Neil Chriss, a highly reputed mathematician, has also found his way into hedge fund management, having founded Hutchin Hill Capital in 2007. He went into the hedge fund business after spending some time working on Wall Street and has since built a name for himself as a result of his success. His fund submitted its 13F filing with the U.S. Securities and Exchange Commission for the period of March 31 and the filing showed that the fund sported a public equity portfolio value of $3.61 billion, representing an increase of 24.8% over the last quarter of 2014, while Hutchin Hill Capital maintained $6.73 billion in assets under management. In Chriss’ first years in the hedge fund business, he has posted 12% in annualized gains, approximately six times the average returns registered by his peers. With his multi-strategy approach, he has attracted large sums of capital from investors big and small. Chriss chooses his stocks carefully, carrying out thorough analysis to establish their potential before moving to secure portions in them. In this article, we are looking at three of his new picks made during the first quarter, which are Albemarle Corporation (NYSE:ALB), Darden Restaurants, Inc. (NYSE:DRI), and Kohl’s Corporation (NYSE:KSS).
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 83 percentage points, returning over 142% (read the details here). Hence a retail investor needs to isolate himself from the herd and take advantage of the best growth opportunities in the market by concentrating on small-cap stocks.
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Chriss roped Albemarle Corporation (NYSE:ALB) into his fold during the first quarter of 2015. At the close of the quarter, the Wall Street expert held a total of 1.08 million shares of the specialty chemical company, with his holding having a market value of $57.17 million. The Baton Rouge, Louisiana-based company acquired Rockwood Holdings, Inc. earlier this year and realigned its global business units in an effort to strengthen its international operations. For the first quarter of 2015, the company posted earnings per share of $1.17, representing a 19% rise compared to the first quarter of 2014. The earnings per share figure handily surpassed Thomson Reuters consensus estimate of $0.71. Analysts forecast $3.89 in earnings per share for the current fiscal year, falling within the company’s own guidance of $3.65-$4.05 per share. 38 of the hedge funds that we track had positions in Albemarle Corporation (NYSE:ALB) at the end of the first quarter, with their holdings having an aggregate value of $595.33 million. Jeffrey Gates‘ Gates Capital Management and Ross Margolies’ Stelliam Investment Management are among the funds that had stakes in the stock.
Darden Restaurants, Inc. (NYSE:DRI), a full service multi-branded restaurant firm with its headquarters in Orlando, Florida, was among the stocks that attracted Chriss during the quarter. At the end of the period the investor held 800,000 shares of the stock, with a market value of $55.47 million. The restaurant holding company carries out its activities through its different brands such as Olive Garden, LongHorn Steakhouse, Bahama Breeze and Eddies V’s Prime Seafood. Darden Restaurants, Inc. (NYSE:DRI) delivered earnings per share of $0.99 in its latest results, beating Thomson Reuters’ consensus estimate of $0.84, on revenue of $1.73 billion. In the same quarter last year, the company posted earnings per share of $0.82. Analysts have given the stock an average rating of “Buy” and forecast $2.50 in earnings per share for the current fiscal year. 29 hedge funds in our database had portions of the stock on their portfolio’s plates as of March 31, accounting for $1.06 billion in total value. Jeffrey Smith‘s Starboard Value LP, who helped drive a major shakeup at the company, came on top with 11.64 million shares of the stock, followed distantly by Chriss, and John Overdeck and David Siegel’s Two Sigma Advisors.
Finally, let us now look at Kohl’s Corporation (NYSE:KSS), in which Chriss held 705,700 shares valued at $55.22 million at the end of the first quarter of 2015. The retail chain headquartered in Menomonee Falls, Wisconsin, trades in an assortment of products, including jewelry, footwear, and clothing, among others. For greater productivity, the $12.38 billion market cap company recently created new executive positions, including the already-filled Chief Merchandising and Customer Officer and Chief Operating Officer, which are yet to be filled. Kohl’s Corporation (NYSE:KSS) has been involved in offering services to the communities where it operates and has so far raised over $274 million towards children’s initiatives across the nation. It implements these activities through Kohl’s Cares, LLC, its subsidiary. In terms of the company’s performance, it reported earnings per share of $0.63 for the quarterly period ended April 30, 2015, resulting in a surprise factor of 10.53%. Analysts expect Kohl’s Corporation (NYSE:KSS) to post much strong earnings per share of $1.16 for the quarter ending July 31. As of March 31, a total of 37 hedge funds in our database were invested in the stock, with an aggregate investment value of $917.86 million. Of the 37, six were managed by billionaires. Donald Chiboucis‘ Columbus Circle Investors and billionaire David Harding’s Winton Capital Management were among the funds that had stakes in the stock at the end of the period.
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