In this article, we will be taking a look at the top 10 stock picks of Zweig-DiMenna Associates. To skip our detailed analysis, you can go directly to see Top 5 Stock Picks of Zweig-DiMenna Associates.
Joe DiMenna is the managing director of Zweig-DiMenna Associates, which he co-founded between in 1984 with Martin Zweig. He currently serves as the Chief Investment Officer of the firm while Zweig serves as the Chief Portfolio Officer. Zweig-DeMenna Associates is considered to be one of the longest-lived hedge funds in the world, having been in existence for around 35 years, and having been established at a time when hedge funds weren’t as popular as they are now.
The story of Joe DiMenna is quite inspiring, as he initially served as a research assistant for Martin Zweig while he was still in college. Zweig was considered ahead of his time as he focused on in depth quantitative and economic research based on hard data, and was even acknowledged as the creator of several important market indicators such as the put / call ratio. DiMenna approached Zweig to be his research assistant and with time, convinced Zweig to begin a hedge fund in a period when there were less than 10 such funds with just a few hundred million in assets under management. That compares to today where there are thousands of such funds with some funds managing more money than the GDP of many countries.
Photo by Chris Liverani on Unsplash
Zweig-DiMenna Associates currently boasts a portfolio worth more than half a billion dollars, with the total value being around $526.4 million. The fund is dominated by the basic materials industry, while the services and technology sector makes up a large chunk of the portfolio too. Despite being run by legends in the field, the fund hasn’t really performed that brilliantly over the past 15 years, especially in 2009, when the fund lost 3.5%, even as all other funds were recouping their 2008 losses. Zweig-DiMenna Associates has done better than many funds in the latest quarter of 2022, however, despite the market volatility.
Methodology
We used Zweig-DiMenna Associates’ Q1 portfolio according to 13F filings and picked the top 10 stocks for this analysis. We also included the number of hedge fund holders in our database that also held shares in the same stock.
Top 10 Stock Picks of Zweig-DiMenna Associates
10. Teck Resources Limited (NYSE:TECK)
Zweig-DiMenna Associates’ Stake Value: $12.340 million
Number of Hedge Fund Holders: 56
Teck Resources Limited (NYSE:TECK) is one of Canada’s largest mining companies, and is engaged in the mining of coal, zinc, copper, lead, silver and gold, among other minerals.
According to Deutsche Bank, the target share price of Teck Resources Limited (NYSE:TECK) is $45, which is a price cut from $47 initially. However, it is worth noting that Teck Resources Limited (NYSE:TECK) has seen its share price rise by 12% year to date, which in the current economic climate, is quite newsworthy on its own. If inflation continues, some commodity stocks could benefit from higher prices.
Alongside Amazon.com, Inc. (NASDAQ:AMZN), Occidental Petroleum Corporation (NYSE:OXY), and Marathon Oil Corporation (NYSE:MRO), Teck Resources Limited (NYSE:TECK) is one of Zweig-DiMenna Associates’ top stocks.
9. Palo Alto Networks, Inc. (NASDAQ:PANW)
Zweig-DiMenna Associates’ Stake Value: $12.684 million
Number of Hedge Fund Holders: 87
Palo Alto Networks, Inc. (NASDAQ:PANW) is a cybersecurity company which is headquartered in California. Palo Alto Networks, Inc. (NASDAQ:PANW). The average price expectation of Palo Alto Networks, Inc. (NASDAQ:PANW) from various analysts is $654.79, while its current price is below $550.
“The portfolio also saw solid performance from cybersecurity names Palo Alto Networks (NYSE:PANW) which is gaining prominence as the risk of global cyberattacks increases as part of the Russian offensive. On an individual stock basis, leading contributors to absolute returns in the first quarter included positions in Palo Alto Networks.”
8. Freeport-McMoRan Inc. (NYSE:FCX)
Zweig-DiMenna Associates’ Stake Value: $12.684 million
Number of Hedge Fund Holders: 87
Freeport-McMoRan Inc. (NYSE:FCX) is another mining company which makes the list of the top 10 stock picks of Zweig-DiMenna Associates. Freeport-McMoRan Inc. (NYSE:FCX) has seen its share price spiral, losing close to 32% YTD as copper prices have declined from the beginning of the year.
In its Q1 2022 investor letter, Carillon Town advisors mentioned Freeport-McMoRan Inc. (NYSE:FCX). Here is what they said:
“Supply chains eased for some goods, but remained challenged for many commodities including energy, agriculture, and fertilizer due to war and general scarcity, and also in many consumer products as semiconductors remained in short supply. Copper and gold producer Freeport- McMoRan (NYSE:FCX) rose as copper prices remained strong due to supply shortages and growing use in renewable energy systems and electric vehicles.”
7. Ovintiv Inc. (NYSE:OVV)
Zweig-DiMenna Associates’ Stake Value: $13.151 million
Number of Hedge Fund Holders: 44
The unique sounding Ovintiv Inc. (NYSE:OVV) is a new addition to the top 10 stock picks of Zweig-DiMenna Associates, making up nearly 2.5% of the entire portfolio.
In May, Ovintiv Inc. (NYSE:OVV) lifted its dividend by 25%, and the company has sold some assets in Uinta and Bakken for approximately $250 million.
Miller Value Partners mentioned Ovintiv Inc. (NYSE:OVV) in its Q4 2021 investor letter. Here is what is said:
“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.
We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently.”
6. Texas Instruments Incorporated (NASDAQ:TXN)
Zweig-DiMenna Associates’ Stake Value: $13.982 million
Number of Hedge Fund Holders: 46
Texas Instruments Incorporated (NASDAQ:TXN) is considered to be among the top 10 semiconductor companies in the world.
In its Q4 2021 investor letter, Davis Funds mentioned Texas Instruments Incorporated (NASDAQ:TXN). Here is what it said:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
Much like Texas Instruments Incorporated (NASDAQ:TXN), Amazon.com, Inc. (NASDAQ:AMZN), Occidental Petroleum Corporation (NYSE:OXY), and Marathon Oil Corporation (NYSE:MRO) are also among Zweig-DiMenna Associates’ top stocks.
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Disclosure: None. Top 10 Stock Picks of Zweig-DiMenna Associates is originally published on Insider Monkey.
