(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)
Next up is Chris Shumway's hedge fund Shumway Capital Partners. Shumway uses intensive fundamental research to create long/short equity portfolios from the bottom-up. Chris Shumway was previously Julian Robertson's right-hand man at Tiger Management before launching his own fund. He received his B.S. from the University of Virginia and his MBA from Harvard Business School.
Shumway's returns are outstanding as they have a rolling 3-year annualized return of 28% according to Barron's top 100 hedge funds for 2009. We've long been an admirer of Shumway's intense due diligence. They are included in our Market Folly portfolio where we have combined various hedge fund portfolios to generate a unique replication strategy that has backtested over 25% annualized returns with the help of Alphaclone.
The positions listed below were Shumway's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.
Brand New Positions
Bank of America preferreds (BAC-S)
Johnson & Johnson (JNJ)
Pfizer (PFE)
Freeport McMoran (FCX)
Brocade Communications (BRCD)
Gap (GPS)
Salesforce (CRM)
Amazon (AMZN)
CVS Caremark (CVS)
Radioshack (RHS)
MEMC Electronics (WFR)
Fifth Third Bancorp (FITB)
Dollar General (DG)
AOL (AOL)
Research in Motion (RIMM)
Biomarin Pharma (Notes 1.875%)
Kinross Gold (Notes 1.750%)
Increased Positions
Wells Fargo (WFC): Increased by 305%
Time Warner (TWX): Increased by 180%
Quest Diagnostics (DGX): Increased by 179%
JPMorgan Chase (JPM): Increased by 78.5%
Ingersoll Rand (IR): Increased by 69%
Pepsico (PEP): Increased by 54%
Qualcomm (QCOM): Increased by 50.5%
Universal Health (UHS): Increased by 48.7%
Las Vegas Sands (LVS): Increased by 43%
Laboratory Corp (LH): Increased by 40%
Walt Disney (DIS): Increased by 33.5%
Apple (AAPL): Increased by 32%
Reduced Positions
Monsanto (MON): Reduced by 77.8%
Allstate (ALL): Reduced by 75%
Baidu (BIDU): Reduced by 57.5%
Union Pacific (UNP): Reduced by 49%
Community Health (CYH): Reduced by 39.4%
Goldman Sachs (GS): Reduced by 39%
Colgate Palmolive (CL): Reduced by 37.6%
Urban Outfitters (URBN): Reduced by 34.2%
Visa (V): Reduced by 33.6%
Cisco Systems (CSCO): Reduced by 30%
Yum Brands (YUM): Reduced by 27.3%
Mastercard (MA): Reduced by 25.2%
Juniper Networks (JNPR): Reduced by 24.8%
EMC (EMC): Reduced by 21%
Removed Positions (Sold out completely):
Bank of America (BAC)
Procter & Gamble (PG)
Walgreen (WAG)
Zimmer Holdings (ZMH)
Google (GOOG)
Cemex (CX)
Bard (BCR)
Waters (WAT)
Charles Schwab (SCHW)
Weatherford International (WFT)
Nordstrom (JWN)
BB&T (BBT)
Wyeth (inactive ~ merger completed)
American Tower (AMT)
SBA Communications (SBAC)
CSX (CSX)
Williams (WMB)
Federal Realty (FRT)
XL Cap (XL)
Unilever (UL)
Lazard (LAZ)
SLM (SLM)
Genworth Financial (GNW)
Washington Fed (WFSL)
Melco Crown (MPEL)
Top 15 Holdings by percentage of assets reported on 13F filing
- Bank of America preferreds (BAC-S): 5.97%
- Apple (AAPL): 5.4%
- Wells Fargo (WFC): 5.3%
- Johnson & Johnson (JNJ): 4.7%
- Teva Pharmaceutical (TEVA): 4.7%
- Equinix (EQIX): 4.6%
- Pepsico (PEP): 4.3%
- Pfizer (PFE): 4.1%
- Walt Disney (DIS): 3.8%
- Time Warner (TWX): 3.8%
- Qualcomm (QCOM): 3.8%
- JPMorgan Chase (JPM): 3.7%
- Mastercard (MA): 3.7%
- EMC (EMC): 3.2%
- Freeport McMoran (FCX): 3.2%
Of Shumway's top holdings, four of them were brand new stakes: Bank of America preferreds, Johnson & Johnson, Pfizer, and Freeport McMoran. Take note that they completely dumped their BAC common stock and bought the Bank of America preferred on the offering, a trend we've seen many hedge funds take advantage of.
Looking over their portfolio though, it has a multinational blue-chip feel to it. What's interesting is that in the quarter prior they had purchased blue-chip stocks as well. This time around though, they were largely selling off those blue-chips and buying new blue-chip names. Shares of JNJ, PEP, and PFE find a place in Shumway's portfolio and are the definition of these 'safer' plays that are seemingly undervalued on a relative basis. We've seen this mantra out of numerous other hedge funds as they note 'junk' high beta stocks rallied the most during 2009, leaving solid blue-chip companies behind. As such, many hedgies have rotated into these multinational stocks for 2010, a year in which many think we'll see tepid growth.
It's also interesting to see hedge funds return to old favorite Freeport McMoran. Hedgies loved this play pre-crisis but dumped shares in a hurry once the global economy started heading south. It looks like some funds are starting to dip their toe back in the water with this name. Turning to financials, we also saw Shumway massively boost their holdings in Wells Fargo (WFC), something we've started to see more and more hedge funds do as of late as well.
Shumway dumped stakes in SBA Communications and American Tower, a move we found intriguing solely because tower stocks have been some of the most popular stocks amongst Tiger Cub hedge funds. Additionally, Shumway's sale of Google made us take notice as shares of the internet giant slowly seem to have fallen out of favor with many hedgies.
Data used for this article comes from Alphaclone. Using their hedge fund replicators, you can backtest strategies and sort through all the hedge fund portfolio maneuvers with ease, we highly recommend it. Assets reported on Shumway's 13F filing were $8.6 billion this quarter compared to $7.4 billion last quarter, so quite a noticeable uptick in assets. Remember that these filings are not representative of the hedge fund's entire base of AUM.
We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, Dan Loeb's Third Point, Eddie Lampert's RBS Partners, and David Ott's Viking Global. Check back daily for our new updates.
