YWR: Hedge Fund Holdings Analysis
Let’s review the hedge fund holdings data to see what’s consensus, then do a deep dive on our hedge fund of the month!
As usual the link to the source data of Top 20 holdings for over 1,000 hedge funds is at the bottom.
YTD Returns through March.
This performance doesn’t include the April sell-off, but overall, not too bad. Global Macro doing well for once.
Big reduction in net exposure
This Goldman chart is a week old, but it shows equity net exposure at the bottom of the range (which is bullish).
But before you get too excited…
Notice the gross exposure for equity funds is at record highs, which appears to be because hedge funds have been quickly adding short exposure.
This high level of gross isn’t great. There hasn’t been a proper washout. Ideally, both gross and net would be low.
The set up suggests we get a relief rally, but it’s in the sectors where the hedge funds just shorted, ie the rally is not going to be in big cap tech.
Top 21 Most Consensus Stocks
I thought we would start to see some change in the top holdings, but it’s still the same. The most popular hedge fund positions are all the big US tech names. HF’s aren’t ready to give up on the Mag7.
Let’s see if this changes after April.
Most consensus funds
Square Point is moving up the list of most consensus funds. They are now #6th most consensus fund, up from 16th in April 2024. It must be all those alpha generation systems they are running. Same as Marshall Wace.
It’s also the first time I’ve seen Balyasny on the consensus list. This must be part of revamping of their equities business. Quick, do what everyone else is doing.
Not a new thing, but still worth noting the relationship where the bigger the fund, the more they all own the same thing.
Now let’s get to the money making part.
Deep Dive of the Month: Platinum Asset Management
For this month’s deep dive I wanted a fund outside the Borg (NY+Boston).
And as I scanned the data and positioning a fund stood out.
Kerr Nelson’s Platinum Asset Management in Sydney.
Quick trip down memory lane. I liked Kerr Nelson from the moment I met him. I was joining a tour of the Port of Maputo in Mozambique, which had already started, and was trying to find a seat on the mini-bus. As I shuffled down the aisle, there there was Kerr Nelson stuffed into one of the small seats smiling and wearing a safari hat. The guys runs a multi-billion $ fund in Sydney and yet there he was with the rest of us smooshed onto those little benches. I took the seat behind him and we had fun chatting about the port. That trip ended up being nuts.
Very cool guy, but his Platinum fund also has unique positioning.
Platinum Asset Management Top 20 Equity Positions.
I’m not familiar with Weichai Power or ZTO, but now I’m interested.
Samsung I’m mixed about, but it’s super beaten down, buying back shares and if they figure out the foundry business, could be massive. So risk reward is positive. It’s part of why we’ve been buying the South Korea ETF.
JD.com is one of the original Cash Dragons.
ICE, love it and should write about it someday. Need to look at Transunion.
Then Allfunds. Genius. This former darling of the European wealth management industry is trading on just 10x free cash flow.
Allfunds is the dominant platform for subscribing to UCITS funds in Europe. Everyone uses it.
And of course, like all good entrepreneurs, Founder/CEO Juan Alvarez, never sits still. Allfunds is extending their network effects into funds for private assets and creating a platform for launching ETP’s (ETF’s).
Moving down the list..
UPM Kymmene. Probably should look into it.
And we love Tencent (Tencent’s path to HK$ 1,000)
Schlumberger..another beaten down gem at 10x earnings. I haven’t looked at SLB in awhile, but their digital services revenues are finally material to the group.
SK Hynix!! Love it. Hynix looks really interesting and it’s been screening well. Also 10% of the shares South Korea ETF.
Finally, China Merchants Bank. 🤌
Love it. Platinum, doing what nobody else will do. Into the mouth of the lion. China Merchants is a great bank, which we all used to love, because of the credit card business.
Data Links
Below are links to:
Data file with Top 20 equity holdings for over 1,000 funds.
Allfunds 2024 results presentation
Schlumberger June 2024 presentation at JP Morgan conference.