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Joe DiMenna joined Zweig Cos. in 1977 while he was studying at Fairfield University. DiMenna was a keen reader of “The Zweig Forecast”, and he decided to send a letter to Martin Zweig about potential investment suggestions. After reading his letter, Zweig decided to hire DiMenna as a summer intern. Through the years, their partnership flourished and they formed Zweig-DiMenna International Limited in 1984.

The duo was successful in producing strong returns for their investors over the years. Zweig-DiMenna Partners was up almost 90% for the last 5 years as of early 2011. However, as mentioned in a previous article, their fund did not perform up to investor expectations, losing around 20% since August 2008.

During the first quarter Zweig-DiMenna sold its entire stake in Barrick Gold Corp (ABX) which lost -11.2% since March. DiMenna also sold its entire stake in AIG, Priceline (PCLN), and Teck Resources (TCK). He also reduced his bets on Newmont Mining (NEM), Apache Corp (APA), Rio Tinto (RIO), and Prudential (PRU) by at least 60%. DiMenna also soured on his Apple (AAPL) investment and reduced his holdings by 56%. At the end of March Zweig-DiMenna’s largest 30 positions were as follows:

Stock

Value (Thousands)

Return Since March 31, 2011

Goldcorp Inc New (GG)

$47,092

0.2%

Marathon Oil Corp (MRO)

$38,518

-3.6%

Google Inc (GOOG)

$36,884

-10.1%

Chesapeake Energy Corp (CHK)

$31,931

-11.6%

Jpmorgan Chase & Co (JPM)

$30,018

-12.0%

Red Hat Inc (RHT)

$28,616

-7.6%

Comcast Corp New (CMCSA)

$27,338

-2.3%

Citigroup Inc (C)

$26,687

-13.5%

Potash Corp Saskatchewan Inc (POT)

$26,244

-5.7%

Williams Cos (WMB)

$25,938

-3.9%

Royal Dutch Shell Plc (RDS)

$25,980

-4.2%

Steel Dynamics Inc (STLD)

$25,037

-14.5%

Wyndham Worldwide Corp (WYN)

$24,805

4.8%

Apple Inc (AAPL)

$24,402

-1.3%

Starwood Hotels & Rest Wldwd Inc (HOT)

$24,542

0.2%

Lyondellbasell Industries N V (LYB)

$24,107

-1.7%

C I G N A Corp (CI)

$24,099

10.9%

National Oilwell Varco Inc (NOV)

$23,395

-9.5%

Freeport Mcmoran Copper & Gold (FCX)

$23,226

-9.4%

Halliburton Company (HAL)

$23,340

-1.3%

Valeant Pharmaceuticals Intl Inc (VRX)

$22,862

5.7%

N V R Inc (NVR)

$22,929

-4.6%

Oracle Corp (ORCL)

$22,832

-1.6%

American Tower Corp (AMT)

$21,783

1.2%

Allegheny Technologies (ATI)

$21,518

-6.7%

Walter Energy Inc (WLT)

$20,832

-12.4%

Du Pont E I De Nemours & Co (DD)

$20,774

-9.3%

Chemtura Corp (CHMT)

$20,342

7.8%

Metlife Inc (MET)

$20,280

-7.4%

Ciena Corp (CIEN)

$19,996

-5.0%

Weighted Average

-4.4%

SPY

-2.1%

Zweig DiMenna’s largest stock picks returned -4.4% and underperformed SPY by 2.3 percentage points since the end of March. DiMenna reduced some of his commodity plays while making Goldcorp (GG) his largest position. He added more than 80K shares during the quarter. The stock returned 0.2% since March 31 and 7.8% YTD. Goldcorp Inc (GG) recently traded at $49.10 and has a market cap of $39.56 Billion. The Stock has a dividend yield of 0.82% and P/E ratio of 20.44. Jean-Marie Eveillard’s First Eagle and Daniel Bubis’ Tetrem Capital had very large GG holdings.

The second largest holding in DiMenna’s portfolio is Marathon Oil Corp (MRO) where he initiated a $38+ Million position during the lst quarter. Marathon has lost 3.6% and underperformed SPY by 1.5 percentage points since March 31. The stock recently traded at $50.86 and has a market cap of $36.3 billion. The Stock has a dividend yield of 1.96% and P/E ratio of 11.68. Jeffrey Altman’s Owl Creek Asset Management is the largest holder of the stock among the hedge funds; he owns $216.5 million in MRO. The second largest holder is Eton Park, which initiated a new position and now owns 3.3 million shares. Reid Walker’s Ws Capital is also bullish and increased its stake by 25% during the last quarter. Karsch Capital Management and Senator Investment Group both initiated new positions in the stock as well.

DiMenna increased his stake in Google (GOOG) slightly. The stock lost 10.1% since March 31 and underperformed SPY by 8 percentage points. Google recently traded at $525.6 and does not pay dividends. The stock has a market cap of $169.4 Billion and P/ E ratio of 20.4. Ken Griffin’s Citadel Investment Group initiated a new position at Google. According to Citadel’s Latest 13F filing, Griffin owns 1,134,870 shares of the internet search giant. Also, Griffin owns more than 930K+ call options and 1.3 million put options in the stock. Stuart Peterson’s Artis Capital Management and DE Shaw are the other largest hedge fund holders of the stock.

Cheseapeake (CHK) was DiMenna’s second largest new investment during the first quarter. DiMenna bought 900K+ shares of the stock. CHK lost 11.6% since March, underperforming the SPY by 9.4%. Chesapeake recently traded at $30.25 and has a dividend yield of 0.99%. The stock has a market cap of $19.99 Billion and P/ E ratio of 33.3. Mason Hawkins’ Southeastern Asset Management currently owns more than 79 million shares. The second largest holder is Robert Pohly’s Samlyn Capital with a holding of approximately 4.2 million shares. Curtis Macnguyen’s Ivory Capital is also a large investor in CHK, owning approximately 3 Million shares and 3 Million call options.

Source: Zweig-DiMenna's Favorite Stock Picks