If its first-quarter equity holdings are anything to go by, Marble Arch Investments — the New York hedge fund firm headed by Scott McLellan and Timothy Jenkins — likes to fit in with its peers.
The firm was clearly the biggest copycat in the first quarter among hedge fund firms with roots in Julian Robertson Jr.’s Tiger Management Corp.
Among such firms, Marble Arch has the highest percentage of its portfolio invested in stocks owned by other so-called Tiger Cubs, Grandcubs and Seeds, according to Alpha’s quarterly analysis of data collected by New York–based Novus, a portfolio intelligence platform that, among other things, analyzes the quarterly filings of hedge funds.
McLellan co-founded New York–based Hound Partners with Jonathan Auerbach in 2004 while working at Tiger Management. In 2007, McLellan left to launch Marble Arch with Tiger alum Jenkins. At the end of the first quarter, Marble Arch had a little more than $1.1 billion in U.S. equity assets, spread over 25 individual positions.
About 64 percent of Marble Arch’s portfolio was invested in securities held also by Benjamin Gambill’s New York–based Tiger Eye Capital, a Tiger Seed, according to the Novus data.
The sentiment is not nearly as mutual, as just 16 percent of Tiger Eye’s portfolio is invested in securities that Marble Arch also holds.
Marble Arch’s three biggest positions that appear in Tiger Eye’s portfolio are very popular stocks among the entire Tiger crowd of Cubs, Grandcubs and Seeds: drug company Valeant Pharmaceuticals International, payment systems maker Fleetcor Technologies and cable giant Charter Communications. Altogether, Marble Arch and Tiger Eye have eight common positions.
None of those eight stocks is a major position for either firm. While each of Marble Arch’s common holdings accounts for at least 4.9 percent of its portfolio, none of them accounts for more than 3.9 percent of Tiger Eye’s.
Meanwhile, 63.5 percent of Marble Arch’s portfolio is invested in securities held also by longtime Cub Lone Pine Capital, the Greenwich, Connecticut, firm headed by Stephen Mandel Jr. Again, Valeant, Fleetcor and Charter are the three largest overlapping positions owned by Marble Arch. And once again the two firms have eight common positions. However, just 13.7 percent of Lone Pine’s portfolio is invested in stocks held also by Marble Arch.
Moving down the list of overlapping pairs, according to Novus, 59.5 percent of Marble Arch’s portfolio is invested in securities held also by Hound Partners. Sure, just six stocks overlap, and yes, the same three stocks once again are Marble Arch’s largest positions that are in common with Hound’s holdings.
Nevertheless, Marble Arch and Hound seem to think more alike than the previous two pairs. About 40 percent of Hound’s portfolio is invested in securities held also by Marble Arch. And several of these securities account for a big portion of their respective portfolios.
For example, in the first quarter, Valeant accounted for 18.9 percent of Marble Arch’s portfolio and 11.5 percent of Hound’s. Fleetcor accounted for 11.2 percent of Marble Arch’s book and 6.1 percent of Hound’s. What’s more, Spirit AeroSystems Holdings, a maker of aerostructures, accounted for 11.4 percent of Hound’s portfolio and 8.7 percent of Marble Arch’s. The stock was also a popular holding for the two firms in the fourth quarter of 2014.
These findings are based on Alpha’s analysis of Novus’s database of public global filings, including the first-quarter 13F filings of U.S. equities held by nearly 50 Tiger-affiliated firms, including Tiger Management itself. Novus does not include in its analysis short positions or investments made in sovereign bonds, currencies, credit or other non-equity-related instruments.
In the fourth most-overlapped portfolio pair, 58.6 percent of San Francisco–based Valiant Capital Partners’ portfolio is invested in securities held by Dallas-based Maverick Capital. Valiant is headed by Christopher Hansen, a Grandcub because he previously served as a managing director at Tiger Cub John Griffin’s Blue Ridge Capital.
Several of their overlapping positions are very small holdings for Maverick. However, two Internet stocks are roughly equally favored by both firms — the Priceline Group and Google.
The fifth and sixth most-overlapped portfolio pairs are composed of New York–based Blue Ridge and firms whose founders used to work there.
For example, 57 percent of Falcon Edge Capital’s portfolio contained stocks held by Blue Ridge. This is not too surprising given that New York–based Falcon Edge was founded in 2012 by Richard Gerson, a founding executive at Blue Ridge.
However, just 20 percent of Blue Ridge’s portfolio overlapped with Falcon Edge. Even so, they have nine stocks in common, although many of these are much larger portions for Falcon Edge, such as Cheniere Energy and Chinese e-commerce giant Alibaba Group Holding. In one case — Tekmira Pharmaceuticals Corp., which is trying to find a cure for chronic hepatitis B infection — Falcon Edge and Blue Ridge were two of just three Tiger-related shareholders.
The other firm with a lot of overlap with Blue Ridge is New York–based Slate Path Capital, founded in 2012 by David Greenspan, who was previously a partner and managing director at Blue Ridge. Another partner, Stephen Cook, also previously spent time at Blue Ridge as an analyst.
Not all of the common positions are held with equal conviction. For example, 13.4 percent of Slate Path’s assets are invested in Kraft Foods Group, but just 1.9 percent of Blue Ridge’s assets are invested in the company.
However, in two cases, the two firms share roughly similar conviction. Some 11.1 percent of Slate Path’s assets are invested in Charter Communications, as are 6.4 percent of Blue Ridge’s. Meanwhile, 9.8 percent of Slate Path’s assets are invested in drugstore giant Walgreens Boots Alliance, while Blue Ridge has invested 4.3 percent of its assets in the company.
