Real Estate Stocks Dominate Tricadia Capital’s Top-5 Holdings

Page 1 of 2

New York-based Tricadia Capital Management recently disclosed the contents of its U.S. equity portfolio via a 13F filing submitted with the SEC. The fund was founded in 2003 by Michael Barnes and Arif Inayatullah, boasted discretionary assets under management (AUM) of $4.83 billion as of June 21, while its equity portfolio contained assets valued at $295.7 million on June 30.

According to Tricadia’s latest filing, its U.S. equity portfolio had a quarterly turnover rate of 61.1% during the second quarter and its top-ten holdings amassed 68.40% of the value of its equity portfolio at the end of that period. The filing also revealed that at the end of June, stocks from the real estate and financial sectors each accounted for 26% of the value of Tricadia’s portfolio. In this article we’ll take a look at the fund’s top-five picks going into the third quarter, three of which belonged to the real estate sector.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

investing, investment, real, risk, market, loan, banking, business, sale, home, crash, loss, danger, problems, despair, credit, falling, gamble, model, housing, economy,

Brian A Jackson/

#5. RAIT Financial Trust (NYSE:RAS)

– Shares Owned by Tricadia Capital Management (as of June 30): 6.62 Million

– Value of Holding (as of June 30): $20.73 Million

Let’s start with RAIT Financial Trust (NYSE:RAS), which is the only stock among Tricadia’s top-five holdings in which the fund didn’t make any changes to its stake during the second quarter. The Philadelphia-based real estate investment trust (REIT) lost over 65% of its market capitalization last year. However, its stock has performed well this year, appreciating by 15.36%. The REIT currently pays a quarterly dividend of $0.09 per share, which translates into a stellar annual dividend yield of 11.7%. On August 5, RAIT Financial Trust (NYSE:RAS) reported its second quarter results, declaring a loss per share of $0.08 on revenue of $85.07 million, a curious case of a large bottom-line miss but a huge top-line beat, as analysts’ had expected EPS of $0.13 on revenue of just $25.55 million. Billionaire Jim Simons‘ Renaissance Technologies increased its stake in the company by 15% to 2.55 million shares during the second quarter.

Follow Rait Financial Trust (NYSE:RASFQ)

#4. Air Products & Chemicals, Inc. (NYSE:APD)

– Shares Owned by Tricadia Capital Management (as of June 30): 175,000

– Value of Holding (as of June 30): $24.86 Million

Tricadia Capital lowered its stake in Air Products & Chemicals, Inc. (NYSE:APD) by 9% during the second quarter. The fund first initiated its stake in the industrial gases company during the second quarter of 2014. Air Products & Chemicals’ stock recently broke above a strong technical resistance barrier near the $150 level and is currently trading up by 13.56% year-to-date. The company has hiked its dividend for the last 33 years and owing to its management’s focus on cash flow generation. analysts expect this trend to continue going forward. For its third quarter of fiscal year 2016, Air Products & Chemicals reported EPS of $1.92 on revenue of $2.43 billion, exhibiting strong bottom-line growth compared to the results of EPS of $1.65 on revenue of $2.47 billion for the same quarter of last year. On August 12, analysts at JPMorgan Chase & Co. upgraded the stock to ‘Overweight’ from ‘Neutral’ and also hiked their price target on it to $160 from $140. David Stemerman‘s Conatus Capital Management upped its stake in Air Products & Chemicals, Inc. (NYSE:APD) by 65% to 465,208 shares during the second quarter.

Follow Air Products & Chemicals Inc. (NYSE:APD)

We’ll check out Tricadia Capital’s top-three stock picks on the next page.

Page 1 of 2