Billionaire Richard Perry’s Perry Capital was right on the money when it initiated a position in Williams Companies Inc (NYSE:WMB) during the first quarter. The stock soared by 25% on Monday on the back of takeover news and is up by more than 33% year-to-date. We decided to take a closer look at some of his other top new picks including Micron Technology, Inc. (NASDAQ:MU) and Alibaba Group Holding Ltd (NYSE:BABA) and analyze their performance so far.
Perry started his career at Goldman Sachs’ Risk Arbitrage department. According to Forbes the net worth of the self made billionaire stands at $1.2 billion. He launched his fund in 1998 and currently it has about $11.6 billion worth of regulatory assets under management. The market value of Perry Capital’s public equity portfolio stood at $3.04 billion at the end of the first quarter with 51% of holdings represented by financial stocks.
Follow Richard Perry's Perry Capital
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period from 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 142% over the last 33 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
During the first quarter, Perry Capital acquired some 3.29 million shares of Williams Companies Inc (NYSE:WMB), valued at $166.38 million, equal to 5.48% of its equity portfolio. Perry was bullish on the $44.80 billion natural gas pipeline company despite a loss of interest among hedge funds that we track during the first quarter. A total of 60 firms had an aggregate investment of $6.62 billion in Williams Companies Inc (NYSE:WMB) at the end of March as compared to 77 funds with $6.50 billion at the end of the previous quarter. The recent hike came on the heels of a buyout offer by Energy Transfer Equity LP (NYSE:ETE) on Monday, valuing the company at $64 per share, which represented a 33% premium to the company’s closing price on Friday. However, Williams Companies Inc (NYSE:WMB) rejected the offer claiming that it was much more valuable than that price tag. A condition in the offer that didn’t sit well with Williams’ management was the termination of WMB’s ongoing acquisition of its affiliate Williams Partners (NYSE:WPZ). Keith Meister‘s Corvex Capital and Eric W. Mandelblatt’s Soroban Capital Partners are the two largest stockholders of Williams Companies Inc (NYSE:WMB) within our database with respective stakes of 41.68 million valued at $2.11 billion and 21 million shares valued at $1.06 billion.
Perry Capital acquired about 5.73 million shares of Micron Technology, Inc. (NASDAQ:MU) valued at $155.46 million during the first quarter. The holding represents 0.54% of the company’s outstanding stock and 5.12% of the fund’s equity portfolio. The $26.59 billion global provider of semiconductor devices is suffering from uncertainty regarding the competition brewing up in DRAM space, especially by Samsung, which might anchor down its margins. Micron Technology, Inc. (NASDAQ:MU)’s stock has depreciated by almost 30% so far this year. The analysts remain divided ahead of the company’s quarterly financial report this Thursday. While Topeka recently upgraded the company to ‘Buy’, Goldman Sachs downgraded Micron Technology, Inc. (NASDAQ:MU) to ‘Sell’ from ‘Neutral’ and revised down its price target to $19 from $27. David Einhorn‘s Greenlight Capital is the largest stockholder of Micron Technology, Inc. (NASDAQ:MU), among the funds we track, holding some 33.55 million shares valued at $910.20 million.
During the January – March quarter, Perry acquired ‘Call’ options underlying 1.7 million shares of Alibaba Group Holding Ltd (NYSE:BABA) with a value of $141.51 million. The holding represented 4.66% of the fund’s 13F portfolio. The e-commerce giant’s stock has slumped by more than 18% so far this year. Its venture into the American market also failed as it is selling 11 Main to OpenSky. However, Alibaba Group Holding Ltd (NYSE:BABA) has decided to test the waters of ‘online to offline’ market, a name given to the budding booking-via-mobile devices industry, through a joint venture with its affiliate Ant Financial. About $1 billion is invested into the venture, which is called Kouboi. Rob Citrone’s Discovery Capital Management is the largest stockholder of Alibaba Group Holding Ltd (NYSE:BABA) among the investors that we track, holding some 8.77 million shares valued at $730.34 million as of the end of March.
Disclosure: None
