Over the past days hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings by filed institutional investment managers with at least $100 million in equity assets under management, as required by the United States Securities and Exchange Commission (SEC). In this article, let´s concentrate on one particular hedge fund and try to see the principal holdings in its portfolio. I will look into Tudor Investment Corporation.
Recently the fund reported its equity portfolio at the end of June. The total value of the portfolio amounted to $1750 million, up from $1736 million disclosed at the end of the previous quarter. Consequently, the fund's total return was 0.8% in the last quarter. The filing revealed that at the end of June, the fund added 330 new positions to its equity portfolio and sold out 354. The top ten portfolio holdings as of the end of the quarter represented 25.42%. The largest changes from previous 13-F´s fillings are in the tech and consumer staples sectors.
In this article, we have selected three companies, in which the fund holds the largest stakes, in terms of market value.
The first on the list is Apple Inc. (AAPL, Financial), in which the fund disclosed a $121.93 million stake with over 1.31 million shares.
Key drivers
Apple's strength comes through the integration of hardware, software, services and third-party applications into differentiated devices. It has a very strong brand in all markets that operates as well as a strong product pipeline.
The iPhone has truly integrated hardware and software. The smartphone will continue be a successful product because it is attractive for new customers to iOS and existing ones, who are not going to switch to other brands. The company needs to retain these customers so it will be critical for the future to develop attractive new advances. Further, a partnership with China Mobile should also give iPhone upside potential.
Other hedge fund gurus have also been active in the company. Gurus like Leon Cooperman (Trades, Portfolio), John Burbank (Trades, Portfolio) and Andreas Halvorsen (Trades, Portfolio) bought the stock in the second quarter of 2014.
iShares MSCI Emerging Markets (EEM, Financial) comes in next, the fund owning over 2.24 million shares, worth $96.835 million.
Key drivers
This fund is one of BlackRock´s iShares ETFs and is a passively managed ETF designed to provide a broad exposure to the equity markets in the emerging markets, more than 800 securities in 22 emerging markets (China, South Korea, Taiwan, Brazil, South Africa, India, Russian Federation, Mexico and Malasya).
The ETF measures the performance of stocks traded in the emerging market stock exchange. It manages an asset base of $44.1 billion and the top ten Holdings (Samsung Electronics, Taiwan Semiconductor, Tencent Holdings, China Mobile, China Construction Bank, Ind & Comm BK of China, Gazprom, Naspers LTD-N, America Movil SAB DE C-SER, Itau Unibanco Holding) accounts for 16.16%. Drivers for these companies include infrastructure spending and a rising middle class. Moreover, this ETF should benefit from appreciating emerging-markets currencies in the long run.
Other hedge fund gurus have also been active in the company. Sarah Ketterer (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Jim Chanos (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) have taken long positions in the first quarter of 2014.
In iShares iBoxx $ Invst Grade Crp Bond (LQD, Financial) the fund disclosed ownership of over 348.720 shares, worth $41.588 million.
It offers diversified exposure to investment-grade corporate bonds. It is ideally for investors who want fixed-income exposure with low credit risk, but searching for higher yields than government bonds.
Other hedge fund gurus have also been active in the company. Ken Fisher (Trades, Portfolio) has taken long positions.
Final comment
I like the strategy of Tudor Investment betting on liquid ETF, which are also relatively inexpensive to trade. Probably the worst mistake new investors can make is to not properly diversify their portfolios. Investors need at least 20 or 30 carefully selected individual stocks to be truly diversified. Diversify your portfolio asset allocation by spreading money amongst a variety of stocks is what I recommend, because it’s simple, diversification can work and can prevent your entire portfolio from losing value.
Disclosure: Omar Venerio holds no position in any stocks or funds mentioned.
