Caxton Associates Betting on Gold and Consumer Staples Amid Major Portfolio Overhaul

Caxton Associates was founded in 1983 by Bruce Kovner, undoubtedly one of the legends of the investment world. He built the fund into a financial powerhouse that managed approximately $11 billion worth of assets when he retired in 2011. According to its latest 13F filing, Caxton Associates’ equity portfolio, which is now managed by Andrew E. Law, carried a market value of $1.41 billion at the end of the first quarter, more than double the value it contained at the end of 2015. The fund has great exposure to the consumer staples and materials sectors, amounting to 37% and 31% of the value of its portfolio, respectively. Mr. Law and his team performed a major overhaul of their portfolio during the first quarter, as evidenced by the vast increase in its worth, so in this article we’ll take a look at Caxton Associates’ overhauled top-5 and see where some of that capital was invested.

At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

New Bet on Commodities

First up is Freeport-McMoRan Inc (NYSE:FCX), of which Caxton Associates’ acquired 2.43 million shares of during the first quarter, worth $25.1 million on March 31. Analysts at Jefferies & Co. recently upgraded the stock to ‘Buy’ from the previous ‘Hold’ rating and increased their price target on it by 20% to $15 per share. Hit by the slump in the commodities market, Freeport-McMoRan Inc (NYSE:FCX) was forced to sell some of its assets to keep up with its debt repayment schedules. The company has successfully raised $1.4 billion through asset sales in the first quarter and recently announced its intention to sell its interest in TF Holdings Limited for $2.8 billion. The stock had a difficult start to the year, dropping by as much as 46%, but has since staged a strong rally and currently trades up by 60% for the year. Renowned corporate rider Carl Icahn is also betting big on Freeport-McMoRan Inc (NYSE:FCX), with his fund, Icahn Capital, holding 104 million shares of the company valued at $1.07 billion.

Confident in Coca-Cola’s Comeback

Andrew Law and his team are also betting big on The Coca-Cola Co (NYSE:KO), having initiated a stake that amassed 1.73 million shares at the end of March. According to the fund’s latest 13F filing, this position was valued at $80.4 million at the end of the March quarter. Last year the company embarked on a quest to revamp its business model in order to stimulate growth and keep up with its competitors. Coca-Cola’s management sought to aggressively cut costs and channel the extra funds towards innovation and marketing. On the other side, the company has been affected by the recent shift in consumer tastes towards health conscious food and drink, an area in which The Coca-Cola Co (NYSE:KO) lags behind the likes of Nestle SA (ADR) (OTCMKTS:NSRGY) and Sodastream International Ltd (NASDAQ:SODA). A long-term fan of the fizzy beverage maker is Warren Buffett, who continues to maintain his investment in the company despite the recent slowing in its growth. At the end of the first quarter, Berkshire Hathaway held exactly 400 million shares of The Coca-Cola Co (NYSE:KO), a position that it first reported back in 2001.

We’ll study Caxton’s top three stock picks on the next page.