Richard Driehaus' Top Stock Picks

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 |  Includes: ACTG, BEAV, DECK, DSW, F, FMCN, GLNG, GMCR, GTLS, IGT, IMAX, IPGP, LEA, MELI, NLY, PCLN, QLIK, ROSE, RSX, SODA, STP, TRW, UA, VALE, VMED
by: Insider Monkey

Richard Driehaus is the founder of Driehaus Capital. He founded the mutual fund in 1982. In 2000, he was named by “Barron’s” as one of the 25 most influential people within the mutual fund industry within the last 100 years; in other words, Driehaus knows his stuff. So much so that DePaul University awarded him an honorary doctorate in 2002. Besides being a top notch mutual fund manager, Driehaus is also a philanthropist. He gives $4 million per year to various charities and non-profit organizations within the Chicago area, where Driehaus Capital is based, in addition to funding the $200,000 Driehaus Prize for Classic Architecture and the Richard H. Driehaus Museum.

Driehaus is a performance-oriented investor with a focus on the long haul. He has said that it is “the objective of [Driehaus Capital] to create investment strategies that generate superior rates of return over a full market cycle.” This strategy has served him well in the past, frequently outperforming the market and producing double digit returns, but as of late, Driehaus has been hit by several major losses. Point in fact, his top 25 stock picks have lost 21% since the end of last quarter.

He doesn’t usually go for mega-cap stocks in his portfolio. The most well-known stocks in his portfolio are Ford (NYSE:F), Vale (NYSE:VALE), DSW, Deckers (NYSE:DECK), and SodaStream (NASDAQ:SODA). The other stocks in his portfolio are smaller, high beta stocks. That’s one of the reasons why his top stock picks underperformed the market by such a large margin. Here are his top 25 picks at the end of June:

Company

Ticker

Value (x1000)

Activity

Return Since June

VIRGIN MEDIA INC

VMED

52858

0%

-21%

SUNTECH POWER HOLDINGS

STP

43991

2%

-36%

FORD MOTOR CO DEL

F

41987

0%

-25%

I P G PHOTONICS CORP

IPGP

31667

-27%

-29%

D S W INC

DSW

30816

-3%

-15%

GOLAR L N G LTD

GLNG

28813

112%

-11%

GREEN MOUNTAIN COFFEE

GMCR

28749

-11%

3%

B E AEROSPACE INC

BEAV

28598

47%

-20%

LEAR CORP

LEA

27472

24%

-19%

IMAX CORP

IMAX

25979

62%

-52%

DECKERS OUTDOOR CORP

DECK

25813

5%

-8%

INTERNATIONAL GAME TECH

IGT

25416

0%

-20%

UNDER ARMOUR INC

UA

25407

104%

-23%

T R W AUTOMOTIVE

TRW

24740

0%

-37%

QLIK TECHNOLOGIES INC

QLIK

23475

New

-31%

PRICELINE COM INC

PCLN

22651

0%

-6%

VALE S A

VALE

22252

-4%

-16%

MARKET VECTORS Russia ETF

RSX

21505

0%

-20%

SODASTREAM INTL

SODA

20423

235%

-44%

ROSETTA RESOURCES INC

ROSE

19929

-19%

-19%

ACACIA RESEARCH CORP

ACTG

19670

-4%

3%

CHART INDUSTRIES INC

GTLS

18924

-15%

-25%

FOCUS MEDIA HOLDING LTD

FMCN

18370

-8%

-1%

MERCADOLIBRE INC

MELI

18038

113%

-21%

ANNALY CAPITAL MAN

NLY

18029

17%

-4%

Click to enlarge

Out of his top 25 picks, only two have produced a positive return – Green Mountain Coffee and Acacia Research Corp. each returned a modest 3%. Green Mountain Coffee is a favorite of Philippe Laffont of Coatue Management (check out Laffont’s top picks) as well as the legendary Steven Cohen of SAC Capital Advisors (see billionaire Cohen’s top picks). Acacia Research is favored by George Soros, “the Man Who Broke the Bank of England” and founder of Soros Fund Management (read about Soros’ top picks).

Since the end of June, Driehaus has lost big on several big names. He lost 52% of his position in IMAX Corp after increasing his position in the company by 62% last quarter. Brett Barakett, Tremblant Capital, has a larger position than Driehaus but even he decreased his position in the movie media company by 42% last quarter as did John Thaler of JAT Capital Management and John Murphy of Alydar Capital, reducing their positions by 43% and 60% respectively.

We like Richard Driehaus. He is a consistent performer but his top stock picks are not looking good right now. While Driehaus has many big names in his portfolio, like Ford, Lear and Priceline, the numbers just aren’t there right now. Driehaus may be one to mirror once the market stabilizes, but, until then, proceed at your own risk.

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