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.”
8. Antero Midstream Corp (NYSE:AM)
Return since Q1 End: 6.8%
Antero Midstream Corp (NYSE:AM) is a growth-oriented midstream company focused on developing energy infrastructure primarily serving Antero Resources.
Brendan Krueger, CFO of Antero Midstream, was reported saying the following in Antero Midstream Corp (NYSE:AM)‘s Q1 2024 Earnings Call, “The first quarter of 2024 was a record-breaking quarter, both financially and operationally. Antero Midstream’s organic growth strategy delivered a 4% and 6% increase in gathering and processing volumes, respectively, compared to last year. We delivered double-digit EBITDA growth, combined with double-digit declines in capital year-over-year. The growing EBITDA and declining capital resulted in $182 million of free cash flow before dividends and $74 million of free cash flow after dividends, both of which were company records. All of this record free cash flow was utilized to reduce absolute debt during the quarter.”
According to the Regulatory filings, Cinctive Capital Management owned 1.8 million shares in Antero Midstream Corp (NYSE:AM) at the end of the first quarter of 2024 worth $26 million, representing 1.21% of the portfolio. Among the hedge funds being tracked by Insider Monkey, Aventail Capital Group is a leading shareholder in Antero Midstream Corp (NYSE:AM) with over 2 million shares worth $38 million.
7. Snowflake Inc. (NYSE:SNOW)
Return since Q1 End: -20.2%
Snowflake Inc. (NYSE:SNOW) is a cloud-based data platform for various organizations. Its AI data cloud is used by over 10,000 companies including Adobe, AT&T, HP, Mastercard, PepsiCo, Nielsen, Siemens, Yamaha, and US Foods, to name a few. Its Q1 product revenue grew 34% year over year to $790 million and expects full-year product revenue to reach $3.3 billion, up 24% year-over-year.
According to the Regulatory filings, Cinctive Capital Management owned 164,405 shares in Snowflake Inc. (NYSE:SNOW) at the end of the first quarter of 2024 worth over $26 million, representing 1.23% of the portfolio. Among the hedge funds being tracked by Insider Monkey, Altimeter Capital Management is a leading shareholder in Snowflake Inc. (NYSE:SNOW) with over 10 million shares worth $1.6 billion.
Alger Focus Equity Fund stated the following regarding Snowflake Inc. (NYSE:SNOW) in its Q1 2024 investor letter:
“Snowflake Inc. (NYSE:SNOW) is a cloud-based data warehousing company that allows organizations to store, analyze and share data in a secure. scalable and cost-effective manner. This includes the Data Cloud. an ecosystem where Snowflake customers, partners. data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in a secure, governed, and compliant way. Its platform supports a range of use cases. including data warehousing, data lakes, data engineering, data science, data application development, and data sharing. While the company reported an overall healthy fiscal fourth quarter. shares detracted from performance after management lowered their fiscal 2025 forward revenue guidance below analyst estimates. Further, the company announced that CEO Frank Slootman would be retiring from the role immediately, succeeded by Sridhar Ramaswamy, the former SVP of Al who has demonstrated impressive speed in bringing new Al products and features to market.”
6. Array Technologies, Inc. (NASDAQ:ARRY)
Return since Q1 End: -30.0%
Array Technologies, Inc. (NASDAQ:ARRY) is a specialized solar power equipment firm that makes and sells trackers that help solar panels maintain their skyward orientation. According to the company’s website, it has generated 194,060 MW of clean energy and has offset 17 million MT of carbon dioxide in the U.S. Around 10 Wall Street analysts over the past three months, have a consensus rating of “Moderate Buy” on the stock. The average price target of $19.61 has an upside of 37.37% to the stock’s current price of $14.28 as of March 21.
According to the Regulatory filings, Cinctive Capital Management owned 1.8 million shares in Array Technologies, Inc. (NASDAQ:ARRY) at the end of the first quarter of 2024 worth over $27 million, representing 1.28% of the portfolio. Among the hedge funds being tracked by Insider Monkey, Hill City Capital is a leading shareholder in Array Technologies, Inc. (NASDAQ:ARRY) with over 11 million shares worth $168 million.
Array Technologies, Inc. (NASDAQ:ARRY)’s CEO, Kevin Hostetler, stated the following in the Q1 2024 Earnings Call,
“As a reminder, starting this quarter, we are reporting gross margins inclusive of the benefits derived from 45X, which to-date only reflects the contribution from domestic content related to our torque tube. Having said that, our core adjusted gross margin, excluding 45X benefits, would have been in the mid-20s range for the quarter, which is consistent with our underlying long-term target. We delivered $26.2 million of adjusted EBITDA, representing 17.1% of revenue, inclusive of the $4 million benefit mentioned earlier. And we generated $45.1 million of free cash flow to end the quarter with a cash balance of $288 million. Total available liquidity was approximately $465 million, when including the capacity on our undrawn revolving credit facility.”
