Valeant Pharmaceuticals Intl Inc (VRX), Transocean LTD (RIG) & More: How Q Investments Managed to Outperform the Market?

Q Investments (Specter Holdings) is a Texas-based investment fund founded by Geoffrey Raynor in 1994. As of the end of the second quarter, Q Investments has an equity portfolio valued at $309.57 million. According to our calculations, in the third quarter, the fund generated a return 17.50% from its seven long positions in companies worth at least $1 billion.

Q Investments (Specter Holdings) is just one of nearly 627 stocks tracked by Insider Monkey that posted sterling returns in the third quarter from their long positions in companies with market valuation of over $1 billion. Our research shows that hedge funds’ bearish returns are mostly due to overall losses, mainly coming from short side of positions. Mimicking smart money for its long positions in non-microcap companies can help beat the market pretty efficiently.

Having said that, let’s take a closer look at Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Transocean LTD (NYSE:RIG), Oasis Petroleum Inc. (NYSE:OAS), and Rice Energy Inc (NYSE:RICE), which ranked among Q Investment’s top picks heading into the third quarter.

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Q Investments initiated a stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX)  in the second quarter and reported ownership of 700,000 shares valued at $14.19 million as of the end of June. The stock appreciated by 21.9% during the third quarter. At the end of the second quarter, 60 funds tracked by Insider Monkey were bullish on this stock, down by 15% from one quarter earlier. The largest stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) was held by Pershing Square, which reported holding $434.8 million worth of stock. It was followed by Paulson & Co with a $384.1 million position. Other investors bullish on the company included ValueAct Capital, Okumus Fund Management, and Pentwater Capital Management.

Q Investments moved into the third quarter with 248,800 shares of Transocean LTD (NYSE:RIG), which were valued at $2.96 million. The stock lost 10.3% during the third quarter. Overall, 32 investors followed by our team held long positions in this stock at the end of the second quarter, down by 18% from the end of March. More specifically, Carl Icahn’s Icahn Capital LP had the most valuable position in Transocean LTD (NYSE:RIG), worth close to $255.4 million. Coming in second was Robert Pitts of Steadfast Capital Management, with a $149.3 million position stock. Remaining members of the smart money with similar optimism included Cliff Asness’s AQR Capital Management, Jim Simons’ Renaissance Technologies, and D. E. Shaw’s D E Shaw.

Q Investments (Specter Holdings) sold 33% of its stake in Oasis Petroleum Inc. (NYSE:OAS) in the second quarter, and ended the period with a total of 249,815 shares valued at $2.33 million. The investment proved to be fruitful for the hedge fund as the stock surged by 22.8% between July and September. Oasis Petroleum Inc. (NYSE:OAS) was included in the equity portfolios of 33 funds from our database at the end of June, compared to 29 funds a quarter earlier. Among these funds, SPO Advisory Corp held the most valuable stake in Oasis Petroleum Inc. (NYSE:OAS), which was worth $186 million. On the second spot was Paulson & Co, which amassed $49.4 millions worth of shares. Moreover, Brenham Capital Management, Think Investments, and Blue Ridge Capital were also bullish on Oasis Petroleum Inc. (NYSE:OAS).

Q Investments cut its stake in Rice Energy Inc (NYSE:RICE) by 71% to 26,055 shares worth $574,000 during the second quarter. The timing of the move didn’t seem right though, as in the following three months the stock surged by 18.5%. At the end of the second quarter, a total of 38 funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the first quarter. Viking Global, managed by Andreas Halvorsen, held the largest position in Rice Energy Inc (NYSE:RICE), having reported $278 million worth of stock. The second largest stake was held by Firefly Value Partners, led by Ryan Heslop and Ariel Warszawski, with a $80.3 million position. Some other investors bullish on the stock included Robert Pitts’s Steadfast Capital Management, Stuart J. Zimmer’s Zimmer Partners, and Israel Englander’s Millennium Management.

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