JAT Capital, led by John Thaler, has filed its Form 13F with the U.S. Securities and Exchange Commission for the reporting period of March 31, 2015. Connecticut-based JAT Capital is a global long/short equity hedge fund that employs a fundamentally-oriented, private equity-like approach to public equity investing. The fund focuses on investing in the telecom, media, technology, and gaming sectors. The hedge fund was launched by Thaler back in 2007 and had its worst performing year in 2012 when it lost 19%. However, the fund rebounded to post returns of 30.6% in 2013.
In its 13F filing, JAT Capital reported holding equity positions in 60 stocks as of the end of the first quarter of 2015. The value of the fund’s equity portfolio totaled $2.61 billion. The filing showed that JAT Capital had a particularly strong focus on Technology and Consumer stocks during the quarter. In this article, we are going to discuss JAT Capital’s top technology stocks, including Twitter Inc (NYSE:TWTR), Yahoo! Inc. (NASDAQ:YHOO), JD.Com Inc (ADR)(NASDAQ:JD), Tesla Motors Inc (NASDAQ:TSLA), and LinkedIn Corp (NYSE:LNKD).
We track hedge funds like JAT Capital because historically their stock picks managed to generate alpha. Our research has shown that an equally weighted portfolio composed of hedge funds’ 50 most popular picks generated a monthly alpha of 6 basis points between 1999 and 2012, however this 50-stock portfolio also underperformed the market by 7 basis points per month. On the other hand, the top 15 small-cap stocks had an average monthly return of 127 basis points per month during the three month holding period that begins 2 months after the end of each quarter. We have been sharing the stock picks of our small-cap hedge fund strategy since the end of August 2012. Through March 11th, 2015 our small-cap strategy returned 132.0%. The S&P 500 ETF (SPY) returned only 52.6% during the same period. Our small-cap hedge fund strategy outperformed the market by 79.4 percentage points over this 2.5 year period (read the details here).
On the top of our list is Twitter Inc (NYSE:TWTR), in which JAT Capital held 7.26 million shares, with a reported value of nearly $364 million. Twitter Inc (NYSE:TWTR) remained the fund’s top tech stock despite the number of shares remaining unchanged from the previous quarter. Twitter Inc (NYSE:TWTR)’s earnings report was a major talking point in the last few days, as the social media company displeased many investors by providing a much lower full year guidance for 2015 than anticipated. Twitter Inc (NYSE:TWTR) stock plunged soon after, dropping more than 20% of its value. On the positive side, Twitter Inc (NYSE:TWTR) posted a 74% increase in first quarter revenue to $436 million from $250 million in the same period in 2014. Net loss rose also however, to $162 million from $132 million in the first quarter of 2014. For full-year 2015, Twitter expects revenue to be in the range of $2.2 billion to $2.3 billion.
Michael Khouw of Action Alert Options, who was discussing Twitter Inc (NYSE:TWTR) stock on ‘The Street’, pointed out that there is an unknown catalyst sitting on the horizon for Twitter, which is Periscope. He said that there is no other major catalyst to propel Twitter stock higher before the next earnings report, save for the Google takeover talks heating up again. JAT holds the largest position in Twitter, followed by billionaire Ken Griffin.
Next up is Yahoo! Inc. (NASDAQ:YHOO), in which JAT Capital disclosed owning 6.71 million shares, worth just under $298 million. The position represents a slight decrease from the previously held stake of 6.83 million shares. Yahoo! Inc. (NASDAQ:YHOO) has a market cap of $41.2 billion, and the company’s shares have risen by nearly 30% since May 2014. For the first quarter ended March 31, Yahoo missed earnings and revenue forecasts, which disappointed many investors. The internet giant reported adjusted earnings of $0.15 per share vs. $0.38 in the same period last year. Analysts forecast earnings of $0.18 per share. Adjusted revenue was $1.04 billion, as compared to $1.09 billion in the same quarter of 2014. Yahoo had a number of bullish new investors in the fourth quarter, including James Dinan, Christian Leone, and Daniel Och.
