Billionaire Eric Sprott’s investing reputation is rooted in precious metals. In one interview he admitted to have held 90% of his assets outside of Sprott Inc.’s shares, in gold and silver. If his selection isn’t in the precious metals sector, it still usually has to do with something inflation-related such as agriculture or energy. In January, Eric Sprott stepped down from his portfolio manager duties and began to focus on his role as Chairman and Chief Investment Officer, but his firm has continued with the inflation-related theme.
Why do we track Eric Sprott and his funds? Because in 2014, equity hedge funds returned just 1.4%, 11.1% in 2013, and 4.8% in 2012. These are pretty bad compared to the S&P 500 ETF (SPY)’s returns of 13.5% in 2014, 32.3% in 2013, and 16% in 2012. And with management fees ranging anywhere from 20-80%, we hope to get the best picks from the best managers without paying a dime. Investors can avoid these fees by imitating their top small-cap picks themselves. Historically, this approach managed to beat the market by an average of 95 basis points per month. We have also been live testing the performance of this approach since the end of August 2012. The 15 most popular small-cap stocks among hedge funds returned 137% through the end of March 2015 and beat the market by more than 82 percentage points (see the details here).
Now back to Sprott Inc’s positions. Sprott Inc filed its latest 13F with the SEC on April 20. As of March 31, 2015, Sprott Inc held some 343,000 shares of NXP Semiconductors NV (NASDAQ:NXPI) at a value of $34.4 million. Investors like NXP Semiconductors NV (NASDAQ:NXPI) because it’s a play on growing trends in the electronics industry as more connected devices come online. NXP Semiconductors NV (NASDAQ:NXPI) makes the chips to power Apple’s Apple Pay system, a big win for 2015. The company also makes chips for vehicle to vehicle (V2V) and vehicle to infrastructure (V2I) systems. James Dinan’s York Capital Management and David Tepper’s Appaloosa Management are two other prominent names invested in NXP. The stock of NXP Semiconductors jumped by more than 31% during the first three months of 2015.
Sprott has another interesting pick, Microsoft Corporation (NASDAQ:MSFT). As of March 31, the investor holds 90,000 shares of Microsoft Corporation (NASDAQ:MSFT) worth $3.65 million. Microsoft Corporation (NASDAQ:MSFT) shares surged by 10% on Friday as the company reported fiscal third quarter EPS of $0.61, beating consensus estimates by $0.10. Revenues grew by 6.5% year-over-year to $21.73 billion, beating estimates by $670 million. Investors applauded the performance of its Surface tablets. Since the beginning of the second quarter, Microsoft is up almost 17%. Click here for other roaring tech stocks from Friday.
As of the end of the first quarter, Sprott Inc owns 516,000 shares of Verizon Communications Inc. (NYSE:VZ) for a value of $25.1 million. Investors like Verizon Communications Inc. (NYSE:VZ) because of its superior cash flows and 4.4% dividend. The company also recently said it will offer a la carte packages. Among the funds we track, Warren Buffett’s Berkshire Hathaway is the largest shareholder of Verizon followed by Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’ AQR Capital Management, among others.
Sprott Inc also more than doubled its position in Pfizer Inc. (NYSE:PFE) to 842,000 shares, valued at $29.3 million. Pfizer Inc. (NYSE:PFE) is one of the most popular healthcare picks among the funds that we track. The company spends billions in buybacks and its stock sports a dividend yield of 3%. Pfizer Inc. (NYSE:PFE) was one of Healthinvest’s top bullish picks. Furthermore, among the billionaires that we track, 10 had an aggregate investment of $1.56 billion at the end of the fourth quarter of 2014, including Ken Fisher, David Shaw and Israel Englander.
Sprott Inc also boosted its position in Apple Inc. (NASDAQ:AAPL) by 160% on the quarter to 202,000 shares, valued at $25 million. Moreover, the fund initiated a noteworthy ‘Put’ position equivalent to 110,000 shares valued at $13.7 million. The iPhone brand continues to be a juggernaut and investors seem to be optimistic about the Apple Watch’s prospects. Apple Pay may also be getting investors excited. Carl Icahn’s Icahn Capital is the largest shareholder of Apple, among the funds that we track. Another investor that is bullish on Apple is David Einhorn’s Greenlight Capital, which in the latest letter to investors said that they consider the stock undervalued and that Apple is a superior company that merits a premium multiple.”