Napier Park Global Capital, founded and managed by Jim O’Brien and Jonathan Dorfman, was recently awarded the title of 2015 Hedge Fund Manager of the Year by Risk magazine. The fund, which had approximately $6.4 billion in assets under management (AUM) as of December 30, was originally an internal hedge fund unit of Citigroup Inc (NYSE:C) before being spun off into an independent firm in 2013.
“We could not be more pleased to have been recognized by Risk for our accomplishments over the past year,” states Jim O’Brien, senior managing partner of Napier Park Global Capital. “Our core strength is our ability to understand complex, highly structured credit-intensive assets and to then correctly match those assets with the appropriate fund structure and financing. The structure of our funds can enable us, at times, to increase risk when many funds are selling.”
Once primarily a credit fund that has since moved into the equity market, Napier Park won particular praise for a skillful macro hedge they executed in late August which set them up perfectly for a credit default swap buying spree in October, when spreads widened.
Credit aside, there’s also been a good deal of activity in Napier Park’s equity portfolio within the past few months. As you can see from when we profiled Napier Park’s top picks four months ago, there were some major changes in the intervening quarter, up until their third quarter 13F filing on September 30.
Only Ally Financial Inc (NYSE:ALLY) remained in their top three picks, though Napier Park did sell off slightly more than 100,000 of the 834,900 shares they purchased in the second quarter, when they opened their position on the financial services company (which had its IPO during in April, 2014). Ally Financial Inc (NYSE:ALLY) has not been a successful investment thus far, as they have slipped 13% since their IPO, and nearly 13% this week alone after it was announced that General Motors Company (NYSE:GM) would stop using Ally for discounted leases on new cars, replacing them with an in-house financing division.
Other shareholders of Ally Financial Inc (NYSE:ALLY), as of the end of September, include Dan Loeb’s Third Point, which is one of the largest shareholder with 41.91 million shares, Stephen Feinberg‘s Cerberus Capital Management, and James Dinan’s York Capital Management.
Shire PLC (ADR) (NASDAQ:SHP) and Healthequity Inc (NASDAQ:HQY) are Napier’s new top picks, as the fund significantly increased its exposure to both stocks during the third quarter of last year. Healthequity Inc (NASDAQ:HQY), which conducted the IPO during the third quarter, was a new position in Napier’s 13F, as the investor went bullish after the offering grabbing more than 4 million shares over the following two months, which represent 7.3% of Healthequity’s common stock. The investor’s holding, valued at $73.8 million as of September 30, represented 25% of their entire equity portfolio. The stock of the company has increased 16% since then. Other shareholders of Healthequity Inc (NASDAQ:HQY) include Anand Parekh’s Alyeska Investment Group, and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital.
In the case of Shire PLC, the Irish biopharmaceutical company which was amid takeover rumors six months ago, Napier increased their position in the company over 400%, from 10,200 shares, to 52,087 shares as of September 30. This was one of the hedge plays by Napier mentioned above. The expected takeover of Shire by AbbVie Inc (NYSE:ABBV) eventually fell through on concerns that new government tax rules would make the deal much less profitable for the latter, and Shire PLC (ADR)(NASDAQ:SHPG)’s stock plunged on October 14 as a result, which according to O’Brien was “one of our (Napier’s) biggest buying days” .
Other top shareholders of Shire PLC (ADR)(NASDAQ:SHPG) as of September 30 included John Paulson’s Paulson and Co., who increased their position in the stock 169% to over 9 million shares and took a hard hit when the merger fell through, Phill Gross and Robert Atchinson’s Adage Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Previous top picks Lions Gate Entertainment Corp. (USA) (NYSE:LGF), and Micron Technology, Inc. (NASDAQ:MU) both fell out of the top 3, though Napier increased their position slightly in Lions Gate, adding just over 20,000 shares in the movie production company best known for producing the Hunger Games films. That signalled a large shift for Napier, which had sold off 65% of their Lions Gate portfolio in the second quarter. Meanwhile, Napier sold off 40% of their Micron portfolio during the third quarter, which proved wise, as like Shire, Micron took a big hit in the middle of October, shedding over 20% of its value within the span of a week.
Disclosure: None
