Highbridge Capital Management, led by Glenn Russell Dubin, has just submitted its 13F report with the SEC for the current reporting period. Highbridge Capital Management is an alternative investment management organization which was set up back in 1992. The fund has developed a diversified investment platform comprising hedge funds, traditional investment management products, as well as credit and equity investments with longer-term holding periods. At the end of 2004, J.P. Morgan Asset Management purchased a majority interest in Highbridge, simultaneously establishing one of the first and most significant strategic alliances in the hedge fund industry. Five years later, J.P. Morgan Asset Management decided to complete the purchase of the remaining shares of the fund. These days Highbridge Capital Management oversees around $31 billion in assets, with its public equity portfolio containing $6.80 billion in holdings as of June 30. In this article we are going to take a closer look at the top picks of the fund, including Johnson & Johnson (NYSE:JNJ), NorthStar Asset Management Group Inc (NYSE:NSAM), and Mosaic Co (NYSE:MOS).
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks have returned 118% since then and outperformed the S&P 500 Index by over 60 percentage points (see more details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
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At the halfway point of the year, Highbridge Capital Management held 785,569 shares of Johnson & Johnson (NYSE:JNJ) valued at $76.56 million. On a year-to-date basis the stock of this $273.62 billion market cap pharmaceutical giant has depreciated by 5.51%. The good news for its investors and for those who consider it for their portfolios is that the company offers a quite attractive dividend yield of 3.04%. In the middle of July, Johnson & Johnson (NYSE:JNJ) announced its second quarter results, beating EPS expectations by $0.03, posting a $1.71 per share figure, and beating revenue estimates, even if only by a mere $30 million, reporting $17.19 billion in sales. What disappoints the general public here is that both numbers were down compared to the same quarter last year: the former by 3.9% and the latter by 8.8%. Regardless of declining results, the company’s management remains confident in the power of its incredibly diverse product portfolio. Despite strong currency headwinds, the company raised its guidance for full-year adjusted EPS to $6.10-$6.20 from $6.04-$6.19, on the back of its strong pharmaceuticals portfolio. Among the other funds that we track, one can find Ken Fisher’s Fisher Asset Management possessing around 10.64 million shares of Johnson & Johnson (NYSE:JNJ) worth $1.04 billion.
Next up is NorthStar Asset Management Group Inc (NYSE:NSAM), in which Highbridge Capital Management increased its equity stake by 408% during the second quarter. After this addition the fund held 4.14 million shares of NorthStar Asset Management Group Inc (NYSE:NSAM) valued at $76.54 million. The company is focused on managing real estate and other investment platforms in the United States and internationally. During 2015 the share price of NorthStar has suffered an 18.17% loss, in spite of the latest revenue figures, for the second quarter, showing a 264.5% increase from the same period of 2014. Nonetheless, the company posted second quarter EPS of $0.19 that missed estimates by $0.10, despite that improved revenue of $119.13 million, being $6.16 million higher than expected, suggesting the company is not being run as efficiently as possible. Last week, Deutsche Bank analysts lowered their target price for the firm to $26 from $30, while maintaining their “Buy” rating on the stock. At present, the stock is trading around $18.5, suggesting big upside potential. Ken Griffin’s Citadel Investment Group held around 5.61 million shares of NorthStar Asset Management Group Inc (NYSE:NSAM) worth $103.72 million as of the end of June.
Lastly, Highbridge Capital Management owned around 1.59 million shares of Mosaic Co (NYSE:MOS) valued at $74.45 million. The $15.34 billion market cap company based in Plymouth, Minnesota, is a producer and marketer of concentrated phosphate and potash crop nutrients. Being the industry leader, Mosaic isn’t far removed from its golden days of 2008, when its stock crested the $150 level. However, such a market-leading position becomes a real problem if the supply in that industry exceeds the demand, as it has today, driving the commodity prices down, and holding Mosaic Co (NYSE:MOS)’s share price beneath the $50 mark. The overall demand in the industry has been steadily declining, which has resulted in a contraction of the total sales of the company. The demand in emerging economies has taken a hit and the ripple effect has caused a distress in the global markets. At the beginning of this month Scotibank market experts decided to decrease the price target for the company to $53 from $55. Like in the previous case, Citadel Asset Management is among the largest shareholders of Mosaic Co (NYSE:MOS), owning some 1.53 million shares valued at $71.61 million.
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