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Quarterly Filings

Q1 2022 Filings Insights

All around the world, some thrived among the chaos. From oil-and-gas rights to ESG motivations, managers lean into their strategies to generate alpha.

Nathan Innis
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Top 10 Names in the Hedge Fund Universe

Nine of the top 10 most commonly held names within the Novus Hedge Fund Universe (HFU) stayed the same over the first quarter of 2022. UnitedHealth Group ceded its spot to Chevron but, aside from that, there’s been little jockeying for position.

Even so, it’s instructive to see how position sizes have changed. At the top of the list, it looks like hedge funds took another bite of Apple at the expense of Microsoft and Alphabet.

Amazon and Bank of America remain in the HFU’s good graces. Meantime, payment processing is having a moment as both Visa and American Express improved their position.

And then there’s Meta Platforms, which seems to be standing on a fairly shaky platform of its own. It went from 1.15% of all equity positions in the HFU to 0.73%. Certainly, a lot of that has to do with a share price that dropped almost $100 in one day, but that was during the first week of February. Still, not a lot of fund managers saw this as a buying opportunity.

top 10 most commonly held hedge fund names from Q1 2022
Figure 1: Top 10 Names in the HFU, compared to previous quarter. Viewed on SEI Novus Hedge Fund Ownership Dashboard.
Data source: Public 13F Filings.


If you're looking for more insights from top hedge funds as well as aggregate trends, take a look at our Hedge Fund Ownership dashboard.

As a reminder, the Novus Hedge Fund Universe (HFU) is a proprietary portfolio that aggregates data from over 1500 underlying managers using publicly available 13F filings.

Managers in the News

Paul Singer

It doesn’t take a long memory to recall when the Energy sector was a ghost town. Barely more than two years ago, oil was trading below $20 per barrel, and some poor sap actually became contractually obliged to pay $37 per barrel for someone to take it and put it in a tank. If you look at the West Texas Crude fever chart (at $117 per barrel at last check) or drive by a gas station, you won’t find it below $4.20 anywhere in the U.S. today—times have changed.

This hasn’t escaped the notice of anyone with a car, so it’s certainly not news to billionaire Paul Singer. His Elliott Management firm is among the most influential activist funds on Wall Street and got that way by buying distressed securities and turning them into performers. Since January, Singer has been soliciting pitches for oil-and-gas rights.

But is Singer too late to the party? Could be. Right now, it looks to all the world that oil—the most dependably cyclical of commodities—is peaking. This is the time, the conventional wisdom goes, to cash out rather than buy in.

Even so, it’s not wise to place an unhedged bet against the 261st wealthiest American. Singer not only squeezed money out of such perennial underperformers as Delphi Automotive and Twitter, he found ways to get paid by insolvent regimes in Peru, Argentina, and Republic of the Congo.

Lynn Forester de Rothschild

As a hedge fund, Inclusive Capital Partners isn’t one that jumps off the screen at you. It’s a long-only equity player with about $1.2 billion under management. But let’s look past the numbers.

In-Cap, the investment advisory arm of the non-profit Council for Inclusive Capitalism, is “in pursuit of a healthy planet and the health of its inhabitants,” according to its website. “By actively partnering with management—often from inside the boardroom—on focused, company-specific environmental and social metrics, Inclusive Capital Partners commits to making business models more sustainable.”

Such virtuous goals are refreshing.  

Founding and managing partner, Lynn Forester de Rothschild, made news recently as In-Cap made a $1.9 billion offer to British homebuilder Countryside Partnerships. The offer was rejected, but that probably won’t be the last word. At the end of last year, In-Cap held no Countryside equity. By the end of the first quarter, though, the San Francisco-based fund had picked up 7.69% and, according to published reports, its stake has since grown to 9.2% of outstanding shares.

Meanwhile, very little attention is being paid to the similar investment In-Cap has made in Dutch food ingredients player Corbion. As with Countryside, In-Cap went from a non-position at the end of 2021 to a comparable 8.69% stake in the first quarter. In fact, the Corbion entry cost In-Cap $103.3 million, tangibly more than the Countryside buy-in’s $91.4 million.

Perhaps Rothschild knows something the rest of us don’t about Corbion’s newest line of business, ingredients based on microalgae, or its growing presence in the Brazil market. In-Cap’s biggest holding—valued at $412.6 million—is Enviva, which makes biofuels. Acknowledging we are now crossing over to conjecture, currently, Enviva uses compressed wood to make its fuel pellets, but there’s science behind using microalgae instead.

Inclusive Capital Partners position sizes and changes for Q1 2022
Figure 2: Inclusive Capital Partners' Position Sizes and Changes for Q1 filings. Viewed on SEI Novus Manager Analysis Dashboard.
Data source: Public 13F Filings.

If none of this works out though, shed no tears for Lady Rothschild. She and Sir Evelyn de Rothschild will still be managing the portfolio of The Economist Group as well as pursuing other ventures on their own account.

You can explore Inclusive Capital Partners on The Novus Platform free through the end of the quarter on our  Manager Analysis Insights Dashboard.

General Trends

Toughing it out

Without question, this year has been challenging for the alternative finance community. Even so, there are always pockets of outperformance. And some have hidden in plain sight.

SEI Novus℠ tracks 230 long-bias managers and simulates returns based on the daily price returns of the most recently reported holdings. 98 of those tracked eked out at least some alpha.

Year to date Alpha for both a long bias and long short using 13F filings from Q1 2022
Figure 3: YTD Alpha (Long Bias) and YTD Alpha (Long Short). Viewed on The Novus Platform. Data source: Public 13F Filings. Data updated through May 2022 using daily price returns and most recently reported holdings.

