This year hedge funds became financial media’s punching bag following the poor performance of some high profile hedge funds. Not all hedge funds are created equal. At Insider Monkey we track the quarterly performance of more than 700 hedge funds’ stock picks that are disclosed in 13F filings. A relatively unknown hedge fund, Sessa Capital, topped the list of best performing stock pickers in Q3. Based on our calculations John Petry’s Sessa Capital’s stock picks managed to return 45.2% during Q3. Our methodology ranks hedge funds based on the value weighted returns of their 13F positions that are at least $1 billion in market cap.
Obviously each hedge fund’s actual return will be different from the figures we calculated because we don’t take into account their micro-cap positions -like PJT Partners Inc. (NYSE:PJT) discussed in this article-, short positions, or other derivative positions. Hedge funds may also change their portfolio composition during the quarter. However, our numbers are helpful in determining whether we should pay attention to a certain hedge fund’s stock picks.
Let’s take a closer look at Sessa Capital’s top 5 stock positions at the end of June.
Sessa Capital’s biggest position was Chemours Co (NYSE:CC) which didn’t disappoint its investors by returning 94.7% during the quarter. At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, David Einhorn’s Greenlight Capital has the most valuable position in Chemours Co (NYSE:CC), worth close to $135.2 million, amounting to 2.5% of its total 13F portfolio. The second largest stake is held by Sessa Capital, managed by John Petry, which holds a $71.9 million position; 21.5% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism include Thomas E. Claugus’s GMT Capital, Jeffrey Gates’s Gates Capital Management and Michael Kaufman’s MAK Capital One.
Sessa Capital’s second largest position was Citizens Financial Group Inc (NYSE:CFG) which posted a third quarter return of 24.3%. CFG was actually a very popular stock among hedge funds but, of course, you don’t read about this kind of stuff much in the financial media. Heading into the third quarter of 2016, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from one quarter earlier.
AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Citizens Financial Group Inc (NYSE:CFG). AQR Capital Management has a $132.6 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Anthony Bozza of Lakewood Capital Management, with a $130.4 million position; the fund has 6.3% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass Ken Griffin’s Citadel Investment Group, Clint Carlson’s Carlson Capital and Michael Blitzer’s Kingstown Capital Management. As you can see Sessa Capital couldn’t crack into the top 5 holders of this stock even though CFG was its second largest holding.
In the next page we will take a look at John Petry’s other three top positions.
Next up is PJT Partners Inc (NYSE:PJT). At Q2’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. John Petry’s Sessa Capital has the number one position in PJT Partners Inc (NYSE:PJT), worth close to $34.5 million, comprising 10.3% of its total 13F portfolio. The second most bullish fund manager is Kingstown Capital Management, managed by Michael Blitzer, which holds a $20.7 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Mark Rachesky’s MHR Fund Management, Gunnar Overstrom’s Three Corner Global Investors and Paul Tudor Jones’s Tudor Investment Corp.
PJT Partners returned close to 15% during the quarter. We should note that we haven’t included this stock in our return calculations because its market cap is less than a billion dollars.
Ashford Hospitality Prime Inc (NYSE:AHP) sits at number 4 in John Petry’s 13F portfolio. Heading into the third quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. According to Insider Monkey’s hedge fund database, John Petry’s Sessa Capital has the most valuable position in Ashford Hospitality Prime Inc (NYSE:AHP), worth close to $33 million, accounting for 9.8% of its total 13F portfolio. The second most bullish fund manager is Steve Pei of Gratia Capital, with a $14.9 million position; the fund has 5% of its 13F portfolio invested in the stock. Other peers with similar optimism comprise J. Alan Reid, Jr.’s Forward Management and Jim Simons’s Renaissance Technologies. AHP returned less than 1 percent during the third quarter.
Ally Financial Inc (NYSE:ALLY) is the fifth and the final stock we will discuss in this article. ALLY is another stock that outperformed the market in Q3 by returning nearly 15%. Sessa Capital allocated 8.2% of its portfolio to this financial company, yet it wasn’t one of its top 5 holders due to the stock’s popularity among other hedge funds. At Q2’s end, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier.
When looking at the institutional investors followed by Insider Monkey, Cerberus Capital Management, managed by Stephen Feinberg, holds the largest position in Ally Financial Inc (NYSE:ALLY). Cerberus Capital Management has a $411.7 million position in the stock, comprising 75.6% of its 13F portfolio. On Cerberus Capital Management’s heels is Richard Perry of Perry Capital, with a $269 million position; 18.8% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism encompass Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Howard Marks’s Oaktree Capital Management and Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors.
