One of the largest and most closely-watched hedge funds in the world, Highbridge Capital Management, disclosed in a recent 13G filing with the Securities and Exchange Commission ownership of 1.0 million shares of GP Investments Acquisition Corp. (NASDAQ:GPIAU), which represent 5.2% of the company’s outstanding common stock. The above-mentioned stock represents a new position for Glen Russell Dubin’s fund.
Professional investors like Glen Dubin, spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, while Glen Dubin’s returns have been strong the past years, 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 their small-cap picks performed far better than their large-cap picks, which is where most of their money is invested and which is why their performances as a whole has been poor. A portfolio of the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 144% and beaten the market by more than 84 percentage points since then, and by 4.6 percentage points in the first quarter of this year (see more details).
Highbridge Capital Management is a New York-based hedge fund founded in 1992 by Glenn Dubin and Henry Swieca. Initially, the firm operated as a convertible arbitrage hedge fund before turning into a multistrategy fund. In the year of 2004, Highbridge Capital Management sold a 55% equity stake to JPMorgan for $1.3 billion. Eventually, Glenn Dubin’s fund was hit severely by the financial crisis of 2008, ending the year with a 27% loss. However, in 2009 the investment bank JPMorgan acquired almost all remaining shares of the Highbridge hedge fund, while the CIO Swieca left the firm and Dubin embarked on the chief executive position. Highbridge’s liquid hedge fund business has delivered typical returns after the disastrous results of 2008, returning 6.5% in 2013, 9.79% in 2012, -5.11% in 2011 and 4% in 2010. In July of 2014, Glenn Dubin stepped down as chief executive and Scott Kapnick was appointed as CEO. According to the latest 13F filing, Highbride Capital Management’s equity portfolio is worth $7.25 billion as of March 31.
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GP Investments is a blank-check company established with the intention of effecting mergers, capital stock exchanges, asset acquisitions, stock purchases, reorganizations and other analogous business arrangements with other businesses. Last week, GP Investments Acquisition Corp. (NASDAQ:GPIAU) closed its initial public offering, which involved the sale of 17.25 million shares, including 2.25 million in over-allotment options. The securities have been sold at $10 apiece, which generated proceeds of $172.5 million. Moreover, each unit consists of one ordinary share and one-half of one warrant, while each warrant permits its holder to acquire one ordinary share at $11.50 a share. GP Investments Acquisition’s shares started trading on the NASDAQ Stock Market on May 20 and so far remained almost flat.
