This Hedge Fund’s Top Picks Crushed The Index Funds

AlphaOne Capital Partners was launched in 2009 by Paul Hondros and Daniel Niles. Mr Hondros is the fund’s President and CEO, while Mr Niles holds the position of the fund’s senior portfolio manager. Paul Hondros has a decade-long career focused on investment industry. He holds a BA in History from St. Joseph’s University. Since 1975 he worked at various positions in companies and funds such as Fidelity Investments, Liberty Ridge Capital Pilgrim Baxter & Associates, and so on. Currently, Paul Hondros is also CEO at Nationwide Funds, and a member and a trustee in funds such as Dreyfus Gvt International Value Fund and Aberdeen Funds. Mr. Niles holds a MS in Electrical Engineering from Stanford University, and his first job was at Digital Equipment Corporation where he worked as an Engineer. Later on he worked at various positions at Lehman Brothers, Neuberger Berman Inc. AlphaOne Capital Partners combines equity long-short strategies and long-only small/micro-cap strategies through hedge funds, institutional separate accounts, and registered mutual funds.

As for the fund’s performance, during the last several years it has gone through some ups and downs. In 2014, it delivered 2.46% followed by 12.61% in 2015. In 2016 the return was 0.67%, while in 2017 and 2018 it dropped to -3.83% and -1.87% respectively. However, 2019 showed that the fund got back on the track, delivering 5.62% through June. An annualized return of 7.31% reflects these fluctuations nicely, but is also a reminder to the fund’s managers about rethinking the strategies the fund employs.

AlphaOne Capital Partners' Returns, AUM and Holdings

Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. We leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters, listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out recommendations of services with hard to believe track records. Last month, we recommended a long position in one of the most shorted stocks in the market. No, our recommendation wasn’t Tesla (TSLA). It was a better pick than Tesla as this stock gained nearly 50% in 3 weeks. Sometimes, though not this time, we share the names of these stocks free of charge in our free e-newsletter. You can subscribe to our e-newsletters below to get these emails before the rest of the market.

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Let’s now see AlphaOne Capital Partners’ top stock picks for Q3 2019. These stocks returned an average of 31.3% since the end of September, vs. 13.5% gain for the S&P 500 ETFs. AlphaOne will probably disclose its Q4 holdings in a day or two.

The fund’s fifth top stock pick was a new addition, Apple Inc. (NASDAQ:AAPL). The company was ranked #9 among the 30 most popular stocks among hedge funds for the third quarter of 2019. There were 111 hedge funds bullish on the stock during this period, a positive change of 17% compared to Q2. Berkshire Hathaway held the largest stake in the company at the end of Q3, which reported holding $55.73 billion worth of stock. Right behind it, allocating large portions of their portfolios to Apple Inc. were Fisher Asset Management, AQR Capital Management and Adage Capital Management (see more details about this here). Apple shares gained 43.5% since the end of September.

Another new addition, Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) took the fourth place in AlphaOne Capital Partners’ portfolio. Hedge funds seem to be more and more interested in the company lately as you can read in more detail here. There were a total of 52 hedge funds tracked by Insider Monkey bullish on the stock, which is a change of 24% compared to Q2. Among them, Fisher Asset Management held the largest stake in the company, worth $1576.8 million. Among the company’s other top shareholders were Renaissance Technologies, AQR Capital Management and Arrowstreet Capital. TSM shares gained more than 27% since the end of September.

The third most valuable position in AlphaOne Capital Partners’ portfolio for Q3 was NVIDIA Corporation (NASDAQ:NVDA), a new addition from Q2. The fund decided to cut the position by 23% during the quarter. Heading into Q4, there were 48 hedge funds investing in NVIDIA Corporation, which is 7% higher compared to Q2. D E Shaw was the company’s top shareholder, which reported holding $469.5 million. Among other top hedge funds bullish on the stock were Fisher Asset Management, Renaissance Technologies and Adage Capital Management (see the details here). NVDA shares returned a mind blowing 54% since September.

The fund’s second top stock pick for Q3 2019 was Activision Blizzard, Inc. (NASDAQ:ATVI), a new addition. This company is becoming popular among shareholders, since there were 70 hedge funds bullish on it at the end of Q3, a change of 53% compared to the previous quarter. The most valuable stake in the company was held by Lone Pine Capital, worth $595.1 million. The other hedge funds interested in the company included Alyeska Investment Group, Citadel Investment Group, and Suvretta Capital Management, as you can read in more detail here. ATVI shares returned 15.6% since the end of September.

Finally, the most valuable position in AlphaOne Capital Partners’ latest 13F fillings was Facebook Inc (NASDAQ:FB). Even though it was cut by 5% during the quarter, it remained at the first place, comprising 12.98% of the fund’s portfolio. Facebook Inc is among the most popular hedge funds, it was once again #1 among the 30 most popular stocks among hedge funds. As for Q3, there were 179 hedge funds bullish on the stock. Facebook shares also outperformed the market since the end of Q3, delivering a return of more than 16%.

Disclosure: None.