Hedge Fund P.A.W. Capital Partners’ Top Stock Picks

Peter A. Wright launched P.A.W. Capital Partners back in 1990. He is the fund’s Chief Investment Officer, General Partner and Senior Portfolio Manager ever since. He holds a BS in Chemical Engineering and an MBA from Cornell University. Mr. Wright started off his career at I.B.M, later moving to Gartner Group where he worked as an Executive Vice President and Research Director. Later on, he moved to SoundView Financial Group, holding positions of President and CEO. This experience directed the main interests of his hedge fund as well, which is mainly focused on technology sector businesses, and to a lesser extent healthcare and retail companies. The fund employs long/short strategy.

During the last 5 years P.A.W Capital Partnters started off returning negatively. In 2014 the fund lost 14.5%, followed by -3.7% in 2015. The fund delivered a positive 3.6% in 2016 and a solid 21.5% in 2017 which was its best showing in the last five years. In 2018 it returned 8.0%, while year to date, the return was 14.9 throughout June this year. With annualized return of 9.9%, the fund seems to be in a fairly good position.

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Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. Our long strategy is based on the consensus picks of the 100 best performing hedge funds. This strategy was launched 5 years ago and generated a cumulative return of 115%. You can think of it as a mutual fund that returned 16.2% annually over the last 5 years, vs. 11.1% annual gain for the S&P 500 ETF (SPY). Basically we outperformed the S&P 500 Index by 5 percentage points annually by identifying the top stock picks of the best hedge fund managers (see the details here).

Our short strategy is based on shorting hedge fund hotels that are likely to experience large hedge fund sales during market weaknesses. We launched this strategy in February 2017. It’s been almost 2.5 years and the stock picks of this strategy lost a cumulative 24.7% vs. a cumulative gain of 30.8% for the S&P 500 ETF. This is an absolutely mind blowing performance. The annualized return of our short picks is -11.2%, vs. 11.8% annualized gain for the S&P 500 Index during the same period. The annual alpha of this strategy is 23 percentage points. Jim Chanos doesn’t generate this kind of performance. The best thing about this short strategy is that it provides an excellent hedge during market meltdowns. For example, in Q4 of 2018 when the S&P 500 Index lost nearly 14%, this strategy’s picks lost 25% protecting our premium subscribers from large losses.

Our newsletters are successful because we follow hedge fund managers like Peter A. Wright to identify the best and worst hedge fund stock picks. In this article we are going to take a look at P.A.W. Capital Partners’ top stock picks for Q2 2019.

P.A.W. Capital Partner’s fifth most valuable stake in Q2 2019 was Digital Turbine Inc (NASDAQ:APPS). The position was cut by 7% during this quarter, but it nevertheless moved up from 10th place in the fund’s portfolio. There were 11 hedge funds bullish on the stock during this period, but this is 6 hedge funds less than in Q1 2019. P.A.W. Capital Partner was the company’s third largest shareholder, holding a stake worth $4 million. Digital Turbine Inc’s top shareholder was Trellus Management Company, holding shares of total value of $4.2 million. The following were Arrowstreet Capital, Manatuck Hill Partners, and Citadel Investment Group.

The fund’s fourth largest top stock pick for the second quarter 2019 was Uniqure NV (NASDAQ:QURE). The position was cut by 7% during this quarter but it raised from 9th place in the fund’s portfolio. Investors seem to be more and more interested in the stock, since 34 hedge funds were holding stakes in the company which is 21% more compared to the previous quarter. Once again, Consonance Capital Management held the most valuable stake in the company, worth $149.4 million. Other funds with large positions in the stock included Redmile Group, Nantahala Capital Management, and OrbiMed Advisors.

The third place in P.A.W Capital Management’s portfolio for Q2 2019 was R1 Rcm Inc (NASDAQ:RCM), a healthcare revenue management company. This position was also cut during the quarter by 13%, but it raised from the 7th place since the previous quarter. A total of 21 hedge funds tracked by Insider Monkey were investing in the company during the period, a slight decrease of 5 hedge funds since the previous quarter. The company’s top shareholder in our database was Tenzing Global Investors, holding a stake worth $26.9 million. Right behind were Renaissance Technologies, Portolan Capital Management, and Cloverdale Capital Management.

The second most valuable position in P.A.W Capital Partner’s portfolio was Attunity Ltd (NASDAQ:ATTU). It moved from the third place since the previous quarter, despite being cut by 3%. Only 3 hedge funds still kept interest in the company, compared to the previous quarter when a total of 19 shareholders were investing in it. Among them, P.A.W Capital Management was the second largest shareholder, holding a stake worth $4.6 million. The largest shareholder for Q2 2019 was Whetstone Capital Advisors, holding shares of total value of $16.3 million, while the third one was GAMCO Investors, holding a stake valued at $235,000.

Finally, the fund’s top stock pick for Q2 2019 was Marchex Inc. (NASDAQ:MCHX), despite being cut by 4% during the quarter. A total of 17 hedge funds were long this stock, a slight decrease of 2 hedge funds since the previous quarter. Renaissance Technologies was the company’s top shareholder, with a stake worth $11.5 million reported as of the end of June. Right behind it was P.A.W. Capital Partners, holding shares worth $4.6 million. Other hedge funds in the stock were Ancora Advisors, Royce & Associates, and Harbert Management.

 Disclosure: None. This article was originally published at Insider Monkey.