Paul Hondros’ AlphaOne Capital Partners is a Philadelphia, Pennsylvania- headquartered asset management firm with offices in San Francisco and Boston. It provides its services to institutions, advisors and high net worth individuals since its launching, back in April 2009, by utilizing alternative, equity investment strategies. Besides Paul Hondros (pictured below), who’s its President, CEO, and co-founder, the firm is run by its senior portfolio manager, Daniel Niles, who’s also its founding partner, as well as Stewart Stecker, Daniel Goldfarb, and Christopher M. Crooks who serve as its senior portfolio managers.
The head of the firm, a sixty-eight-years-old Mr. Paul Hondros, spent more than four decades in the investment industry, having vast experience in the financial services industry. After obtaining a BA in History from St. Joseph’s University, he joined SEI Investments in 1975. Since then, Mr. Hondros knew how to pave the way towards a successful career. He worked for Fidelity Investments, where he served as a CEO of its individual investor groups as well as the President and Chief Executive Officer of its Institutional Services Company, Inc. for seven years, until 1997. Prior to launching his own fund, Mr. Hondros served as President and Chief Operating Officer at Liberty Ridge Capital, Inc., and Pilgrim Baxter & Associates. Also, he was the Principal Executive Officer of Gartmore Variable Insurance at JP Morgan NVIT Balanced Fund and a CEO of Gartmore Distribution Trust plc. During his time in Gartmore Investment Management, he served as Non-Executive Chairman through 2003 and a CEO of the Gartmore Group for the following four years. Mr. Hondros serves as CEO at Nationwide Funds and AlphaOne Investment Services, LLC, while he’s also its President. He’s a member and a trustee in a number of funds, including Dreyfus Gvit International Value Fund, and Aberdeen Funds, to name a few.
The fund’s senior portfolio manager, Mr. Dan Niles holds a BS in Systems Engineering from Boston University, while he also obtained an MS in Electrical Engineering from Stanford University. He started his career at Digital Equipment Corporation, where he worked as an Engineer, and entered the Wall Street world in 1990, being a part of Robertson Stephens’s mergers & acquisitions group for seven years. While there, he dealt with equity research. He also served as its Managing Director, until 2000, when he joined Lehman Brothers. For the following three years he served as a Managing Director and Head of Computer Hardware and Semiconductor Research in the company. In 2004 he became a Managing Director of Neuberger Berman, Inc., a subsidiary of Lehman Brothers, and also a CEO of Neuberger Berman Technology Management, LLC where he served for four years. The same year, he launched the AlphaOne Satori Fund which he has been managing for almost 15 years now. During the U.S. Performance Awards in New York in 2006, the fund was awarded the “Best Newcomer” by MARHedge.
AlphaOne Capital Partners employs equity long-short strategies as well as long-only small/micro-cap strategies through hedge funds, institutional separate accounts, and registered mutual funds. The fund’s investment strategies are based on deep fundamental research and insightful risk management. The firm’s aim is to provide its clients with a good investment performance through market cycles. As of March 2018, Alpha One Capital Partners’ wholly owned subsidiary AlphaOne Investment Services, LLC manages around 397.39 million of regulatory assets on a discretionary basis. It serves as an adviser as well as sub-adviser to registered investment companies such as AlphaOne NextGen Technology Fund (which is managed by Dan Niles), offshore and onshore private funds such as AlphaOne Satori Fund Ltd. (also under the guidance of Mr. Niles), as well as individually managed accounts. The firm is involved in a UMA program financed by an unaffiliated investment advisory firm. It employs a number of investment strategies including long and short term purchases, trading, short sales, options writing, derivative transactions, etc.
