Conan Laughlin’s North Tide Capital posted impressive first quarter returns of 10.1% from its 14 long positions in companies valued at $1 billion or greater. With 25 long positions at the end of 2014, there were a number of unaccounted for positions in our estimated returns, as North Tide invested in nearly a dozen companies with market caps of less than $1 billion. However as with many funds, the majority of its top picks were in larger cap companies, with eight of its top ten picks have at least $1 billion market caps.
Even then, many of North Tide’s top picks are notable to us given the fact that they are in small-cap stocks (which we classify as having market caps between $1 billion and $5 billion). It’s investors like North Tide which add great value to our small-cap strategy system, as they are heavily invested in the success of their small-cap picks and have poured considerable resources into identifying undervalued or under-the-radar companies to invest in. We have found that collectively, hedge funds’ top small-cap picks provide a great investment opportunity, with our strategy having returned over 137% since it was launched at the end of August, 2012 and beating the market by more than 80 percentage points (see the details).
Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is one of the largest companies North Tide is invested in, as it held a 3.0 million share position valued at $172.53 million in the $70 billion pharmaceutical company. That position was North Tide’s second-largest, and accounted for 11.59% of its equity portfolio.Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) shares were up by 8.97% during the first quarter, which was good news for George Soros and a number of other billionaire investors who are crazy about Teva. All told, ten billionaires had positions in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) at the start of 2015, with $799 million of their formidable wealth invested in it.
A position in Kindred Healthcare, Inc. (NYSE:KND) was North Tide’s fourth-largest, and was increased by 54% during the fourth quarter. That added investment paid off in a big way, as shares of Kindred Healthcare, Inc. (NYSE:KND) ballooned by 31.58% during the first quarter. The $2 billion market cap provider of healthcare living and rehabilitation facilities also helped billionaire Steve Cohen trump the market in the first quarter, though he had much less exposure to the stock than North Tide. Laughlin’s fund in fact had the highest exposure of any fund in our database, in addition to owning the largest position at 5.0 million shares valued at $90.90 million.