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.

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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.

Monster Addition to Monster Stake

Having almost halved its stake in Monster Beverage Corporation (NASDAQ:MNST) during the previous quarter, Caxton’s management made a U-turn and decided to boost their position in the stock heading into the second quarter. The fund now holds 991,000 Monster shares valued at $132 million at the end of March, with the position having been enlarged by 55% during the first quarter. Monster Beverage Corporation (NASDAQ:MNST) had a stellar first quarter, signaling to the market that its on the right track back to solid growth. Its latest quarterly report showed an 8.5% year-over-year increase in sales to $680 million, above analysts’ consensus of $665 million. Sales in overseas markets rose by an impressive 32%, despite the effects of the stronger dollar. The company also posted a profit of $0.80 per share, surpassing expectations of $0.74 per share. The results propelled the stock higher and pushed it into green territory for the year. Neal C. Bradsher‘s Broadwood Capital is also betting big on Monster Beverage Corporation (NASDAQ:MNST), which accounts for 44% of its portfolio. According to its latest 13F filing, the fund holds 1.6 million shares valued at $213 million.

Gold’s Time Has Come

With gold prices back in an uptrend, Mr. Law and his team chose to place a big bet on Barrick Gold Corporation (USA) (NYSE:ABX). Caxton Associates’ new position in the stock amounts to 11.5 million shares valued at $157 million. The fund’s latest 13F filing also indicates ownership of 15.2 million call options underlying shares of the stock. After a two-year slump, gold prices started to rise in the beginning of 2016, pushing Barrick Gold up as well. The stock ended yesterday’s trading session at $17.62 per share, up by 130% for the year. The uncertainty about the pace of the Fed’s rate hikes is still keeping gold traders nervous and indirectly putting pressure on the stock price of mining companies, including Barrick Gold Corporation (USA) (NYSE:ABX). Traders got a breather for now, as the latest statement issued by the Fed stated that a rate hike is dependent on improved economic indicators. George Soros‘ family office is also betting big on gold again after having liquidated its positions in gold mining companies and ETFs during the third quarter of 2015. Soros Fund Management recently reported a fresh investment in Barrick Gold Corporation (USA) (NYSE:ABX) that amounts to 19.4 million shares worth roughly $263 million.

Kraft Heinz Ranks as New Top Bet

Kraft Heinz Co (NASDAQ:KHC) is Caxton Associates’ new top bet, with the fund having acquired 3.19 million shares of the company during the first quarter. According to its latest 13F filing, the value of the position was $251 million on March 31. Despite a 3% year-over-year drop in revenue, the company still managed to beat Wall Street’s expectations for the first quarter of fiscal year 2016 ended April 3. Kraft Heinz Co (NASDAQ:KHC) posted a profit of $0.73 per share on the back of $6.57 billion in revenue, topping analysts estimates of $6.47 billion in revenue and earnings of $0.62 per share. The stock is currently trading at a massive P/E multiple of 152 however, significantly higher than the industry average of 41 according to Yahoo! Finance. One of the architects of the Kraft/Heinz merger, Warren Buffett, still holds a sizable position in the new company. Valued at $25.6 billion, Berkshire Hathaway’s stake in Kraft Heinz Co (NASDAQ:KHC) amounts to 325 million shares.

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