Ricky Sandler's Eminence Capital's Top Stock Picks

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Includes: AAPL, AON, GS, IR, ITW, NVLS-OLD, ORCL
by: Insider Monkey

Eminence Capital is a New York based hedge fund that was founded by Ricky Sandler in 1998. Mr. Sandler, 42 years old, started his career in 1991 as a research analyst at Mark Asset Management. At the age of 25, he started Fusion Partners with Wayne Cooperman.

However, the partnership did not live long as Cooperman and Sandler’s investment philosophies started to differ. Mr. Sandler started his own hedge fund, Eminence Capital, in 1998. Mr. Sandler attended University of Wisconsin and received his BBA in Finance and Accounting with honors in 1991. Mr. Sandler holds a CFA designation and is a member of the New York Society of Security Analysts.

According to its latest 13F filing, Eminence Capital had $3.8 Billion in its 13F portfolio as of June 30, 2011. Below are the most recent trading activities that Eminence Capital reported:

Security

Ticker

Value (x$1000)

Activity

Return

Aon Corp

AON

$301,593

No Chg

-12.42%

Oracle Corp

ORCL

$229,883

68%

-21.49%

Tyco International Ltd Swtzlnd

TYC

$200,995

-7%

-19.29%

Ebay Inc

EBAY

$168,966

17%

-13.47%

Novellus Systems Inc

NVLS-OLD

$165,554

41%

-27.13%

C M E Group Inc

CME

$157,954

New

16.99%

Abbott Laboratories

ABT

$132,602

-7%

-5.09%

Fiserv Inc

FISV

$125,840

-17%

-16.66%

Genpact Ltd

G

$123,180

4%

-9.72%

Jpmorgan Chase & Co

JPM

$119,954

No Chg

-14.09%

U S Bancorp Del

USB

$106,910

No Chg

-14.24%

Check Point Software Techs Ltd

CHKP

$92,324

14%

-9.11%

Mohawk Industries Inc

MHK

$88,185

25%

-28.49%

United Technologies Corp

UTX

$86,556

-12%

-20.98%

Thermo Fisher Scientific Inc

TMO

$86,218

-27%

-19.06%

Google Inc

GOOG

$85,224

-44%

-0.19%

Target Corp

TGT

$84,325

33%

5.61%

Illinois Tool Works Inc

ITW

$83,765

New

-24.37%

Apple Inc

AAPL

$83,918

New

8.87%

Itau Unibanco Hldng-Pref Adr

ITUB

$82,896

-9%

-30.48%

Schwab Charles Corp New

SCHW

$83,122

-17%

-29.39%

Goldman Sachs Group Inc

GS

$82,344

New

-19.62%

Baxter International Inc

BAX

$79,783

-26%

-12.27%

Cisco Systems Inc

CSCO

$79,143

-18%

-4.56%

Laboratory Corp America Hldgs

LH

$78,460

-16%

-19.48%

Lowes Companies Inc

LOW

$78,421

No Chg

-15.04%

Becton Dickinson & Co

BDX

$78,544

-24%

-12.47%

Accenture Ltd Ireland

ACN

$75,827

-30%

-16.63%

Equifax Inc

EFX

$70,829

-25%

-12.73%

Ingersoll Rand Plc

IR

$64,324

New

-36.89%

Fidelity National Info Svcs Inc

FIS

$63,681

-10%

-13.06%

Schein Henry Inc

HSIC

$62,405

-31%

-14.71%

Carefusion Corp

CFN

$62,491

371%

-12.18%

T D Ameritrade Holding Corp

AMTD

$61,281

-27%

-27.58%

Lennar Corp

LEN

$61,049

-3%

-28.42%

Ross Stores Inc

ROST

$60,971

-22%

-11.70%

Click to enlarge

Approximately 8% of Mr. Sandler’s portfolio was invested in Aon Corp. (NYSE:AON) on June 30th. Mr. Sandler did not change his holdings since the previous quarter. The stock generated a negative return of 12.4% since the end of the second quarter. Mr. Sandler’s loss amounted to more than $37 million from this security. Glenn Greenberg’s Brave Warrior Capital was also disappointed with the stock’s performance as it had increased its AON holdings by almost 40% in the second quarter.

Mr. Sandler was bullish about Oracle Corp. (NASDAQ:ORCL) in the second quarter. He increased his holdings by 68%, buying up almost 2.8 million new shares. ORCL lost more than 20% in value since the end of June and left Mr. Sandler with a loss of almost $50 million. Many hedge funds were optimistic for ORCL in the second quarter. Chris Hohn’s Children Investment Fund increased its holdings by 170% while William Von Mueffling’s Cantillon Capital increased its stake by 29%.

Novellus Systems (NASDAQ:NVLS-OLD) was another security that has disappointed Mr. Sandler with its 27% negative return since the end of June. Mr. Sandler had increased his holdings by 41% in the second quarter. We estimate his loss to be around $45 million. Like in ORCL, many funds were bullish for NVLS in the second quarter, including Ray Dalio’s Brigewater Associates. Mr. Dalio increased his NVLS holdings by 108% in the second quarter.

Mr. Sandler bought 250K new Apple Inc. (NASDAQ:AAPL) shares in the second quarter and made more than $7 million from this decision. Rob Citrone’s Discovery Capital has probably benefited most from this uptrend in the stock as it had increased its holdings by 16% in the second quarter. We estimate Mr. Citrone’s gain to be more than $62 million. Duke Buchan from Hunter Global Investors probably regrets that he trimmed 63% of his AAPL shares in the second quarter.

Despite the profit from AAPL, Mr. Sandler has been disappointed with most of his other new holdings’ performances. Illinois Tool Works (NYSE:ITW), for example, has cost Mr. Sandler more than $20 million as the stock lost almost 25% in value since the end of the second quarter. Goldman Sachs (NYSE:GS) was another disappointer for Mr. Sandler as the stock lost almost 20%. Percentage-wise, the 37% loss in Ingersoll Rand (NYSE:IR) was a major disappointment for Mr. Sandler. We estimate Mr. Sandler’s loss in IR to be around $23 million.

Overall, Mr. Sandler’s 13F portfolio lost 14% in value since the end of the second quarter and has been performing slightly worse than the S&P 500, which lost around 12% during the same time period. This doesn’t mean that Eminence Capital’s investors lost 14% though. Since hedge funds usually hedge their bets by using short positions or options and carry cash in their portfolio, Eminence Capital’s actual returns are much better than the performance of its 13F portfolio during market declines.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.