Russell Hawkins‘ Hawkins Capital recently filed its 13F form with the Securities and Exchange Commission for the reporting period of March 31. The market value of the fund’s equity portfolio at the end of March declined to $427.90 million from $648.02 million at the end of the previous quarter. The investment firm’s top long-term holdings didn’t fare all that well during the quarter, which led to Hawkins Capital ranking as the 17th-worst performing fund in our database during the first quarter with weighted average returns of -5.4% from its 17 long positions. At the head of those positions was Royal Dutch Shell plc (ADR)(NYSE:RDS.A), Oaktree Capital Group LLC (NYSE:OAK), Intel Corporation (NASDAQ:INTC), and Staples, Inc. (NASDAQ:SPLS).
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Prior to setting up his own shop in 2003, Hawkins used to manage more than $8 billion for Dreyfus’ mutual funds. Currently, Hawkins Capital has about $1.2 billion in assets under management and employs four people, three of which perform investment advisory functions. The long/short equity hedge fund’s holdings are focused in three main sectors: finance, technology and energy, which represented 39%, 26% and 22% of the fund’s portfolio value respectively, at the end of the first quarter.
Most investors don’t have enough time to do in-depth analysis on each stock that they want to include in their portfolios. Professional investors like Russell Hawkins spend weeks conducting due diligence on each company and spend millions obtaining information and paying the salaries of Ivy League-educated analysts. That’s why we have always believed that imitating the stock picks of hedge funds and billionaires is an excellent short cut we can take. It doesn’t cost an arm and a leg either. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of hedge funds performed better than the market and better than their large-cap picks. A portfolio of the 15 most popular small-caps among hedge funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012. The exceptional results of this strategy got even better in the forward tests we have been conducting since the end of August 2012. The most popular small-cap stocks among hedge funds beat the market by more than 79 percentage points since then (see the details here).
As far as Hawkins Capital’s long-term picks are concerned, Royal Dutch Shell plc (ADR)(NYSE:RDS.A) occupies the first spot with 1.50 million shares valued at $89.39 million. The holding, which has been in the fund’s portfolio since 2005, was slashed by 41% during the first three months of this year. It still represents a major chunk of the portfolio at 20.89%. Royal Dutch Shell plc (ADR)(NYSE:RDS.A)’s stock has slid by nearly 5% year-to-date amid first quarter financial results that reported an EPS of $0.69 (4% decrease year-over-year) and revenues of $68.84 billion (48.7% decrease year-over-year). The oil and gas company recently placed a $69.6 billion bid for Britain’s third-largest energy company, BG Group. Based on BG Group’s share price just before the bid, the premium that Shell offered amounted to nearly 50%. Provided that no regulatory hurdles are met, the deal will be completed early next year. Richard S. Pzena‘s Pzena Investment Management and Jonathon Jacobson‘s Highfields Capital Management are the two largest stockholders of Royal Dutch Shell plc (ADR)(NYSE:RDS.A) among funds in our database.
Next in line is Oaktree Capital Group LLC (NYSE:OAK), the holding of which Hawkins reduced by 37% to 1.46 million shares valued at $75.27 million. The holding represents 17.59% of the fund’s portfolio value. Hawkins Capital initiated a stake in the company during the second quarter of 2012. Oaktree Capital Group LLC (NYSE:OAK)’s stock has inched up by 0.33% so far this year. The $8.03 billion global investment management firm primarily invests in less efficient markets and alternative investments. Among other investors of Oaktree Capital Group LLC (NYSE:OAK) is Murray Stahl’s Horizon Asset Management, which held about 554,150 shares of the company at the end of the fourth quarter.
The third spot on the list of long term picks is taken by Intel Corporation (NASDAQ:INTC), which has depreciated by 11.13% this year despite the solid performance of the technology sector, which gained 9.77% during the same time period. Hawkins Capital sliced its holding in Intel Corporation (NASDAQ:INTC) by 25% in the first quarter to reduce the total stake to 2.21 million shares valued at $69.01 million. The $155.08 billion technology company delivered an EPS for the first quarter which was in line with the estimates, however revenues fell short of expectations. Despite that, some analysts are bullish on the company and cite that positive changes are taking place, which can be seen through the diversification of Intel Corporation (NASDAQ:INTC)’s revenue stream. Data center, Internet of Things and memory contributed almost 40% to the company’s top line. Ken Fisher’s Fisher Asset Management held some 19.16 million shares of Intel Corporation (NASDAQ:INTC) valued at $599.25 million at the end of the first quarter.
Lastly, Hawkins also slashed his Staples, Inc. (NASDAQ:SPLS) holding by 26% to 2.56 million shares valued at $41.61 million. Depreciating by 9.11% year-to-date, Staples, Inc. (NASDAQ:SPLS) further dragged Hawkins Capital’s returns down in the first quarter. The $10.67 billion office products company has been in the fund’s portfolio since the second quarter of 2012. Besides Hawkins, other investors who hold Staples, Inc. (NASDAQ:SPLS) in their fund’s portfolio are Jeffrey Smith and Ken Griffin.
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