Charles Paquelet founded Skylands Capital, a Milwaukee-based long/short equity hedge fund, in 2004. Before founding Skylands, Paquelet served as a principal at Strong Capital Management, which he joined in 1989 after completing his MBA at Indiana University. The firm recently filed its 13F with the Securities and Exchange Commission (SEC) for the reporting period of June 30. According to the filing, the public equity portfolio of Skylands Capital shrunk to $931 million from the $985.36 million it was valued at on March 31. This is likely tied to our calculations of the fund’s stock pick returns, which came in at a loss of 3.9% based on the weighted average return of the 146 stocks with a market cap of over $1 billion that Skylands Capital was long in heading into the second quarter. However, our figures are only estimates of the performance of a fund’s long stock picks, and don’t factor in such variables as options, bonds, short positions, long positions in sub-$1 billion companies, and changes throughout the quarter to qualifying long positions, so they could differ greatly from a fund’s actual returns. The 13F filing further revealed that Skylands Capital reduced its stake in 137 companies during the second quarter, which included some of its top picks like Union Pacific Corporation (NYSE:UNP), Apple Inc. (NASDAQ:AAPL) and General Motors Company (NYSE:GM), which we’ll look at in this article.
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At Insider Monkey we track hedge fund moves because professional investors like Charles Paquelet spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. 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? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 139% and beaten the market by more than 80 percentage points since the end of August 2012 (see the details).
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Union Pacific Corporation (NYSE:UNP) remained the top pick of Skylands Capital at the end of the second quarter, even though the company’s shares slumped by over 12% during the period and are down by 18.25% year-to-date. Skylands sold a paltry 13,750 shares of Union Pacific Corporation (NYSE:UNP) during the second quarter, bringing its total holding down to 828,100 shares valued at almost $79 million as of June 30. With a consistent dividend paying history and a yield of 2.24%, the company is considered one of the best dividend stocks in the S&P 500. Union Pacific Corporation (NYSE:UNP) is scheduled to declare its second quarter earnings on July 23 and the consensus estimate among analysts is that the company will report EPS of $1.35. Of the 28 prominent brokerages and firms that cover the company, 22 have a ‘Buy’ rating on it. The average 12-month price target among analysts for the stock is $114.19, 16% above its current trading price of $98.69. Jim Simons‘ Renaissance Technologies initiated a stake in Union Pacific Corporation (NYSE:UNP) during the March quarter, buying over 1.9 million shares of the company.
Skylands trimmed its exposure to Apple Inc. (NASDAQ:AAPL) by 16,050 shares during the April-June period, bringing its total ownership down to 335,665 shares valued at $42.10 million at the end of June. Shares of the largest company in the world remained flat during the second quarter, but were up by over 17% year-to-date. However, Apple Inc. (NASDAQ:AAPL)’s shares have fallen by 7% in after-hours trading today following its latest earnings results and guidance, which fell short of expectations. Though the Apple Watch was released during the second quarter, Apple Inc. (NASDAQ:AAPL) previously noted that it wouldn’t be providing sales data for the device, at least in this earnings report, and that proved to be the case. Among the over 700 hedge funds we cover, Carl Icahn’s Icahn Capital LP held the largest stake in Apple, consisting of 52.76 million shares at the end of March quarter.
Owing to an 11% drop in share price during the quarter ending June 30, General Motors Company (NYSE:GM) dropped to the sixth-largest holding of Skylands from the fifth-largest at the end of first quarter. The fund also sold 26,500 shares of General Motors Company (NYSE:GM) during the June quarter and held 857,750 shares of the auto makerm valued at $28.59 million. General Motors Company (NYSE:GM) is scheduled to report its quarterly earnings on July 23 and on the back of a healthy economy and surge in demand, the Street is expecting the company to declare EPS of $1.08, significantly above the $0.12 EPS it reported during the same period last year. Analysts have an average recommendation of ‘Overweight’ on the stock with an average price target of $41.40, almost 30% above where the company currently trades at. Warren Buffett‘s Berkshire Hathaway held one of the largest stakes in General Motors Company (NYSE:GM), of 41 million shares at the end of first quarter.
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