Leighton Welch’s Welch Capital Partners has filed its 13F with the U.S. Securities and Exchange Commission for the reporting period of June 30, 2015. The hedge fund has a long/short investment approach based upon fundamental valuation of a given stock. According to its website, the investment advisory firm targets companies with the highest relative growth rates, new product cycles, and practical commercialization strategies, for long-term investing. On the contrary, its short investing focuses on companies with slowing growth rates, overvalued shares, and stocks with pending catalysts for decline. According to its 13F filing, the hedge fund has a public equity portfolio worth $335.56 million, with its primary investments being in the finance, healthcare, and information technology sectors. We decided to take a closer look at the largest equity investments of Leighton Welch and identify the prevailing hedge fund sentiment around these stocks. Zimmer Biomet Holdings Inc (NYSE:ZBH), Grupo Televisa SAB (ADR) (NYSE:TV), Oracle Corporation (NYSE:ORCL) are the top three stocks in Welch Capital’s portfolio, which we’ll discuss below.
But first, we don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 123%, which is more than 65 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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Zimmer Biomet Holdings Inc (NYSE:ZBH) comes in at the top of the equity investments of Leighton Welch. The investor’s hedge fund reported ownership of 183,158 shares of the healthcare company, with market value of $20.01 million. Zimmer Biomet Holdings Inc (NYSE:ZBH) reported better-than-expected second quarter 2015 financial results, surpassing Wall Street’s earnings expectations of $1.56 with reported EPS of $1.59. It was an excellent quarter for the newly-combined company, although the quarterly revenue of $1.17 billion fell short of the market’s expectations of $1.19 billion. Zimmer Holdings, Inc. (NYSE:ZMH) completed the acquisition of Biomet in June for $14 billion in a cash and equity transaction. The company changed its name to Zimmer Biomet Holdings Inc (NYSE:ZBH) after the merger and the combined company is likely to be a key player in the $45 billion musculoskeletal healthcare market. The hedge funds that we track at Insider Monkey boosted their investments in Zimmer Holdings slightly to $1.61 billion by the end of the first quarter compared to net investments of $1.54 billion three months earlier. Mario Gabelli‘s GAMCO Investors reported holding 288,317 shares of Zimmer as of June 30.
Welch Capital Partners’ second-largest equity investment was in Grupo Televisa SAB (ADR) (NYSE:TV), with the fund owning 452,351 shares valued at $17.56 million. The shares of the entertainment firm have lost their momentum after its second quarter 2015 earnings results on July 7 failed to meet expectations. Prior to the quarterly results, the shares of Grupo Televisa SAB (ADR) (NYSE:TV) were up by 13.84% year-to-date, but understandably sank after the announced 40% decline in the net income of the firm, falling by 14.3% between July 6 and August 10. What makes these results even more gloomy is the fact that Grupo Televisa SAB (ADR) (NYSE:TV) has now fallen short of the market’s earnings expectations in each of the last four quarters. Among the hedge funds that we track at Insider Monkey, Ken Fisher’s Fisher Asset Management holds 3.33 million shares of the company as of June 30, a $129.31 million stake.
Oracle Corporation (NYSE:ORCL) is the next largest equity investment of Welch Capital, which holds 434,463 shares valued at $17.51 million in its portfolio. The investment manager reduced its stake in the enterprise-solution provider slightly in comparison with the previous quarter, selling 3,883 shares. Oracle, which is one of the biggest software companies in the World, has also struggled after its latest quarterly financial results, for the fiscal fourth quarter of 2015, with its shares down by 13.61% year-to-date, with the losses being primarily incurred after the June 17 earnings release. The tech company missed the earnings as well as revenue expectations of Wall Street, posting adjusted EPS of $0.78 on revenues of $10.71 billion. Analysts were expecting EPS of $0.86 over revenues of $10.92 billion. Oracle Corporation (NYSE:ORCL) pinned its dismal quarterly results on a stronger U.S. dollar, adding that its revenue would have been 3% higher if not for the foreign exchange rates. The market has a mixed response to the shares of Oracle, with analysts at Zacks Research rating it a “Sell”, whereas analysts at Jefferies have upgraded it to a “Buy” rating, with a price target of $50 per share. Donald Yacktman‘s Yacktman Asset Management holds just over 30.0 million shares of Oracle as of June 30, though it sold off over 5.0 million shares during the second quarter in the position it opened two years prior.
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