Nigel Greig and Kenneth Cowin’s Gabalex Capital is the latest fund to file a 13F with the SEC for the March 31 reporting period and we have all the details of the fund’s top positions. Gabalex Capital was founded by Greig in 2008 after more than a decade spent as a money manager at Bear Stearns. The New York-based fund is majority owned and managed by Greig, with Cowin serving as the fund’s COO. The fund has assets under management of approximately $341 million, nearly $283 million of which are tied up in its equity portfolio, a small, top-heavy portfolio consisting of just 14 long positions as of the latest reporting period.
Wal-Mart Stores, Inc. (NYSE:WMT) is the heaviest of those top-heavy positions, with Gabalex’s holding in the retail giant standing at $49.35 million from an even 600,000 shares, unchanged from the previous reporting period. Unlike rival Target Corporation (NYSE:TGT), which is enjoying a strong bounceback year in the U.S and subsequent run on its stock, Wal-Mart Stores, Inc. (NYSE:WMT) is struggling to generate much momentum. Though same-store sales have crept back into positive territory after more than a year of declines, earnings and revenue haven’t made much of a move over the past year, and the retailer offered cautious guidance for its fiscal 2016 year that came in below estimates. Gabalex Capital’s exposure to Wal-Mart stood at more than 18%, the highest of any fund in our database, though billionaire Warren Buffett held the largest position at over 60.38 million shares. Wal-Mart Stores, Inc. (NYSE:WMT) is down by 10% year-to-date, and by 1% over the past calendar year.
Gabalex also had the greatest exposure to W.W. Grainger, Inc. (NYSE:GWW) of any fund in our database, at nearly 15%. Its position was valued at $42.06 million and consisted of 165,000 of the company’s shares. W.W. Grainger, Inc. (NYSE:GWW) sells industrial and automotive parts worldwide and online in addition to offering a number of other services to clients, including inventory management. Shares are down more than 3% in 2015 after the company was forced to cut its outlook due to weakened demand in the oil and gas industry and a stronger U.S dollar. W.W. Grainger, Inc. (NYSE:GWW) also missed its most recent earnings estimates, with per share earnings that were flat year-over-year during the first quarter. The David Blood and Al Gore managed Generation Investment Management held a position of 896,749 shares of W.W. Grainger, Inc. (NYSE:GWW) at the end of 2014.
Home Depot Inc (NYSE:HD) was enjoying a strong year until late April when it gave up a good chunk of its yearly gains to close the month. Still, shares have appreciated by 3% this year and several analysts believe the stock’s run isn’t necessarily over just yet, despite a nearly 50% gain between August of last year and March of this year. In particular, the flooring controversy that has embroiled its rivals in that space: Lowe’s Companies, Inc. (NYSE:LOW) and Lumber Liquidators Holdings Inc (NYSE:LL), can only benefit Home Depot Inc (NYSE:HD), already the U.S market leader in that segment, further. Home Depot is also a stock that insiders are bullish on (along with billionaire Ken Fisher), a metric which has proven in the past to be correlated to better stock performance. Gabalex’s position consists of 300,000 shares which held a value of $34.08 million, with exposure of 12%. Fisher’s position stands at 8.30 million shares through the end of the first quarter.
Microsoft Corporation (NASDAQ:MSFT) may not be as flush with cash as Apple Inc. (NASDAQ:AAPL), one of the most profitable businesses ever, but it does have nearly $100 billion in cash and equivalents to play with, raising a nearly limitless number of possibilities for what it could buy with that money, be it a company or even a country. Gabalex holds 800,000 shares of Microsoft, up from 700,000 at the end of 2014, with them being valued at $32.52 million. It’s been a tale of two earnings reports for Microsoft Corporation (NASDAQ:MSFT) in 2015, with shares slumping nearly 15% in late January following its Q2 2015 earnings results, and gaining more than 10% following its Q3 2015 earnings report in late April. The latter report featured revenue of $21.73 billion that blew past estimates by $670 million and which were up by 6.5% year-over-year. Among its segments, Microsoft Corporation (NASDAQ:MSFT)’s commercial cloud revenue doubled to $6.3 billion, and the Seattle company is poised to be an Internet of Things leader through Azure. All of which is great news for Gabalex and Jeffrey Ubben’s ValueAct Capital, the latter of which has 21.6% exposure to Microsoft through a 74.24 million share position.
Gabalex Capital is just one of more than 700 hedge funds that we have in our database here at Insider Monkey, whose equity portfolios just like this one we collate quarterly as part of our small-cap strategy. Even though most investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 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 used a delay of 60 days in our backtests that involved 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 135%, beating the S&P 500 Total Return Index by 79 percentage points through the end of April (see the details).
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