with net profit of $0.10 per share, and with $29.85 million of revenues, which was up by 47.60% over the same period a year ago. Among the other prominent investors covered by our extensive database, one can find Crosslink Capital, led by Seymour Sy Kaufman and Michael Stark, which held some 341,963 shares of Healthequity Inc (NASDAQ:HQY), valued at $8.55 million.
