Horseman Capital Management Bets Big on Financial Sector This Quarter

The ensuing volatile markets have cast a serious dent in the portfolios of most hedge funds. However, John Horseman‘s London-based hedge fund, Horseman Capital Management, did not only strike gold last year, returning 20.42% when most other funds struggled, but the $965 million fund was also up by more than 10% for this year by mid-January. Our data show that the investor’s 27 long positions in companies with a market cap above $1.0 billion had a negative return of 2% last year. While most of these returns came from the firm’s short positions which ranged from bets against oil, oil-transportation stocks to emerging markets, in this article we are going to look at Horseman’s top long positions that the fund reported in its latest 13F filing. The filing showed that Horseman’s equity portfolio was valued at $369.75 million at the end of December, with around 60% represented by stocks from the financial sector.

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#5 Costco Wholesale Corporation (NASDAQ:COST)

– Shares Owned by Horseman Capital (as of December 31): 208,800

– Value of Holding (as of December 31): $33.72 Million

Horseman raised its stake in the $64.5 billion Issaquah retailer by 32% during the fourth trimester. The holding represented more than 9% of the fund’s portfolio. Over the last 12 months, Costco Wholesale Corporation (NASDAQ:COST)’s stock has slid by almost 1.4%. The company delivered flat comparable-store sales (comps) for January, which included a 1% increase in Costco’s U.S locations and a 6% decline in Canadian stores primarily due to adverse exchange rate effects. On another front, although the company announced the termination of its 16-year deal with American Express Company (NYSE:AXP) for Costco affinity cards in March it has now extended the time limit to the middle of this year before Visa cards take over. Warren Buffett‘s Berkshire Hathaway held more than 4.33 million shares of Costco Wholesale Corporation (NASDAQ:COST) at the end of the fourth quarter.

#4 TJX Companies Inc (NYSE:TJX)

– Shares Owned by Horseman Capital (as of December 31): 528,900

– Value of Holding (as of December 31): $37.50 Million

During the October-December period Horseman slightly increased its exposure to the off-price apparel retailer. The stock has been trading nearly sideways and has gained around 3% in the last 52 weeks. Recently TJX Companies Inc (NYSE:TJX) has formally elected Ernie Hermann as CEO, replacing Carol Meyrowtiz, who is set to continue as the company’s Chairman of the Board. During the fourth quarter, Ric Dillon‘s Diamond Hill Capital increased its stake in TJX Companies Inc (NYSE:TJX) by 223,909 shares to 4.21 million shares, held as of the end of December.

#3 Goldman Sachs Group Inc (NYSE:GS)

– Shares Owned by Horseman Capital (as of December 31): 251,300

– Value of Holding (as of December 31): $45.29 Million

Horseman has held a stake in Goldman Sachs since the first quarter of 2013. The holding which remained unchanged during the fourth quarter represents more than 12% of the fund’s portfolio. Recently Goldman Sachs Group Inc (NYSE:GS) settled a class-action lawsuit for $27.5 million related to sub-prime mortgage-lined securities. Several bank stocks, including Goldman’s, have been under pressure lately as investors are starting to price in the fact that Federal Reserve’s plans to increase interest rates might be slower than expected given the global economic slowdown, concerns surrounding China and the volatility in energy markets. Over the last year, Goldman Sachs Group Inc (NYSE:GS)’s stock price has fallen by more than 22%. Berkshire Hathaway is also the largest stockholder of Goldman Sachs within our database holding almost 10.96 million shares at the end of December.

#2 Bank of New York Mellon Corp (NYSE:BK)

– Shares Owned by Horseman Capital (as of December 31): 1.22 million

– Value of Holding (as of December 31): $50.15 Million

Horseman’s holding in Bank of New York Mellon Corp remained unchanged during the fourth quarter. The $38.21 billion company managed to beat the bottom-line estimates for the fourth quarter as its EPS of $0.68 was $0.04 above expectations. However, the revenue of $3.7 billion missed the estimates by $50 million. Shares of the bank holding company have fallen by 13.7% in the last 12 months. Nelson Peltz‘s Trian Partners held 30.94 million shares of Bank of New York Mellon Corp (NYSE:BK) at the end of the fourth quarter.

#1 Wells Fargo & Co (NYSE:WFC)

– Shares Owned by Horseman Capital (as of December 31): 1.07 million

– Value of Holding (as of December 31): $57.95 Million

The fund’s top position was also unchanged during the October-December period and amasses about 15.67% of the firm’s portfolio. The bank holding company recently revealed that it had an additional $25 billion exposure to the oil and gas industry on top of the $17 billion reported earlier. The additional amount comprises of unfunded commitments, including lines of credit that have been made available to energy company but still haven’t been utilized. Wells Fargo & Co (NYSE:WFC)’s stock price has dived down by about 14.5% in the last 52 weeks. Billionaire Ken Fisher’s Fisher Asset Management upped its stake in Wells Fargo & Co (NYSE:WFC) to about 18.99 million shares during the last three months of 2015.

Disclosure: None