GLG Partners Gets Aggressive On Its Top 5 Stock Picks

GLG Partners, founded by billionaire Noam Gottesman, has filed its latest 13F with the SEC, revealing a public equity portfolio worth $3.8 billion as of the end of the third quarter. GLG Partners was founded in 1995 as a sub-division of Lehman Brothers International (Europe), and later became independent in 2000. The fund, now part of Man Group, currently is managed by Teun Johnston and Mark Jones. GLG Partners has a diversified portfolio which includes technology, energy, finance, and healthcare stocks. During the third quarter, the fund opened positions in over 160 companies, and sold its holdings in over 140 companies. In this article, we are going to focus on GLG Partners’ top stock picks for the third quarter.

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (see more details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

#5 Hudson City Bancorp Inc. (NASDAQ:HCBK)

– Shares held (as of September 30): 4.91 million

– Total Value (as of September 30): $49.97 million

Hudson City Bancorp Inc. (NASDAQ:HCBK) represents GLG Partners’ fifth-most valuable holding, and the fund upped its position in it by 6% during the third quarter. On Nov. 2, M&T Bank Corporation (NYSE:MTB) announced that it completed the acquisition of Hudson City Bancorp Inc. (NASDAQ:HCBK), and merged it into a subsidiary of M&T. In a statement, M&T Bank said that Hudson City’s branches will continue to operate under the same name, as a division of M&T Bank, until they are converted to M&T’s network, which is expected to occur in the first quarter of 2016. Clint Carlson’s Carlson Capital held 10.71 million shares of Hudson City Bancorp as of the end of September.

#4 McKesson Corporation (NYSE:MCK)

– Shares held (as of September 30): 279,376

– Total Value (as of September 30): $51.69 million

GLG Partners raised its share ownership in McKesson Corporation (NYSE:MCK) during the third quarter by 29%. California-based McKesson Corporation is engaged in distributing pharmaceuticals and providing health information technology, medical supplies, and care management tools, and has a market cap of $43.65 billion. For the quarter ended Sept. 30, McKesson Corporation (NYSE:MCK) reported a profit of $617 million, or $2.63 per share, a significant increase compared to the $469 million, or $1.99 per share, that it earned in the same year-ago period. Meanwhile, the company’s quarterly revenue rose by 10% to $48.8 billion, while analysts were expecting the company to report EPS of $2.99 on revenue of $47.8 billion. In addition, McKesson Corporation (NYSE:MCK)’s board recently approved the repurchase of up to $2 billion of shares, which have lost 8.57% year-to-date. Another investor that sees value in the stock is Andreas Halvorsen’s Viking Global, as it owns 2.27 million shares as of the end of September.

On the next page, we will talk about the top three stocks of GLG Partners, including Cheniere Energy Inc. (NYSEMKT:LNG).

#3 Shanda Games Limited (ADR) (NASDAQ:GAME)

– Shares held (as of September 30): 8.04 million

– Total Value (as of September 30): $53.89 million

GLG Partners upped its position in Chinese game developer Shanda Games Limited (ADR) (NASDAQ:GAME) by 10% during the third quarter. Shanda Games Limited (ADR) (NASDAQ:GAME) recently completed its merger with Capitalhold Limited, and become a direct wholly owned subsidiary of Capitalhold. Under the merger agreement, Shanda Games was offered $3.55 per ordinary share and $7.10 per American depositary share. As a result of this merger, Shanda Games’ shares will no longer be listed on the NASDAQ. At the end of the third quarter, Shanda Games Limited (ADR) (NASDAQ:GAME) was held in the portfolios of seven hedge funds tracked by Insider Monkey, including Matthew Hulsizer’s Peak6 Capital Management, which owned 429,262 shares.

#2 Cheniere Energy Inc. (NYSEMKT:LNG)

– Shares held (as of September 30): 1.40 million

– Total Value (as of September 30): $67.77 million

GLG Partners seems to be a big fan of Cheniere Energy Inc. (NYSEMKT:LNG), as the fund increased its position by 355,713 shares during the third quarter. Houston-based Cheniere Energy is set to export the first cargo of liquefied natural gas (LNG) from the lower 48 U.S states in early 2016, The Globe and Mail reported, citing Tarek Souki, vice-president of finance for Cheniere. The company plans to start the LNG production at the Sabine Pass terminal in Louisiana in January. Cheniere will face competition from Australian terminals, and increased supply from the U.S and Australia is likely to create pressure on LNG pricing. Cheniere Energy Inc. (NYSEMKT:LNG)’s stock has lost 29.4% of its value year-to-date. Among investors that we track, Carl Icahn’s Icahn Capital LP is the largest shareholder of Cheniere Energy Inc. (NYSEMKT:LNG), with ownership of 28.55 million shares.

#1 CIGNA Corporation (NYSE:CI)

– Shares held (as of September 30): 597,602

– Total Value (as of September 30): $80.69 million

GLG Partners’ top holding is represented by Cigna Corporation (NYSE:CI), in which the fund increased its position by over 65% during the quarter. The company posted strong financial results for the third quarter, with profit increasing to $547 million, or $2.10 per share, versus $534 million, or $2.01 per share, a year earlier. The company’s revenues in the quarter rose by 7% year-over-year to $9.4 billion. Cigna’s stock is trading up by 30.46% year-to-date. At the end of the third quarter, a total of 76 hedge funds among those we track were holding Cigna Corporation (NYSE:CI) in their portfolio, compared to 78 funds at the end of the second quarter. The aggregate value of these investments fell to $3.2 billion compared to $3.6 billion during that time. Among the company’s largest investors is Larry Robbins’ Glenview Capital, which held 4.60 million shares of the company at the end of September.

Disclosure: None