John Horseman’s Horseman Capital Management is the latest hedge fund tracked by Insider Monkey which has submitted its 13F with the U.S. Securities and Exchange Commission for the June 30 reporting period, with the fund’s public equity portfolio being valued at $388.79 million as of that date, representing a 20.87% increase from the end of the first quarter of 2015. The London-based hedge fund employs a concentrated strategy in its investments, with its top ten holdings representing 91.31% of its entire portfolio. With more than $1 billion in assets under management, Horseman Capital Management invests in diverse markets, including Europe and the U.S. In this article, we focus on its top three U.S. stocks, which also all happen to be financial companies. Those stocks are Wells Fargo & Co (NYSE:WFC), Capital One Financial Corp. (NYSE:COF), and Goldman Sachs Group Inc (NYSE:GS).
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Professional investors like Horseman spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 139% and beaten the market by more than 80 percentage points since the end of August 2012 (see the details).
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At the end of the second quarter of 2015, Horseman Capital Management’s number one U.S. stock pick was Wells Fargo & Co (NYSE:WFC), in which the fund held a total of 1.02 million shares with a market value of $57.60 million, representing 14.82% of its total portfolio value, up from 11.98% three months earlier. The company now ranks as the most valuable bank in the world, with a market cap that is approaching $300 billion, and is now the S&P 500’s seventh-biggest stock after delivering a 12% gain over the past year. However, Wells Fargo & Co (NYSE:WFC) has posted a drop in profit in each of the last two quarters, due to stringent federal government scrutiny, higher expenses, and lower interest rates. Going into the second quarter, Warren Buffett’s Berkshire Hathaway remained the largest shareholder of the company out of the hedge funds tracked by Insider Monkey. The fund held 470.29 million shares with a market value of $25.58 billion after raising its position by 2% during the first quarter. Lansdowne Partners, managed by Alex Snow, came in a distant second with 20.09 million shares with a market value of $1.09 billion, after raising its own stake by 46% during the period. Billionaire Ken Fisher’s Fisher Asset Management was also on the list, holding 18.54 million shares valued at $1.01 billion.
The second-biggest position in a U.S. stock that John Horseman had at the end of the second quarter was in Capital One Financial Corp. (NYSE:COF), in which the investor held a stake of 636,200 shares valued at $55.97 million after raising its stake in the stock by 52%. The stock represents 14.40% of its total portfolio value. The McLean, Virginia-based bank holding company recently announced a planned layoff of some of its employees as it sets out to overhaul its operations across the nation. The company is also closing a number of call centers in different locations, including Sioux Falls, South Dakota, and Oregon. These are among the measures that Capital One Financial Corp. (NYSE:COF) is taking to enhance its profitability, coming on the heels of a 28.08% year-over-year drop in second quarter profit. Going into the second quarter, a total of 51 hedge funds out of the more than 700 that we track were long in the stock. The biggest shareholder among those, Ric Dillon‘s Diamond Hill Capital, held 3.54 million shares valued at $278.92 million after raising its position by 31% during the first trimester. Thomas E. Claugus’ GMT Capital was also long in the stock after opening a new position during the first quarter, closing the quarter with 2.28 million shares valued at $179.78 million, representing 4.35% of its total public equity portfolio. Other funds that held positions going into the second quarter were AQR Capital Management, Viking Global, and Columbus Circle Investors.
Finally, let’s look at Goldman Sachs Group Inc (NYSE:GS), in which Horseman Capital Management held a total of 241,500 shares with a market value of $50.42 million after raising its position in the stock by 57% during the first three months of this year. The Manhattan, New York-based investment banking company is betting on Pepperfry.com, an Indian startup that sells furniture online. The $89.58 billion company is set to invest up to $100 million in the startup. Goldman Sachs Group Inc (NYSE:GS) has posted solid share price growth during the year, going up by 7% year-to-date. The company also recently announced a deal to acquire Imprint Capital, which is an impact investing firm based in San Francisco. Going into the second quarter of 2015, billionaire investor Warren Buffett‘s Berkshire Hathaway remained the biggest shareholder of the company in our database, holding 12.63 million shares with a market value of $2.37 billion. Lansdowne Partners again followed Buffett’s lead in a financial stock, increasing its stake in the equity to 6.31 million shares valued at $1.19 billion during the first quarter.
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