OZ Management Slashes Fees, Looks for Big Things from ‘Warcraft’ Developer Activision Blizzard (ATVI)

Founded by Daniel S. Och in 1994, OZ Management had developed into one of the largest hedge funds around, boasting more than $39 billion in assets under management. The fund’s parent company, Och-Ziff Capital Management Group LLC (NYSE:OZM), is currently under pressure to cut management fees, as more and more investors are scaling down on their investments in hedge funds. According to a report by Barron’s, sources close to the firm’s management say the company is considering lowering its management fees for OZ Master, Asia and Europe multi-strategy funds by 25 basis points, but only for existing clients. The fund currently charges between 1.5% and 2% of assets per year plus 20% of profits.

There were also rumors that the fund management company was for sale, but Och-Ziff promptly denied them. At the end of the second quarter, the fund’s equity portfolio carried a market value of $17.3 billion, with 27% being invested in tech stocks, while 26% of the portfolio was accounted by consumer discretionary stocks. OZ Management’s top five equity positions suffered major changes and in this article we’ll take a look at the new hierarchy.

We determine hedge fund sentiment by analyzing the equity portfolios of some of the best-performing hedge funds and institutional investors. Through extensive research, we have determined that the due diligence that these investors employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also showed that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).

Still Optimistic About FleetCor Technologies

We’ll start with FleetCor Technologies, Inc. (NYSE:FLT), a stock OZ Management has been holding since the end of 2012. During the most recent quarter, the fund’s management increased the position by 5% to 2.42 million shares worth $347 million. At the end of June, roughly 31% of FleetCor Technologies, Inc. (NYSE:FLT) outstanding stock was held by 52 of the funds followed by Insider Monkey, up from 48 registered three months earlier. Eric W. Mandelblatt boosted Soroban Capital Partners’ stake in the company by 48% to 1.46 million shares valued at $209 million. A provider of payment and data solutions, FleetCor Technologies, Inc. (NYSE:FLT) is currently up by 18% so far this year, having ended Wednesday’s trading session at $166.02 per share. At the beginning of August, the company issued its second-quarter report, managing to surpass Wall Street’s expectations. Revenues came in at $417.9 million, easily beating analysts’ projections of $414.1 million. FleetCor also posted adjusted earnings of $1.56 per share, just above the consensus of $1.55 per share. As a result, analysts at Jefferies Group reiterated their ‘Buy’ rating and increased the price target to $186 per share, from the previous target of $175 per share.

Merger Bet

Daniel Och and  his team are still betting on E I Du Pont De Nemours And Co (NYSE:DD), a position established during the first quarter of this year. According to its latest 13F filing, OZ Management’s stake ballooned 207% to 6.29 million shares worth $408 million at the end of June. Overall, 36 of the funds we track had E I Du Pont De Nemours And Co (NYSE:DD) in their equity portfolios at the end of the quarter, up from 32 three months earlier. Billionaire Mason Hawkins chose to trim his fund’s exposure, reducing its holding by 8% to 6.16 million shares worth $399 million. At the end of 2015, E I Du Pont De Nemours And Co (NYSE:DD) made public a merger agreement with Dow Chemical Co (NYSE:DOW). The deal is currently under review by the European authorities and the US Justice Department. The U.S. Senate Judiciary Committee has decided to scrutinize the deal as well, amid complaints that the deal would result in higher production costs for farmers.

Turn the page to find out what were the fund’s three largest equity positions at the end of the quarter.