Alan Fournier is the founder and managing member of Pennant Capital Management, a long/short hedge fund. Prior to setting up Pennant Capital, Fournier had worked at Sanford C. Bernstein and David Tepper’s Appaloosa Management. He has also been a portfolio manager at Hagler, Mastrovita and Hewitt, and at Pzena Investment Management. Fournier graduated in mechanical engineering in 1983 from Wentworth Institute of Technology in Boston, MA.
During the second quarter, the fund didn’t make major changes to its top holdings. The fund's largest holding, Transdigm Group (TDG), is unchanged during the quarter. Pennant added to its second largest holding Davita Inc. (DVA) by 3%, and reduced its third largest holding Sensata Technologies (ST) by 3%. There is also not much of a change to its fourth largest holding, which is the chip maker Qualcomm (QCOM). The fund increased its Qualcomm position by 3% during the quarter.
At the end of June, its largest holding, Transdigm Group, accounted for 7.2% of the portfolio, followed by Davita Inc. at 6.7%, Sensata Technologies at 6.5% and Qualcomm at 6.2%. Each of the fund’s top four holdings has generated negative returns since July. Sensata Technologies is a big loser, falling 25% compared to the S&P’s 14.6% loss during the period. Davita and Qualcomm have also underperformed the index with Davita losing 20% and Qualcomm giving up 18% since July. Transdigm Group though has outperformed the index with a smaller loss of 6% compared to the S&P since the start of July.
Besides Pennant Capital, funds holding large stakes in Transdigm Group include Stephen Mandel’s Lone Pine Capital and Chase Coleman’s Tiger Global Management. Its second largest holding Davita Inc. is also a major position of Andreas Halvorsen’s Viking Global (check out Viking Global’s positions).
In Sensata Technologies, besides Pennant Capital, hedge fund Scout Capital Management owns a very large stake. Scout Capital is run by James Crichton and Adam Weiss. You can check out the major holdings of Scout Capital Management here.
The following table lists Alan Fournier’s positions at the end of June:
CompanyName | Ticker | Value (x1000) | Activity |
TRANSDIGM GROUP INC | 290889 | 0% | |
DAVITA INC | 271179 | 3% | |
SENSATA TECHNOLOGIES | 264468 | -3% | |
QUALCOMM INC | 252392 | 3% | |
WELLPOINT INC | 226934 | -13% | |
FIDELITY NATIONAL INFO | 226009 | 4% | |
ABERCROMBIE & FITCH CO | 199274 | -11% | |
ADOBE SYSTEMS INC | 177298 | 7% | |
UNITEDHEALTH GROUP | 167708 | -10% | |
EXPEDIA INC | 160784 | New | |
GENERAL MOTORS CO | 147492 | 28% | |
ROCKWELL COLLINS INC | 143058 | 22% | |
UNION PACIFIC CORP | 141069 | 5% | |
COCA COLA ENTERPRISES | 140275 | 3% | |
TEREX CORP NEW | 136995 | 47% | |
N V R INC | 128052 | 29% | |
WALTER ENERGY INC | 120519 | 14% | |
DOLLAR GENERAL | 113975 | 140% | |
P H H CORP | 113078 | 0% | |
WILLIS GROUP HOLDINGS | 107714 | 5% | |
WELLS FARGO & CO | 107470 | 6% | |
APPLE INC | 106407 | 72% | |
CITIGROUP INC | 103517 | -89% | |
PFIZER INC | 102657 | -20% | |
RANGE RESOURCES CORP | 97680 | 0% |
One major addition to the portfolio during the quarter is online travel company Expedia Inc. This is a brand new position and accounts for 4% of the portfolio, and is the fund’s 10th largest position at the end of the June quarter. Hedge fund Glenview Capital run by Larry Robbins is a major Expedia holder. You can check out Glenview Capital’s largest positions here. Expedia has lost 8% since July.
Two significant additions for the fund outside of the top 10 holdings are Dollar General (DG) and Terex Corp. (TEX). During the June quarter, the fund increased its Dollar General position by 140% and upped its Terex Corp. holdings by 47%. Dollar General has lost 6% since July, while Terex Corp. has collapsed to a 53% loss since the start of the third quarter. Hedge fund Lone Pine Capital is a large investor in Dollar General, while Eton Park Capital holds a large stake in Terex though it did significantly reduce its position in Terex during the second quarter.
The underperformance of some of the fund’s largest holdings has led the fund’s 13F portfolio to trail the widely followed S&P 500 index since the start of July. As a result Fournier’s 13F portfolio has lost 18.4%, vs. a 14.6% loss for the SPY since the beginning of the third quarter.
Disclosure: I am long C.
