One of the early movers and success stories of the hedge fund industry was Julian Robertson and he continues to get attention from investors and the media despite no longer managing money for clients. Robertson instead runs his family office Tiger Management, whose public equity portfolio has market value of $596.87 million as per the reporting period of its latest 13F filing with the SEC, March 31. While Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Ltd (NYSE:BABA) and Apple Inc. (NASDAQ:AAPL) are the leading investments of the hedge fund legend, he also holds investments in several small-cap companies, which we are going to focus on in this article, with the top small-cap picks of Robertson being SeaWorld Entertainment Inc (NYSE:SEAS), FNFV Group (NYSE:FNFV), NorthStar Asset Management Group Inc (NYSE:NSAM), and Equity Commonwealth (NYSE:EQC).
Professional investors like Robertson, spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the best small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 144% and beaten the market by more than 84 percentage points since then, and by 4.6 percentage points in the first quarter of this year (see the details).
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SeaWorld Entertainment Inc (NYSE:SEAS) is the top small-cap stockholding of Robertson, who owns 538,382 shares valued at $10.38 million. The entertainment company has a market cap of $1.93 billion and it offers quarterly dividend payments of $0.21, providing a strong yield of 3.91%, despite shares of SeaWorld Entertainment Inc (NYSE:SEAS) also having grown by 21.75% year-to-date. SeaWorld announced that Marc G. Swanson would take over as the new interim Chief Financial Officer of the company after his predecessor James M. Heaney announced his departure to accept a senior position with another company. Swanson has worked as the Chief Accountant Officer for SeaWorld Entertainment Inc (NYSE:SEAS) since 2012 and will take charge on June 1, 2015. Jonathon Jacobson‘s Highfields Capital Management is one of the largest investors of the entertainment company, along with the similarly-named fund Highland Capital Management.
FNFV Group (NYSE:FNFV) comes in at number two on the list of top small-cap stocks of Tiger Management, with the family office holding 488,208 shares valued at $6.88 million. The insurance company has a market cap of $1.20 billion and its shares have declined 1.9% during 2015. Fidelity National Financial Ventures is one of the two business groups of Fidelity National Financial, with the other being Fidelity National Financial Inc (NYSE:FNF). The former was created as a tracking stock, to showcase the value of Fidelity`s portfolio companies, and has gained over 38% since its IPO 11 months ago. Keith Meister‘s Corvex Capital and Daniel Och’s OZ Management maintain significant positions in FNFV Group (NYSE:FNFV).
With a position of 130,400 shares valued at $3.04 million in NorthStar Asset Management Group Inc (NYSE:NSAM), the company represents the third-largest small-cap stock pick of Robertson. The asset management company is primarily focused on real estate investments and has a market cap of $4.15 billion. One of the major subsidiaries of NorthStar Asset Management Group Inc (NYSE:NSAM), NorthStar Realty, recently acquired a portfolio of independent living facilities for $875 million. NorthStar Realty owns a 60% share of the portfolio whereas NorthStar Healthcare, another subsidiary, owns a 40% share. SteadFast Capital Management and MSDC Management are among the primary stockholders of NorthStar Asset Management Group Inc (NYSE:NSAM).
Equity Commonwealth (NYSE:EQC) is the final top small-cap choice of Tiger Management, which owns 85,200 shares valued at $2.26 million of the real estate investment trust (REIT), which has a market cap of $3.37 billion. The REIT is planning to trim its portfolio, with expected office building sales of $2 billion to $3 billion in the upcoming months. Its recent earnings release indicated that the company is under contract to sell 52 properties for nearly $750 million. Sam Zell, chairman of Equity Commonwealth (NYSE:EQC), announced in February that the REIT is planning to trim its far-flung property portfolio. The market has reacted with indifference to the sales, with shares of Equity Commonwealth nearly flat in 2015 and over the past 52 weeks. Fir Tree, Corvex Capital and Martin Whitman‘s Third Avenue Management are among some of the major investors of Equity Commonwealth.
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