Should You Follow Sachem Head’s Stock Picks: CDK Global Inc (CDK), FleetCor Technologies, Inc. (FLT) & More

Sachem Head Capital is a New York-based hedge fund founded by Scott Ferguson. Sachem’s equity portfolio has a total value of $2.02 billion, as of the end of September, down from $2.26 billion a quarter earlier. The fund returned 12.81% from its 11 long positions in companies having a total market cap of $1 billion or more, according to our calculations.

Our approach reveals interesting facts about hedge funds’ stock picking skills. For instance, there were 659 hedge funds in our database that had at least five non-microcap stocks in their 13F portfolio. These hedge funds’ long portfolio managed to deliver an average return of 8.3% during the third quarter whereas S&P 500 ETFs returned only 3.3%.

Sachem Head was one of the hedge funds tracked by Insider Monkey whose long positions in companies having a market cap of at least $1 billion returned sterling returns. Let’s have a look at some of the important stocks in Sachem’s portfolio, including CDK Global Inc (NASDAQ:CDK), Envision Healthcare Holdings Inc (NYSE:EVHC), FleetCor Technologies, Inc. (NYSE:FLT), and Team Health Holdings LLC (NYSE:TMH). 

Sachem Head Capital sold 67% of its stake in CDK Global Inc (NASDAQ:CDK) moving into the fourth quarter. The fund has over 2.52 million shares of the company worth $144.51 million as of the end of September. The stock inched up by 3.6% during the third quarter. During the second quarter, the number of funds followed by us long CDK Global went up to 45 from 41. Among them, Elliott Management, managed by Paul Singer, held the largest position in CDK Global Inc (NASDAQ:CDK), which was worth $450 million at the end of June. Some other peers with similar optimism encompassed William B. Gray’s Orbis Investment Management, John Griffin’s Blue Ridge Capital and Jeffrey Tannenbaum’s Fir Tree.

Envision Healthcare Holdings Inc (NYSE:EVHC) was a new position in Sachem Head Capital’s portfolio in the second quarter, but the fund slashed its position by 37% between July and September, ending the period with 3.1 million shares valued at $69.04 million. The fund cut its exposure to the company as its stock lost 12.2% during the third quarter. Overall, 43 funds from our database held shares of Envision Healthcare Holdings Inc (NYSE:EVHC) at the end of June, up by 11 funds over the quarter. More specifically, the largest stake was held by Viking Global, which reported holding $198.3 million worth of stock as of the end of June. It was followed by Sachem Head Capital with a $124.9 million position. Other investors bullish on the company included Valinor Management LLC, Samlyn Capital, and Bloom Tree Partners.

Sachem Head Capital upped its stake in FleetCor Technologies, Inc. (NYSE:FLT) by 60% and left it unchanged at 800,000 shares in the third one as the stock advanced by 21.4%. In this way, the value of the holding advanced to $138.98 million from $114.50 million during the third quarter. The number of funds tracked by us that held shares of FleetCor Technologies, Inc. (NYSE:FLT) at the end of June went up by four to 52. Stephen Mandel’s Lone Pine Capital had the biggest position in FleetCor Technologies, Inc. (NYSE:FLT), worth close to $823.1 million at the end of June. Sitting at the No. 2 spot was Tiger Global Management LLC, led by Chase Coleman, holding a $466.6 million position. Remaining members of the smart money with similar optimism consisted of Daniel S. Och’s OZ Management, John Griffin’s Blue Ridge Capital and Eric W. Mandelblatt’s Soroban Capital Partners.

Sachem Head Capital trimmed its exposure to Team Health Holdings LLC (NYSE:TMH) by 9% to 2.55 million shares worth $83.03 million during the third quarter. Meanwhile, the stock lost 19.9% in the same period. At the end of the second quarter, 25 funds from our database amassed long positions in Team Health Holdings LLC (NYSE:TMH), compared to 22 funds at the end of March. Among these funds, JANA Partners, managed by Barry Rosenstein, amassed the biggest stake, which was worth $239.6 million at the end of June. Remaining professional money managers that were bullish included Alan Fournier’s Pennant Capital Management, Keith Meister’s Corvex Capital, and Matthew Knauer and Mina Faltas’s Nokota Management.

Disclosure: none