Balyasny Asset Management: Performance, AUM, Holdings

In 2001, Dmitry Balyasny together with Scott Schroeder and Taylor O’Malley founded Balyasny Capital Management in Chicago. Over 16 years, the fund, which, in 2004, changed its name to Balyasny Asset Management, has grown to a team of over 500 people with offices in New York, London, Singapore, and Hong Kong, in addition to Chicago. In addition to the founding partners, the fund has two other partners, Christian Zann and Paul Brinberg, which joined Balyasny Asset Management in 2004.

Prior to founding Balyasny Asset Management, Dmitry Balyasny, had been working at Schonfeld Securities since 1994. He is currently the Chief Investment Officer and Managing Partner and owns over 75% of the fund. Two other founding partners, O’Malley, who is also BAM’s Chief Risk Officer, and Schroeder, the Head of Relationship Group, joined Balyasny, when it was still a group within Schonfeld Securities.

Balyasny Asset Management currently manages $12.7 billion in client assets. The fund provides investment advisory services and specializes in investing in fundamental long/short equity, equity trading, quantitative systematic strategies, global macro and credit, but also invests in some alternative asset classes. Balyasny seeks to build a hedge fund that would be run in a way similar to which Jeff Bezos runs Amazon. In his first-quarter letter to investors, Balyasny said that Amazon “is a great example of the benefits of building a scalable platform that can extend opportunistically into new business lines.” In this way, Balyasny Asset Management is built as a large, highly-diversified hedge fund that employs a variety of uncorrelated strategies. The fund also seeks to integrate its long/short fundamental approach with quantitative analysis in order to generate alpha. Balyasny believes that their “ability to spread the investment, data sourcing, and analysis across both the Long/Short and Systematic businesses gives [them] an edge.”

So far this year, Balyasny Asset Management’s performance has been a bit disappointing. Its Atlas Global fund returned 0.08% in the first six months of 2017, while its Atlas Enhanced inched up by 0.78%. On the one hand, it’s not so bad, given that hedge funds on average have been underperforming. Hedge Fund Research’s HFRX Multi-Strategy Index is 4.80% in the green since the beginning of the year, while HFRX Equity Hedge Fund Index has gained 5.70%. On the other hand, the S&P 500 Index has advanced by 8.24% in the first six months and 11.40% year-to-date.

One of the reasons for Balyasny’s weak first-half performance is the high level of diversification. While its investment in Financials, Consumer, Industrials and Healthcare generated double-digit growth in the first six months, these gains were offset by the losses registered by positions in the Energy sector, as well as Macro and Credit investment, according to its second-quarter investor letter.

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At Insider Monkey, we also calculated the returns of Balyasny Asset Management’s stock picks. According to our estimates, which take into account the fund’s long positions in companies with market capitalization over $1.0 billion, as disclosed in quarterly 13F filings, Balyasny Asset Management’s picks returned 1.8% in the second quarter and were 9% in the green in the first six months.

Balyasny Asset Management’s latest 13F showed that the fund has an equity portfolio worth $24.25 billion, as of the end of June. The portfolio is highly diversified, with nearly 1,500 positions. Even though its overall returns were rather poor, Balyasny’s top four holdings generated very solid gains, but they amass slightly more than 1% of the total 13F portfolio value.

On the following pages, we are going to take a closer look at Balyasny Asset Management’s top four long positions.

1. Bank of America Corp (NYSE:BAC)

During the second quarter, Balyasny Asset Management added 15.22 million shares of Bank of America Corp (NYSE:BAC) to its holding. In this way, the fund held 15.62 million shares worth $378.88 million at the end of June. Over the last 12 months, Bank of America Corp (NYSE:BAC)’s stock has surged by over 59%, gaining ground alongside the rest of the financial sector, as investors got excited about a potential lessening of regulations and higher interest rates. Bank of America Corp (NYSE:BAC) also managed to beat the consensus estimates for both EPS and revenue in three out of the last four quarters. At the end of June, Bank of America Corp (NYSE:BAC) was the third most popular stock among the funds we track at Insider Monkey, with 132 funds holding shares, down from 138 a quarter earlier.

2. Apple Inc. (NASDAQ:AAPL)

In Apple Inc. (NASDAQ:AAPL), Balyasny boosted its stake by 123% to 1.95 million shares valued at $281.19 million during the second quarter. Apple Inc. (NASDAQ:AAPL)’s stock is 38% in the green year-to-date amid a string of positive developments, including the recent event, where the company unveiled several new products including two iPhones, iPhone 8/8S and the flagship iPhone X. However, Apple Inc (NASDAQ:AAPL) is also facing some issues with supply of the new iPhones, which led to the delay of the release day. A number of analysts have cut their forecasts for the shipments of iPhone X this year, with KGI Securities now estimating delivery figures of around 40 million, down from the previous 45 – 50 million. In addition, the delays are expected to have a negative impact on Apple Inc (NASDAQ:AAPL)’s financial results for the fiscal fourth quarter, which ends on October 25,  as consumers are more likely to wait for the iPhone X to become available instead of buying the iPhone 8. During the second quarter, the number of investors from our database long Apple Inc (NASDAQ:AAPL) increased by two to 115.

3. Alcoa Corp (NYSE:AA)

Alcoa Corp (NYSE:AA) saw Balyasny inch up its position by 9% on the quarter to 7.85 million shares worth $256.26 million held at the end of June. Including Balyasny, there were 44 funds tracked by us that held shares of Alcoa Corp (NYSE:AA) heading into the third quarter. These funds owned $1.86 billion worth of stock, which represented around 31% of the company’s outstanding stock. Alcoa Corp (NYSE:AA)’s stock has advanced by more than 60% since the beginning of the year, as aluminum prices have been gaining ground. China has recently started to lower the production of aluminum in an effort to reduce pollution, which sent prices higher. In addition, the US government has announced plans to impose tariffs on Chinese steel and aluminum imports, although Alcoa’s global presence means it will be less affected by these regulations. However, what’s more important for investors are Alcoa’s cost-cutting efforts, which the company has been expected to be pursuing aggressively since the spin-off from Arconic.

4. Olin Corporation (NYSE:OLN)

Balyasny Asset Management also raised its exposure to Olin Corporation (NYSE:OLN) by 2% during the second quarter, having disclosed a $244.84 million stake that contains 8.09 million shares in its latest 13F filing. Over the last 12 months, Olin Corporation (NYSE:OLN)’s stock has surged by over 73%, amid the company delivering strong revenue growth, although its results were mixed in comparison with analysts’ estimates. At the end of August, Olin Corporation (NYSE:OLN)’s stock jumped following reports that the hurricane Harvey has disrupted a significant part of the US chemical production. Olin Corporation (NYSE:OLN) is the world’s largest producer of chlorine and caustic and it is expected that the company should benefit from the disruptions through higher prices. Between April and June, the number of investors tracked by Insider Monkey bullish on Olin Corporation (NYSE:OLN) went up by four to 34, while the total value of their holdings increased to $1.45 billion from $1.21 billion and represented 28.90% of the company’s outstanding stock at the end of June.

Disclosure: none