Ruling the roost at the moment is Nierenberg Investment Management Co., a $150 million AUM mid-cap boutique that placed its bets on natural gas driller EQT and mortgage lender Mr. Cooper. Over the trailing three months, simulated data shows that it returned 22.27% versus a benchmark loss of 8.00%, with YTD alpha at 1,685 bps.

Interestingly only one long-bias manager with alpha exceeding 1,000 bps manages more than $1 billion in assets. That distinction goes to Trinity Street Asset Management, which has been placing its biggest bets in BAE Systems, Icon, Compass Group, and other names in western Europe.

But the best long-short strategists are doing an order of magnitude better than the best long-bias strategists. It appears that Karst Peak Capital generated 12,524 bps of alpha by going all in on cyclical midcaps in emerging Asia, especially Haichang Ocean Park. Again, Like Nierenberg, Karst is a small player.  


Mega-bucks for mega-caps

We’ve often mentioned, with some irritation, how some hedge fund managers take their 2-and-20 then just park their clients’ capital in Apple or Microsoft—which anyone with a Robinhood account can do for free. The data suggest that those days are coming to a middle.

Comparison of Market Cap: Novus Hedge Fund Universe Equity-Only vs. SDPR Portfolio S&P 1500 Composite Stock Market ETF. Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.
Figure 3: Comparison of Market Cap: Novus Hedge Fund Universe Equity-Only vs. SDPR Portfolio S&P 1500 Composite Stock Market ETF. Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.

While 71.74% of an S&P 1500-based portfolio would be invested in mega-caps, the HFU is only 43.31% exposed to that market cap range. While the HFU’s appetite for mega-caps is declining over time, it’s a very long, very gentle slope. And the SPDR portfolio is also trending down at about the same rate.

Ultimately, the HFU’s mega-cap exposure trended up from April 2020 through April 2022 and has remained stubbornly above 40% for two years now.

Historical Market Cap Exposure. Viewed on SEI Novus Hedge Fund Ownership Dashboard (date range adjusted from current snapshot to isolate timeframe discussed). Data source: Public 13F Filings.
Figure 4: Historical Market Cap Exposure. Viewed on SEI Novus Hedge Fund Ownership Dashboard (date range adjusted from current snapshot to isolate timeframe discussed). Data source: Public 13F Filings.

Explore more information like this on our Hedge Fund Ownership dashboard.


Energy surge

Some industrial sectors always draw a crowd—Information Technology, Health Care, Financials—while some always get crowded out. But one of these hey-we-need-capital-too sectors is elbowing out some room for itself.  

When compared to Real Estate, Utilities, and Materials—its peers at the bottom of any stacked graph—Energy has come a long way in a short time. There’s no surprise why, given the price of oil today. On a roll since August 2021, Energy now accounts for 6.4% of HFU exposure.

 Historical Sector Exposure, showing: utilities, real estate, materials, and energy. Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.
Figure 5: Historical Sector Exposure, showing: utilities, real estate, materials, and energy. Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.

It bears mentioning that we should mention bears. Oil-and-gas is a late-cycle play, Price spikes have a way of presaging a weakening economy. We’re not saying that the 1970s stagflation or the 2008 financial crisis were caused by rising energy prices, but these spikes do seem to be revelatory of a possible contraction.

Hedge Fund Ownership  

Taking a closer look at our Hedge Fund Ownership dashboards:

Hedge Fund Assets Under Management (blue) vs. Market Performance (teal). Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.
Figure 6: Hedge Fund Assets Under Management (blue) vs. Market Performance (teal). Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.

Hedge fund ownership decreased a dramatic 18.72% from December 2021 to May 2022 to $3.4 trillion.

Top Securities Owned by Hedge Funds, sorted by new hedge fund owners. Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.
Figure 7: Top Securities Owned by Hedge Funds, sorted by new hedge fund owners. Viewed on SEI Novus Hedge Fund Ownership Dashboard.
Data source: Public 13F Filings.

Semiconductor manufacturer Advanced Micro Devices registered the greatest number of new hedge fund owners with 54, followed by Meta with 50 and Visa with 43.

Top Securities Owned by Hedge Funds, sorted by HFU% of shares owned. Viewed on SEI Novus Hedge Fund Ownership Dashboard. Data source: Public 13F Filings.
Figure 8: Top Securities Owned by Hedge Funds, sorted by HFU% of shares owned. Viewed on SEI Novus Hedge Fund Ownership Dashboard.
Data source: Public 13F Filings.

Bank of America had the greatest proportion of shares owned by hedge funds with 14.16% spread among 178 hedge fund owners, followed by Uber with 11.74% and Coca Cola with 11.15%. 

More Dashboards, Please!

The graphs and charts discussed in this article were primarily pulled from our Hedge Fund Ownership Dashboard and our Manager Analysis Dashboard, but we have even more to explore. Check out our Hedge Funds & ESG Dashboard, Manager League Tables, or Novus 4C Indices.

The Novus Platform is an ever-evolving toolset that enables investors to visualize their own portfolio data, as well as industry data, in ways that enlighten their investment strategies and uncover trends in the broader market. SEI Novus clients have full access to analyses of our public data set as well as their own private data, which they have the freedom to upload themselves if they choose. Combining public and private data, SEI Novus users have an infinite ability to derive insights with a user-friendly reporting suite and the support of a best-in-class coverage team.  

Want to learn more? Fill out this form to request a demo.   

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Information provided by SEI through its affiliates and subsidiaries. This information is for educational purposes only and should not be considered investment advice. The strategies discussed herein are complex and are not suitable for all investors.

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Learn how SEI Novus can help you.

Our team of world-class client management analysts will introduce you to our product, tailoring the conversation to your specific needs and interests.