Brett Hendrickson launched his fund Nokomis Capital in the midst of the financial crises in 2008 with $4 million in capital. The Dallas-based fund gets its name from a lake and street in Minneapolis where Hendrickson grew up. The fund is characterized by a simple investment strategy for potential investment candidates, seeking out fat profit margins and good cash flow. Currently, Nokomis has about $414 million worth of assets under management with the market value of its public equity portfolio standing at $337.69 million at the end of the first quarter. The technology and consumer discretionary sectors represented 52% and 15% of the portfolio value respectively. We decided to take a look at how the fund’s top picks including Vishay Precision Group Inc (NYSE:VPG), Penn Virginia Corporation (NYSE:PVA), Kirkland’s, Inc. (NASDAQ:KIRK), and Telenav Inc (NASDAQ:TNAV) are performing this year.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Following a hike of 17% in the holding during the first quarter, Penn Virginia Corporation (NYSE:PVA) is now Nokomis’ most valuable position, consisting of some 4.31 million shares valued at $27.91 million. The stake represents 8.26% of the fund’s portfolio value. So far this year Penn Virginia Corporation (NYSE:PVA)’s stock has slumped by nearly 31% while the company missed estimates for both the top and bottom lines for is first quarter financial results. George Soros‘ Soros Fund Management is the largest stockholder of Penn Virginia Corporation (NYSE:PVA) within our database, owning some 6.0 million shares valued at $38.90 million. The stake comprises nearly 9% of Penn’s outstanding common stock. Given the predicament that the company is in, the billionaire advised its management to sell its business, and according to a Wall Street Journal report in February, Penn Virginia Corporation (NYSE:PVA) was in talks with Bank of America to look for potential buyers.
Nokomis’ second largest holding, in Kirkland’s, Inc. (NASDAQ:KIRK), was trimmed by 2% during the first quarter to 1.14 million shares valued at $27.11 million. Over the past year, the stock price of the $440.65 million retailer of home decor and gifts has surged by 36.5%. Donald Chiboucis‘ Columbus Circle Investors is another prominent stockholder of the company with 524,200 shares valued at $12.50 million.
The third spot was occupied by Telenav Inc (NASDAQ:TNAV). Nokomis trimmed its holding in the $352.57 million technology company by 3% during the first quarter to 2.75 million shares valued at $21.81 million. Another impressive performer among Hendrickson’s top picks, Telenav Inc (NASDAQ:TNAV)’s stock has appreciated by over 30% year-to-date. John W. Rogers’ Ariel Investment held about 1.61 million shares valued at $12.78 million at the end of March.