Ivory Investment Management L.P. is a Los Angeles-based research-intensive hedge fund firm founded by Curtis Macnguyen in 1998. The hedge fund currently employs one long and two long/short investment strategies. Initially, the fundamental value-based investment firm was financed with seed capital from outside investors amounting to $10 million and it has managed to deliver quite exceptional returns despite focusing on this relatively “old-fashioned” investment approach. The flagship fund of Ivory Investment Management has delivered a cumulative return of 346% since its inception, more than doubling the 139% cumulative return delivered by the Standard & Poor’s 500 Index during the same period. Therefore, the fund has generated an annualized return of as much as 9.7% since its establishment, which represents an attractive return considering the economic turmoil experienced throughout the last decade. As shown in the fund’s latest 13F filing, the value of its public equity portfolio stands at $4.23 billion. In the following article we will list and discuss the top new picks of Curtis Macnguyen, which include the following companies: Western Digital Corporation (NASDAQ:WDC), St. Jude Medical Inc. (NYSE:STJ), Bank of America Corporation (NYSE:BAC) and Delta Air Lines Inc. (NYSE:DAL).
Ivory Investment 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 of more than 142%, beating the S&P 500 Total Return Index by greater than 83 percentage points (see the details).
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That latest 13F filing reveals that Ivory Investment Management has taken a long position in Western Digital Corporation (NASDAQ:WDC). Macnguyen purchased a stake of 1.56 million shares worth $141.83 million during the first quarter, which, considering the fact that shares of Western Digital have plummeted by 17% year-to-date, might represent that it’s a really cheap buying opportunity for bottom-fishing investors at the moment. This idea is also supported by the research team at Goldman Sachs, which recently upgraded the stock to a “Buy” rating from a “Neutral” one. At the same time, the reputable investment banking firm also raised the stock’s price target to $122 from $106, which yields a potential 33% upside for investors. Within our database, Ken Griffin’s Citadel Investment Group is the largest investor in Western Digital Corporation (NASDAQ:WDC), owning 3.07 million shares valued at $279.41 million.
Ivory Investment Management also acquired a 1.73 million share-stake in St. Jude Medical Inc. (NYSE:STJ), with the stake valued at $113.29 million. Despite the fact that the stock is already up 13% in 2015, it might keep rising in the upcoming months as the company has been constantly introducing new revolutions and products to the market. On June 4, the company announced the CE Mark approval for the St. Jude Medical Invisible Trial System in Europe, which is an app-based and wireless neuromodulation programming system. Therefore, the newly-launched system provides a secure, safe and wireless experience when patients trial spinal cord stimulation for the remedy of chronic pain. This is only one of the high number of launches and developments St. Jude Medical has been announcing lately, so the company and the stock have more room to grow in the future. David Stemerman’s Conatus Capital Management is among the largest shareholders in St. Jude Medical Inc. (NYSE:STJ) from the hedge funds we track, owning 1.32 million shares, trailing only Macnguyen.
Ivory Investment Management also initiated a long position in Bank of America Corporation (NYSE:BAC) during the most recent quarter. In its latest 13F filing with the SEC, Macnguyen’s fund reported that it owns 6.98 million shares of Bank of America, worth $107.43 million. The Consumer Financial Protection Bureau (CFPB) is expected to announce new regulations regarding bank’s overdraft practices, which will most likely include a cap on overdraft fees, and limits on the number of times an account can be charged. Thus, even though the new regulations will most probably hit the banking sector, Bank of America Corporation might not suffer overly much from these changes, as its overdraft fees come at around 4-6% of its non-interest income. In the meantime, the stock has increased by 8% over the last three-month period and it seems that the stock has embarked on quite a strong uptrend lately. From the list of over 700 hedge funds and investment firms that we track, Bruce Berkowitz’s Fairholme is by far the largest shareholder in Bank of America Corporation (NYSE:BAC), holding a stake of 76.75 million shares.
Finally, Ivory Investment Management reported the acquisition of a new stake in Delta Air Lines Inc. (NYSE:DAL) consisting of 2.22 million shares which are valued at $99.77 million as of March 31. Even though the shares of Delta have plunged by 17% since the beginning of the current year, it appears that the company is in good financial health, as it recently announced an agreement to purchase 60 single-aisle Boeing and Embraer aircraft. Precisely, Delta plans to acquire 40 Boeing 737-900ER planes that will be used to replace some of its aircraft that is scheduled to be retired by 2019. Therefore, as the company is progressively getting rid of its ageing fleet, it is expected that Delta’s operating margins will improve significantly. Among the funds we track, Paul Ruddock and Steve Heinz’s Lansdowne Partners is the largest shareholder in Delta Air Lines Inc. (NYSE:DAL), owning 24.76 million shares.
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