Hedge funds have warmed up to consumer discretionary stocks. They accounted for nine of the 15 stocks with the highest percentage of shares owned by the 50 largest hedge fund companies, according to an analysis by Credit Suisse Quantitative Equity Research.
To meet this criterion, each stock had to have been held by at least three of the top 50 hedge funds. The two stocks that top the list — Sears Holdings and AutoNation — have been major holdings of Eddie Lampert’s ESL Partners for several years.
Here is a rundown of the 15 stocks and their major holders:
Sears Holdings: Lampert’s ESL is still the largest owner, with about 40 percent of the shares. London-based LMR Master Fund was the largest new investor in the third quarter, ringing up 215,000 shares. D.E. Shaw more than quadrupled its stake, to more than 216,000 shares.
AutoNation: Lampert’s ESL remains the largest owner of the largest auto retailer, with about 40 percent of the shares. John Kleinheinz’s Kleinheinz Capital Partners owns 703,000 shares, while Jeff Vinik’s Vinik Asset management LP took an initial stake of 238,500 shares in the third quarter.
Charter Communications: Private equity firm Apollo Management, which controlled the cable operator through its reorganization from bankruptcy in 2009, is by far the largest holder, with about 30 percent of the shares. Alternative asset manager Oaktree Capital Management owns more than 14 percent of the stock. Among the largest hedge fund owners are Soros Fund Management, Highfields Capital Management, Brahman Capital, D.E. Shaw and Tiger Global Management.
TripAdvisor: The online travel source is a big favorite among Tiger Cubs, including largest holder, Viking Capital. Other Cub holders include Philippe Laffont’s Coatue Management, Stephen Mandel’s Lone Pine Capital and Lee Ainslie’s Maverick Capital. The second largest holder is Luxor Capital Management, founded by Goldman alum Christian Leone.
Equinix: Coatue is the largest owner, with more than 4.1 million shares, or more than 8.3 percent of the total outstanding, which also made it Coatue’s second largest position at the end of the third quarter. Fellow Tiger Cub John Griffin of Blue Ridge Capital took the largest new position in the third quarter, buying more than 622,000 shares of the company, which is known for its data centers. Other large hedge fund holders include Paulson & Co. (2.1 million shares), Lone Pine (2.1 million shares) and Och-Ziff Capital Management (1.8 million).
LyondellBasell: Apollo is also the largest holder of the Netherlands-based specialty chemicals maker. Viking, which boosted its stake by 45 percent in the third quarter, now owns more than 9.3 million shares, while Tiger Cub Rob Citrone's Discovery Capital Management owns more than 3.2 million shares.
JC Penney: Bill Ackman’s Pershing Square Capital Management, which only owns a handful of stocks, made a big bet on the embattled retailer, taking a 39 million share activist position earlier this year. Lee Ainslie’s Maverick Capital owns 4.7 million shares. Larry Robbins’ Glenview Capital Management took an initial stake of more than 4.4 million shares in the September period.
Liberty Global “A”: The media giant’s “A” shares, which offer one vote per share, are another favorite among the Tiger crowd. Coatue is the largest owner after lifting its stake 28 percent to more than 6.5 million shares at the same time Tiger Global cut its stake by 21 percent, to 6.25 million shares. Lone Pine also owns more than 4.4 million shares after trimming its stake by 27 percent, while Blue Ridge, which also cut its stake, now owns 3.9 million shares.
NetEase: Lone Pine is the largest hedge fund holder with more than 6.2 million shares, while Renaissance Technologies owns nearly 2.8 million shares of the China-based Internet technology company.
Liberty Global “C”: The company’s “C” shares have no voting rights, but still attract a big hedge fund crowd. John Scully’s SPO Advisory is by far the largest owner of the stock, with 15 percent or so of the total outstanding shares, despite trimming 15 percent of its holdings. Other large holders include Tiger Global, Eton Park and Third Point.
Delphi Automotive: Paul Singer’s Elliott Associates (28.5 million shares) and John Paulson’s Paulson & Co. (25 million) remain the two largest holders despite trimming their stakes by 17 percent and 22 percent, respectively. Private equity firm Centerbridge Partners, which also makes big credit-related investments, owns 10 million shares of the auto parts maker, while hedge funds Third Point and Greenlight Capital are also large holders.
Beam: Bill Ackman’s Pershing Square is by far the largest holder with 13 percent of the stock, making it the hedge fund firm’s fourth largest holding. It is also the only significant hedge fund investor in the liquor company.
Sensata Technologies: Private equity giant Bain Capital Investors owns half the common shares of the producer of sensors and controls. However, several hedge funds have sizable stakes themselves, including Scout Capital Management (10.5 million shares), founded by Adam Weiss and James Crichton, and Blue Ridge Capital (7.9 million). Other large holders include Pennant Capital Management, Lone Pine, Och-Ziff and Hoplite Capital Management.
Yandex: Tiger Global remains by far the largest shareholder of the most popular Internet company in Russia. Yandex also operates the country’s largest search engine. Tiger Global, the hedge fund and private equity firm founded by Chase Coleman, owns 23.5 million shares, even after unloading more than 26 percent of its holdings in the most recent quarter. It is also still the firm’s second largest holding. Fellow Tiger Cub Discovery Capital Management owns more than 3 million shares, while TPG-Axon owns more than 2.8 million shares. Dan Och’s Och-Ziff was the stock’s largest new owner in the third quarter after buying more than 2 million shares.
Sally Beauty Holdings: Scout Capital Management (10.5 million shares), founded by Adam Weiss and James Crichton, is the largest shareholder with nearly 12 million shares. Alan Fournier’s Pennant Capital owns nearly 6.8 million shares of the retailer and distributor of professional beauty supplies, while Ken Griffin’s Citadel took the largest new position in the third quarter, buying more than 2.4 million shares.