Sophrosyne Capital is a multi strategy hedge fund founded in 2005. The firm has about $200 million in assets under management and is based in New York, NY. Sophrosyne is the name of a goddess of self-control, temperance, restraint, and moderation in Greek mythology. She was one of the goddesses released from Pandora’s Box. Benjamin Taylor is the manager and he has been with the firm since 2005. The firm just filed its Form 13F last week and we noticed a number of interesting positions.
First, let’s talk about why it’s important to follow funds like Sophrosyne Capital and managers like Benjamin Taylor. We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 and these stocks beat the market by 80 percentage points (137% return vs. S&P 500 ETF (SPY)’s 57% gain) over the last 32 months (see the details here).
Now, let’s get on to the picks. BioTelemetry, Inc. (NASDAQ:BEAT) remains as Sophrosyne Capital’s largest position in its 13F portfolio. Mr. Taylor trimmed the position likely because shares of this wireless medical technology company are very volatile. Sophrosyne Capital first started a position in BioTelemetry, Inc. (NASDAQ:BEAT) around August-September 2013 when shares were trading around $8 a share. BioTelemetry, Inc. (NASDAQ:BEAT) has since returned to that level after trading as high as almost $11 per share in January 2015. Investors are bullish on BioTelemetry, Inc. (NASDAQ:BEAT) as the company’s business continues to show strong growth. BioTelemtry reported a tenth consecutive period of year-over-year growth with fourth quarter revenues growing 32% to $44 million and EBITDA up 20% over the prior year to $6.3 million. As of the end of the first quarter, Sophrosyne held some 827,000 shares valued at $7.3 million, which was almost $2 million lower than the previous filing. Sophrosyne Capital is the second largest holder of BioTelemtry among the firms we track. J. Carlo Cannell’s Cannell Capital and Jim Simon’s Renaissance Technologies are also among the largest shareholders of the company.
Taylor also trimmed his fund’s second largest position, represented by Iradimed Corp (NASDAQ:IRMD), a $172 million company that specializes in non-magnetic intravenous (IV) infusion pump systems. The fund’s owns 339,000 shares of Iradimed Corp (NASDAQ:IRMD) at a value of $5.17 million. Iradimed Corp (NASDAQ:IRMD)’s stock tumbled in September 2014 after the FDA sent a letter to the company requesting it cease commercial distribution of its MRI IV pumps and submit a 510(k). The stock fell below the $7 level, but has since more than doubled after the company announced it resumed domestic distribution in December.
