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.

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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.

#3. T-Mobile US Inc. (NASDAQ:TMUS)

– Shares owned by Marshall Wace LLP as of March 31: 5.59 Million

– Value of Marshall Wace LLP’s holding as of March 31: $213.94 Million

The British investment firm founded by Ian Wace and Paul Marshall owned 5.59 million shares of T-Mobile US Inc. (NASDAQ:TMUS) at the end of the first quarter, 81,674 shares more than at the end of the fourth quarter of 2015. The 5.59 million-share stake was valued at $213.94 million on March 31 and accounted for 2.1% of the firm’s entire portfolio. The third-largest wireless carrier has seen its market capitalization increase by 8% since the start of 2016. Nomura analysts downgraded T-Mobile to “Neutral” from “Buy” last week and cut their price target on the stock to $44 from $46, citing possible intensifying competition in the final quarter of 2016. Precisely, Nomura expects the much-anticipated launch of the iPhone 7 to “return promotional intensity and phone upgrade rates” to levels registered in the second half of 2015. John Paulson’s Paulson & Co had 14.62 million shares of T-Mobile US Inc. (NASDAQ:TMUS) among its holdings on March 31.

#2. Alphabet Inc. (NASDAQ:GOOGL)

– Shares owned by Marshall Wace LLP as of March 31: 315,900

– Value of Marshall Wace LLP’s holding as of March 31: $241.00 Million

Marshall Wace LLP had 315,900 Class A shares of Alphabet Inc. (NASDAQ:GOOGL) in its portfolio at the end of the first quarter of 2016, 105,089 shares more than at the end of the previous quarter. The upped Alphabet position was valued at $241.00 million at the end of the quarter, constituting 2.3% of the firm’s portfolio. Reportedly, Alphabet’s Google plans to enter the competitive smartphone market by releasing a Google-branded phone, which could compete directly with Apple Inc. (NASDAQ:AAPL)’s highly-successful iPhones. Google already develops the Android operating system that runs on roughly 80% of smartphones across the globe, including those of HTC, LG and Samsung. Meanwhile, driverless technology appears to be among the hottest industries in Silicon Valley, with Alphabet being a pioneer of the driverless technology. Alphabet’s Class A shares have lost 11% of their value since the beginning of the year. Andreas Halvorsen’s Viking Global Investors LP owns 2.05 million Class A shares of Alphabet Inc. (NASDAQ:GOOGL) as of March 31.

#1. Zoetis Inc. (NYSE:ZTS)

– Shares owned by Marshall Wace LLP as of March 31: 8.99 Million

– Value of Marshall Wace LLP’s holding as of March 31: $398.35 Million

Zoetis Inc. (NYSE:ZTS) was by far the largest equity holding in Marshall Wace LLP’s portfolio at the end of March, accounting for 3.8% of the firm’s portfolio. The London-based asset manager cut its Zoetis stake by 404,538 shares during the first quarter of 2016 to 8.99 million shares, which were worth $398.35 million on March 31. The leader in the discovery and development of animal health medicines and vaccines has seen the value of its shares decline by 3% since the start of 2016. The company recorded total revenue of $1.16 billion for the three months that ended April 3, up from $1.10 billion reported a year ago. Zoetis’ operational revenue growth, which represents revenue growth excluding the impact of currency exchange headwinds, grew 12% year-over-year. The increase was partially driven by the acquisition of privately-held Norwegian aquaculture company called Paharmaq, as well as the acquisition of certain assets of Abbott Animal Health. Bill Ackman’s Pershing Square Capital Management was the equity holder of 41.82 million shares of Zoetis Inc. (NYSE:ZTS) at the end of March.

Disclosure: None