How Did Cannell Capital’s Investments in Callon Petroleum Company (CPE), Cardionet Inc (BEAT) & Two Other Stocks Performed?

There were 659 hedge funds in our system whose 13F portfolios on June 30 consisted of at least five long positions in billion-dollar companies. Of those 659 funds, an impressive 627 of them delivered positive returns during the third-quarter from their long positions in those stocks, based on the size of those positions on June 30. All told, their long picks in billion-dollar companies averaged 8.3% returns for the quarter, well above the S&P 500 ETFs’ 3.3% figure. Nonetheless, hedge funds continue to disappoint their investors for the most part, as redemptions have hit the industry hard of late. That can be chalked up to their high fees and the underperformance on the short-side of their portfolios, which provide downside protection but have dragged down overall returns.

Having said that, let’s take a closer look at four top picks that were in the equity portfolio of J. Carlo Cannell‘s Cannell Capital on June 30.

Cannell Capital is a hedge fund founded by J. Carlo Cannell back in 1992, which primarily invests in stocks of small-cap companies. The fund disclosed an equity portfolio worth $246.07 million, as of the end of June. Out of eight “relevant” positions in companies, which were worth $1 billion or more on June 30, the fund’s weighted average return amounted to 19.20%. Although our calculations may vary from the fund’s actual returns, since we don’t factor in the investments in small-cap stock, short positions, and other instruments, they can still be used to assess the fund’s performance, and whether or not it’s worth imitating its investments.

First, we’ll start with an oil and gas company, Callon Petroleum Company (NYSE:CPE), in which Cannell Capital had a $9.77 million, stake that contained 870,292 shares. The stock surged by 39.8% during the third quarter, and is 61.75% in the green year-to-date. A total of 35 investors followed by Insider Monkey reported long positions in the company as of the end of June, a change of 21% from the previous quarter. The largest shareholder of Callon Petroleum Company (NYSE:CPE), with a stake worth $71.9 million reported as of the end of June, was Brenham Capital Management. Discovery Capital Management reported the second-biggest position, worth around $59.9 million. Some other bullish investors encompassed Point72 Asset Management, Zimmer Partners, and GRT Capital Partners also held valuable positions in the company.

Cannell Capital owned 1.4 million shares of Cardionet Inc (NASDAQ:BEAT) valued at $22.83 million at the end of the second quarter. The stake was lowered by 10% from the previous quarter, but still managed to account for 9.28% of the fund’s equity portfolio at the end of June, which is more than the previous 7.64%. During the third quarter, the stock returned 13.9%. At the end of the second quarter, 18 investors tracked by Insider Monkey were bullish on this stock, up by 29% over the quarter. Among these funds, Cannell Capital held the most valuable stake, and was followed by Renaissance Technologies, which held a $15.1 million stake. Moreover, Royce & Associates, McKinley Capital Management, and Craig Drill Capital were also bullish on Cardionet Inc (NASDAQ:BEAT).

Baker Hughes Incorporated (NYSE:BHI), a company that provides professional oilfield-related services, represented a new addition to Cannell Capital’s portfolio during the second quarter, as the fund acquired 43,901 shares, creating a stake which was valued at the end of June at $1.98 million. The stock gained 12.2% during the third quarter. Baker Hughes Incorporated (NYSE:BHI) was in 44 funds’ portfolios at the end of the second quarter, up by one from the end of the first quarter. More specifically, among the funds tracked by Insider Monkey, Jeffrey Ubben’s ValueAct Capital had the largest position in Baker Hughes Incorporated (NYSE:BHI), worth close to $1.75 billion. Coming in second was Citadel Investment Group, managed by Ken Griffin, which held a $160.3 million stake. Some other members of the smart money with similar optimism included John Overdeck and David Siegel’s Two Sigma Advisors, William B. Gray’s Orbis Investment Management, and Richard S. Pzena’s Pzena Investment Management.

Another new position that Cannell Capital acquired during the second quarter, was in Axalta Coating Systems Ltd (NYSE:AXTA). This is a holding company that produces coatings systems mainly for the transportation industry, and the stock returned 6.6% during the third quarter. Cannell Capital amassed 68,227 shares of the company worth around $1.81 million at the end of June. Axalta Coating Systems Ltd (NYSE:AXTA) included in the equity portfolios of 43 funds from the Insider Monkey’s database, at the end of June, up by one from the end of March. Berkshire Hathaway was the largest shareholder of Axalta Coating Systems Ltd (NYSE:AXTA), with a stake worth $618.8 million reported as of the end of June. Trailing Berkshire Hathaway was Iridian Asset Management, which amassed a stake valued at $382.8 million. Deccan Value Advisors, Gates Capital Management, and First Eagle Investment Management also held valuable positions in the company.

Disclosure: None