A Look at Billionaire Paul Singer’s Long-Term Investments

Activist investor and billionaire hedge fund manager Paul Singer was awarded this year’s Manager Lifetime Achievement Award by the Institutional Investor magazine in New York in June. In his nearly four-decade-long career as a fund manager, Mr. Singer has seen various and ups-and-downs in the market, but has still managed to consistently generate superior returns for his investors by focusing heavily on risk management.

In this article, we will take a look at five stocks that have been a part of his hedge fund Elliott Management‘s equity portfolio for a long time and will discuss how they have been performing of late.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

#5 Fortress Biotech Inc (NASDAQ:FBIO)

– Shares Owned by Elliott Management (as of June 30): 1.07 million

– Value of Holding (as of June 30): $2.89 million

Let’s start with Fortress Biotech Inc (NASDAQ:FBIO), which has been a part of Elliott Management’s equity portfolio since the first quarter of 2012. After cutting its position in the stock by 25% during the March quarter, Elliott again cut the size of the position by 25% during the June quarter, to 1.07 million shares. Earlier this year, Fortress Biotech Inc (NASDAQ:FBIO) surprised a lot of analysts and investors by announcing that it will be acquiring National Holdings (NASDAQ:NHLD), an investment bank and asset management company, for $3.25 per share. Following that announcement, shares of Fortress Biotech tumbled heavily and have yet to make up much ground, though they are currently trading down by just 0.72% year-to-date. Fortress Biotech’s subsidiary FBIO Acquisitions Inc commenced a standard offer to purchase up to 100% of National Holdings’ shares on August 12, which will expire on September 9. Dr. Behzad Aghazadeh‘s venBio Select Advisor owns 1.33 million Fortress Biotech shares as of June 30.

#4 CorMedix Inc. (NYSEMKT:CRMD)

– Shares Owned by Elliott Management (as of June 30): 1.50 million

– Value of Holding (as of June 30): $2.99 million

Elliott Management has not made any changes to its stake in CorMedix Inc. (NYSEMKT:CRMD) during the first half of 2016, a stake which it initiated during the first quarter of 2011. Shares of CorMedix Inc. (NYSEMKT:CRMD) shot through the roof in early 2015 after the FDA approved a phase 3 study of its catheter lock solution product, Neutrolin. However, after the initial rise, the stock started declining rapidly and gave up all of the gains by the end of the year. This year CorMedix’s stock has so far followed the same trajectory, making big gains in March and April before giving them all back in the months that followed. CorMedix recently announced that two of its executives have been invited to speak at two separate conferences to be held in September, the 2016 World Anti-Microbial Resistance Congress on September 9, and the Anti-Infectives Rx Conference on September 21. The company is planning a second phase 3 study of Neutrolin for later this year. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners opened a new position in CorMedix during the second quarter consisting of 45,320 shares.

Three more long-term holdings of the activist fund are revealed on the next page.

#3  National Bank Holdings Corp (NYSE:NBHC)

– Shares Owned by Elliott Management (as of June 30): 2.40 million

– Value of Holding (as of June 30): $48.92 million

Moving on, National Bank Holdings Corp (NYSE:NBHC) is another long-term holding of Elliott Management in which the firm reduced its stake during each of the first two quarters of this year, by 10% in the first quarter and by a further 14% in the second quarter. The fund has held a stake in the bank holding company ever since its IPO in the final quarter of 2012, and shares have been trading in a relatively narrow range since then. Shares have surged in August following an investor presentation made by the company on August 5 and the announcement a few days later that it will repurchase $50 million worth of shares. Billionaire Jim Simons’ Renaissance Technologies upped its stake in the company by 21% to 1.04 million shares during the second quarter.

#2 Companhia de Saneamento Basico (ADR) (NYSE:SBS)

– Shares Owned by Elliott Management (as of June 30): 8.10 million

– Value of Holding (as of June 30): $72.60 million

Elliott Management has been the largest shareholder of Companhia de Saneamento Basico (ADR) (NYSE:SBS) among the funds in our database since it initiated a stake in the company during the fourth quarter of 2013. That has continued through June 30, despite the activist fund cutting its stake in the company by 49% during the second quarter. Shares of the water and sewage services provider have enjoyed an outstanding year, gaining over 102%, which likely prompted Mr. Singer and his team to cash out of half of their holding. After having sharply cut its annual dividend payment for two consecutive years, the stock now provides an annual dividend yield of just 0.71%, down from 3.99% in April 2014. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital initiated a stake of almost 4.00 million shares of the company during the first quarter and added another 1.63 million shares to its holding in the second quarter.

#1 Hess Corp. (NYSE:HES)

– Shares Owned by Elliott Management (as of June 30): 18.80 million

– Value of Holding (as of June 30): $1.13 billion

Elliott Management launched its activist campaign against Hess Corp. (NYSE:HES) immediately after initiating a stake in the company during the final quarter of 2012. Although the fund and the company reached a settlement in May 2013, Elliott Management has continued to remain one of the largest shareholders of Hess Corp. (NYSE:HES) ever since, with the position ranking as its second-most valuable for each of the past three quarters. Like the shares of most other oil exploration and production companies, Hess Corp. (NYSE:HES) shares have benefited greatly from the rally in crude oil prices this year, trading up by 16.85% year-to-date. The stock currently sports an average rating of ‘Hold’ and an average price target of $62.32 from the 21 leading analysts and research firms on Wall Street who track it.

Disclosure: None