Prince Street Capital Management, led by David Halpert, is a New York-based hedge fund with around $1.65 billion in assets under management. The fund’s stock picks have not performed exceptionally this year according to our calculations, however the fund’s picks did rebound from a poor first quarter with a very strong second quarter. While the fund’s picks are still down by 1.2% year-to-date using our weighted average returns metric from its positions in companies with a market cap of $1 billion or greater, those picks, based on 15 qualifying positions as of March 31, were up by 11.80% in the second quarter. Note that these calculations exclude bonds and options and are only estimates based on previously held positions. The actual returns may be very different from our approximations. Anyway, we couldn’t just pass by such an outstanding rebound, and in this article we take a closer look at some of Prince Street Capital Management’s top positions in Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), EPAM Systems Inc (NYSE:EPAM) and SouFun Holdings Ltd (NYSE:SFUN), all of which performed well int he second quarter, fueling the rebound.
We don’t just track the latest moves of funds and stocks at Insider Monkey. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 139%, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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Following a 107% increase in its position in Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), Prince Street Capital Management finished the first three months of the year with 1.98 million shares valued at $12.06 million. This $45.54 billion Brazilian oil giant is notorious to many investors for a steep decline in the last few years. A corruption scandal, the oil price decline, the economic problems in Brazil, and the high share of government ownership in the company are among the top problems of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), which nonetheless managed to climb back by 50% during the second quarter of 2015. The rally didn’t live long, as the price retreated in July, however it only adds more margin of safety to Barclays’ most recent price target, which is set at $13 versus $6.92, where the shares are changing hands today. OZ Management, headed by Daniel S. Och, tops the list of the most prominent investors in the stock of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) with a newly initiated position of 22.32 million shares worth $135.91 million in the first quarter.
The next equity on the list is EPAM Systems Inc (NYSE:EPAM), in which David Halpert has allocated $11.88 million of his 13F portfolio, owning 193,800 shares of the company in total. Over the second quarter, the shares of the company have made the bets of investors look quite brilliant, returning around 16.22%. Among the most recent moves of EPAM Systems Inc (NYSE:EPAM) is the acquisition of NavigationArts, a Virginia digital consulting firm, which acts as a strategic advisor to Fortune 500 companies. John Smith Clark’s Southpoint Capital Advisors held some 1.75 million shares of EPAM Systems Inc (NYSE:EPAM) worth $107.21 million.
Lastly, Prince Street Capital Management reported having 1.35 million shares of SouFun Holdings Ltd (NYSE:SFUN), valued at $8.11 million. The company is engaged in the operation and maintenance of several furnishing and improvements websites in China. SouFun Holdings Ltd (NYSE:SFUN) is going through a challenging improvement period, which should allow it to become a full-service real-estate platform. During the second quarter of 2015, the shares of the company soared by 39.24%, while the consensus price of analysts still suggests a 47.9% upside. Yet, investors should beware of strong headwinds coming from the Chinese mainland stock market. Kerr Neilson’s Platinum Asset Management decided not to make any changes in its ownership of SouFun Holdings Ltd (NYSE:SFUN), as they kept on the balance around 13.06 million shares worth some $78.35 million.
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