In this article, we will take a look at the $3 billion hedge fund Cinctive Capital’s top 10 stock picks.
Cinctive Capital Management is a hedge fund specializing in long/short equity strategies. Based in New York City’s Hudson Yards, its founders and industry veterans, Richard Schimel and Larry Sapanski, aim to redefine the multi-manager model with an evolved approach to portfolio management. The firm provides a multi-manager investment platform to its investors combining fundamental stock picking with proprietary quantitative tools with a focus on scrupulous risk management practices to ensure robust investment strategies. According to Schimel, “Cinctive is the evolution of the experiences Larry and I had over the past two decades.”
Richard Schimel and Lawrence Sapanski founded Cinctive Capital Management in 2019. Since its inception, the hedge fund’s assets have nearly quadrupled. Sapanski and Schimel have worked together for 14 years. Back in 2005, Larry also co-founded Diamondback Capital, managing significant assets in financials, energy, bonds, and macro strategies. In the early 2000s, Rich Schimel and Lawrence Sapanski worked for Steve Cohen’s SAC Capital Advisors. They founded Diamondback Capital Management in 2005, which managed $5.8 billion in assets. However, the firm closed in 2012 due to client withdrawals following a non-prosecution agreement related to an insider trading investigation. However, the government later dropped the agreement and Diamondback was refunded the $9 million after the conviction was tossed out.
In addition to managing and founding Cinctive Capital Management and the aforementioned ventures, both the Co-Founders and Co-CIOs have held many distinctive roles in the past. Richard Schimel was a Senior Managing Director and Head of Aptigon Capital at Citadel. He also served as Chief Investment Officer at Sterling Ridge Capital Management, which he founded in 2013. Schimel holds a B.A. in Economics from the University of Michigan. Larry Sapanski also brings over 30 years of investment management experience to the Cinctive family. Larry Sapanski paved a similar path for himself like his fellow Richard Schimel before co-founding Cinctive. He started a hedge fund called Scoria Capital (2013-2017) where he served as CIO, overseeing trading, risk exposures, and a best ideas portfolio. Larry Sapanski has held various trading roles at London Bishopgates International, Lehman Brothers, Deutsche Bank, and Morgan Stanley. Sapanski graduated from St. John’s University with a B.S. in Accounting.
According to the Form ADV filed on March 2024, Cinctive Capital Management disclosed that they are serving 8 clients with discretionary assets under management totaling $3,019,428,000. Their most recent 13F filing for Q4 2023 revealed managed 13F securities amounting to $1,505,809,649, with a top 10 holdings concentration of 17.76%.
Currently, Cinctive Capital Management has been successful in betting on artificial intelligence in energy, technology, and utility sector-related stocks as it ended the first half of the year gaining 11%. Its performance has also been noteworthy while betting in other sectors such as Financials, healthcare, and biotech thereby beating other big multi-strategy hedge funds, such as Citadel and Millennium. The successful track record at Diamondback has allowed Rich Schimel and Lawrence Sapanski to draw noteworthy interest from institutional investors for their venture, Cinctive Capital Management. This achievement comes despite the broader hedge fund industry’s increased scrutiny from investors over subpar returns.
A businessman in a suit, counting stacks of money in front of a graph of a mortgage finance market.
Our Methodology
Stocks mentioned in this article were picked from the investment portfolio of Cinctive Capital Management at the end of the first quarter of 2024. Schimel and Sapanski’s top 5 stock picks returned an average of 11% since the end of the first quarter, vs. 4% gain for the broader indices for large-cap stocks.
$3 Billion Hedge Fund Cinctive Capital’s Top 10 Stock Bets
10. Jefferies Financial Group Inc. (NYSE:JEF)
Return since Q1 End: 31.7%
Jefferies Financial Group Inc. (NYSE:JEF) engages in investment banking capital markets and asset management business. The Group provides banking advisory services for mergers, acquisitions, restructuring, or recapitalization. It also provides customers with investment-grade corporate bond sales and trading.
Regulatory filings show that Cinctive Capital Management owned 560,978 shares in Jefferies Financial Group Inc. (NYSE:JEF) at the end of the first quarter of 2024 worth $24 million, representing 1.15% of the portfolio. Among the hedge funds being tracked by Insider Monkey, First Pacific Advisors LLC is a leading shareholder in Jefferies Financial Group Inc. (NYSE:JEF) with 5 million shares worth more than $239 million.
Jefferies has been a very popular stock among hedge funds about 5 years ago when it was trading at $20. Hedge funds liked the stock because it was deeply discounted based on a sum-of-the-parts analysis. We highlighted JEF shares in our quarterly newsletter as well. JEF shares tripled since then and currently trade at $57.
9. Amazon.com, Inc. (NASDAQ:AMZN)
Return since Q1 End: 0.7%
Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products, advertising, and subscription services through online and physical stores. Amazon.com, Inc. (NASDAQ:AMZN) reported robust results in Q1 of 2024 and generated revenue of $143.3 billion, up 13% year-over-year. Recently, Needham restated a “Buy” rating on the stock and maintained its price target of $205. Analysts’ median price target of $220 represents an upside of 11% from current levels.
Regulatory filings show that Cinctive Capital Management owned 140,892 shares in Amazon.com, Inc. (NASDAQ:AMZN) at the end of the first quarter of 2024 worth $25 million, representing 1.18% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, First Pacific Advisors LLC is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 5 million shares worth more than $239 million.
Lakehouse Global Growth Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its May 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) delivered an impressive quarterly result that also came in well ahead of analyst expectations. Net sales increased 13% year-on-year to $143.3 billion and operating profits increased 219% year-on-year to $15.3 billion (vs the high end of guidance at $12.0 billion). As has been the case for several quarters now, the highlight of the result was the significant improvement in profitability metrics, as management continues to drive cost efficiencies across its retail operations and Amazon Web Services (AWS). Amazon delivered to Prime members at its fastest speeds ever. In March, across the top 60 largest U.S. metro areas, nearly 60% of Prime member orders arrived the same or next day, and in London, Tokyo, and Toronto, 3 out of 4 items were delivered the same or next day. Bigger picture, we continue to believe that the market underestimates the length of the runway ahead in the core retail business (note that e-commerce sales in the U.S. still only make up 15% of total retail sales) and that there is still significant margin expansion ahead as scale and efficiency benefits continue to come through.”