Rail-Splitter Gets Aboard the Apple and Facebook Hype Trains, Still Loves EA, Red Hat

Rail Splitter Capital Management LLC primarily offers its services to investment companies, endowments and other investment advisers. The firm was founded in 2002 and it mainly invests in equity ad derivative products in the United states. The fund combines eclectic investment styles with an emphasis on growth based strategy.

Rail Splitter Capital Management LLC holds a well diversified portfolio. Information Technology stocks form the biggest chunk of the fund’s 13F portfolio at 38%, followed by Health Care stocks constituting 21% of the 13F portfolio. It currently has $358 million worth of securities in its 13F portfolio at the end of Q3. This article will discuss various stocks held by Rail Splitter Capital, Electronic Arts Inc. (NASDAQ:EA), Facebook Inc. (NASDAQ:FB), Red Hat Inc. (NYSE:RHT), Apple Inc. (NASDAQ:AAPL) and NXP Semiconductor N.V. (NASDAQ:NXPI), and the general outlook concerning them.

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

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Electronic Arts Inc. (NASDAQ:EA) stock has gained 12% this year so far and accounted for 4.51% of Rail Splitter Capital’s portfolio at the end of Q3. For the quarter ended on 30^th September, 2016, the investment fund trimmed its holding of the stock by 8% to 189,043 shares, worth $16.144 million. Of the hedge funds in our database, 61 funds owned $3.01 billion of Electronic Arts Inc. (NASDAQ:EA) and accounted for 9.90% of the float on September 30. Electronic Arts increased its forecast for full-year revenue and profit, expecting to earn $2.69 per share, up from previous forecast of $2.56 per share. Its full year revenue forecast stands at $4.78 billion, up from $4.75 billion.

Facebook Inc. (NASDAQ:FB) stock gained 12% in this year so far. Rail Splitter Capital initiated its position in the company by buying 113,470 shares during the quarter ended on 30^th September, 2016. The fund held $14.55 million worth of Facebook stock at the end of the quarter, forming 4.06% of its portfolio. In terms of broader hedge fund ownership, 149 elite funds had a bullish position in Facebook Inc (NASDAQ:FB) at the end of September. Facebook announced third quarter revenue of $7.01 billion, up 56% and beating consensus estimate of $6.92 billion. Its earnings at $1.09 per share also surpassed expectations of $0.97 per share. However, the company issued a warning that its sizzling revenue growth may slow in the future.

Red Hat Inc. (NYSE:RHT) stock formed 3.91% of Rail Splitter Capital’s portfolio at the end of September quarter. The fund held 173,428 shares of the company with the market value of $14.08 million. Of the 742 elite funds we track, 34 funds owned $985.79 million of Red Hat Inc (NYSE:RHT) and accounted for 4.50% of the float on September 30, versus 35 funds and $597.92 million respectively on June 30.  Red Hat Inc specializes in open technologies usable by businesses. It also deals in cloud deployments. The company’s products are used by various communications companies such as FreeBit and Turkcell.

Apple Inc. (NASDAQ:AAPL) stock has gained 6% this year so far. The company also offers dividend yield of 2%. Rail Splitter Capital inaitiated a new position of 108,915 shares of Apple with a market value of $12.31 million at the end of Q3. In terms of the smart money funds that we track, 145 top funds were long Apple Inc. (NASDAQ:AAPL) as of the most recent 13-F reporting period, up 29 funds from the previous quarter. Since the announcement of AT&T acquiring Time Warner, there had been many unsubstantiated media reports projecting that Apple may extend bid for the media company. So far that hasn’t happened yet. Judging by Apple’s previous conservative M&A history, many investors believe that event may never happen.

NXP Semiconductor N.V. (NASDAQ:NXPI) stock climbed 16% this year so far, courtesy of the Qualcomm, which agreed to buy it for $38.5 billion in cash or $110 per share. NXP Semiconductors is based out of Netherlands and Qualcomm is expected to save $500 million in annual cost savings within two years of the transaction completion. The combine entity will have annual revenue of more than $30 billion. Rail Splitter held 118,776 shares of NXP Semiconductor worth $12.11 million as on the end of September quarter.

DISCLOSURE – NONE