According to a recent filing with the Securities and Exchange Commission, Andreas Halvorsen‘s (pictured) Viking Global has revealed a stake of about 43.5 million shares in First Data Corp (New) (NYSE:FDC) that it holds along with its affiliated funds. Half of this stake is held directly, while the other half indirectly. The holding amasses about 26% of the company’s outstanding stock. In other news, Christian Leone‘s Luxor Capital Group has increased its stake in RCS Capital Corp (NYSE:RCAP) by about 20% to 28.83 million shares according to a 13D filing. The holding represents almost 25% of the company’s outstanding shares and includes about 17.33 million shares issuable upon the conversion of new convertible preferred stock, convertible notes and series D-2 preferred stock.
Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research has shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 102% over the last three years and outperformed the S&P 500 Index by 53 percentage points (see the details here).
In 2007, First Data Corp (New) (NYSE:FDC) was acquired by Kohlberg Kravis Roberts & Company for $29 billion, and the current IPO was directed at reducing some of the $21 billion debt burden that was weighing down on the company’s balance sheet. Although it is too early to comment, but the $2.6 billion IPO has exactly been a blockbuster so far, even though it was the biggest such offering this year. The stock is currently down by about 3.3% since yesterday.
The company registered a top line growth of 3.2% in 2014. CEO and Chairman Frank Bisignano’s main strategy thus far has been to make an array of acquisitions, the most prominent of which has been of the cloud-based payments company Clover.
Luxor Capital has held a stake in RCS Capital Corp (NYSE:RCAP) since the second quarter of 2014. The stock price of the $89.66 million brokerage firm has slumped by more than 96% since then. However, Luxor remains undeterred about the changing fortunes of the company. However, analysts at Citigroup don’t see eye to eye with Leone on this stock as they downgraded the company to ‘Neutral’ from ‘Buy’ in August owing to liquidity concerns. The downhill trajectory of RCS Capital’s stock has continued despite reorganization moves in which the company sold its wholesale businesses to the private equity firm Apollo Global Management for $25 million. On top of this the company also replaced its chief executive and chief financial officer.
Read on to find out what top hedge fund managers think about RCS Capital Corp (NYSE:RCAP).
Follow Rcs Capital Corp (NYSE:RCAP)
Follow Rcs Capital Corp (NYSE:RCAP)
The history of RCS’s downfall has little to do with the company itself. Nicholas Schorsch, the founder of RCS Capital, also owns the company that previously went by the name American Realty Capital Properties and was plagued by a $23 million accounting error in 2014. As a result of this many brokerage firms suspended their contracts to sell RCS’s wholesale products.
The hedge funds that we track at Insider monkey have generally overlooked RCS Capital Corp (NYSE:RCAP) during the second quarter. A total of 19 funds had an aggregate investment worth $157.81 million in the company at the end of end June, representing more than 26% of the company’s market value. This marked a slide from 25 funds holding $260.44 million in stocks at the end of March. Besides Luxor Capital Group, the two largest stockholders were Israel Englander‘s Millennium Management and Ken Griffin‘s Citadel Investment Group with respective holdings of 2.55 million shares valued at $19.54 million and 2.46 million shares valued at $18.85 million.
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