Impax Asset Management, led by Ian Simm, is a hedge fund headquartered in London, England. As of July 31, 2015 the total amount of assets under management of the fund stood at $4.8 billion. Impax Asset Management’s equity funds seek out mis-priced companies that are set to benefit from long-term trends of changing demographics, urbanization, rising consumption, and the resultant increases in resource scarcity. Ian Simm, a graduate of both Cambridge and Harvard universities, has managed the company since the moment it was set up in 1998. Recently his fund filed its 13F form with the SEC, disclosing an equity portfolio containing holdings worth $1.59 billion, more than half of which are invested in industrial companies. In this article we are going to take a closer look at the top industrials picks of the fund, including Xylem Inc (NYSE:XYL), Pentair Ltd (NYSE:PNR) and Danaher Corporation (NYSE:DHR).
Professional investors like Simm 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 118% and beaten the market by more than 60 percentage points since the end of August 2012 (see the details).
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After the first six months of the year, Impax Asset Management owned around 2.29 million shares of Xylem Inc (NYSE:XYL) valued at $85.05 million. The $6.08 billion market cap company designs, manufactures, and applies engineered technologies for the water industry. On a year-to-date basis the stock of Xylem Inc (NYSE:XYL) has suffered a loss of 11.53%, while its peers from the pump and pumping equipment sector were down by an even greater 15.69%. On July 30 the company announced its financial results for the second quarter, posting EPS in line with expectations at $0.43, while it slightly missed on the revenue front, by 0.4%, with its $920 million sales figure. At the beginning of last year the company named a new CEO, Patrick K. Decker, who has already managed to improve the operational performance of the company, pushing both the operating and EBT margins, which might be a good sign for the future FCF of Xylem. Among the other funds that we track, Mario Gabelli’s GAMCO Investors held around 4.56 million shares of Xylem Inc (NYSE:XYL) valued at $169.12 million. The fund added 9.38% to its holding in the company during the second quarter.
The total position of Impax Asset Management in Pentair Ltd (NYSE:PNR) included 1.12 million shares worth $77.04 million at the end of June, 2015. The company is known to the general public as a worldwide producer and distributor of products such as water & fluid solutions, valves & controls, and technical solutions. During 2015, the performance of the stock price can hardly be called satisfactory, as Pentair Ltd (NYSE:PNR) has depreciated by 7.15%. It is not surprising, given the 9.3% drop in the company’s revenue according to its second quarter results. Still, the company managed to beat both the top and bottom line estimates, on EPS by $0.01, posting $0.96, and on revenue by $20 million, reporting $1.66 billion in sales. David E. Shaw’s D E Shaw finished the second quarter with 813,250 shares of Pentair Ltd (NYSE:PNR)with a value of $55.91 million.
Impax Asset Management added to its ownership in Danaher Corporation (NYSE:DHR) by some 17% over the course of the second quarter, lifting the total amount of shares in its portfolio to 699,339 worth $59.92 million. Unlike the two other stocks, the $62.14 billion medical, industrial and commercial products manufacturer has seen its price increase by 6.08% during 2015. At the end of July, Nigel Coe, a market expert from Morgan Stanley, upgraded Danaher Corporation (NYSE:DHR) to “Overweight” from “Equal Weight”, and raised its price target to $100 from $93. Coe believes that Danaher’s recent $13.8 billion acquisition of Pall Corporation (NYSE:PLL) will lead to double-digit free cash flow and EPS growth for the company through 2020. Analysts from Argus Research seem to have a similar opinion of the stock, raising their price target to $98 from $95 on the same day. Steven Cohen‘s Point72 Asset Management holds around 1.07 million shares of Danaher Corporation (NYSE:DHR) valued at $91.82 million as of June 30.
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