Despite of all the negative sentiment looming around them, hedge funds had a pretty solid run for much of this year. The smart money delivered positive returns for seven or eight consecutive months through October. The third-quarter was a particularly strong one for the industry. Insider Monkey’s data of 659 funds show that investment firms which filed for the June 30 13F reporting period held long positions in at least 5 non-micro-cap stocks, and those funds’ long bets posted 8.3% gains in the third-quarter based on the size of their positions on June 30, dwarfing the performance of S&P 500 ETFs, which returned only 3.3% for the period. Where hedge funds tend to falter is on the other positions in their portfolios (options plays, bonds, etc.), which are there to limit downside risk, but also limit upside potential. That’s why we recommend investors consider hedge funds’ top long bets and share them with readers throughout the year. In this article, we’ll analyze the top picks and performance of Blue Jay Capital Management, whose holdings included Mead Johnson Nutrition CO (NYSE:MJN), Masimo Corporation (NASDAQ:MASI), ABIOMED, Inc. (NASDAQ:ABMD), and Boston Scientific Corporation (NYSE:BSX).
Blue Jay Capital Management is a Los Angeles-based hedge fund managed by Paul Sinclair. Blue Jay’s public equity portfolio’s worth stands at $183.14 million as of June 30, and the fund’s stock picks returned 12.50% when looking at its 14 holdings in companies which had a market cap of at least $1 billion. We believe that investors should pay attention to hedge funds’ top picks for a chance to beat the market like Sinclair’s stock picks did in Q3, so let’s have a look at his aforementioned picks and see how he traded them and how they’ve performed.
Blue Jay Capital Management cut its stake in Mead Johnson Nutrition CO (NYSE:MJN) by 18% in the second quarter, and it turns out the move was somewhat smart, as the stock lost 12.5% in the following quarter. Nonetheless, heading into the third quarter, the fund had 135,045 shares of Mead Johnson in its portfolio, so it does like the stock long-term. The aggregate value of this position was about $12.25 million at Q2’s end. Other hedge funds were completely running for the hills. A total of 28 of the hedge funds tracked by Insider Monkey were long the stock on June 30, a 30% fall from one quarter earlier. Emerging Sovereign Group was the largest shareholder of Mead Johnson Nutrition CO (NYSE:MJN), with a stake worth $132.2 million reported as of the end of June. Trailing Emerging Sovereign Group was D E Shaw, which amassed a stake valued at $99.3 million. Citadel Investment Group, Balyasny Asset Management, and AQR Capital Management were also long the stock.
At the start of the third quarter, Blue Jay Capital Management had 218,960 shares of Masimo Corporation (NASDAQ:MASI) among its holdings. This position had a total worth of about $11.49 million at the end of June, which was poised to increase, as the stock returned 13.3% during the third quarter. According to Insider Monkey’s hedge fund database, D E Shaw has the biggest position in Masimo Corporation (NASDAQ:MASI) among the funds we follow, worth close to $30.4 million. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $15.8 million position. Remaining peers that hold long positions consist of Israel Englander’s Millennium Management and Principal Global Investors’ Columbus Circle Investors.
We’ll check out two more of the fund’s stock picks on the next page.
Blue Jay Capital Management sold 15% of its ABIOMED, Inc. (NASDAQ:ABMD) shares during the second quarter, ending the period with 104,920 shares of the company, whose total worth was over $11.46 million at the end of June. ABIOMED’s shares delivered a return of 17.7% in the three-month period ended September 30. Heading into the third quarter of 2016, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, 21% higher than from the previous quarter. Palo Alto Investors was the largest shareholder of ABIOMED, Inc. (NASDAQ:ABMD), with a stake worth $225.9 million reported as of the end of June. Trailing Palo Alto Investors was Renaissance Technologies, which amassed a stake valued at $67.9 million. Sectoral Asset Management, Arrowstreet Capital, and Polar Capital were other shareholders of the company.
Boston Scientific Corporation (NYSE:BSX) was a new pick of Blue Jay Capital in the second quarter, as the fund acquired 469,900 Class A shares of the company, with those shares being worth $10.98 million at the end of June. The stock however returned a scant 1.8% during the third quarter, so this was one of the fund’s rare underperforming picks. Blue Jay was one of many hedge funds in our system to jump into the stock in Q2. BSX was in 47 hedge funds’ portfolios at the end of June, up from just 35 at the end of the previous quarter. OrbiMed Advisors was the largest shareholder of Boston Scientific Corporation (NYSE:BSX), with a stake worth $540.5 million reported as of the end of June. Trailing OrbiMed Advisors was Citadel Investment Group, which amassed a stake valued at $343.4 million. Millennium Management, Renaissance Technologies, and Diamond Hill Capital also held valuable positions in the company.