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Manatuck Hill Partners is a corporate spin-off of the troubled Pequot Capital Management founded in 2009 by the team that managed the small-cap Pequot Scout Fund. The 10-person team, which is headed by Mark Broach, has produced solid returns since its inception and has outperformed the S&P 500 significantly since the end of the first quarter. While the Manatuck Hill Partners hedge fund has generated a negative return of just over -7%, the S&P 500 produced a 14.89% loss for the same period. This stellar performance has earned Manatuck Hill a spot on our top hedge funds of 2011.

Manatuck Hill bases its investment strategy on buying undervalued stocks and holding them until the market shifts. As such, Manatuck Hill’s hedge fund portfolio is filled with major losses offset by significant gains.

CompanyName

Ticker

Value (x1000)

Return

CHIPOTLE MEXICAN GRILL INC

CMG

156160

10.1%

CROCS INC

CROX

44727

51.2%

VICOR CORPORATION

VICR

33400

-31.3%

REALD INC

RLD

30666

-56.5%

CINEMARK HOLDINGS INC

CNK

30426

0.2%

TITAN MACHINERY INC

TITN

20897

-17.5%

G P STRATEGIES CORP

GPX

19788

-14.4%

ALCATEL LUCENT

ALU

18458

-45.4%

LULULEMON ATHLETICA INC

LULU

18237

13.3%

SODASTREAM INTERNATIONAL LTD

SODA

18120

57.1%

SILICON GRAPHICS INTL CORP

SGI

17120

-46.1%

SONUS NETWORKS INC

SONS

16070

-40.4%

NATIONAL CINEMEDIA INC

NCMI

15207

-29.3%

IMAX CORP

IMAX

14915

-50.3%

VONAGE HOLDINGS CORP

VG

14820

-32.9%

S T E C INC

STEC

14551

-52.8%

DEXCOM INC

DXCM

14170

-33.6%

VERIFONE SYSTEMS INC

PAY

13540

-36.8%

TEMPUR PEDIC INTERNATIONAL INC

TPX

13121

11.8%

ACACIA RESEARCH CORP

ACTG

12881

-1.0%

Manatuck Hill’s top two positions had significant gains since the end of the first quarter. Sodastream gained 57.1% while the shoe company Crocs produced a healthy 51.2%. Sodastream has been in the sights for several major hedge funds, including John Murphy’s Alydar, and Crocs is a recent favorite of Jim Cramer. Other positive returns include a decent 13.3% return via its position in Lululemon Athletica, the famous yoga sportswear clothing company, and its position in Tempur Pedic International returned 11.8%.

Chipotle Mexican Grill has produced an excellent 10.1% return for Manatuck Hill since the end of March despite the double digit decline in the market. It seems Cramer was right when he called bottom for the made-to-order burrito giant three months ago; it has been gaining steadily ever since.

However, with the sweets come the spoils. Manatuck Hill also lost big on several stocks. To be precise, six of its top 20 stock picks (almost one-third) produced negative returns over 40%; these include -56.5% in Reald, -52.8% in STEC, -50.3% Imax, -46.1% in Silicon Graphics, -45.4% in Alcatel Lucent and -40.4% in Sonus Networks.

Time will tell whether these stocks will turn around, but in the meantime investors may consider adopting Manatuck Hill’s top positions. These 20 stocks managed to beat the index funds by 7.7 percentage points since March.

Source: Manatuck Hill Partners' Top 20 Stock Picks