Destrier Capital Management is a hedge fund founded and managed by Michael Pollack, who is also an adjunct professor at New York University Stern School of Business. The fund last disclosed an equity portfolio, for the second quarter of 2014, worth more than $300 million. It is mainly focused on technology stocks, which account for roughly 45% of its total equity portfolio, and consumer discretionary companies (25%). In this article we will take a look at its top thee long positions, Zynga Inc (NASDAQ:ZNGA), KCG Holdings, Inc. Class A (NYSE:KCG) and Expedia Inc (NASDAQ:EXPE), in order to find out if any of them still stand as attractive investment options.
Although this fund’s largest bet is placed on 3D Systems Corporation (NYSE:DDD)’s stock, it’s put options that it owns – more than $33 million in derivative securities. Leaving 3D Systems Corporation (NYSE:DDD) aside, Destrier seems most bullish about Zynga Inc (NASDAQ:ZNGA), a $2.78 billion market cap social game services provider. The stock lost more than 27% over the second quarter, and somewhere along the line, Destrier decided to acquire 8.19 million shares. According to its latest 13F filing, the fund owns 8.56 million Class A shares, worth approximately $27.5 million. Another major fund, Ricky Sandler’s Eminence Capital disclosed, on September 2, ownership of 38.06 million shares of Zynga Inc (NASDAQ:ZNGA). This stake makes it the largest hedge fund shareholder (amongst those we track) at the company.
Despite a robust first quarter, Zynga Inc (NASDAQ:ZNGA)’s stock price has been plummeting since mid-March, as investors are worried about future profitability. However, bulls have been taking advantage of the falling stock price; about 30 of the major hedge funds that we track have either started new stakes or substantially boosted their preexisting ones over the second quarter.
Second in Destrier’s list is KCG Holdings, Inc. Class A (NYSE:KCG), a $1.25 billion market cap wholly owned subsidiary of Knight Capital Group, Inc. that provides financial services. Between April 1 and June 30, the fund more than quadrupled its exposure to the company, and now owns 1.7 million Class A shares, worth more than $20 million. This position makes it the largest hedge fund shareholder at the company, trailed by Michael Doheny’s Freshford Capital Management, which owns 461,167 Class A shares, and Israel Englander’s Millennium Management, which last disclosed ownership of 384,812 Class A shares.
KCG Holdings, Inc. Class A (NYSE:KCG) stock gained more than 4% over the second quarter, after recuperating from April’s low prices, during May. The upsurge was driven by impressive results for the first quarter of the year, and several analyst upgrades received during the course of May, including a Strong Buy rank by Zacks. A few days ago, the company announced that Steve Bisgay, Chief Financial Officer, has left the company. Sean Galvin, Chief Accounting Officer, will serve as the company’s Interim CFO, as the Board looks for a definitive replacement.
Finally, there’s Expedia Inc (NASDAQ:EXPE), a $10.85 billion market cap online travel company of which Destrier owns 239,751 shares of Common (New) Stock, following a 21% increase in its holdings. Paul Reeder and Edward Shapiro’s Par Capital Management holds an even larger stake in the company, with 3.31 million shares.
Expedia Inc (NASDAQ:EXPE)’s stock is up more than 23% year-to-date, but analysts still recommend buying it, as there is plenty of upside potential still left. As the world’s largest travel agent, Expedia Inc (NASDAQ:EXPE) stands to benefit from the increasing shift towards online bookings, not only in the U.S. but also worldwide, as the company continues to expand in Asian and European markets.
Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned
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