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Sean Murphy’s Game Creek Capital’s Return, AUM, and Holdings

In 2008, Scott Mayo, son of an experienced investor Richard Mayo (who co-founded Boston-based money manager GMO) launched his own hedge fund called Game Creek Capital. The fund got the seed money from Richard Mayo, and it was run by Scott until his unfortunate death in 2010. Then, it was taken over by Sean Murphy, who was previously recruited from Vardon Capital Management by Scott Mayo. At Vardon Capital Management, Sean Murphy was a senior analyst having its main focus on telecom, media and consumer sectors. Before he got employed at Vardon Capital Management, he was a media analyst at Credit Suisse Boston. Presently, Sean Murphy is the President and Chief Investment Officer of Game Creek Capital, and a Chartered Financial Analyst. Once, when asked about his investment philosophy, he answered very simply: “If you’ve got a great idea, make it a real position”. He earned his B.A. cum laude from the University of Notre Dame.

Game Creek Capital employs an absolute return, long/short strategy mainly investing in the business from media, consumer, and telecom sectors. It uses bottom-up research to recognize companies that are currently undervalued. It invests in both mid and large cap stocks. According to its website –  capital preservation is their mantra. When analyzing a potential stock for its portfolio, Game Creek Capital reaches both current and former employees, customers, suppliers, competitors, and of course, the management team. It collects all data possible, trying to get the detailed picture of each company, in order to make a proper evaluation of it. At the end of June 2017, Game Creek Capital held $354.00 million in regulatory assets under management. Let’s take a look at what Game Creek Capital’s investment strategy brought back in the last couple of years.

From January 2008 through May 2011, one of the fund’s long-short strategies delivered a compounded annualized return of 17.8% (or a cumulative return of 75.2%). Its Game Creek Fund, L.P. gained a great 19.70% in 2013, which was followed by a loss of 4.58% in 2014. Then, the next year, Game Creek Fund, L.P. came back on its feet posting positive returns of 3.23%. In 2016 it delivered 0.73%, and in 2017 it brought back 2.81%. Last year through October, the fund managed to stay positive generating a return of 3.62%. Game Creek Fund, L.P. had a total return of 191.77%, for a compound annual return of 11.2%. Its worst drawdown stood at 11.55.

On December 31st, 2018, Game Creek Capital’s portfolio was valued at $212.97 million, representing a 21.85% decrease from one quarter earlier, when the fund’s portfolio carried a value of $272.52 million. During the quarter, the fund said goodbye to 15 stocks from its portfolio and added 7 new positions. The largest position was in a Philadelphia-headquartered telecommunications conglomerate with a market cap of $177.28 billion, Comcast Corporation (NASDAQ:CMCSA). The company’s three main businesses are Comcast Cable, Sky, and NBCUniversal. Game Creek Capital held 294,350 Comcast’s shares, which were valued $10.02 million. Aside from being one of the US biggest high-speed internet, video, and phone providers, Comcast is also one of the 30 Most Popular Stocks Among Hedge Funds. It is trading at a price-to-earnings ratio of 15.50, and year-to-date,  the company’s stock gained 13.96%, having its closing price on March 11th of $39.17. In its last financial report for the fourth quarter of 2018, Comcast disclosed consolidated revenue of $27.84 billion or $0.55 per share, compared to revenue of $22.08 million or $3.17 per share in the corresponding period of 2017. At the end of January 2019, TD Securities raised its price target on the stock to $48.00 from $47.00 with a ‘Buy’ rating, and Credit Suisse Group restated its ‘Buy’ rating on the stock while keeping its price target of $44.00.

Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. We launched a long activist investing strategy in our monthly newsletter 2 years ago. This strategy’s stock picks returned 61% in 2 short years, vs. a gain of 21% for the S&P 500 Index ETF (SPY). Last October we shared one of our stock picks, Ascendis Pharmaceuticals (ASND), in a free sample issue of our monthly newsletter (you can still download it free of charge). The stock doubled in less than 5 months.

We have also been very successful at identifying stocks that will decline even in a bull market. We launched our short strategy a little more than 2 years ago and share our short stock picks in our quarterly newsletter. This strategy’s picks lost 27.5% since then, vs. a gain of 25% for the S&P 500 Index. This means our short strategy actually outperformed the market by 52.5 percentage points (let us know if you don’t understand how the outperformance for a short strategy is calculated).

Three weeks ago our monthly newsletter identified another undervalued stock that is expected to increase its earnings by more than 10% annually and trades at only 10 times its 2019 earnings. We expect this stock to return 60% in the next 12-24 months (it already returned 9% in 3 weeks). Email us if you are interested in this stock or subscribe here. We take a closer look at hedge funds like Game Creek Capital in order to identify their best and worst ideas.

If you are interested to read more about Game Creek Capital’s similar 4th quarter long positions and investment moves, head on to the next page.

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