Billionaire Bruce Kovner’s Caxton Associates’ Favorite Stock Picks: Kraft Heinz Co (KHC), Monster Beverage Corporation (MNST) & More

Bruce Kovner is one of the most prominent hedge managers in the U.S. Kovner began his career as a trader working under Michael Marcus at Commodities Corporation, which is now part of the Goldman Sachs Group Inc. (NYSE:GS). In 1983, he established his own hedge fund Caxton Associates. Caxton was closed to new investors on several occasions, including in 1992. The fund last reopened to new investors in 2013, however, by that time Kovner left the fund. ovner now serves as Chairman of CAM Capital through which he manages his investments.  Caxton was one of the few funds that generated solid returns even during the financial crisis of 2008. The fund generated returns of 13% in what turned out to be one of the worst years for financial markets.

According to Caxton’s latest 13F filing, the fund had an equity portfolio worth $3.62 billion at the end of the second quarter, significantly higher compared to $1.41 billion reported a quarter earlier. The filing also showed that 27% of Caxton’s portfolio was represented by the Financial sector, which was followed Materials and Consumer Staples stocks, which amassed 25% and 21% of the portfolio, respectively. In this article, we will take a look at five stocks, in which Caxton held the largest stakes heading into the third quarter

Hedge fund sentiment is an important metric for assessing long-term profitability. At Insider Monkey, we track over 740 hedge funds, whose quarterly 13F filings we analyze to determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (read more details hxere).

Let’s start with Raytheon Company (NYSE:RTN), in which Caxton held 375,200 shares worth $51 million at the end of June. Caxton added 355,200 shares of Raytheon Company during the second quarter. A total of 38 funds from our database held $1.05 billion worth of Raytheon shares at the end of the last quarter, down from 42 funds with stakes worth $1.44 billion in aggregate at the end of March. Last month, Raytheon was awarded a $37.7 million US Navy contract for the procurement of MK 54 lightweight torpedo common parts kits, MK 54 Mod 0 lightweight torpedo kits, and MK 54 exercise fuel tanks, spares, production support material, engineering support, and hardware repair support.

One of Consumer Staples stocks in Caxton’s portfolio is Molson Coors Brewing Co. (NYSE:TAP).  At the end of the second quarter quarter, Caxton owned 537,600 shares of the company valued at $54.36 million. The position was boosted by  417,600 shares over the quarter. Among the funds we track, 57 were long Molson Coors, holding approximately $2.88 billion worth of stock, compared to 52 funds holding $2.71 billion worth of shares a quarter earlier. Year-to-date, the stock has generated returns of more than 10% and currently offers a dividend yield of 1.58%. Molson Coors reported its second-quarter results last month, posting earnings of $1.11 per share, in-line with the Street estimates, while revenue for the quarter came in at $986.2 million, beating the  consensus estimate by $24.1 million.

Read about Caxton Associates’ three other favorite stocks on the next page.