Phil Gross (pictured) and Robert Atchinson’s Adage Capital Management recently boosted its stake in Anixter International Inc. (NYSE:AXE) according to a filing with the Securities and Exchange Commission. The $48.2 billion hedge fund now owns about 1.68 million shares of Anixter, up from the 1.24 million shares that it held previously. The current holding comprises 5.11% of the outstanding common stock of the company, which is engaged in the distribution of communication and security products, including electrical wire and cable products.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Adage Capital was established by the duo in 2001 with a $3.8 billion commitment from their former employer, Harvard Management Company (HMC). While at HMC, Gross and Atchinson formed a team that outperformed the S&P 500 on an annual basis by an average of 4.5%. At the end of March, the market value of Adage’s public equity portfolio stood at $41.02 billion. The portfolio is fairly diversified with its top ten holdings representing 13.87% of the portfolio value, while the healthcare sector comprises about 20% of Adage’s holdings. Apart from Anixter International Inc. (NYSE:AXE), Adage’s top picks among services stocks included Walt Disney Co (NYSE:DIS), Home Depot Inc (NYSE:HD), and CVS Health Corp (NYSE:CVS) at the end of the first quarter. Let us have a closer look at these holdings.
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Coming back to Anixter International Inc. (NYSE:AXE), in which Adage has held a stake since the second quarter of 2013, the $2.19 billion company’s stock has slumped by nearly 25% year-to-date. In its financial results for the first quarter, Anixter International Inc. (NYSE:AXE) delivered an EPS of $0.81, which was $0.18 below estimates. However, revenues of $1.39 billion were $10 million ahead of expectations. The company recently entered into a definitive agreement to sell its Fasteners segment to American Industrial Partners for $380 million after it had been working for two years to improve its performance. However, Anixter International Inc. (NYSE:AXE)’s management wanted to focus its resources on its cabling and security businesses, which led to the disposal of the unit. The sale, which is expected to close in the second quarter, has also reduced the company’s exposure to Europe, thus leading to more stable top line growth in the future. Among over 700 hedge funds that we track, John W. Rogers‘ Ariel Investments is the largest stockholder of Anixter International Inc. (NYSE:AXE), as it owns some 2.23 million shares valued at $169.89 million.
Adage increased its holding in Walt Disney Co (NYSE:DIS) by 14% during the first quarter to 2.35 million shares valued at $246.06 million. The $186.56 billion entertainment and media enterprise beat both the top and bottom line estimates in its latest quarterly financial results. So far this year, Walt Disney Co (NYSE:DIS)’s stock has appreciated by 16.73%. The stake represented 0.6% of the fund’s portfolio value. Ken Fisher‘s Fisher Asset Management is the largest shareholder of Walt Disney Co (NYSE:DIS), holding some 8.40 million shares valued at $881.32 million.
During the first quarter, Adage inched up its holding in Home Depot Inc (NYSE:HD) by 1% to lift the total stake to 2.03 million shares valued at $230.96 million. The 5.36% rise of Home Depot Inc (NYSE:HD)’s stock on a year-to-date basis is a little higher than the home improvement stores industry as a whole, which is up by 4.34% during the same period. Among the billionaires that we track, eight had a total investment of $1.64 billion in Home Depot Inc (NYSE:HD) at the end of March. Ken Griffin is one of them, with his managed futures fund, Citadel Investment Group holding 986,450 shares valued at $112.07 million.
Adage’s holding in the $115.34 billion pharmacy company, CVS Health Corp (NYSE:CVS), saw a boost of 11% during the first three months of the year. The stake now consists of some 2.11 million shares valued at $218 million. The company’s stock is up by a modest 6.14% year-to-date. The interest of hedge funds in CVS Health Corp (NYSE:CVS) rose during the first quarter as 59 firms had an aggregate investment of $2.49 billion in the company at the end of March, as compared with 53 funds with $2.34 billion at the end of the previous quarter. Robert Rodriquez and Steven Romick’s First Pacific Advisors is the largest stockholder of CVS Health Corp (NYSE:CVS) in our database, as it holds 4.63 million shares valued at $477.81 million.
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