earnings preview

Pennant Capital Management has had a solid year thus far the company’s Broadway Gate Fund has beaten the S&P 500  for the first few months of the year. Pennant Capital Partners is a hedge fund run by Alan Fournier. The company’s Broadway Gate Fund has $1.2 billion assets under management, and  the firm manages a total of $5.9 billion.

Up to the end of April the fund posted a return of over 14% beating the S&P 500 which showed an increase of just under 12% in the period. The fund’s equity portfolio is extremely liquid, most of it being accessible within 5 days while only a very small proportion is tied up for periods of more than a month.

The fund has retained its concentration of equity in very large firms. More than 60% of its long positions are held in firms whose market capitalization of greater than $5 billion. Almost 30% of the firm’s assets are placed in its top 5 biggest holdings.

For April alone the firm’s returns were 3.92% split between a 1.845 return on long positions and a 2.26% return on shorts. The firm is most heavily weighted in industry and information technology stocks and added a large amount of healthcare equity in the third quarter of 2011. Across the firm’s funds that investment is thought to have been worth 700 million.

Pennant’s Broadway fund is diverse in equity and has beaten the S&P as it rallied in the early part of the year. As the market seems ready to turn to less prosperous returns on European and Chines worries the firm will have to work harder to maintain the same rate of growth and continue accumulating investment in the fund.