Stadium Capital’s Q3 return was 33.01% — #1 among hedge funds*. Tiger Legatus, Baker Bros and ValueAct also had big quarters.

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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.

FilerPerf Mgr Q3Holdings 13F MV Turnover %% in Top 103 Yr Perf Mgr-Weight AnnualizedAvg Qtrs Held
STADIUM CAPITAL MANAGEMENT LLC33.0110      166,230,000 101003.3111.20
TIGER LEGATUS CAPITAL MANAGEMENT, LLC31.8111      231,349,000 45.454598.88526.043.82
KEYWISE CAPITAL MANAGEMENT LTD28.6517      220,424,000 52.941296.084825.154.82
SARISSA CAPITAL MANAGEMENT LP24.2612      797,914,000 8.333399.98119.157.92
BAKER BROS. ADVISORS LP22.5109 14,699,689,000 11.009285.94879.5913.31
LODGE HILL CAPITAL, LLC19.5425      346,634,000 5271.884216.413.56
CLEARLINE CAPITAL LP19.3252      219,477,000 78.846250.12141.922.15
SUMMIT STREET CAPITAL MANAGEMENT, LLC19.2329      142,639,000 3.448347.541713.218.10
SOUTHERNSUN ASSET MANAGEMENT, LLC18.6630   1,204,574,000 6.666754.70056.8428.30
VALUEACT HOLDINGS, L.P.18.6222   9,269,466,000 22.727392.531513.449.59

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
BLDR38.39%$79,248,000 47.671-31%Q4 200611.419/30/1911/14/19
GRBK22.88%$16,409,000 9.8720%Q2 20188.639/30/1911/14/19
CRHM-6.33%$15,366,000 9.24317%Q4 20172.899/30/1911/14/19
CARB62.55%$14,560,000 8.764-32%Q1 201925.939/30/1911/14/19
WW30.92%$12,222,000 7.355-75%Q1 201919.849/30/1911/14/19
UVE8.92%$9,287,000 5.5965%Q1 201930.119/30/1911/14/19
WSBF13.74%$7,491,000 4.5173%Q4 201816.639/30/1911/14/19
ASNA59.66%$5,079,000 3.0680%Q4 201210.179/30/1911/14/19
CLUB11.70%$4,500,000 2.7190%Q2 20176.999/30/1911/14/19
ATLO7.49%$2,068,000 1.2410-1%Q3 201826.799/30/1911/14/19

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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