Sloane Robinson Investment Management is a London-based long/short equity hedge fund founded by Hugh Sloane and George Robinson in 1993. The fund employs a combination of both a top-down and bottom-up approach to stock selection. Although Sloane Robinson Investment Management primarily invests in equities in European, Pacific, and emerging markets, it also manages a sizable U.S. public equity portfolio. The fund recently filed its 13F for the reporting period of June 30, and according to the filing the firm’s U.S. equity portfolio was worth $101.66 million at the end of June, with 89% of that invested in stocks from the information technology sector. The fund’s U.S. equity portfolio is highly concentrated, with its top ten holdings accounting for 99% of the portfolio value. During the second quarter, Sloane Robinson Investment Management increased its stake in four stocks and initiated a stake in five other stocks, and we’ll look at three such stocks in this article (two of the former, one of the latter), which represent the fund’s most bullish plays during the quarter. Those stocks are Hollysys Automation Technologies Ltd (NASDAQ:HOLI), Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM), and Harman International Industries Inc./DE/(NYSE:HAR).
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 65 percentage points since the end of August 2012. These stocks returned a cumulative of 123% vs. 58% gain for the S&P 500 Index (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
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Hollysys Automation Technologies Ltd (NASDAQ:HOLI) climbed up a rank from the end of the first quarter to become Sloane Robinson Investment Management’s top holding following the close of the second quarter. The fund increased its stake in the company by 74% during the quarter and as of June 30, owned over 1.68 million shares worth $40.42 million. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) is a leading provider of automation and control products and technologies in China, the Middle East, and Southeast Asia. On June 25, the company reported that it had won a contract worth almost $21.16 million to supply its proprietary supervisory control and data acquisition system (SCADA) to Shenzhen Subway Line 11. This was followed by another announcement on July 7 that it had won a similar contract worth $12.26 million to supply its proprietary SCADA to Lanzhou Subway Line 1. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) will be reporting its fiscal 2015 fourth quarter results on August 13. Analysts expect the company to report a 10% year-over-year increase in EPS to $0.41. At the end of June, Chuck Royce‘s Royce & Associates owned 405,982 shares of the company.
Moving on to Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM), Sloane Robinson Investment Management increased its stake in the company by a whopping 658% to 486,500 shares. As of June 30, this stake was worth almost $11.05 million. Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM) is a Taiwan-based behemoth that manufactures and supplies integrated circuits and other semiconductor devices and is one of Apple Inc. (NASDAQ:AAPL)’s largest suppliers. The company recently announced that it will commence mass production of A9 chips with its 16nm FinFET process technology in the fourth quarter of 2015. On August 11 , the company reported that it would be acquiring a stake worth up to $126 million in Visera, OVT Taiwan. Ken Fisher‘s Fisher Asset Management, which was the largest shareholder of Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM) among the hedge funds we cover at the end of the first quarter, increased its stake in the company by another 7% to over 26.61 million shares during the second quarter.
Sloane Robinson Investment Management initiated a stake in Harman International Industries Inc./DE/(NYSE:HAR) by purchasing 71,200 shares of the company during the April-June period. This stake was worth almost $8.47 million as of June 30. Harman International Industries Inc./DE/(NYSE:HAR) is an acoustics company which manufactures and markets audio products for the automotive industry. On August 4 the company declared its fiscal 2015 fourth quarter and full-year results for the period ending June 30. Operational EPS for the quarter came in at $1.37, up by 10% year-over-year, while revenue for the quarter came in at $1.7 billion, up by 16% from the same quarter last year. The company faced significant headwind s from the rise in the dollar during the quarter, evidenced by the fact that if foreign currency impact is excluded, its revenue was up by 26% year-over-year for the quarter. In a research note published on August 7, analysts at Robert W. Baird reduced their price target on the stock to $147 from $172 and reiterated their ‘Outperform’ rating on the stock. Analysts at Barclays also upped their price target on the stock to $140 from $139 on August 11, while maintaining their rating of ‘Overweight’. Donald Chiboucis‘ Columbus Circle Investors reduced its stake in the company by 234,679 shares to 456,378 shares during the second quarter.
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