By Alex Oleinic
No later than 45 days after the end of each calendar quarter, institutional investors like hedge funds and other major investors are required to file 13F forms with the Securities and Exchange Commission. We'll look into these 13Fs and select the five largest positions in terms of value. In this piece we will take a glance at the equity portfolio of Tigershark Management, which was founded by Tom Facciola and Michael Sears. The original 13F can be seen here.
Why is this important?
We use this information because we have discovered that everyday investors can benefit from watching hedge fund sentiment. It has been discovered that those who track specific hedge fund activity can outperform the general indices by as much as 18 percentage points per year over a long-term period (discover the secrets of this strategy).
A top trio
Tigershark Management disclosed a $7.2 million stake in Johnson & Johnson (JNJ), up from $6.3 million reported in the previous 13F. The fund slightly increased its holding to 89,407 shares, from 89,289 shares. The stock of Johnson & Johnson has a year-to-date return of slightly below 22%, and sports a forward P/E of 14.7x. Johnson & Johnson is one of the best companies a money manager can hold, at least according to peer sentiment, which is confirmed by the fact that it was in the equity portfolios of over 60 hedge funds from our database at the end of last year.
The Molson Coors Brewing Company (TAP) is represented in Tigershark Management's 13F by a $6.5 million holding, containing 133,718 class B shares. In the previous 13F, the fund disclosed owning 76,117 shares, worth $3.3 million. The stock of Molson Coors Brewing Company is trading at a P/E of 20.3x, seventh largest among all brewers. According to our database, more than 20 hedge funds were bullish on Molson Coors at the end of December.
Next on the list is Teva Pharmaceutical (TEVA). At the end of March, Tigershark held 150,651 shares of the company, the value of the stake being almost $6.0 million. The fund was extremely bullish on Teva last quarter, increasing the holding from its 45,590 share, $1.7 million position at the end of December. For the January-March quarter, Teva posted a GAAP diluted EPS worth $0.74 and total net revenue of $4.9 billion, versus EPS of $0.97 per share and revenue of $5.1 billion posted a year ago.
The best of the rest
Tigershark Management also reported a $4.5 million stake in Exelon (EXC). The fund owns 130,107 shares of the company, up from 120,646 shares held at the end of December. The previous value of the stake was $3.6 million. The stock of energy provider, Exelon, is trading at a forward P/E of 15.3x and has a year-to-date return of above 19%. Over 20 hedge funds were long Exelon at the end of last year. The adjusted (non-GAAP) net income of Exelon declined to $602 million in the first quarter, from $603 million a year ago. Diluted EPS fell to $0.70 from $0.85 year-over-year.
Last among the five most valuable holdings in Tigershark's 13F is Ocean Rig UDW (ORIG), in which the fund holds 270,000 shares worth almost $4.4 million. This is a new position in the equity portfolio of the fund. Headquartered in Cyprus, Ocean Rig UDW is involved in offshore drilling services for oil and gas exploration. Only five of the funds we track were invested in Ocean Rig UDW at the end of last year, but this looks like quite the value play flying under the radar. Ocean Rig UDW is trading at a forward P/E of 8.3x and has a year-to-date return near 15%, so we'll be watching it closely moving forward.
The total number of positions in the 13F portfolio if Tigershark Management has increased to 56 in the January-March quarter, from 50 holdings disclosed for the fourth quarter of last year. Generally speaking, we can see that the fund has been investing in both large- and small-cap companies. This simple diversification tactic isn't rare by any means, but it certainly isn't the standard that all hedge funds follow either, so it's interesting to note (continue preparing for 13F-filing season here).