Swift Run Capital Management’s Top Stock Picks for Q4

Swift Run Capital Management, led by Tim Mullen, has recently filed its latest 13F with the Securities and Exchange Commission for the quarter ended September 30, disclosing an equity portfolio valued at around $191.44 million. During the third quarter, the fund started new positions in three companies and it upped its stakes in more than 15 companies. The filing also showed that Swift Run Capital reduced its positions in over 14 companies during the quarter. In this article, we will analyze the fund’s top holdings in terms of value for the last quarter.

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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 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (see more details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

#5 Beneficial Bancorp Inc (NASDAQ:BNCL)

Shares held (as of September 30): 685,140

Total Value (as of September 30): $9.09 million

Percent of Portfolio (as of September 30): 4.75%

Beneficial Bancorp Inc (NASDAQ:BNCL) is a diversified financial services company that provides consumer and commercial banking services. Swift Run Capital upped its position in the company from 680,640 shares disclosed a quarter earlier. Beneficial Bancorp Inc (NASDAQ:BNCL)’s stock is trading up 12.55% year-to-date. Last month, Beneficial Bancorp agreed to acquire Conestoga Bancorp’s ownership interest in Conestoga Bank, which will subsequently be merged into Beneficial Bank, a subsidiary of Beneficial Bancorp. The transaction is valued at 160% of Conestoga Bank’s tangible book value at closing, but will not be greater than $105 million, according to a statement. The deal is expected to close during the first or second quarter of 2016. Beneficial Bancorp Inc (NASDAQ:BNCL)’s third quarter income declined to $5.8 million, or $0.07 per share, compared to $6.5 million, or $0.08 per share, in a year ago period. In its most recent 13F, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, disclosed ownership of 11,102 shares of Beneficial Bancorp.

#4 American International Group Inc (NYSE:AIG)

Shares held (as of September 30): 414,334

Total Value (as of September 30): $9.41 million

Percent of Portfolio (as of September 30): 4.91%

Swift Run Capital slightly increased its position in insurance giant American International Group Inc (NYSE:AIG) from 412,424 shares during the third quarter. The insurance giant posted a loss of $231 million, or $0.18 per share for the last quarter, compared to an income of $2.2 billion, or $1.52 per share, delivered a year earlier. The total number of hedge funds, among those we track, that were holding American International Group Inc (NYSE:AIG) at the end of second quarter slipped to 99 compared to 101 funds at the end of the first quarter. However, the aggregate value of their investments rose to $11.40 billion compared to $10.65 billion held in shares at the end of the first quarter. Shares of American International Group Inc (NYSE:AIG)’s stock have gained 8.98% year-to-date. Richard S. Pzena’s Pzena Investment Management holds 8.18 million shares of American International Group as of September 30.

On the next page, we will talk about Williams Companies Inc (NYSE:WMB) and two other top stocks.

#3 Williams Companies Inc (NYSE:WMB)

Shares held (as of September 30): 289,382

Total Value (as of September 30): $10.66 million

Percent of Portfolio (as of September 30): 5.57%

Williams Companies Inc (NYSE:WMB) remains Swift Run Capital’s third largest holding, in which the fund increased its position by more than 15% during the last quarter. Oklahoma-based Williams is an energy company, focusing on natural gas processing and transportation. Williams Companies Inc (NYSE:WMB) did not post impressive results for the third quarter. The company turned to a loss of $40 million, or $0.05 per share, for the third quarter, compared to income of $1.68 billion, or $2.22 per share, in 2014. The performance of Williams Companies Inc (NYSE:WMB) does not look remarkable, with shares declining by 22.23% year-to-date. Another investor that loves Williams Companies is Keith Meister’s Corvex Capital, with ownership of 41.68 million shares as of the end of June.

#2 Colony Capital Inc (NYSE:CLNY)

Shares held (as of September 30): 767,003

Total Value (as of September 30): $15.00 million

Percent of Portfolio (as of September 30): 7.84%

Colony Capital Inc (NYSE:CLNY) is a $2.32-billion market cap commercial real estate and investment management company, in which Swift Run Capital trimmed its stake by 7,926 shares during the third quarter. Colony Capital Inc (NYSE:CLNY)’s financial performance was impressive in the third quarter, with the company’s income attributable to common stockholders increasing to $37.2 million, or $0.33 per share, compared to $31.98 million, or $0.30 per share, for the same quarter a year ago. Colony Capital Inc (NYSE:CLNY) is currently considering potential capital raising opportunities in Europe, which may include investment vehicles through publicly listed entities, private funds or separate accounts. Shares of the company’s stock has dropped over 13% year-to-date. Brian Jackelow’s SAB Capital Management held 5.30 million Colony Capital shares as of June 30.

#1 DaVita HealthCare Partners Inc (NYSE:DVA)

Shares held (as of September 30): 211,382

Total Value (as of September 30): $15.29 million

Percent of Portfolio (as of September 30): 7.99%

DaVita HealthCare Partners Inc (NYSE:DVA) represents Swift Run Capital’s top holding, in which the investor upped its position by over 16%. Having a market cap of $15.66 billion, DaVita HealthCare Partners Inc (NYSE:DVA) is a healthcare company in the United States. For the third quarter, DaVita HealthCare Partners reported an income of $215.9 million, up from $184.1 million for the same quarter last year. The company’s stock has lost 3.27% year-to-date. At the end of the second quarter, the total number of hedge funds, among those we track, with positions in DaVita HealthCare Partners rose to 44 from 38 at the end of the first quarter. The aggregate value of these investments, however, slipped to $5.29 billion, compared to $5.46 billion a quarter earlier. Warren Buffett’s Berkshire Hathaway sees potential in DaVita HealthCare Partners Inc (NYSE:DVA), in which the investor held 38.57 million shares at the end of the second quarter.

Disclosure: none