Zweig-DiMenna's Top Stock Picks

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Includes: AAPL, APC, CI, CMCSA, DE, DVMT, ESV, F, FCX, GG, HAL, JNJ, KMI, MAR, MDT, MRO, NEM, PFE, POT, QCOM, RHT, ROC, TYC, VRX, WMB
by: Insider Monkey

Zweig-DiMenna Partners was founded by Martin Zweig and Joseph DiMenna in 1984. Since then, DiMenna has been the head portfolio manager of the hedge fund. Under his leadership, Zweig-DiMenna has risen to be considered a pioneer of “long/short investing.” This means that Zweig-DiMenna focuses on buying long positions expected to increase in value and selling short positions expected to underperform the market. Zweig-DiMenna was also one of the earliest hedge funds to be involved in alternative investments, like commodities, venture capital and financial derivatives.

Zweig-DiMenna Partners has returned over 90% when taken over the last five years, but when looking at more recent years the numbers are less impressive (read more about DiMenna’s performance). Since the end of the second quarter, Zweig-DiMenna’s top stock picks in its 13F portfolio lost 7.2% compared to a negative 8.0% loss in the S&P 500.

Company

Ticker

Value (x1000)

Activity

Return Since June

APPLE INC

AAPL

41627

77%

16%

GOLDCORP INC NEW

GG

39658

-13%

7%

EL PASO CORP

EP

37641

109%

-6%

NEWMONT MINING CORP

NEM

33300

520%

15%

COMCAST CORP NEW

CMCSA

30477

9%

-16%

TYCO INTL

TYC

29625

51%

-16%

FREEPORT MCMORAN

FCX

26961

22%

-13%

ROCKWOOD HOLDINGS INC

ROC

26912

New

-10%

C I G N A CORP

CI

26056

-7%

-10%

RED HAT INC

RHT

25238

-13%

-19%

VALEANT PHARMA

VRX

25176

6%

-14%

ANADARKO PETROLEUM

APC

23620

New

-7%

STARWOOD HOTELS

HOT

23112

-2%

-22%

HALLIBURTON COMPANY

HAL

23110

-3%

-16%

MARATHON OIL CORP

MRO

21911

-42%

-17%

E M C CORP MA

EMC

21615

82%

-19%

JOHNSON & JOHNSON

JNJ

21183

New

0%

E N S C O PLC

ESV

20159

49%

-11%

COVIDIEN PLC

COV

19991

New

-2%

FORD MOTOR CO DEL

F

19687

51%

-21%

QUALCOMM INC

QCOM

19537

8%

-10%

PFIZER INC

PFE

19525

5%

-7%

DEERE & CO

DE

19311

New

-4%

WILLIAMS COS

WMB

19132

-24%

-12%

POTASH CORP

POT

19047

-25%

3%

Click to enlarge

Of Zweig-DiMenna’s top 25 stocks, only three have brought a positive return. Luckily, these positions are among the four largest in the Zweig-DiMenna portfolio. The first is the eternally popular Apple Inc. (NASDAQ:AAPL). It returned 16% since the end of June, after DiMenna increased his position in the company by 77% last quarter. The list of hedge funds with positions in Apple is long and includes some of the top names in the industry (see the entire list here). Zweig-DiMenna earned 7% since the end of the second quarter via its second largest position, Goldcorp, Inc. (NYSE:GG) and 15% through its fourth largest position overall, Newmont Mining Corp (NYSE:NEM). DiMenna had increased his stake in Newmont by 520% last quarter. Several hedge funds have very large positions in Newmont, like Jabre Capital Partners (see the list here).

DiMenna’s largest losses were in Starwood Hotels (HOT), in which he lost 22%, and Ford Motor Company (NYSE:F), in which he lost 21%. Ford is a top stock pick right now among several hedge funds, while Starwood Hotels is popular with Robert Mignone (check out Mignone’s top picks).

DiMenna had several energy and healthcare companies in his portfolio. El Paso (EP) and Anadarko (NYSE:APC) managed to beat the market by a percentage point, while HAL, MRO, ESV, and WMB underperformed. Among the healthcare stocks COV, JNJ and PFE slightly outperformed while CI and VRX underperformed.

We like DiMenna. We believe investors can beat the market over the long-term by imitating his best stock picks.

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