Billionaire James Dinan Betting On These Stocks To Recover Losses

Billionaire James Dinan founded York Capital Management in 1991 with $3.6 million of his own money. The fund has a good track record, with a 12.1% annualized return, but has been facing some performance issues in the last couple of years. Overall, the hedge fund industry has had another poor year, with many asset managers experiencing investor withdrawals and having been forced to cut fees. According to The Wall Street Journal, York Capital Management has seen its assets under management fall to $17 billion from $26 billion over the last year.

In its latest 13F filing, York Capital Management reported a 13F portfolio worth $3.16 billion as of the end of September. The portfolio is well diversified across sectors and the fund made significant changes to it during the third quarter, having initiated 33 new positions and selling out of 19 other holdings.

In this article, we are going to take a closer look at some of York Capital’s top stock picks, including Monsanto Company (NYSE:MON), WhiteWave Foods Co (NYSE:WWAV), Air Products & Chemicals, Inc. (NYSE:APD), Shire PLC (ADR) (NASDAQ:SHPG), and Coca-Cola European Partners Plc. (NYSE:CCE).

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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

York Capital Management reported owning a $332 million position in Monsanto Company (NYSE:MON) which contained 3.25 million shares as of the end of September, up by 974,180 shares over the third quarter. Dan Loeb’s Third Point also increased its holding in Monsanto during the period, by 1.7 million shares to 3.7 million shares worth $378 million. Monsanto Company (NYSE:MON) has performed more or less in line with the overall market, gaining 6.6% over the last year. Monsanto shareholders recently approved the company’s $66 billion merger with German pesticide and pharmaceutical giant  Bayer AG (ADR) (OTCMKTS:BAYRY). The number of funds we track that had Monsanto Company (NYSE:MON) in their portfolios declined by 10 to 77 during the third quarter, while the value of their holdings dropped by 31% quarter-over-quarter.

York Capital Management initiated a major new position in WhiteWave Foods Co (NYSE:WWAV) during the September quarter, purchasing 4.98 million shares worth $270 million at the end of September. Daniel S. Och‘s OZ Management also bought a new stake in the stock during that time, holding more than 1 million shares worth $55 million at the end of September. WhiteWave Foods Co (NYSE:WWAV) is engaged in the business of selling consumer packaged food and beverages. The stock has performed extremely well over the last year, gaining more than 40%. This is currently another merger arb stock, as Paris-based dairy products and food company Danone SA (ADR) (OTCMKTS:DANOY) announced a $10.4 billion deal to buy WhiteWave Foods Co (NYSE:WWAV) earlier this year, which is expected to close in the first quarter of 2017. At the end of September, 38 funds in our system held WhiteWave shares worth $1.81 billion.

On the next page, we’ll check out three more stocks that James Dinan is betting on for a turnaround.

During the third quarter, York Capital Management decreased its stake in Air Products & Chemicals, Inc. (NYSE:APD) by 9% to 793,622 shares worth $102 million. Andreas Halvorsen‘s Viking Global also reported selling 2.2 million shares of the stock during the quarter, reducing its holding to 5.2 million shares worth $724 million. Air Products & Chemicals, Inc. (NYSE:APD) has gained more than 11% over the last year, in line with the broader S&P Index, which also gained 11.08%. Air Products & Chemicals, Inc. (NYSE:APD) has a market capitalization of $31.3 billion and gives a healthy dividend yield of 2.38%. For its latest quarter, the company posted earnings per share of $2.01, which beat analysts’ estimates of $1.99, while revenue also came in slightly ahead of estimates at $2.46 billion, topping the $2.45 billion consensus figure. While the number of funds that we track long Air Products & Chemicals, Inc. (NYSE:APD) remained the same at 56 during the third quarter, the value of their holdings declined to $4.33 billion from $5 billion during the quarter.

James Dinan reduced his fund’s holding in Shire PLC (ADR) (NASDAQ:SHPG) by 44% during the third quarter, though the stock still remained his largest healthcare holding, amounting to 515,947 shares valued at $100 million. Though the stock has fallen by 12% over the last 52 weeks, 24 out of the 29 analysts who cover it remain confident, having it rated as a ‘Buy’. Their average target price for Shire PLC (ADR) (NASDAQ:SHPG) is $230, which implies a 35% increase from the current market price. The company posted revenue of $3.4 billion during its latest quarter, more than doubling its top-line compared to the year-ago quarter. The hedge funds that we track were less bullish on the stock in the third quarter however, with their numbers declining to 50, down from 64 with bullish positions at the end of June.

Lastly, York Capital Management initiated a large new position in Coca-Cola European Partners Plc. (NYSE:CCE) during the quarter, by buying 2.3 million shares worth $92.4 million at the end of September. Larry Robbins’ Glenview Capital also started a new position in the stock during the period, buying 1.4 million shares. Coca-Cola European Partners Plc.  (NYSE:CCE) was created on May 28, 2016 after the merger of the three main bottling companies of The Coca-Cola Company (NYSE:KO) in Western Europe, creating the world’s largest independent Coca-Cola bottler.  Coca-Cola European Partners currently has a market value of $15.8 billion and is trading near the low point of its 52-week trading range.

Disclosure: None