Billionaire Lei Zhang‘s Hillhouse Capital Management recently filed its 13F for the reporting period of June 30. Hillhouse Capital Management was founded by Zhang in 2005, and within a span of ten years it has become one of the largest hedge funds operating out of Asia, with over $18 billion in assets under management as of December 2014. According to the fund’s latest 13F, its U.S public equity portfolio was worth almost $6.49 billion at the end of June. Although Hillhouse Capital had positions in over 30 stocks, its top ten holdings accounted for the vast majority of the portfolio’s value, at 97.48%. The fund had low turnover of 18.75% during the second quarter, having initiated a stake in six stocks, made additional purchases in four stocks and reduced its holdings in seven stocks. In this article we are going to focus on Hillhouse Capital’s favorite North American companies at the end of second quarter, which were Mondelez International Inc (NASDAQ:MDLZ), Cameco Corporation (USA)(NYSE:CCJ), and Mobileiron Inc (NASDAQ:MOBL).
Hillhouse Capital Management is just one of more than 700 hedge funds that we have in our database, whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most smaller investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns 118%, beating the S&P 500 Total Return Index by greater than 60 percentage points (see the details).
Follow Lei Zhang's Hillhouse Capital Management
Mondelez International Inc (NASDAQ:MDLZ) represented Hillhouse Capital’s second-largest equity holding and its biggest bet on a North American company at the end of the second quarter. The fund made no changes to its stake in the company during the April-June period, continuing to own slightly over 9.3 million shares of Mondelez International Inc (NASDAQ:MDLZ) worth $382.66 million as of June 30. Renowned activist investor Bill Ackman‘s firm Pershing Square Capital recently revealed that it had acquired 120.27 million shares or 7.5% of the outstanding shares of Mondelez International Inc (NASDAQ:MDLZ). According to Mr. Ackman, the company can significantly increase shareholder value by reducing costs, improving revenues, and selling itself to a strategic acquirer. Although Mondelez International Inc (NASDAQ:MDLZ) has been working towards reducing costs in the past few quarters, several analysts on the Street agree with Mr. Ackman that the company can do more. On August 13, analysts at Canaccord Genuity reiterated their ‘Hold’ rating on the stock, while upping their price target to $44 from $38, which represents a potential 4% upside to the stock’s current trading price.
Moving on to Hillhouse Capital Management’s next favored North American company, Cameco Corporation (USA)(NYSE:CCJ). Here too the fund didn’t made any changes to its stake during the second quarter, owning over 1.0 million shares of the company. As of June 30, this stake was worth almost $14.65 million. Cameco Corporation (USA)(NYSE:CCJ) is one of the largest uranium exploration and trading firms in the world. The slump in uranium prices in 2011 following the nuclear disaster in Japan took a big toll on the company’s stock, which hasn’t been able to recover since and currently trades near its 4-year low. Japan starting its first nuclear reactor since the Fukushima disaster earlier this month is seen by many as a big positive for the company. On August 6, analysts at Cowen and Company reiterated their ‘Market Perform’ rating on the stock, while reducing their price target to $17 rom $19, which still represents 26% upside to where the stock currently trades at. Legendary investor George Soros of Soros Fund Management increased his stake in Cameco Corporation (USA)(NYSE:CCJ) by 45% to almost 3.7 million shares during the April-June period.
Mobileiron Inc (NASDAQ:MOBL) was Hillhouse Capital’s third-largest holding in a North American company as of June 30. The fund continued to own slightly above 1.1 million shares of the company, the stake being worth over $6.5 million. Shares of the enterprise mobile security company saw a massive slump in April when it reduced its guidance and announced that its CFO Todd Ford would be leaving the company. Since then the shares have continued to drift lower and are now down by 60% year-to-date. Mobileiron Inc (NASDAQ:MOBL) reported an earnings and revenue beat for the second quarter on July 30. While the Street was expecting it to report an EPS loss of $0.27 on revenue of $33.68 million, the company declared an EPS loss of $0.25 on revenue of $34.80 million. On August 3, analysts at Imperial Capital reiterated their ‘Outperform’ rating on the stock, but lowered their price target to $8 from $9 , which represents a potential 100% upside to the stock’s current market price. After Hillhouse Capital, Leon Shaulov‘s Maplelane Capital was the second-largest shareholder of Mobileiron Inc (NASDAQ:MOBL) among the hedge funds we cover, owning 761,000 shares.
Disclosure: None
