Adam Usdan’s Trellus Management Company hedge fund was set up in 1994 and its investment strategy focuses on small, mid and large-cap companies. With a portfolio value of over $68.07 million, its top ten positions make up 45% of the disclosed portfolio. Moreover, out of a total of 75 long positions, the fund has 35 stakes in companies with a market cap of over $1.05 billion, which registered an 11% return in the first quarter of 2015.
In order to establish the validity of our small-cap hedge-fund strategy and to identify the best stock picks of the best hedge fund managers, we analyze the equity portfolio of over 700 hedge funds. By ranking companies with a market capitalization between $1 billion and $5 billion, it turns out that the top 15 stocks at the end of each quarter had an average monthly return of 127 basis points per month, as compared to the S&P 500 ETF (SPY) 32 basis points during the same 13-year period, between June 1999 and August 2012 (see more details about our backtests). Furthermore, our strategy had a 132.0% gain in the last 2.5 years, contrary to only 52.6% for the SPY’s return during the same period.
Let us take a closer look at five of Trellus Management’s significant positions. FireEye Inc (NASDAQ:FEYE) represents the largest stake, amassing 19.21% of the equity portfolio, with 414,188 shares total, valued at $13.08 million. The considerable return of 24.29% of FireEye Inc (NASDAQ:FEYE)’s stock in the first three months of 2015 is most certainly due to the corporate and government cyber attacks, that become more and more common, and the constantly increasing notoriety of FireEye Inc (NASDAQ:FEYE) among investors. Moreover, in its latest quarterly earnings report, FireEye Inc (NASDAQ:FEYE) announced a narrower-than-expected loss and recorded a sales growth of nearly 150% year-over-year in the fourth quarter of 204. The firm’s largest shareholder among the investors that we track is Karthik Sarma’s SRS Investment Management, which owns 3.0 million shares worth $94.7 million as of the end of 2014.
Another pick of Trellus Management is Halliburton Company (NYSE:HAL), in which the hedge fund holds 36,500 shares worth $1.44 million at the end of last year. Halliburton Company (NYSE:HAL) is a $40.47 billion oilfield services company, whose stock was up by 12.02% in the first three months of the current year. Even though Halliburton Company (NYSE:HAL) underperformed as compared with the industry average, its revenue and net income growth of 14.8% and 13.6% respectively for the first quarter and a low debt-to-equity ratio of 0.48, are most certainly the strengths the investors are interested in and the reasons the analysts rate it as a ‘Buy’. Oil prices are also rising, against expectations, which give a boost to the stock price. Jeffrey Ubben’s ValueAct Capital is one of Halliburton Company (NYSE:HAL)’s top shareholders, with nearly 21 million shares worth $821.8 million, according to the latest 13F filing.
Trellus Management’s latest 13F revealed that the fund holds a $1.3 million stake comprised of 31,700 shares of Chicago Bridge & Iron Company N.V. (NYSE:CBI). Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s stock advanced by 17.51% in the first quarter of 2015. A new turning point for Chicago Bridge & Iron Company N.V. (NYSE:CBI) was the appointment of Michael S. Taff as the new Chief Financial Officer, effective April, 1. Moreover, the company gave a very optimistic EPS and revenue outlook for 2015. Warren Buffet’s Berkshire Hathaway is Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s largest shareholder among institutional investors with more than 10.7 million shares worth $449.2 million held as of the end of 2015. Another shareholder is David Einhorn’s Greenlight Capital with $123.4 million worth of shares.
The $40.43 billion communication holding American Tower Corp (NYSE:AMT) had a bad first quarter with its stock being down by 4.75%. Trellus Management’s stake in the holding represents 15,000 shares, valued at $1.48 million. Despite the downgrade for American Tower Corp (NYSE:AMT), the company maintained its Buy rating. American Tower Corp (NYSE:AMT) announced several new contracts for the acquisition of nearly 9,000 towers in Africa, another 6,500 towers in Italy, and over 4,800 towers in India. Analysts are being reserved about the new purchases, as they involve integration risks, foreign currency exchange rate risks, stiff competition and increasing operating expenses. Among the funds that we track, Philippe Laffont’s Coatue Management, with a $406.4 million stake, and Charles Akre’s Akre Capital Management with a $397.1 million stake, hold the largest positions in American Tower Corp (NYSE:AMT).
JPMorgan Chase & Co. (NYSE:JPM), the $235.6 billion financial company, represents another position in Trellus Management’ equity portfolio. The hedge fund holds Call options underlying 60,000 shares of JPMorgan Chase & Co. (NYSE:JPM). At the same time, Trellus Management holds a long position of 11,600 shares of the company. JPMorgan Chase & Co. (NYSE:JPM)’s stock is down by 2.57% over the first three months of the current year. The investors are mostly bullish on the stock and the majority of the analysts rating it as a ‘Buy’ or a ‘Strong Buy’. Lansdowne Partners, Ken Fisher’s Fisher Asset Management and Jean-Marie Eveillard’s First Eagle Investment Management, are among the largest shareholders of JPMorgan Chase & Co. (NYSE:JPM).
Disclosure: none
