Christian Leone‘s Luxor Capital Group recently initiated two new stakes according to recent filings with the SEC. The fund acquired a 5.0% stake in GrubHub Inc (NYSE:GRUB) comprising of 4.23 million shares. The second addition to the fund’s portfolio is Videocon d2h Limited American Depositary Shares (NASDAQ:VDTH), in which the fund disclosed holding 29.56 million equity shares represented by ADS. The stake represents 7.5% of the company’s outstanding stock.
Founded in 2002, Luxor Capital has now about $11.5 billion in regulatory assets under management. The New York based fund applies both a value based approach as part of its investment strategy and also seeks out distressed companies that could potentially overcome their prevalent circumstances and delivering high returns in the process. The market value of the fund’s equity portfolio towards the end of 2014 stood at $ 4.96 billion, with financial and consumer discretionary sectors amassing the largest portions. According to our metric which is based on the fund’s equity holdings according to the latest 13F filing, 26 of the fund’s long positions returned 4.4% in the first quarter. Only the companies with a market cap exceeding $1 billion were chosen according to our methodology. Some of the most valuable stakes of the fund are represented by Yahoo! Inc. (NASDAQ:YHOO), Voya Financial Inc (NYSE:VOYA) and Tesla Motors Inc (NASDAQ:TSLA).
Luxor Capital is a fund that we have been following for the last couple of years along with over 700 other investors. We follow hedge funds because our research has shown that their stock picks historically managed to generate alpha even though the filings are 45 days delayed. We used a 60-day delay in our back tests to be on the safe side. Our research has shown that 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We are also tracking the performance of these stocks since the end of August 2012 and the system returns 132% over the last 2.5 years, outperforming the S&P 500 ETF by nearly 80 percentage points (see more details here).
Coming back to GrubHub Inc (NYSE:GRUB), a provider of online food delivery services, which held its IPO in April last year, while its stock gained around 34.82% since then. The company’s growth prospects are looking bright as can be seen from its fourth quarter financial results. The numbers of active diners increased to 5 million, a 47% increase from the same quarter last year. GrubHub Inc (NYSE:GRUB)’s revenues grew by 50% and GAAP earnings by 300% during the quarter as compared to the same quarter a year ago. Patrick Mccormack‘s Tiger Consumer Management initiated a stake in GrubHub Inc (NYSE:GRUB) during the fourth quarter with some 1.5 million shares valued at $54.62 million.
Videocon d2h Limited American Depositary Shares (NASDAQ:VDTH) sold about 33% stake in the company for $325 million as it launched its IPO this month. The operator of satellite pay TV channels in India has about 11.8 million subscribers, which accounts for nearly 16% of the country’s direct-to-home market. Videocon d2h Limited American Depositary Shares (NASDAQ:VDTH) went public after a combination with blank check company Silver Acquisition Corp, of which Luxor is also a shareholder with 7.39 million shares.
Luxor initiated a position in Yahoo! Inc. (NASDAQ:YHOO) during the fourth quarter with some 9.22 million shares valued at $465.61 million. Even though Yahoo’s financial results for the first quarter were disappointing, some analysts are very hopeful about the company’s future prospects, and even claim that there is an arbitrage opportunity at the company’s current trading levels, since they value the company’s core operations at zero. James Dinan‘s York Capital Management and Daniel S. Och’s Oz Management are two other funds that initiated stakes in Yahoo! Inc. (NASDAQ:YHOO) during the fourth quarter.
Voya Financial Inc (NYSE:VOYA) represents Luxor’s second largest holding with 7.8 million shares valued at $331.58 million. Among the billionaires that we track 10 had investments totaling $1.22 billion in the company. David Einhorn was one of them as his fund, Greenlight Capital, held about 5.54 million shares of Voya Financial Inc (NYSE:VOYA valued at $234.83 million at the end of 2014. As part of the divestment process, ING Groep NV (ADR) (NYSE:ING) recently offloaded 32 million shares of Voya in a public secondary offering. Voya also agreed to purchase another 13.6 million of its shares from ING.
Luxor also owns convertible notes with a 1.50% interest rate underlying 12.16 million shares of Tesla Motors Inc (NASDAQ:TSLA), the value of the position amounting to $22.58 million. The electric car maker recently upgraded its Model S base model, which now goes by the name Model S 70D. Some analysts believe that the new upgrades make the new model seem cheaper, which could potentially translate into helping Tesla Motors Inc (NASDAQ:TSLA) meet its long term sales goal. Daniel Benton’s Andor Capital Management is the largest shareholder of Tesla Motors Inc (NASDAQ:TSLA) among the funds that we track.
Disclosure: None
