By Matt Doiron
Columbus Circle Investors is a $17 billion asset manager, which has about $1 billion in its hedge fund strategies. Managed by Donald Chiboucis, the fund's large-cap strategy managed to beat its benchmark by 0.1 percentage points annually over the last 10 years. Mid-cap strategy outperformed its benchmark by 0.1 percentage points annually and small-cap strategy outperformed by 5.9 percentage points annually over the last 10 years. Last month, Columbus Circle released the 13F holdings of Moore Global Investments as of June 30, 2012. Columbus Circle Investors doesn't recommend or endorse any of the stocks or analysis in this article, and we have no relationship with the fund, but based on SEC filings, these are our opinions of what they are thinking. Read on to see the fund's largest reported positions or compare them to previous portfolios at Columbus Circle.
The largest of the fund's positions by dollar value was Apple (NASDAQ:AAPL), with Columbus Circle owning just over 1 million shares. This was down from a position of 1.1 million shares in the previous quarter as the fund likely decided to take some profits on the rising stock. Apple is seeing a number of technology players attempt to move into the spaces its products currently occupy in the market, but has the advantage of a powerful brand to help it preserve its margins. However, Apple did recently miss earnings estimates by 10% in its second-quarter results.
Qualcomm (NASDAQ:QCOM) was the second largest position according to the 13F; Columbus Circle reported owning 4.4 million shares. However, this was a drop from the 5.6 million shares the fund had in its portfolio at the end of March. With the stock slumping over the course of the second quarter, falling 18% after starting off the year very strong, Chiboucis and the rest of the fund were likely trying to preserve profits- and carry- from their position.
Mastercard (NYSE:MA), which ranked as one of the ten most popular services stocks among hedge funds along with its competitor Visa (NYSE:V), is obviously in a popular industry for money managers. Billionaire Julian Robertson believes that since credit card companies do not actually bear credit risk, but merely collect transaction fees, they are poised for strong growth in the future that is not adequately reflected in stock prices. Columbus Circle had owned about 630,000 shares of Mastercard at the beginning of the second quarter. Even after cutting this position to about 560,000 shares, it was still the third largest holding in the 13F portfolio.
Warren Buffett's favorite Coca-Cola (NYSE:KO) was another major position in the fund's portfolio with 2.7 million shares. This represented about a 20% increase from the 2.3 million shares in the portfolio at the end of March. The reduction in tech companies Apple and Qualcomm, combined with increases in shares of the more defensive Coca-Cola, could imply that Columbus Circle is becoming more cautious with respect to the overall market. Coca-Cola's low beta of 0.4 indicates that moves in its stock price bear little relationship to the overall market, and investors can count on moderate dividends resulting from the company's stable cash flow.
Pfizer (NYSE:PFE) rounded out the list of Columbus Circle's top 5 13F positions, with the fund holding 9.2 million shares. This was up slightly from 8.7 million shares at the end of the first quarter. Like Coca-Cola, Pfizer is a defensive stock (0.7 beta and 3.7% dividend yield), providing further evidence that Chiboucis is trying to reduce the fund's risk ahead of an uncertain second half of the year for the U.S. economy. Pfizer, as with Apple and Qualcomm, made our list of the ten most popular stocks among hedge funds for the first quarter of 2012.
We think that even if an investor doesn't particularly like either of the fund's last two picks - the ones that the fund is increasing - it might be wise to take away that Columbus Circle is rotating into more defensive names. While having large positions in technology companies is fine, some downside protection in the form of value, low-beta stocks - potentially ones which pay good dividend yields as well - is a good idea.
Disclosure: I am long AAPL.