5. Vistra Corp. (NYSE:VST)
Return since Q1 End: -0.7%
Vistra Corp. (NYSE:VST) is a power generation company that is also involved in electricity generation and wholesale energy purchases and sales. It has about 5 million customers for its 41,000-megawatt portfolio of natural gas, coal, nuclear, and solar assets, as well as battery storage facilities.
Shahriar Pourreza, a Guggenheim analyst, believes that VST is a “unicorn” for its portfolio of both gas and nuclear power plants. Adding further in his note to clients on Vistra Corp (NYSE:VST) he stated that data centers are exploring 24-hour power sources that are clean and “nuclear plants are a very strong avenue for that”. He holds a “Buy” recommendation with a Street-high price target of $133 on the stock.
According to the Regulatory filings, Cinctive Capital Management owned 531,789 shares in Vistra Corp. (NYSE:VST) at the end of the first quarter of 2024 worth over $37 million, representing 1.72% of the portfolio. Among the hedge funds being tracked by Insider Monkey, Lone Pine Capital is a leading shareholder in Vistra Corp. (NYSE:VST) with over 6 million shares worth $446 million.
Meridian Hedged Equity Fund stated the following regarding Vistra Corp. (NYSE:VST) in its first quarter 2024 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company based in Irving, Texas. It operates in 12 states and six of the seven competitive markets in the U.S. Vistra’s retail brands serve approximately 2.9 million customers and its power generation fleet totals approximately 41,000 megawatts of natural gas, nuclear, coal, and solar facilities. Vistra was a top performer in the strategy over the past quarter, with its shares rallying over 80%. A key driver has been the thesis that the projected growth of power-hungry data centers, spurred by the rise of generative AI, will increase electricity demand and power prices. This is expected to significantly benefit incumbent power generators like Vistra. The company’s efficient generation portfolio, especially its nuclear and natural gas plants, is well-positioned to capitalize on rising demand, scarcity pricing, and ancillary services in the Texas power market. Vistra is also pursuing opportunities to potentially sign high-margin power offtake agreements directly with data center customers for its nuclear plants, similar to a recent deal by peer Talen Energy and Amazon. We continue to like Vistra’s strong free cash flow generation supporting continued share buybacks and debt reduction, synergies from the recent Energy Harbor acquisition, and a favorable power market backdrop with rising spark spreads. We trimmed the stock following its strong performance during the period.”
4. NextEra Energy, Inc. (NYSE:NEE)
Return since Q1 End: 17%
NextEra Energy, Inc. (NYSE:NEE) is one of the largest producers of electricity and operates through its subsidiaries, Florida Power & Light Company and NextEra Energy Resources to produce over 58GW. NextEra Energy, Inc. (NYSE:NEE) is incorporated and headquartered in Juno Beach, Florida. NextEra Energy generates electricity from nuclear power units in Florida, New Hampshire, Iowa, and Wisconsin. As of June 11, NextEra Energy, Inc. (NYSE:NEE) is valued at $158.14 billion.
Earlier this year, NextEra Energy, Inc. (NYSE:NEE) CEO John Ketchum, while talking about power demand boost due to AI at CERAWeek by S&P Global conference, said:
“What you have today is electric demand that has been relatively flat for years now all of the sudden looking at an 81% increase.”
According to the Regulatory filings, Cinctive Capital Management owned 583,370 shares in NextEra Energy Inc (NYSE:NEE) at the end of the first quarter of 2024 worth over $37 million, representing 1.73% of the portfolio. Based on the hedge funds database being tracked by Insider Monkey, Zimmer Partners is a leading shareholder in NextEra Energy Inc (NYSE:NEE)with over 2 million shares worth $174 million.
3. Impinj, Inc. (NASDAQ:PI)
Return since Q1 End: 21.8%
Impinj, Inc. (NASDAQ:PI) reported strong financial results in the first quarter as its revenue and profitability exceeded both Q4 2023 results and Q1 guidance. Impinj, Inc.’s (NASDAQ:PI) revenue increased 9% sequentially to $76.8 million for the first quarter of 2024 from $70.7 million in Q4 of 2023, but weakened by 11% year-over-year from $86.0 million in Q1 2023.
