London-Based Marshall Wace LLP Wins Big From Brexit Bets despite Founders Backing Opposing Camps

Only a few expected the so-called Brexit to succeed and many hedge fund vehicles left tons of cash on the sidelines ahead of the United Kingdom’s referendum on whether to leave the European Union or not. As global equities went on a freefall following Britons’ decision to quit the 28-member block, most equity portfolios overseen by hedge funds were definitely hit harshly, save for a few asset managers that successfully bet that Britain would leave the bloc.

Marshall Wace LLP, a London-based asset manager founded by Ian Wace and Paul Marshall in 1997, was one of the few hedge fund vehicles that recorded strong gains on Friday, when most equities plunged massively, according to Financial Times. The long/short investment firm made money by betting against U.K. stocks, with the firm having a 1.39% short position in budget airliner EasyJet PLC. Interestingly, the founders of Marshall Wace LLP backed opposing sides of the referendum. Ian Wace was a prominent backer of the Remain campaign, whereas Paul Marshall backed the opposing side of the referendum. Having this in mind, Insider Monkey decided to have a look at the London-based firm’s top US equity positions at the end of the March.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

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#5. Sherwin-Williams Co (NYSE:SHW)

– Shares owned by Marshall Wace LLP as of March 31: 553,524

– Value of Marshall Wace LLP’s holding as of March 31: $157.57 Million

Marshall Wace LLP upped its position in Sherwin-Williams Co (NYSE:SHW) by 252,624 shares during the first three months of 2016, ending the March quarter with 553,524 shares. The increased position was valued at $157.57 million at the end of March and made up 1.5% of the firm’s entire portfolio. The paint and coatings manufacturer has seen its market value jump by 11% since the beginning of the year. In late March, the Cleveland-based paint maker inked an agreement to acquire The Valspar Corp (NYSE:VAL) for $113 per share in cash, with the purchase being valued at $9.5 billion. Although Valspar shareholders may unanimously approve the $9.5 billion-acquisition, it could take some time until they know the exact price they will actually receive for each Valspar share. If regulators force Sherwin-Williams to divest assets representing more than $650 million in annual net sales, the purchase price would fall to a much lower figure of $105 per share. James Crichton’s Hitchwood Capital Management acquired a new stake of 650,000 shares of Sherwin-Williams Co (NYSE:SHW) during the March quarter.

#4. Comcast Corporation (NASDAQ:CMCSA)

– Shares owned by Marshall Wace LLP as of March 31: 2.63 Million

– Value of Marshall Wace LLP’s holding as of March 31: $160.70 Million

The London-based asset manager trimmed its stake in Comcast Corporation (NASDAQ:CMCSA) by 8% during the January-to-March period to 2.63 million shares. The reshuffled stake was worth $160.70 million on March 31, accounting for 1.6% of the firm’s portfolio. Just recently, analysts at Nomura raised their price target on the cable TV giant to $73 from $70 and reiterated their “Buy” rating, citing the accelerated rollout of the company’s entertainment operating system X1. Despite mounting uncertainty following the U.K.’s decision to leave the EU, Nomura analysts believe Comcast offers stability and recurring revenue and earnings. In late April, Comcast revealed that its NBCUniversal division was acquiring Dreamworks Animation Skg Inc. (NASDAQ:DWA) for roughly $3.8 billion. The acquisition of the well-known studio is anticipated to close by the end of the year. Comcast shares are up 11% thus far in 2016. Alex Snow’s Lansdowne Partners was the owner of 26.22 million shares of Comcast Corporation (NASDAQ:CMCSA) at the end of March.

The second page of this article will discuss Marshall Wace LLP’s three-largest equity holdings on March 31.