Ken Gray and Steve Walsh’s Bryn Mawr Capital, based in Bryn Mawr, Pennsylvania, has filed its latest 13F with the holdings in its equity portfolio updated as of March 31. The fund has an estimated $1.75 billion in assets under management, with its equity portfolio standing at $761.89 million as of the end of March. Given that it’s a market neutral fund, it’s not surprising that Bryn Mawr has a highly diversified and balanced portfolio, one which had a great deal of turnover during the previous quarter, with none of its top ten picks at the end of 2014 having cracked its top ten one quarter later.
Bryn Mawr is just one of more than 700 hedge funds we track in our database, and whose equity portfolios we collate quarterly as part of our small-cap strategy. Even though most smaller investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of as many as 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we even used a delay of 60 days in our backtests that analyzed the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of more than 137%, beating the S&P 500 Total Return Index by 82 percentage points (see the details).
At the top of Bryn Mawr’s newly revamped portfolio is its position in Tyco International plc (Ireland) Ordinary Share (NYSE:TYC), which was increased by 217% during the first quarter, lifting it to 342,870 shares valued at $14.76 million. Also a top pick of Sandy Nairn’s Edinburgh Partners at the end of March, Tyco International plc (Ireland) Ordinary Share (NYSE:TYC)’s stock dipped by 1.40% during the first quarter. The pure play fire and security products and services company has continued to struggle into the second quarter, taking a big hit following its latest earnings guidance update for fiscal 2015. Shares fell over 6% as Tyco International plc (Ireland) Ordinary Share (NYSE:TYC)’s EPS guidance of $2.23 to $2.27 in earnings came below the consensus estimate of $2.33.
Magna International Inc. (USA) (NYSE:MGA)’s stock also slid slightly during January-March, by 0.85%. Ranking as Bryn Mawr’s second-most valuable position at $13.82 million entering the second quarter, Magna represents the only newly initiated position in the top ten, containing 257,652 shares. Magna International is a global auto parts supplier, which was founded and remains a majority-owned by Canadian billionaire and politician Frank Stronach. Similar to Tyco, Magna International Inc. (USA) (NYSE:MGA)’s stock has also continued its slide into the second quarter, falling nearly 5% ahead of its May 7 earnings call, a slide which seems to have been precipitated by Magna’s sale of its interior operations to Grupo Antolin for approximately $535 million. Magna sold the lower-margin division to concentrate on its higher-margin operations. Cliff Asness’ AQR Capital Management vaulted into the top shareholder position among the funds we track after increasing its holding in Magna International Inc. (USA) (NYSE:MGA) by over 2,350% during the fourth quarter of 2014 to 1.09 million shares.
ACE Limited (NYSE:ACE) occupies the third spot in Bryn Mawr’s equity portfolio, with the position containing 97,500 shares valued at $10.87 million. ACE Limited (NYSE:ACE) is yet another company whose stock suffered through a poor first quarter, losing 2.95% and the decline wasn’t offset even after the company managed to beat earnings estimates for the first quarter. While earnings of the insurance company were down slightly on the year at $2.08 per share, versus $2.16, the stronger U.S dollar was largely to blame. Among other investors, Robert Raiff’s Raiff Partners had nearly 5% exposure to ACE Limited (NYSE:ACE) alone at the end of 2014 and will hope for positive catalysts in the future. Moreover, while many funds would be in dire straits from negative returns from each of their top three holdings, these positions account for a little more than 5% of Bryn Mawr’s highly diversified equity portfolio, limiting the damage.
Delphi Automotive PLC (NYSE:DLPH) is the first of Bryn Mawr’s top holdings whose stock gained ground and returned 10% during the first quarter. Bryn Mawr’s position contains 133,600 shares of the company and has a value of $10.65 million. The automotive parts supplier’s first quarter earnings showed a revenue that came in well below estimates, but Delphi Automotive PLC (NYSE:DLPH) beat earnings estimates with EPS of $1.21, versus a consensus estimate of $1.17. With a nearly 11% exposure to Delphi Automotive PLC (NYSE:DLPH), John W. Moon’s Moon Capital is surely pleased with its 2015 returns thus far.
Lastly, we come to Bryn Mawr’s position in Armstrong World Industries Inc. (NYSE:AWI), a supplier of both building and flooring products based in Lancaster, Pennsylvania. Bryn Mawr’s position consisted of 180,120 shares with a value of $10.35 million, up by 134,600 shares on the quarter. Armstrong World Industries Inc. (NYSE:AWI)’s stock advanced by 9% since the beginning of the year, though shares took a dive of more than 4% on April 30 following the release of financial results, which fell short of analysts’ expectations. Armstrong World was another company impacted by a stronger dollar, with CEO Matthew Espe attributing about half of the 6.5% year-over-year sales loss on foreign exchange rates. Armstrong World Industries Inc. (NYSE:AWI) announced in February that it would split its flooring and ceiling businesses into separate public companies, an announcement which accounted for much of the stock’s success in 2015. That move was pushed by activist investor Jeffrey Ubben of ValueAct Capital, the firm’s largest shareholder in our database with 9.20 million shares.
Disclosure: None
