A recent survey from Citi Prime Finance showed that assets invested with hedge funds could more than double by 2016. Citi Prime Finance noted that more and more pension funds, endowments, and other institutional investors are parking their money in hedge funds.
The global financial crisis had hit the hedge fund industry hard, with a number of investors pulling money out of funds. A number of hedge funds also had to shut shop. However, the Citi Prime Finance survey suggests that hedge funds have bounced back.
With hedge fund assets expected to rise sharply over the next few years, it is worth taking a look at what some of the funds have been buying lately.
First up lets take a look at one of the biggest hedge funds is buying. Stephen Cohen’s SAC Capital Advisors has been one of the top performing hedge funds. The fund reportedly has averaged returns of nearly 30% annually over the last two decades.
According to SAC Capital’s latest 13F filing, as of March 31, the fund’s top holdings included Ensco Plc (NYSE: ESV) and Murphy Oil Corporation (NYSE: MUR).
Based in London, Ensco provides offshore contract drilling services to the international oil and gas industry. The company’s shares have fallen 8.59% year-to-date, underperforming the S&P 500, which is up 4.54% so far this year.
Murphy Oil is an El Dorado, Arizona-based oil and gas exploration and production company. The company has retail and wholesale gasoline marketing operations in the U.S., as well as, refining and marketing operations in the U.K. MUR shares have had a disappointing year so far, falling 20.49%. The stock is currently trading at $44.32, well off its 52-week high of $70.27.
SAC Capital’s top holdings suggest that the company is bullish on the oil and gas sector. In fact, the 13F filing shows that SAC also invested in WPX Energy Inc. (NYSE: WPX) in the first quarter. Based in Tulsa, Oklahoma, WPX is an independent natural gas and oil exploration and production company. WPX’s performance has also been disappointing this year, falling 26.13%.
SAC Capital raised its stake in Sirius XM Radio Inc. (NASDAQ: SIRI), a satellite radio company. SIRI has seen a steady rise in its revenue and earnings, however, shares have been flat this year. SIRI shares are up 0.27% so far this year. The stock is currently trading at $1.83, well off its 52-week high of $2.41.
SAC also raised its stake in SandRidge Energy Inc. (NYSE: SD), another independent oil and gas company. Based in Oklahoma City, SD is engaged in the development and production activities related to the exploitation of its holdings in West Texas and the Mid-Continent area of Oklahoma and Kansas.
SD shares have underperformed the S&P 500 this year, falling 26.72%.
Lets now take a look at another hedge fund, Eminence Capital. Run by Ricky Sandler, Eminence Capital looks to invest in growing companies in growing industries. The fund also looks to invest in out-of-favor companies.
According to Eminence’s 13F filing, the fund’s new holdings include International Game Technology (NYSE: IGT). Las Vegas-based IGT is a global gaming company engaged in the design, development, manufacturing and marketing of electronic gaming equipment and systems products. IGT shares have fallen 23.14% this year, and are trading well off their 52-week high of $19.15.
The fund raised its stake in Citigroup Inc. (NYSE: C), the New York City-based global bank. Citi’s global exposure makes it an interesting company to have in the portfolio. Citi shares have gained 5.17% so far this year, outperforming the S&P 500. Still, the stock is trading well off its 52-week high of $43.06.
According to Eminence Capital’s 13F filing, the fund’s top holdings as of March 31, 2012 were CME Group (NASDAQ: CME), Tyco International (NYSE: TYC), and Google Inc. (NASDAQ: GOOG).
Chicago, Illinois-based CME Group is an exchange operator. The company offers products across all asset classes. CME shares have gained 11.5% so far this year, compared with a gain of 8.18% for the Nasdaq. CME shares are currently trading at $271.68, well below their 52-week high of $304.61.
Tyco International Ltd. (NYSE: TYC) is provider of diversified products ranging from electronic security and alarm monitoring to fire-fighting equipment. Shares of TYC have outperformed the S&P 500 this year, gaining 11.22%. TYC shares are currently trading at $51.95, which is slightly below the stock’s 52-week high of $57.75.
Search engine giant Google is also among Eminence Capital’s top holdings. GOOG shares have fallen 13.13% so far this year. The stock is currently trading at $561.09, well below its 52-week high of $670.25.
In its most recent quarterly results (Q1), Mountain View, California-based GOOG has reported revenue of $10.65 billion, up 24% over the same period in the previous year. Operating income for the first quarter was $3.99 billion, up from $2.30 billion reported in the first quarter of 2012. Net income for the quarter was $2.89 billion, up from $1.80 billion reported for the same period last year.
Google-owned sites generated revenue of $7.31 billion in the first quarter, up 24% over the same period last year. Google-owned sites accounted for 69% of total revenue.
Finally lets focus on another top performing hedge fund, Bridgewater Associates, which uses global macro investing style. The fund’s 13F filing shows that it bought Weyerhaeuser Company (NYSE: WY) in the first quarter. WY is a forest products company engaged in growing and harvesting trees, build homes and making a variety of forest products.
WY shares are currently trading at $20.36, slightly below their 52-week high of $22.62. Year-to-date, WY shares have gained 9.05%, outperforming the broad market.
Bridgewater also raised its stake in Brocade Communications Systems Inc. (NASDAQ: BRCD), a supplier of networking equipment, which includes end-to-end Internet Protocol-based Ethernet networking solutions and storage area networking solutions for businesses and organizations.
BRCD is currently trading at $4.50, well below its 52-week high of $6.88. The stock has fallen 13.29% so far this year, compared with a gain of 8.18% for the Nasdaq.
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