Here’s How SeaWolf Capital’s Top Bets Paid Off: PHH Corporation (PHH), Fly Leasing Ltd (ADR) (FLY) & More

Insider Monkey follows around 750 elite hedge funds and uses data from their filings to share industry trends and insights with its audience. We do this because history shows that hedge funds are great stock pickers, a fact which is often eclipsed by the hullabaloo of contracting returns, losses from short positions and insider trading scandals. One of the funds in our database is Porter Collins, Daniel Moses, and Vincent Daniel’s Seawolf Capital. The fund had an equity portfolio worth $45.24 million at the end of September, significantly down from $128.15 million a quarter earlier.

Our analysis of hedge funds’ third-quarter returns showed that the funds tracked by us with at least five long positions in billion-dollar companies on June 30 had an average return of 8.3% for the quarter. Meanwhile, the Barclay Hedge Fund Index has hedge funds’ actual returns for the third-quarter at less than 4%, though it should be noted that the Barclay’s Index tracks the performance of thousands of funds, while we focus solely on the cream of the hedge fund crop. Seawolf Capital had a weighted average return of 14.86% last quarter, based on 15 long positions in companies worth at least $1.0 billion.

With this in mind, let’s take a closer look at three stocks that ranked as Seawolf Capital’s top picks and one company, in which the fund unloaded its entire stake last quarter. These companies are Net 1 UEPS Technologies Inc (NASDAQ:UEPS), PHH Corporation (NYSE:PHH), Fly Leasing Ltd(ADR) (NYSE:FLY), and Flagstar Bancorp Inc (NYSE:FBC). 

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First stock we are going to examine is PHH Corporation (NYSE:PHH), a company that provides professional mortgage-related services. During the second quarter, Seawolf Capital lowered its stake in the company by 34%, and it further reduced it by 71% in the third quarter. In this way, the fund held 440,510 shares worth $6.37 million at the end of September. Meanwhile, the stock advanced by 8.5% during the third quarter. At the end of June, 17 funds tracked by Insider Monkey were bullish on this stock, unchanged from the previous quarter. More specifically, Glenview Capital was the largest shareholder of PHH Corporation (NYSE:PHH), with a stake worth $64.1 million reported as of the end of June. Trailing Glenview Capital was Silver Point Capital, which amassed a stake valued at $53.3 million. Samlyn Capital, and Three Corner Global Investors also held valuable positions in the company.

Next in line is Fly Leasing Ltd (ADR) (NYSE:FLY), whose stock gained 16.7% in the third quarter. The fund trimmed its position in this company as well, lowering its stake by 2% and by 70% in the second and third quarters, respectively. On September 30, SeaWolf’s stake counted 547,160 shares worth $6.34 million. Only nine funds from our database held shares of Fly Leasing at the end of June, up by 13% over the quarter. One of the largest stakes in Fly Leasing Ltd (ADR) (NYSE:FLY) was held by Hawkeye Capital, which amassed $17.4 million worth of stock as of the end of June. Other investors bullish on the company included Millennium Management, D E Shaw, and Two Sigma Advisors.

After having raised its stake in Net 1 UEPS Technologies Inc (NASDAQ:UEPS) by 8% to 1.38 million shares in the June quarter, the fund reduced it by 43% in the following three months to 783,244 shares worth $6.71 million. The fund unloaded shares as the stock dropped by 14.3% between July and September.  Heading into the third quarter of 2016, 18 funds followed by us were long this stock, a change of 13% from the end of March. Among these funds, Orbis Investment Management was the largest shareholder of Net 1 UEPS Technologies Inc (NASDAQ:UEPS), with a stake worth $90.5 million reported as of the end of June. Trailing Orbis Investment Management was International Value Advisers, which amassed a stake valued at $74.3 million. Renaissance Technologies, and D E Shaw also held valuable positions in the company.

Flagstar Bancorp Inc (NYSE:FBC), a savings and loan holding company, saw its shares gain 13.7% last quarter. Meanwhile, the fund dumped its entire stake during the same period, after having cut it by 41% to 299,236 shares worth $7.30 million during the second quarter. The number of funds from our database long Flagstar Bancorp appreciated by 8% to 13 during the April-June period. Among these funds, the largest stake in Flagstar Bancorp Inc (NYSE:FBC) was held by Millennium Management, which reported holding $19.5 million worth of stock as of the end of June. It was followed by Renaissance Technologies with a $11.6 million position. Other investors bullish on the company included Arrowstreet Capital, and Kingdon Capital.

Disclosure: None