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Sprott Asset Management’s 13F Portfolio Posts 10.77% Gain in Q1

Insider Monkey calculates a fund’s long stock picking skill by looking at the weighted average returns of its long positions in companies with a market cap that exceeds $1 billion, based on the size of those positions at the beginning of each quarter. Our analysis has shown that Eric Sprott‘s qualifying picks returned a negative 8.2% for the fourth quarter of 2015, triggering an overhaul of the equity portfolio. His efforts have seemingly paid off, as our data show a 10.8% gain for the first quarter of 2016. His fund, Sprott Asset Management, reportedly had an equity portfolio worth $2.65 billion that comprised 121 positions, of which 76 were represented by companies worth over $1.0 billion. Let’s take a look at some of Sprott’s most notable investments from the first quarter.

At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Eric Sprott
Eric Sprott
Sprott Asset Management

Nr. of Shares (as of December 31): 459,245

Value of Holding (as of December 31): $48.34 million

Apple Inc. (NASDAQ:AAPL) started 2015 on the wrong foot, having fallen as much as 10% by mid-February. However, March was the comeback month and the stock rallied to finish the first quarter up by 4.1%. One of the main events of the quarter was the release of a new iPhone and a new iPad. The iPhone SE sports a smaller, 4-inch display, and is priced at $399, while the new iPad is equipped with a 9.7-inch screen and will start at $599. The tech giant has also locked horns with the FBI and U.S. Justice Department, as it declined to help authorities break into the iPhone of a terrorist suspect. In the end, FBI received help from a third party to unlock the iPhone and Apple Inc. (NASDAQ:AAPL) walked away with clean hands. Eric Sprott boosted his fund’s stake in Apple by 42% over the fourth quarter to 459,245 shares. At the end of the fourth quarter, Apple Inc. (NASDAQ:AAPL) was in the top 10 most popular companies among the funds followed by Insider Monkey. Hedge fund sentiment towards the tech giant was unchanged, with the number of long hedge fund positions remaining the same at 133. Billionaire Ken Fisher’s Fisher Asset Management has continued its buying spree, having increased its stake by 2% to approximately 11.3 million shares. Carl Icahn‘s fund continues to hold the largest stake in Apple among top funds, despite a 14% reduction in the position. In its latest 13F filing, Icahn Capital has indicated ownership of 45.7 million shares worth close to $5 billion.

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Nr. of Shares (as of December 31):  347,230

Value of Holding (as of December 31): $40.85 million

Although it was not a brilliant start of the year for UnitedHealth Group Inc (NYSE:UNH), the stock still managed to turn profitable and ended the first quarter up by roughly 10%. Probably the most important catalyst for the change in trend was the company’s fourth quarter earnings report, which showed revenues up by 30% year over year to $43.6 billion, while earnings came in at $1.40 per share, beating analysts’ estimates of $1.38 in earnings per share. Analysts expected the company to report $43.26 billion in revenues. UnitedHealth Group Inc (NYSE:UNH) could be found in the portfolio of 50 funds from our database at the end of December 2015, down from 51 at the end of September. Despite the large number of funds invested in this stock, they hold only 2.5% of the company’s common stock. Boykin Curry’s Eagle Capital Management is bullish on UnitedHealth Group and has increased its position by 5% during the quarter to 7.9 million shares worth close to $1 billion. Cliff Asness‘ AQR Capital Management, on the other hand, chose to distance from the stock and dumped approximately 13% of his stake, reducing it to 4.01 million shares.

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Nr. of Shares (as of December 31): 390,800

Value of Holding (as of December 31): $38.21 million

Like UnitedHealth Group, CVS Health Corp (NYSE:CVS) embarked on a downtrend at the beginning of the year and it was the fourth quarter earnings report that propped up the stock and pushed it up by 6.5% for the first quarter. The retail pharmacy chain posted revenues of $41.1 billion, up by 11% year over year, and adjusted earnings of $1.53 per share and had reaffirmed their 2016 projections. Analysts at Credit Suisse have recently initiated coverage of CVS Health Corp (NYSE:CVS) and have assigned an ‘Outperform’ rating and a price target of $115 per share. The hedge fund sentiment towards CVS Health Corp (NYSE:CVS) cooled down a bit during the fourth quarter, as the number of funds with long positions tumbled to 53 from 60. AQR Capital unloaded a big chunk of his position during the quarter, having reduced it to 2.61 million shares by the end of 2015. Peter Rathjens, Bruce Clarke and John Campbell‘s fund, Arrowstreet Capital, reported an 8% increase in its holding to 2.33 million shares in its latest 13F filing.

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Nr. of Shares (as of December 31): 811,550

Value of Holding (as of December 31): $32.49 million

Canadian technology and software provider CGI Group Inc (NYSE:GIB) ended the first quarter 19.3% in the green, the largest advance among Eric Sprott’s top stock picks. The company reported strong results for the 2015 fourth quarter, having topped analysts’ estimates. Revenues came in at $2.01 billion, while adjusted earnings stood at $0.63 per share, while analysts had projected $1.86 billion in revenues and a profit of $0.59 per share. During the first quarter, CGI Group Inc (NYSE:GIB) reported several agreements and contracts with a number of parties, including the U.S. Navy and Swedish carmaker Volvo, to provide data management and support services. Although it’s not a very popular stock among top hedge funds, their interest towards CGI Group Inc (NYSE:GIB) picked up during the fourth quarter, with the number of long positions increasing to 14 from 11 positions reported three months earlier. Arrowstreet Capital decided it was a good time to buy CGI shares and have provided a 724% boost to its holding to 1.42 million shares. AQR Capital was also among those buying the stock, having increased his investment by 23% to 940,643 shares.

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Nr. of Shares (as of December 31): 898,800

Value of Holding (as of December 31): $23.19 million

Suncor Energy Inc. (USA) (NYSE:SU) is another Canadian company Eric Sprott is betting on, having tripled his holding during the fourth quarter. The move has paid off, as the energy company ended the first quarter up by 8.7%. With oil prices having finally found a bottom, energy stocks have breathed a sigh of relief and geared up for a comeback. Being a leading oil producer allowed Suncor Energy Inc. (USA) (NYSE:SU) not only to survive the oil glut but also fight to increase its market share, as its CEO had vowed to increase oil production even if prices would have continued their slide. Not only that, but the company proceeded with the takeover of Canadian Oil Sands Limited for roughly $10.17 per share. Hedge fund sentiment towards Suncor Energy Inc. (USA) (NYSE:SU) has improved slightly over the fourth quarter, with the total number of long positions reported by top hedge funds having inched up to 29 or 3.7% of all the funds tracked by Insider Monkey. Legendary investor, Warren Buffett holds a sizable stake in the energy company, with Berkshire Hathaway having reported ownership of exactly 30 million shares in its latest 13F filing. Jean-Marie Eveillard is also bullish on the company, having stepped up his interest during the fourth quarter. At the end of December, his fund, First Eagle Investment Management, reportedly held 4.98 million shares of Suncor Energy.

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Disclosure: none.