WCG Management’s Top Picks After Portfolio Reshuffling

Founded in 2007 by Barry Wittlin, WCG Management‘s investing philosophy revolves around robust research and a constant re-evaluation of themes. According to an ADV form submitted in April last year the firm had $4.31 billion worth of discretionary assets under its management. As of the end of March, the two main sectors representing WCG’s equity portfolio were consumer discretionary, which amassed 32%, an increase of 14 percentage points from the end of fourth quarter, and the energy sector, comprising 22% of the portfolio value and marking a decrease of 33 percentage points from end of last year. A closer look at the firm’s equity portfolio might reveal some bargains for the retail investors as well.

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#5 Synchrony Financial (NYSE:SYF)

– Shares Owned by WCG Management (as of March 31): 174,900

– Value of Holding (as of March 31): $5.0 Million

During the first quarter, WCG slashed its holding in Synchrony Financial (NYSE:SYF) by 17%. Shares of the company have inched down by around 1% so far this year amid a strong financial report for the first quarter in which the company managed to beat both the top and bottom line estimates. Highlights from the quarter included renewal of key programs with Stein Mart and La-Z-Boy, signing of a partnership with Marvel to offer Marvel MasterCard and co-promote Synchrony Bank deposit products, and the launch of the Citgo card program. Phil Gross and Robert Atchinson‘s Adage Capital Management held more than 21.6 million  shares of Synchrony Financial (NYSE:SYF) at the end of last year.

#4 Red Hat Inc (NYSE:RHT)

– Shares Owned by WCG Management (as of March 31): 69,000

– Value of Holding (as of March 31): $5.13 Million

The newly-initiated holding represented about 6.2% of WCG’s portfolio. So far this year, Red Hat Inc (NYSE:RHT)’s shares have cratered by more than 12% even though the company beat analyst expectations in its financial results for the fiscal fourth fiscal quarter ending on February, and also provided a strong guidance. Some bearish analysts have pointed out the number of billings, that stood at $764 million as compared to the expected amount of $771.6, as a cause for concern. Pacific Crest, however, upgraded the $13.5 billion provider of open source software solutions to ‘Overweight’ from ‘Sector Weight’ this month. Veteran investor David Shaw‘s D E Shaw held about 1.05 million shares of Red Hat Inc (NYSE:RHT) at the end of 2015 after an 8% hike during the fourth quarter.

#3 Canadian Pacific Railway Limited (USA) (NYSE:CP)

– Shares Owned by WCG Management (as of March 31): 48,400

– Value of Holding (as of March 31): $6.45 Million

Another newly initiated stake, WCG’s Canadian Pacific Railway Limited (USA) (NYSE:CP) holding amassed about 78% of the fund’s portfolio value. Activist investor Bill Ackman‘s Pershing Square, which has been involved with the company’s turnaround held about 13.94 million shares of the operator of transcontinental railway in Canada and US at the end of last year. Although Canadian Pacific’s first quarter EPS of C$2.5 ($1.98) was C$0.09 ($0.07) above expectations, but revenues of C$1.59 billion ($1.26 billion) missed the mark by C$20 million ($15.88 million). The macro economic weaknesses have lead to volume headwinds for the company, but the management has effectively reined in costs.

#2 Constellation Brands, Inc. (NYSE:STZ)

– Shares Owned by WCG Management (as of March 31): 50,030

– Value of Holding (as of March 31): $7.57 Million

WCG boosted its stake in Constellation Brands, Inc. (NYSE:STZ) by 122% during the first three months. Shares of the $31.6 billion international beverage alcohol company hit an all-time high recently following the announcement of solid fourth quarter financial results. The company is considering an IPO for its Canadian wine business, which includes eight wineries and about 1,700 acres of Canadian vineyards. The proceeds from the offering will be used to deleverage its balance sheet. Stephen Mandel’s Lone Pine Capital hiked its Constellation Brands, Inc. (NYSE:STZ) stake by 15% to 5.35 million shares in the last three months of 2015.

#1 ConocoPhillips (NYSE:COP)

– Shares Owned by WCG Management (as of March 31): 50,030

– Value of Holding (as of March 31): $7.57 Million

Jeffries recently downgraded ConocoPhillips (NYSE:COP) to ‘Underperform’ from ‘Hold’, but WCG had a different take on the prospects of the independent exploration and production company, when it initiated a stake in it during the January-March period. Jeffries set a price target of $38, which reflects a downside of 22% at the current trading level, since the rating firm believes that ConocoPhillips’ current share price reflects an unjustified premium to the sector average. However, shares are up by nearly 3% on a year-to-date basis and as of the end of March the short interest stood at just 1.57% of the total outstanding float. Ken Fisher’s Fisher Asset Management raised its ConocoPhillips (NYSE:COP) holding by 15% to nearly 17,300 shares during the first quarter.

Disclosure: None