Stadium Capital’s Q3 return of 33.01% was best among all hedge funds in the WhaleWisdom universe*. Tiger Legatus ranked #2 with a 31.81% return for the third quarter.
*Performance was measured based on a “manager weighted” portfolio of all hedge funds’ top 10 holdings at Q3’s end, as reported in 13F filings disclosed last week.
To be ranked, a fund must have between 9 and 750 holdings in its 13F filing. It must also have at least 3 consecutive years of quarterly 13F filings, manage more than $100 million in marketable securities, and least 20% of its portfolio held in its top 20 stocks.
Top performing hedge funds of Q3 2019, based on manager-weighted 13F filings.
|Filer||Perf Mgr Q3||Holdings||13F MV||Turnover %||% in Top 10||3 Yr Perf Mgr-Weight Annualized||Avg Qtrs Held|
|STADIUM CAPITAL MANAGEMENT LLC||33.01||10||166,230,000||10||100||3.31||11.20|
|TIGER LEGATUS CAPITAL MANAGEMENT, LLC||31.81||11||231,349,000||45.4545||98.8852||6.04||3.82|
|KEYWISE CAPITAL MANAGEMENT LTD||28.65||17||220,424,000||52.9412||96.0848||25.15||4.82|
|SARISSA CAPITAL MANAGEMENT LP||24.26||12||797,914,000||8.3333||99.981||19.15||7.92|
|BAKER BROS. ADVISORS LP||22.5||109||14,699,689,000||11.0092||85.9487||9.59||13.31|
|LODGE HILL CAPITAL, LLC||19.54||25||346,634,000||52||71.8842||16.41||3.56|
|CLEARLINE CAPITAL LP||19.32||52||219,477,000||78.8462||50.1214||1.92||2.15|
|SUMMIT STREET CAPITAL MANAGEMENT, LLC||19.23||29||142,639,000||3.4483||47.5417||13.21||8.10|
|SOUTHERNSUN ASSET MANAGEMENT, LLC||18.66||30||1,204,574,000||6.6667||54.7005||6.84||28.30|
|VALUEACT HOLDINGS, L.P.||18.62||22||9,269,466,000||22.7273||92.5315||13.44||9.59|
Building products manufacturer Builders FirstSource, Stadium’s #1 holding, drove the fund’s stellar performance.
Stadium Capital’s Q3 profits were driven by Builders FirstSource Inc (BLDR), its #1 position, comprising 47% of its portfolio. The stock was up 38.39% over the Q3 reporting period. BLDR closed at $25.19 on Nov. 14.
In Sept. of last year we highlighted insider buying by Paul Levy, Chairman of the Board at Builders, who increased his stake in the building products manufacturer by 10%, buying 100,000 shares on Sept. 6 at $15.98.
Stadium’s other holdings also showed great performance — #4 position Carbonite Inc (CARB) was up 62.55% during the quarter.
Founded in 1999, New Canaan-based Stadium Capital Management, LLC, is managed by Alexander Seaver and Bradley Kent. As of February 28, 2019, the fund had assets under management of $438 million.
Stadium Capital’s Q3 holdings.
|Stock||Q3 Return||Market Value||% of||Rank||% Change||Qtr 1st||Estimated||Source Date||Date Reported|
|Portfolio||Owned||Avg Price Paid|
Tiger Legatus rides The Stars Group to big Q3 gains.
Tiger Legatus, which returned 31.81% over Q3, is another hedge fund that runs a concentrated book. The fund’s top holding during Q3 was online gaming company The Stars Group (TSG), representing 45.92% of Tiger Legatus’ portfolio. On Aug. 14, TSG traded at $13.23. On Oct. 2, the company received a merger offer from Flutter Entertainment PLC (PDYPY). On Nov. 14 the online gaming company closed at $21.88.
Jesse Ro is the principal owner and portfolio manager of Tiger Legatus. The fund is one of the “Tiger Cubs” — a group of hedge funds that trace their strategies, philosophies — and often funding — to legendary manager Julian Robertson.
Baker Bros and ValueAct post impressive returns, especially given their large size.
Typically, the top performing hedge funds for a given quarter are smaller, nimble funds that can exploit the edge in small cap investing. That’s why the profits generated by Baker Bros ($14.7 billion AUM) and ValueAct ($9.3 billion AUM) are so noteworthy. Baker Bros Q3 return was 22.5% based on 13F positions. ValueAct’s longs gained 18.62%. This kind of performance is nothing new for these funds. Over the last decade Baker Brother’s and ValueAct’s manager-weighted 13F annual returns have averaged 25.5% and 17.61% respectively.
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