Argentiere Capital, founded and managed by Deepak Gulati, is a Switzerland-based hedge fund founded in 2013. Gulati is the former head of global equity proprietary trading at JPMorgan Chase. Under his guidance, JPMorgan Chase produced annualised returns of about 19% from 2007 through 2012. Gulati seeks to exploit inefficiencies across the spectrum of equities, and so his fund Argentiere Capital generates returns that are uncorrelated with the market by employing equity volatility strategies. The second quarter weighted average returns of the fund’s 35 long positions in companies with a $1 billion market cap stood at 2.8%, while its year-to-date returns were 5.1% through June 30 using the same metric. It should be noted that these are only based on the fund’s long positions at a fixed point in time, and do not account for changes to positions during the quarter, bonds, options, or short positions, so the actual returns of the fund could be very different than our calculated stock pick returns. At the end of the second quarter of 2015, the fund had 48% of its holdings in finance stocks, 21% in the materials sector, and 14% in information technology. The market value of the fund’s equity portfolio stood at $151.31 million at the end of June, compared to $242.23 million following the prior quarter. This was also accompanied by a high turnover ratio of 100.00%. In this article we’ll take a look at the top tech picks of the fund heading into the third quarter, which are Alibaba Group Holding Ltd (NYSE:BABA), Apple Inc. (NASDAQ:AAPL), and Yahoo! Inc. (NASDAQ:YHOO).
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At Insider Monkey, we track moves by hedge funds like Argentiere Capital in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 139% and beating the market by more than 80 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
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Argentiere Capital increased its Alibaba Group Holding Ltd (NYSE:BABA) position by 444% in the second quarter, to 98,600 shares with a value of $8.11 million. The fund’s position in the stock amounted to 5.36% of its total portfolio holdings, up from just 0.62%. Alibaba Group Holding Ltd (NYSE:BABA) is principally engaged in online and mobile commerce through products, services, and technology, and has a market cap of $210.09 billion. The Chinese e-commerce giant has had a tough year so far, with its stock sliding by about 19.48% year-to-date, though it’s been relatively flat since the end of the first quarter. The company is trying to spur growth by partnering with Unilever plc. (NYSE:UL), with the aim of reaching out to a larger consumer base in China. The company continues to expand its entertainment business and recently partnered with DMG. Rob Citrone‘s Discovery Capital Management held the largest position in Alibaba within our database, owning 8.77 million shares worth over $730 million. Alibaba was the billionaire’s top position as of March 31.
At the end of the second quarter of 2015, Argentiere Capital held a total of 57,300 shares of Apple Inc. (NASDAQ:AAPL), valued at $7.19 million. The fund increased its exposure to Apple by over four percentage points to 4.75% by the end of second quarter. Apple Inc. (NASDAQ:AAPL) is the world’s biggest company in terms of market capitalization, standing at a whopping $716.84 billion. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service, and support offerings. The Company also delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store. While the Mac is an oft-overlooked component of Apple’s business now, Mac unit shipments and revenue surged by 9% in the most recent quarter. Apple’s shares had a very tame second quarter by its standards of late, returning just 0.79%, while they are down slightly in July. Another major shareholder of the stock heading into the third quarter is Ken Fisher’s Fisher Asset Management, which owns 11.02 million shares of the company, and is surely hoping for better things to come.
At the end of the second quarter of 2015, Argentiere Capital held a total of 45,000 shares of Yahoo! Inc. (NASDAQ:YHOO), with a market value of $1.77 million. The fund’s holding in the stock moving into the third quarter of 2015 represented 1.17% of its total portfolio value. Yahoo! Inc. (NASDAQ:YHOO) is engaged in providing Internet search, communication services, and digital content. Its market cap is $36.51 billion. Recently, Yahoo filed to spin-off its stake in Alibaba, naming the new public company as Aabaco Holdings, Inc. Yahoo plans to distribute all of the outstanding shares of Aabaco Holdings pro rata to its shareholders. Immediately after the spin-off, Aabaco Holdings will own approximately 384 million shares of Alibaba Group, representing an ownership interest of approximately 15% in Alibaba Group, and a 100% ownership interest in Yahoo Small Business (a necessary element of the spinoff). The spin-off is expected to be completed in the fourth quarter of 2015. Another shareholders ss of the stock is Daniel S Och’s OZ Management, which held 14.65 million shares of the company as of March 31.
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