At Insider Monkey, we track around 750 hedge funds and other institutional investors. By analyzing their stock picks and identifying companies that they are collectively bullish on, we believe that we can build a portfolio capable of outperforming the market without employing complex skills and analysis. One of the funds that we follow is James A. Mitarotonda’s Barington Capital Group, which was one of the best-performing in the third quarter, registering a return of 27% based on our calculations.
We determine a fund’s returns by taking into account only its long positions in companies with market caps above $1.0 billion as reported in its 13F filing. Even though we don’t take into account other investments and assume that a holding is unchanged during a particular quarter, the approximate results can still give us an idea whether or not a fund is worth our attention.
Having said that, let’s take a closer look at Barington Capital and its five top picks. At the end of June, Barington had an equity portfolio of $98.37 million, which was diversified across sectors with consumer staples and consumer discretionary sectors amassing over a half of the value.
In Avon Products, Inc. (NYSE:AVP), Barington held 7.31 million shares worth $27.67 million, the position being its largest by far as it amassed 28.13% of its equity portfolio at the end of June. The investment paid off very well in the third quarter, as Avon’s stock surged by nearly 50%. Meanwhile, at the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. Yacktman Asset Management, managed by Donald Yacktman, holds the largest position in Avon Products, Inc. (NYSE:AVP) having reported a $96.8 million stake as of the end of June. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, Wallace Weitz’s Wallace R. Weitz & Co. and Himanshu H. Shah’s Shah Capital Management. On the other hand, Jacob Gottlieb’s Visium Asset Management sold off the biggest stake of all the hedgies followed by Insider Monkey, totaling about $4.4 million in stock.
Ebix Inc (NASDAQ:EBIX) represented Barington’s second-largest stock, with the fund holding 218,015 shares at the end of June, down by 29% over the quarter. The stock returned 18.8% during the July-September period, benefiting 14 of the hedge funds tracked by Insider Monkey that were bullish on this stock heading into the third quarter. Claus Moller’s P2 Capital Partners has the biggest position in Ebix Inc (NASDAQ:EBIX), worth close to $77.8 million, comprising 13.4% of its total 13F portfolio. The second largest stake is held by D. E. Shaw holding a $12.6 million position. Since the number of funds long Ebix Inc (NASDAQ:EBIX) went up by 17% during the second quarter, logic holds that a number of funds initiated stakes in the company. Among them is Citadel Investment Group, managed by Ken Griffin, initiated the largest position and had $2.1 million invested in the company at the end of June.
In Chico’s FAS, Inc. (NYSE:CHS), Barington had raised its stake by 20% to 956,959 shares during the second quarter and saw the stock gain 11.8% in the following three months. Heading into the third quarter of 2016, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 12% from the previous quarter. Among them, Jim Simons’ Renaissance Technologies held the largest stake that was worth $43.9 million at the end of June. On Renaissance Technologies’ heels was AQR Capital Management, led by Cliff Asness, holding a $18.9 million position. Among the funds that sold their stakes in Chico’s FAS, Inc. (NYSE:CHS) is Clifton S. Robbins’s Blue Harbour Group cut the biggest investment of all the hedgies followed by Insider Monkey, totaling close to $54.2 million in Chico’s FAS, Inc. (NYSE:CHS)’s stock, and John Tompkins’s Tyvor Capital was right behind this move, as the fund dumped about $10.2 million worth of shares.
Then there’s Eastern Co (NASDAQ:EML), in which Barington reported a stake containing 525,605 shares as of the end of June. Since Eastern has a market cap of just $121 million, it was not included in our calculations of the fund’s returns, but, nevertheless, the stock returned over 20% during the third quarter. Due to the company’s small size, only five funds tracked by our team were bullish on Eastern Co (NASDAQ:EML) heading into the third quarter, including Mario Gabelli, which reported a $7.4 million stake. Other members of the smart money that are bullish on Eastern Co (NASDAQ:EML) encompass Jim Simons’ Renaissance Technologies, Chuck Royce’s Royce & Associates and Charles Frumberg’s Emancipation Capital.
In OMNOVA Solutions Inc. (NYSE:OMN), Mitarotonda’s fund amassed 971,825 shares at the end of the second quarter. OMNOVA is another small-cap stock in Barington’s equity portfolio and it advanced by 16% in the third quarter. Overall, 10 of the hedge funds tracked by Insider Monkey were bullish on this stock at the end of June, a change of 25% over the quarter. Laurion Capital Management, led by Benjamin A. Smith, held the number one position in OMNOVA Solutions Inc. (NYSE:OMN), having amassed a $9.4 million position in the stock. GAMCO Investors also reported an $8.8-million stake in its 13F filing for the second quarter. Among the funds that initiated stakes in OMNOVA was Hutchin Hill Capital, managed by Neil Chriss, which had initiated the most outsized position in OMNOVA Solutions Inc. (NYSE:OMN) and had $0.2 million invested in the company at the end of the quarter.
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