Sandler Capital Management was established by Harvey Sandler in 1988. Three years later, Harvey’s son Andrew Sandler, the current managing director and head of the hedge fund, joined the company as a research analyst. Andrew became portfolio manager of the flagship hedge fund of the firm in 1997. Currently Sandler Capital Management’s 13F portfolio has around $1 billion in investments in U.S. equities and options.
Below are the top 20 positions in the 13F portfolio of Sandler Capital Management as of September 30, 2011.
Company Name | Ticker | Value | Activity |
CURRENCYSHARES EURO TRUST Put | 80082 | New | |
SPDR GOLD TRUST Put | 47418 | New | |
VAIL RESORTS INC | 37213 | 41% | |
SPDR S & P 500 ETF TRUST | 33945 | New | |
EBAY INC | 27457 | 323% | |
SCRIPPS NETWORKS Call | 25123 | New | |
RESEARCH IN MOTION Call | RIMM | 20300 | New |
KIMBERLY CLARK CORP | 19528 | New | |
SCRIPPS NETWORKS | 17739 | 6% | |
DOMINOS PIZZA INC | 17077 | 94% | |
D S W INC | 16706 | 77% | |
ORACLE CORP | 16382 | New | |
MASTERCARD INC | 16153 | -5% | |
USANA HEALTH SCI. Put | 15824 | 5% | |
UNITED STATES STEEL Call | 15407 | New | |
GENERAL MILLS INC | 15396 | New | |
LAS VEGAS SANDS Call | 15336 | New | |
DISCOVERY COMM | 15304 | -15% | |
CLEAN HARBORS INC | 15243 | 111% | |
CHECK POINT SOFTWARE | 14478 | -13% |
Sandler reduced the value of the portfolio from $1.3 billion at the end of June to $994 million at the end of September. The number of positions in the portfolio was also reduced from 128 at the end of the second quarter to 101 at the end of the third quarter. Sandler sold out many positions over the third quarter. For example, the fund had $29.3 million invested in Tanger Factory Outlet Centers (SKT) and $23.9 million invested in Illumina Inc (ILMN) at the end of June. But according to the latest 13F filing of the firm, Sandler did not own any shares of these two stocks. SKT returned 8.71% since the end of September, underperforming the 12.00% of SPY. ILMN even lost 27.3% in that period.
On the other hand, Sandler opened a few new positions in the third quarter. He had $20 million in Kimberly Clark Corp (KMB) and $16 million in Oracle Corp (ORCL) shares at the end of September. KMB returned 0.44% since the end of September, underperforming the market. But the personal care company had a strong YTD return. Since the beginning of this year, the stock returned 17.56%, beating the 1.20% gain of the market by a wide margin. KMB also has a fat dividend yield of 4.01%. Ric Dillon’s Diamond Hill Capital had $60+ million invested in KMB as well.
Sandler increased his stakes in Vail Resorts Inc (MTN) by 41% during the third quarter. At the end of September, Sandler Capital Management disclosed to own $37.2 million worth of MTN stocks. MTN returned 20.56% since the end of the third quarter, beating the market by over 8 percentage points. John Paulson was bullish about MTN as well. His Paulson & Co invested $68 million in the stock. In addition to MTN, Sandler also increased his position in eBay Inc (EBAY) by 323% to $27.5 million. EBAY returned 4.92% so far in the fourth quarter, lower than the 12.00% of SPY.
Sandler was bearish about Currency Shares Euro Trust (FXE) and SPDR Gold Trust (GLD). He opened put positions of these two indexes. FXE returned 0.11% and GLD returned 7.17% since the end of the third quarter, both underperforming the market.
Sandler’s other profitable large positions were Scripps Networks Interactive Inc (SNI), Dominos Pizza Inc (DPZ), and Mastercard Inc (MA). We like Andrew Sandler. The two largest positions he bet against underperformed the market. His new directional bet in SPY generated double-digit return so far in the fourth quarter. Our research has shown that by focusing on the top stock picks of successful fund managers like Sandler, investors are more likely to beat the market in the long run.
Disclosure: I am long SPY.
