Van Schreiber’s Bennett Lawrence Management recently filed a Form 13F with the U.S. Securities and Exchange Commission (SEC) for the reporting period of September 30. Founded by Van Schreiber in 1995, Bennett Lawrence Management is a long/short hedge fund that focuses on long-term investments in small and mid-cap stocks, while shorting growth stocks with deteriorating prospects. The fund’s equity portfolio consists of a total of 143 positions, with a reported value of over $313 million. Bennett Lawrence Management has a strong focus on consumer, technology, and healthcare stocks, and in this piece, we will take a look at the fund’s top stock picks, which encompass a number of sectors, starting with Royal Caribbean Cruises Ltd (NYSE:RCL).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 102% over the last 37 months, which is more than 53 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
#5 Royal Caribbean Cruises Ltd (NYSE:RCL)
Shares held (as of September 30): 106,541
Total Value (as of September 30): $9.49 million
Percent of Portfolio (as of September 30): 3.03%
Bennett Lawrence Management increased its position in Royal Caribbean Cruises Ltd (NYSE:RCL) by 18% to 106,541 shares, valued at $9.49 million. With a market cap of nearly $22 billion, Royal Caribbean Cruises Ltd (NYSE:RCL) is a global cruise vacation company. For the third quarter, Royal Caribbean Cruises reported adjusted net income of $628.1 million, or $2.84 per share, a notable increase from the $492.9 million, or $2.20 per share, it earned in the same quarter of last year. During the second quarter, we saw some hedge funds among those that we track unload shares of Royal Caribbean Cruises Ltd (NYSE:RCL). The total number of hedge funds holding Royal Caribbean Cruises fell to 43 at the end of the second quarter from 49 at the end of the first quarter. However, the aggregate value of their investments rose to $1.3 billion compared to $1.2 billion held in shares at the end of the first quarter. Another investor that loves Royal Caribbean Cruises is Clifford Fox’s Columbus Circle Investors, which owns 1.94 million shares.
#4 Western Alliance Bancorporation (NYSE:WAL)
Shares held (as of September 30): 319,346
Total Value (as of September 30): $9.81 million
Percent of Portfolio (as of September 30): 3.13%
Western Alliance Bancorporation (NYSE:WAL) is a bank holding company, in which Bennett Lawrence Management reduced its position during the third quarter by 4% to 319,346 shares, worth $9.81 million. The company posted strong financial results for the third quarter, with its income increasing to $59.1 million, compared to $40.9 million in the same quarter of last year. Earnings per share for the quarter was $0.58, versus $0.46 per share in 2014. Its total assets rose to $13.96 billion as of September 30, 2015, compared to $10.29 billion a year ago. This positive financial situation seems to have had a good impact on the company’s stock, which has increased by 32.08% year-to-date. Western Alliance Bancorporation is also a favorite stock of Israel Englander’s Millennium Management, which owns 1.80 million shares of it.
The top three picks of Bennett Lawrence can be found on the second page.