The first quarter was mostly rough for the so-called SAC Pack — hedge fund firms with roots in Steven Cohen’s SAC Capital Advisors.
Four of five firms tracked by Alpha lost money, one by double digits.
The one in the black was Kingdom Ridge Capital, founded in 2007 by Christopher Zepf, which posted a 3.85 percent gain in the first quarter. White Plains, New York–based Kingdom Ridge was also one of the best performers in 2015, posting a 46 percent gain for the year.
The long-short technology specialist had only $154 million at year-end even though its hedge fund — Kingdom Ridge Capital Master Fund — launched in April 2008. At the end of the year, the firm owned just 14 U.S. long positions, half of which were new in the fourth quarter.
However, the longs do not appear to have driven returns. Nearly one third of the long assets were invested in semiconductor company Applied Micro Circuits Corp., Kingdom Ridge’s largest holding for the past few quarters. The stock was up about 1.4 percent for the quarter.
However, Immersion Corp., its second-largest holding, was down more than 30 percent. Immersion develops what is sometimes known as touch feedback technology.
Universal Display Corp., Kingdom Ridge’s third-largest long and biggest new position, came in flat. Universal Display makes organic light technologies. Cybersecurity software firm FireEye, another new position and fourth-largest holding, was down 17 percent.
A look at the long books of the four SAC Pack firms that lost money reveals the strong performance of many of their largest positions. This suggests that these firms may have been hurt by their shorts or non-U.S. longs, which are not publicly disclosed.
For example, Redwood City, California–based Dorsal Capital Management finished the first quarter down just 0.69 percent after gaining 10.13 percent last year. The firm, founded by former SAC technology experts Ryan Frick and Oliver Evans, manages more than $1.5 billion. The long-short equity firm concentrates on technology, media and consumer companies.
By far its largest holding at year-end was Microsoft Corp., which was down very slightly in the first quarter. However, AT&T, a new position that immediately became Dorsal’s second largest, surged more than 13 percent in the quarter.
Yahoo, Dorsal’s third-largest position, jumped about 10 percent.
The Electron Global Master Fund fell 3.26 percent for the quarter. The fund, which specializes in global utilities and infrastructure stocks, is managed by New York–based Electron Capital Partners, founded in 2012 by James (Jos) Shaver. Electron Global had about $592 million under management at year-end, up by about a third from the previous year.
Electron Global did well with its largest U.S. longs. Duke Energy Corp., the utility giant that accounted for about 7 percent of its assets, was by far the largest position at year-end. The stock surged more than 12 percent in the first quarter. The hedge fund also had a sizable position in Duke call options, further boosting its gains.
Shares of Hawaiian Electric Industries, its second-largest individual long, surged 12 percent. Aecom, which designs and builds infrastructure projects, was Electron Global’s third-largest long and was flat for the quarter, while energy giant Dominion Resources, its fourth-largest holding, surged nearly 11 percent.
However, two-thirds of Electron Global’s assets are invested outside the U.S. The fund was hit hard by its smaller, Asia positions, according to an individual familiar with Electron Global. Last year the fund was up 17.7 percent.
New York–based Samlyn Capital, headed by Robert Pohly, posted a 6.67 percent loss for the quarter. Pohly was a portfolio manager at SAC Capital’s Sigma Capital Management subsidiary from 2001 through 2006. Samlyn, founded in 2007, is a lift-out from Sigma. Pohly is also a Tiger Cub, having earlier worked as a financial services analyst for Julian Robertson Jr.’s Tiger Management.
Samlyn, which managed about $4.9 billion at year-end, specializes in financial, health care and industrial companies. Aramark, its largest holding and a major food provider, was up nearly 3 percent for the quarter. No. 2 holding Constellation Brands, the beer and spirits company, jumped 6 percent.
However, Samlyn was hurt by its health care holdings. For example, No. 3 position Envision Healthcare Holdings, a provider of outsourced medical services, fell by more than 21 percent. Laboratory Corp. of America Holdings, Samlyn’s fourth-largest U.S. long and one of the largest diagnostics providers in the U.S., fell more than 5 percent in the quarter. Samlyn’s No. 5 position, drug giant Allergan, fell 14 percent.
As we earlier reported, Jason Karp’s Tourbillon Global Master Fund lost 16.1 percent in the first quarter. Dish Network, the satellite TV giant and Tourbillon’s largest U.S. long, was down about 17 percent for the quarter, while Pfizer, its third-largest position, was off by 8 percent.
American Homes 4 Rent, a real estate investment trust, fell 4.5 percent.
New York-based Tourbillon was also temporarily hurt by its high-profile short of biotechnology company Mannkind Corp., which rose 11 percent in the quarter. Still, the Mannkind short remains over the long haul one of Tourbillon’s most successful investments.
More positively, packaged goods company Post Holdings, Tourbillon’s second-largest U.S. long, was up 11 percent for the period.
