Trellus Management Added These 5 Stocks to Its Portfolio in Q2

Trellus Management Company LLC, a U.S.-based equity hedge fund started by Adam Usdan in January 1994, is one of the few investment firms that has already submitted its 13F filing for the June quarter. Mr. Usdan began his investment career in 1987 at Odyssey Partners, where he was in charge of managing long/short U.S. pools of capital by specializing in the small-to-mid-cap space.

New York-based Trellus Management Company employs an “opportunistic and elastic” investment style that seeks to identify securities that are under-the-radar. “We try to find companies that will emerge as leaders in the future”, said Mr. Usdan several years ago. The asset manager oversees a $61.48 million-portfolio as of the end of the second quarter, with its top ten holdings accounting for 53% of the value of that portfolio. Having this in mind, let’s lay out a list of five new positions added to Trellus Management’s portfolio during the June quarter.

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#5. Opko Health Inc. (NASDAQ:OPK)

 – Shares Owned by Trellus Management Company (as of June 30): 68,000

 – Value of Trellus Management Company’s Holding (as of June 30): $635,000

Trellus Management Company acquired a stake of 68,000 shares of Opko Health Inc. (NASDAQ:OPK) during the second quarter of 2016, which were valued at $635,000 on June 30. In late-June, the diversified healthcare company, viewed as a smart acquirer of undiscovered and under-priced biotech assets, agreed to acquire clinical stage biotechnology company Transition Therapeutics Inc. (USA) (NASDAQ:TTHI) in an all-stock transaction valued at $60 million. The acquisition offers Opko Health important drug candidates with great market potential for the treatment of several diseases and disorders, including diabetes and obesity. The transaction is anticipated to close during the second half of 2016. Transition Therapeutics has two late stage drug candidates: TT401, a once- or twice-weekly oxyntomodulin for type 2 diabetes and obesity; and TT701, a once-daily oral selective androgen receptor modulator for androgen deficiency. Opko shares are down by a little less than 2% year-to-date. Ken Fisher’s Fisher Asset Management owns 37,826 shares of Opko Health Inc. (NASDAQ:OPK) as of June 30.

#4. Snap-on Incorporated (NYSE:SNA)

 – Shares Owned by Trellus Management Company (as of June 30): 5,376

 – Value of Trellus Management Company’s Holding (as of June 30): $848,000

The New York-based equity hedge fund added a 5,376-share position in Snap-on Incorporated (NYSE:SNA) to its pool of holdings during the second quarter. The position was worth $848,000 at the end of June and accounted for 1.4% of the value of the fund’s equity portfolio. The manufacturer of high-end tools and equipment to professional tool users has seen the value of its stock decrease by 6% since the start of 2016. Snap-on’s net sales for the first quarter of 2016 were $834.2 million, up by 0.8% year-over-year. Meanwhile, organic sales, which exclude foreign currency translation impacts and acquisition-related sales, grew by 2.5% year-over-year. The company’s net earnings increased by $17.8 million or $0.29 per diluted share to $128.3 million or $2.16 per diluted share. Snap-on shares are currently changing hands at around 16.0-times expected earnings, slightly below the forward P/E multiple of 16.6 for the industrials sector. John W. Rogers’ Ariel Investments was the owner of nearly 681,000 shares of Snap-on Incorporated (NYSE:SNA) at the end of March.

Let’s head to the next page of this article where we’ll reveal three other stocks added to Trellus Management’s portfolio during the second quarter.

#3. Voya Financial Inc. (NYSE:VOYA)

 – Shares Owned by Trellus Management Company (as of June 30): 42,600

 – Value of Trellus Management Company’s Holding (as of June 30): $1.06 Million

Voya Financial Inc. (NYSE:VOYA) was yet another stock added to Trellus Management’s portfolio during the three months ended June 30. The New York-based asset manager owned 42,600 Voya shares at the end of June, which were valued at $1.06 million. Voya Financial provides products and services in two ongoing businesses: retirement and investment solutions, and insurance solutions. Specifically, the company serves as a custodian for various retirement and 401(k) programs, as well as sells annuities and operates a mutual fund and asset management business. The continued low interest rate environment has weighed massively on the company’s business in recent years, as it is difficult for Voya Financial to manufacture products that are attractive to customers and profitable at the same time. The retirement, investment and insurance company has lost 31% of its market value since the start of the year. David Einhorn’s Greenlight Capital had 4.39 million shares of Voya Financial Inc. (NYSE:VOYA) in its portfolio at the end of the first quarter.

#2. Southwest Airlines Co (NYSE:LUV)

 – Shares Owned by Trellus Management Company (as of June 30): 30,000

 – Value of Trellus Management Company’s Holding (as of June 30): $1.18 Million

Trellus Management initiated a position in Southwest Airlines Co (NYSE:LUV) during the June quarter comprised of 30,000 shares and valued at $1.18 million on June 30. The shares of the Dallas-based passenger airline are down by a little less than 1% year-to-date and have largely treaded water over the past 18 months after a massive 2014 that saw them more than double in value. Southwest’s passenger revenue for the first quarter jumped by 5.3% year-over-year to $4.40 billion, primarily driven by a 9.2% increase in capacity as strong customer demand for low-fare air travel allowed the company to fill the additional seats. Just recently, the nation’s leading discount carrier unveiled a three-year initiative to revamp its reservation system, which could boost the company’s annual profit by $500 million by 2020, in addition to improving customers’ experience. Southwest shares are currently trading at 9.9-times expected earnings, but bullish analysts anticipate the stock to trade near its historical forward P/E multiple of 12 over the next year. John Armitage’s Egerton Capital Limited owned 16.30 million shares of Southwest Airlines Co (NYSE:LUV) on March 31.

#1. Aaron’s Inc. (NYSE:AAN)

 – Shares Owned by Trellus Management Company (as of June 30): 65,000

 – Value of Trellus Management Company’s Holding (as of June 30): $1.42 Million

Trellus Management Company also acquired a stake of 65,000 shares of Aaron’s Inc. (NYSE:AAN) during the April-to-June period, which was worth $1.42 million at the end of the second quarter. Aaron’s, a leader in the sales and lease ownership and specialty retailing of furniture, consumer electronics, computers, and home appliances, has seen its shares gain 3% in 2016. The company, which has more than 2,000 company-operated and franchised stores in 43 states and Canada, reported total revenue of $854.4 million for the first quarter, up by 4.0% year-over-year. The increase of $32.6 million was driven by a $55.0 million increase in revenue from leading virtual lease-to-own company Progressive, which was offset by a decrease of $27.2 million in revenue from its traditional lease-to-own store-based business. Ric Dillon’s Diamond Hill Capital had 3.15 million shares of Aaron’s Inc. (NYSE:AAN) among its holdings at the end of March.

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