Even though investing in the tech sector was a smart thing to do over the past few years, 2018 was a bumpy ride, particularly for tech investors, mainly because of the US-China trade war, and also a major sell-off market witnessed in February, and then again in early October. Luckily, AlphaOne Capital Partners’ portfolio managers seem to have found their way during the last year’s roller coaster ride. For example, its US focused, long-short equity fund, AlphaOne Satori Fund, LP., which is technology biased, managed to return 5.26% last year (at least until October 29th). Since the fund lost 3.83% in 2017, 2018 return is definitely a success. And while the fund’s returns fluctuated throughout years, they remained positive the whole time, with 2017 being an exception. In 2013 and 2014 the fund returned 6.30% and 2.49%, respectively. 2015 was the most prosperous year for the fund since it returned 12.61%. Unfortunately, 2016 was a down year, with fund returning only 0.67%. Its total return amounted to 195.84%, for a compound annual return of 7.77%, and its worst drawdown was 18.99.
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And now, let’s breeze through the most significant changes the fund made to its portfolio on the next page.
During the third quarter, the fund has made some interesting changes to its equity portfolio, by adding 18 new positions and dropping 27 companies, pushing its total down to 212 holdings. Among the newcomers to the fund’s portfolio valued at $337.14 million, is position in Amazon.com,Inc. (NASDAQ:AMZN), which occupies 0.01%. The fund purchased 17 company’s shares for $34000, and it will be quite interesting to see what will be its next move, since FAANG stocks weren’t spared either during October’s turmoil. Nevertheless, they are still among the stocks billionaires are crazy about, and investing in them might be a smart thing to do.
The biggest addition to the fund’s portfolio was the position in HP Inc (NYSE:HPQ), a company that provides its consumers with personal computing and other access devices, printing products, and related technologies and software for twenty years. As of September 30th, the fund owns 193,190 shares of the company, valued around $4.98 million. This stock isn’t particularly popular among the smart money investors from Insider Monkey’s database, however, the hedge fund interest in it is still above the average. They were bullish on HP Inc (NYSE:HPQ) over the last few months with the number of those with long positions in the company being 35 at the end of Q3 2018, compared to 34 in Q2 2018. In addition, the company has a market cap of $32.8 billion.
The fund is quite optimistic when it comes to Salesforce Com Inc (NYSE:CRM), an American cloud-based software company, since it substantially boosted its stake in it by 749%, to 2,010 shares worth $320 000. Over the past six months, its stock has lost 8.02%, and at the moment of writing, it’s trading at $147.55, at price-to-earnings (PE) ratio of 138.33. In addition, it has a market cap of $112.8 billion. At the end of the third quarter, 86 smart money investors were long Salesforce Com Inc (NYSE:CRM), up by four from the previous quarter. The fund also raised its stake in Apple Inc (NASDAQ:AAPL), by purchasing 400 of its shares for $90 000, which is an increase of 20% compared to the previous quarter. However, since iPhone sales are dropping, while the company’s stock has lost around 33% by the end of the year, and it’s currently trading at $152.29, Mr. Dan Niles questions whether holding a position in this company is a good idea these days. He suggests that China’s Apple resellers who slashed iPhone prices by up to 22% aren’t the companies biggest problem. While waiting for a US-China trade war to end, the fact that 18% of Apple’s revenues come from China, definitely affects investor sentiment and, consequently, market values.
Meanwhile, the fund substantially trimmed its positions in Microchip Technology Inc (NASDAQ:MCHP), an American manufacturer of specialized semiconductor products, and in a multinational telecommunications and internet provider company, Gtt Communications Inc. (NYSE:GTT), by 98% and 96%, respectively. At the end of Q3, the fund owned 170 shares of Microchip Technology Inc (NASDAQ:MCHP) worth $13 000, and 3,630 shares of Gtt Communications Inc. (NYSE:GTT) valued at $158 000.
One of the biggest positions the fund decided to completely sell during the third quarter was in JD.com Inc (NASDAQ:JD), China’s largest online retailer, and also one of the main responsible for lowering iPhone prices. The fund previously held 38,000 shares of the company. In addition, it also said goodbye to 123,873 shares of Lumentum Holdings Inc (NASDAQ:LITE).
Disclosure: None. This article was originally published at Insider Monkey.
