Deepak Gulati‘s Switzerland-based fund, Argentiere Capital recently disclosed its equity holdings as of the end of the first quarter in a filing with the SEC. The fund initiated a number of new stakes, the most noteworthy being new positions in Alibaba Group Holding Ltd (NYSE:BABA), Hospira, Inc. (NYSE:HSP), Philip Morris International Inc. (NYSE:PM), JPMorgan Chase & Co. (NYSE:JPM), and SYSCO Corporation (NYSE:SYY).
Founded in early 2013, Argentiere seeks to generate returns that are uncorrelated with the market by employing equity volatility strategies. Gulati headed JPMorgan Chase’s global equity proprietary trading prior to setting up his own shop. The market value of the fund’s equity portfolio stood at $242.23 million at the end of March as compared to $525.80 million in the previous quarter. This was also accompanied by a high turnover ratio of 90.38% as the fund’s equity portfolio was given much greater diversity.
Argentiere held 18,100 shares of Alibaba Group Holding Ltd (NYSE:BABA) valued at $1.51 million by the end of the first quarter. The Chinese e-commerce giant has had a tough year so far with its stock sliding by about 18.32% year-to-date. The company is trying to spur growth from its smartphones segment and has recently partnered with China Telecom, the largest Chinese telecom company by subscriber base, to provide affordable handsets in rural China. The approximate cost of these phones called ‘Tianyi Taobao Shopping Handsets’ is $48. Dan Loeb‘s Third Point is one of the significant shareholders of Alibaba Group Holding Ltd (NYSE:BABA) as it held 10 million shares valued at $1.04 billion at the end of the fourth quarter.
Hospira, Inc. (NYSE:HSP) was added to Argentiere’s portfolio with some 318,000 shares valued at $27.93 million. It is the fund’s largest long position and represents 11.53% of the portfolio value. The pharmaceutical giant Pfizer Inc. (NYSE:PFE) announced the acquisition of Hospira, Inc. (NYSE:HSP) for $17 billion in February. The deal is expected to close in the second half of this year. This has led to the developer of biosimilars appreciating by 42.43% year-to-date. John W. Rogers‘ Ariel Investments enjoyed the after-effects of this deal as it held 2.31 million shares of Hospira, Inc. (NYSE:HSP) valued at $141.57 million at the end of 2014.
Argentiere held 70,500 shares of Philip Morris International Inc. (NYSE:PM) stock valued at $5.31 million at the end of the first quarter. Despite the strong currency headwinds, the $128.19 billion international manufacturer of cigarettes beat revenue and earnings estimates for the first quarter. This led the company to raise its EPS guidance for 2015 to between $4.32 and $4.42, an increase of $0.05 from the previous quarter’s estimate. Tom Russo’s Gardner Russo & Gardner is the largest shareholder of Philip Morris International Inc. (NYSE:PM), according to our database.
JPMorgan Chase & Co. (NYSE:JPM) is up about 11.92% over the past calendar year. As far as its first quarter financial results are concerned, the financial holding company beat both revenue and earnings estimates. Corporate & Investment Bank was the largest contributor to the company’s bottom line with quarterly revenues of $2.54 billion as compared to $2.13 billion in the same quarter last year. The major underlying factor was robust client activity in FICC owing to macro events. Argentiere acquired 81,700 shares of JPMorgan Chase & Co. (NYSE:JPM) valued at $4.95 million during the first quarter. Among other investors who feel particularly positive about the bank’s future prospects is Ken Fisher of Fisher Asset Management, as he held some 13.52 million shares of JPMorgan Chase & Co. (NYSE:JPM) valued at $846.14 million at the end of the fourth quarter.
Finally, Argentiere’s newly initiated stake in SYSCO Corporation (NYSE:SYY) amounted to 125,000 shares valued at $4.72 million. The company has nearly 425,000 customers in the foodservice industry ranging from restaurants, healthcare and educational facilities, to hotels and inns. The stock is up by about 3.2% over the last year. Donald Yacktman’s Yacktman Asset Management is a prominent stockholder of SYSCO Corporation (NYSE:SYY).
Most investors don’t have enough time to do in-depth analysis on each stock that they want to include in their portfolios. Professional investors like Deepak Gulati spend weeks conducting due diligence on each company and spend millions obtaining information and paying the salaries of Ivy League-educated analysts. That’s why we have always believed that imitating the stock picks of hedge funds and billionaires is an excellent short cut we can take. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of hedge funds performed better than the market and their large-cap picks. A portfolio of the 15 most popular small-caps among several hedge funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012. The exceptional results of this strategy got even better in the forward tests we have been conducting since the end of August 2012. The most popular small-cap stocks among hedge funds beat the market by more than 79 percentage points since (see the details here), returning over 137% during that time.
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