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The Morning Brief: Hedge Fund Turnover Remains Low

Hedge funds remain buy-and-hold investors, according to a Goldman Sachs analysis of first-quarter holdings.

Hedge-fund managers continue to be buy-and-hold investors who overload on their most favorite stocks. According to Goldman Sachs’ quarterly analysis of first-quarter holdings disclosed in 13F filings, hedge-fund portfolio turnover declined to 28 percent, a near low since 2002. What’s more, turnover of the largest 25 percent of its positions fell to 15 percent, near its lowest level. These positions account for two-thirds of hedge funds’ long holdings. Meanwhile, the density of the holdings fell slightly. The average hedge fund has 67 percent of its long-equity assets invested in its 10 largest positions. This compares with just 32 percent for the average large-cap mutual fund, 21 percent for small-cap mutual funds, 19 percent for the S&P 500 and a mere 3 percent for the Russell 2000 Index.

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Marcato Capital Management said it received support from proxy advisory firm Institutional Shareholder Services Inc. in its proxy fight with Buffalo Wild Wings. The activist hedge fund firm headed by Mick McGuire, which owns 9.9 percent of the shares of the casual dining company, has nominated four individuals as directors, including McGuire. “We are pleased that ISS recognizes further change on Buffalo Wild Wings’ Board is needed and greater shareholder oversight would help increase Board accountability and avoid any delays in the implementation of strategic projects. ISS’s independent recommendation further underscores our view that new voices and fresh perspectives are urgently required in the BWLD boardroom,” McGuire said in a press release.

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Perceptive Advisors boosted its stake in Corium International by about 46 percent to 3.85 million shares for 13.16 percent of the company as of May 19. Corium is a biopharmaceutical company that specializes in developing transdermal products.

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Renaissance Technologies founder Jim Simons participated in the $25 million funding of Siva Power, a maker of next generation thin-film solar technology.

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