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.
Zeltiq Aesthetics Inc (NASDAQ:ZLTQ) represents Sophrosyne Capital’s third largest position, according to its 13F filing. Taylor also trimmed this position by a significant 25% to 146,000 shares, worth $4.51 million. Zeltiq Aesthetics is a medical technology company focused on developing and commercializing products utilizing its controlled-cooling technology platform. Its main product is the CoolSculpting System, which is designed to reduce stubborn fat bulges. The company posted strong results for the last year, with revenue up by 56% on the year to $174.5 million and a net income of $0.04 per share, versus a loss of $0.53 per share in 2013. In addition, Zeltiq Aesthetics Inc (NASDAQ:ZLTQ) raised its revenue guidance for 2015, expecting sales between $230 and $235 million. Steve Cohen‘s Point72 Asset Management is another shareholder of the company, which surged its position by 105% during the last three months of 2014 to 1.30 million shares. Since the beginning of the year, the stock of Zeltiq has gained around 18%.
Another one of Taylor’s top stock picks is MicroStrategy Incorporated (NASDAQ:MSTR), a $2 billion provider of enterprise software platforms. Taylor cut his stake in MicroStrategy Incorporated (NASDAQ:MSTR) by about 9% to 24,600 shares, worth $4.16 million. MicroStrategy Incorporated (NASDAQ:MSTR) shares are up 46% in the last 12 months and really started to gain momentum after Stanford J. Cohen’s Apex Capital became more involved with management. Ricky Sandler’s Eminence Capital is also another notable name invested in the company. MicroStrategy Incorporated (NASDAQ:MSTR)’s stock advanced by 9% year-to-date.
The only company from our list in which Taylor increased his stake is Health Insurance Innovations Inc (NASDAQ:HIIQ), a $100 million market cap developer and administrator of web-based individual health insurance plans and ancillary products. During the first quarter of 2015, Taylor inched up the position in Health Insurance Innovations Inc (NASDAQ:HIIQ) to some 482,900 shares, valued at $3.77 million. Israel Englander’s Millennium Management and Jacob Gottlieb’s Visium Asset Management are also listed as shareholders of Health Insurance Innovations Inc (NASDAQ:HIIQ).
Disclosure: None
