Daniel Benton, a former employee of Art Samberg’s Pequot Capital Management, founded Andor Capital Management in 2001 together with his colleague Christopher James. Andor has around $1.60 billion in its equity portfolio as of the end of 2014, with most positions represented by technology companies. Moreover, the top positions in the fund’s 13F are in big tech companies such as Apple Inc. (NASDAQ:AAPL), Tesla Motors Inc (NASDAQ:TSLA), Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR), and Alibaba Group Holding Ltd (NYSE:BABA). Overall, 21 out of 23 long positions in Andor’s equity portfolio are stakes in companies with a market cap of over $1.0 billion and they had weighted average returns of 4% during the first quarter, beating the S&P 500 ETF (SPY) by over 3.0 percentage points. Let’s take a closer look at the companies that had the largest impact on Andor’s performance during the first three months of 2015.
Andor Capital is just one of more than 700 hedge funds that we have in our database as part of our small-cap strategy. Even though most smaller investors consider that tracking 13F filings is a waste of time because they are filed with a delay of 45 days after the end of a calendar quarter, the results of our study prove the opposite. To be on the safe side, we used a delay of 60 days in our backtests that involved 13F filings between 1999 and 2012 and still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, we obtained returns of more than 137%, beating the S&P 500 Total Return Index by some 80 percentage points (see more details how to beat the market by following 13Fs).
One of Andor’s most profitable bets was Apple Inc. (NASDAQ:AAPL), whose stock returned 13.17% in the first three months of the year and in which the investor disclosed a $331.14 million position that contains 3.0 million shares (up by 10% on the quarter). The growth of the stock was fueled by strong financial results and the impending release of the Watch, with first orders delivered starting last week. With very high demand for the Watch, the prospects for Apple Inc. (NASDAQ:AAPL) look good, which is one of the reasons why the company is the most popular pick among the funds that we track. The largest stake among the funds that we track is held by billionaire activist Carl Icahn, who owns 52.76 million shares, which is another reason to be bullish on Apple, taking into account that Icahn has previously pushed for Apple to return more capital to shareholders and they will reportedly do just that during their upcoming earnings call. Ken Fisher, Philippe Laffont, and David Einhorn are three other investors with big stakes in Apple Inc. (NASDAQ:AAPL) as of the end of last year.
Even though investors usually purchase shares of the company for long-term gains, in shorter periods the investments can let them down. This is the case with Tesla Motors Inc (NASDAQ:TSLA), whose stock lost 15.13% in the January-March period. Andor owns 1.25 million shares of Tesla which were worth $278.01 million at the end of 2014. Despite the fact that Tesla Motors Inc (NASDAQ:TSLA)’s stock is considered overvalued by many investors, with a significant number of funds among those that we track disclosing ‘Put’ positions on the stock in the previous round of 13F filings, over the long-term it might be a more profitable investment. Since Andor first disclosed a position in Tesla Motors Inc (NASDAQ:TSLA), the stock has almost doubled in value, and some analysts believe that it can reach as much as $1,000 per share in the next five years. Tesla Motors Inc (NASDAQ:TSLA) has several exciting projects in the works such as the Gigafactory and low-cost electric car Model 3. Andor owns the largest long position in Tesla in our database, while several billionaire investors, among which are Ken Griffin and David Shaw, disclosed large ‘Put’ and ‘Call’ stakes underlying shares of the company.
Mr. Benton is also betting on social networking companies, disclosing 2.0 million shares of Facebook Inc (NASDAQ:FB), up by 34% on the quarter, the value of the stake amounting to $156.04 million. The stock gained 5.38% during the first three months of 2015, but taking into account the latest analyst updates it can yet grow further. SunTrust and Brean Capital reiterated their ‘Buy’ ratings on Facebook Inc (NASDAQ:FB) earlier this week with price targets of $90 and $96 per share respectively, 10-15% upside on the current trading levels of $82.15. Stephen Mandel‘s Lone Pine Capital is the largest shareholder of Facebook Inc (NASDAQ:FB) among the funds that we track, disclosing 13.50 million shares in its latest 13F filing.
Twitter Inc (NYSE:TWTR) was also included in Andor’s 13F filing, the investor cutting its stake by 57% to 2.50 million shares valued at $89.68 million. Even though Twitter has far less fund ownership than Facebook, its stock actually surged by 39.62% during the first three months of the year. The company has not reported a profit since going public, but it has steady user growth and several initiatives meant to drive the number of active users higher and as a result increase Twitter Inc (NYSE:TWTR)’s revenues. David Shaw, Chase Coleman, and Steve Cohen are among the largest shareholders of Twitter Inc (NYSE:TWTR) among the funds in our database.
Alibaba Group Holding Ltd (NYSE:BABA) is an investment that so far hasn’t worked out well for Andor, as the stock fell by 19.92% during the first quarter, after the fund initiated a position during the last three months of 2014. According to the latest 13F, the investor holds 400,000 shares of Alibaba, valued at $41.58 million as of the end of 2014. The company had a successful IPO last year, but the stock lost ground amid a series of bad news such as declining sales, criticism over its practices, and allegations of selling counterfeit products. Alibaba Group Holding Ltd (NYSE:BABA) also lost some investors’ interest as the number of funds holding shares declined to 90 from 110 during the fourth quarter (among the funds that we track). On the other hand, Dan Loeb’s Third Point is still betting big on Alibaba Group Holding Ltd (NYSE:BABA), raising its stake by 39% during the fourth quarter to 10.0 million shares.
Disclosure: None
