The Morning Brief: Low Turnover Eases Task of Mimicking Portfolios

Trying to mimic hedge fund portfolios by following their quarterly 13F filings gets easier by the quarter. The reason: low turnover among the funds. According to Goldman Sachs’ latest analysis of first quarter filings—most of which were made public at the deadline 45 days after the quarter’s end—position turnover fell to a new low of 28 percent. What’s more, turnover among the largest quartile of holdings fell to 14 percent. Looking at individual sectors, turnover rose in financials and consumer discretionary but fell in energy and utilities.

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Goldman Sachs also identifies stocks with the most conviction among hedge funds. These are the 50 stocks that most frequently appear among the largest 10 hedge-fund holdings. Goldman calls this group VIP stocks, for very important positions. For several years this basket has easily outperformed the market. In 2014 the group beat the benchmark by 265 basis points and has exceeded the Standard & Poor’s 500 in 66 percent of the quarters since 2001. However, so far this year it is lagging slightly, rising 3.8 percent versus 3.9 percent for the S&P 500.

In the first quarter, 13 new stocks joined the list. However, just one of them ranked among the top-31 stocks on this list—Family Dollar Stores. Here are the top 10:

1. Actavis

2. Apple

Sponsored

3. Facebook

4. Valeant Pharmaceuticals International

5. Microsoft

6. DirecTV

7. Citigroup

8. Time Warner Cable

9. Delta Air Lines

10. Cheniere Energy

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Columbia University Graduate School of Business and Mario Gabelli’s Gabelli Funds announced that Omega Advisors’ Leon Cooperman was recipient of this year’s Graham & Dodd, Murray, Greenwald Prize for Value Investing. “Leon Cooperman’s contributions to the field of value investing over the past nearly 50 years are immeasurable,” said Tano Santos, the David L. and Elise M. Dodd Professor of Finance, and the faculty co-director and head of research of the Heilbrunn Center for Graham & Dodd Investing, in a press release. “We are fortunate to be a beneficiary of his vast talents and largesse at Columbia Business School.” Cooperman is the founder, chairman and CEO of New York-based Omega, which had $9.5 billion at the beginning of the year. After receiving an undergraduate degree from Hunter College, he earned his MBA from Columbia Business School in 1967. Columbia is also where Cooperman first met Mario Gabelli. According to the announcement, Gabelli created the annual prize “to honor an individual, student or practitioner who has made an outstanding contribution to enlarge the field of value investing.” Gabelli’s firm funded the prize with $1 million.

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Total hedge fund assets rose 0.71 percent in April to a total $3.125 trillion, according to a new report from eVestment. During the month, new capital accounted for an addition $12.2 billion while performance boosted assets under management by about $9.9 billion. Although credit strategies closed out 2014 on a losing note, new capital has been steadily flowing into the strategy so far this year, the data collector reports.

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Citadel disclosed it established a new position of more than 1.2 million shares of Fenix Parts. This works out to 6.9 percent of the recycler and reseller of original equipment auto products. Fenix is a passive position for the Chicago firm, according to the regulatory filing.

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Chicago-based Balyasny Asset Management disclosed that various entities own a combined 814,911 shares of Westlake Chemical Partners, or 5.67 percent of the maker of ethylene. Balyasny owned 735,214 shares at the end of the first quarter, according to regulatory filings.

Delta Air Lines Mario Gabelli Tano Santos Elise M. Dodd Cheniere Energy
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