According to the Regulatory filings, Cinctive Capital Management owned 306,964 shares in Impinj, Inc. (NASDAQ:PI) at the end of first quarter of 2024 worth over $39 million, representing 1.83% of the portfolio. Based on the hedge funds database being tracked by Insider Monkey, Point72 Asset Management is a leading shareholder in Impinj, Inc. (NASDAQ:PI) with 459,465 shares worth over $58 million.
Wasatch Micro Cap Value Strategy stated the following regarding Impinj, Inc. (NASDAQ:PI) in its first quarter 2024 investor letter:
“Impinj, Inc. (NASDAQ:PI), a pioneer in helping develop the “Internet of Things,” was also a contributor. The company provides an infrastructure by which items in storage or in transit—such as car parts and even shipping containers— communicate over the internet. Impinj deploys wireless inventory management and tracking platforms for customers in retail, manufacturing, health care and other areas. The company also provides tiny radio-frequency identification chips to connect, count and track individual items. Early in 2023, the stock fell due to a slowdown in platform deployments and chip orders. The slowdown occurred because customers had previously obtained extra inventory based on fears of Covid-related supply-chain disruptions. More recently, the stock has rebounded on reports of solid revenues and profitability that have exceeded expectations. Additionally, management has expressed optimism that Impinj’s long-term business opportunities remain intact. While our positive assessment of the company is unchanged, we sold some shares because we’ve learned from experience to trim our position on strength and add on weakness.”
2. The AES Corporation (NYSE:AES)
Return since Q1 End: -1.2%
The AES Corporation (NYSE:AES) is a Virginia-based global power company that generates and sells electricity from coal, gas, wind, and solar sources. Headquartered in Arlington, Virginia, AES provides its services through its subsidiaries, including Indianapolis Power and Light Company, AES Solutions Management, LLC, AES Laurel Mountain, and more. It holds a portfolio of more than 34,500 megawatts. The company recently reported Q1 2024 earnings per share of $0.50, up from $0.22 last year, and announced a 1 GW solar-plus-storage deal with Amazon. AES reiterated its 2024 growth targets, projecting an adjusted EPS of $1.87 to $1.97 and adding 3.6 GW of new capacity. Analysts rate the stock a “Moderate Buy” with a $23.50 average price target.
According to the Regulatory filings, Cinctive Capital Management owned 2.2 million shares of The AES Corporation (NYSE:AES) at the end of the first quarter of 2024 worth over $40 million, representing 1.86% of the portfolio. Based on the hedge funds database being tracked by Insider Monkey, Orbis Investment Management is a leading shareholder in The AES Corporation (NYSE:AES) with 23 million shares worth over $415 million.
1. GE Aerospace (NYSE:GE)
Return since Q1 End: 20%
Founded in 1892 and headquartered in Boston, Massachusetts, GE recently completed its transition to GE Aerospace (NYSE:GE) after spinning off its energy and healthcare segments into GE Vernova (NYSE) and GE Healthcare (NASDAQ), respectively. GE Aerospace (NYSE:GE) designs and produces commercial and defense aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. With an installed base of around 44,000 commercial and 26,000 military aircraft engines, GE Aerospace(NYSE:GE) is the largest industrial company in the US. As of June 23, it has a market capitalization of $179.78 billion.
According to the Regulatory filings, Cinctive Capital Management owned 452,540 shares of GE Aerospace(NYSE:GE) at the end of the first quarter of 2024 worth over $63 million, representing 2.94% of the portfolio. Based on the hedge funds database being tracked by Insider Monkey, TCI Fund Management is a leading shareholder in GE Aerospace(NYSE:GE) with 58 million shares worth over $8 billion.
Artisan Global Equity Fund stated the following regarding GE Aerospace (NYSE:GE) in its Q1 2024 investor letter:
“Our holdings in industrials, now our largest sector weighting, added to the portfolio’s outperformance as well. In particular, GE Aerospace (NYSE:GE) stood out as the largest contributor to relative performance this quarter. The storied American company and leader in aerospace, health care, renewable energy and power generation will split into three separate companies next quarter. We are most interested in its aerospace assets, given its growing pricing power in that industry. GE said it expects to increase deliveries of its popular LEAP airline engines by 20% to 25% this year given the escalating demand for air travel. The engine is manufactured by CFM International, a 50/50 joint venture between GE and Safran. Together, they make about 50% of the world’s commercial airline engines. In addition to strong fundamentals and pricing power in aerospace, we are attracted to GE’s clean hydrogen and decarbonization technologies in its alternative energy business, assets that are used to generate 30% of the world’s electricity. The unit benefits from the $435 billion in clean energy funding provided by the Inflation Reduction Act and Infrastructure Investment and Jobs Act.”
While we acknowledge the potential of GE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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