Michael Lowenstein‘s Kensico Capital is known for its diversified investments, which are primarily in equities. However, back in 2006, the fund made a detour and invested in credit default swaps, profiting enormously from the effort. The firm was co-founded in January 2000 by Michael Lowenstein and Thomas Coleman and has grown over the years to sport $8.82 billion in assets under management. Kensico Capital’s 13F filing with the U.S. Securities and Exchange Commission for the period of March 31, 2015, indicated that the fund had $5.06 billion in public equity portfolio value. In as much as the company had a diversified portfolio, technology came out on top of the other sectors. In this article we will focus on the fund’s top technology picks for the period, which are SanDisk Corporation (NASDAQ:SNDK), Microsoft Corporation (NASDAQ:MSFT), and eBay Inc (NASDAQ:EBAY).
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 83 percentage points, returning over 142% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.
First, let’s consider SanDisk Corporation (NASDAQ:SNDK), in which Kensico Capital held 6.27 million shares with a market value of $399.13 million at the end of the first quarter. SanDisk is a flash memory designer and manufacturer, ranking at number three globally in that market Just recently, the company reestablished itself within the flash memory segment by introducing its breakthrough flash drive 3.0, which delivers the world’s smallest 128GB storage. The company also introduced a 250GB flash storage. These two entries are likely to boost its market share and earnings. SanDisk Corporation (NASDAQ:SNDK) is keen on strengthening its enterprise solutions and 3D segments. The company has every reason to up its game, especially now that the execution of its partnership with its biggest customer, Apple Inc. (NASDAQ:AAPL), is facing challenges. It’s these challenges that saw the company perform dismally during the first quarter of 2015, making it the worst performer on the S&P 500. The stock posted $0.50 in earnings per share, which came in 15.25% light of analysts’ expectations. At the end of the first quarter of 2015, a total of 40 hedge funds out of the more than 700 that we monitor had stakes in the stock, with their holdings amounting to $1.35 billion. Those figures were a steep drop from the 58 funds that held $2.76 billion of the company’s stock three months prior. Among the hedge funds still hanging on were David Cohen and Harold Levy’s Iridian Asset Management and Jean-Marie Eveillard’s First Eagle Investment Management.