Pennant Capital Management LLC’s Winward hedge fund has returned 1.32 percent in July. The hedge fund reported a positive return of 0.62 percent and a negative return of 0.42 in August. By September, the firm managed to recoup the losses during the previous month and posted a positive return of 1.12 percent. Winward’s return this year was 12.59 percent, higher than the 5.42 percent of the S&P 500. Since 2001, the Fund grew by 158.28 percent.
Pennant Capital Management LLC explained that the return during the quarter was impacted by their conservative net exposure. In addition, the markets experienced sudden growth as investors’ confidence rose in response to the actions of the ECB and Federal Reserve, in stimulating the global economy.
According to Alan Fournier, portfolio manager at Pennant Capital Management, the third quarter performance of the hedge fund is still good, given the volatility of the markets. Despite the ECB and Federal effort to help accelerate economic growth, Fournier pointed out that the firm will remain flexible in its investment strategy, as the market remains uncertain.
The hedge fund’s gross per dollar investment in long portfolios increased by 5.72 percent, short portfolio declined by 6.46 percent, and the hedge portfolio went down by 0.15 percent.
On Cash basis, the firm’s equities and equity hedges were 92 percent long, and 51 percent short; on delta adjusted basis, they were 92 percent long and 58 percent short, as of October 1, 2012.
According to Fournier, the best performers in its long position during the period, were Apple Inc. (NASDAQ:AAPL), Grifols SA, Barcelona (NASDAQ:GRFS), and Terex Corporation (NYSE:TEX).
The fund held the following short positions as of October 12th 2012, Whirlpool Corporation (NYSE:WHR), Fusion-IO, Inc. (NYSE:FIO), and Neustar Inc (NYSE:NSR). Advanced Micro Devices, Inc. (NYSE:AMD) Safeway Inc. and Ciena Corporation. Winners on the short side, include Advanced Micro Devices, Inc. (NYSE:AMD), Safeway Inc. (NYSE:SWY) and Ciena Corporation (NASDAQ:CIEN).
Fournier told investors, the strongest long position of the hedge fund is DaVita Inc. (NYSE:DVA), a company engaged in providing dialysis services to patients. According to him, DaVita’s stock price has continued to grow since the hedge fund invested in the company in 2007. He projected that DaVita Inc. (NYSE:DVA) annual growth will be approximately 20 percent in the future. He cited that the company made laid down a solid foundation to maintain its growth and increased its revenue, by acquiring Health Care Partners (HCP), the largest operator of medical groups and a network of physicians in the United States. Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) recently increased its stake in DaVita to 11 percent.
In addition, Fournier told investors that the firm decided to return its long position in gold. The hedge fund will buy three and six months gold calls at a $1700 price to protect its portfolio, in anticipation for a possible collapse of the euro currency, if the actions taken by the ECB fail to revive the economy of the region.
He also warned investors regarding the challenges ahead in the near term for equities. He expects some disappointments after the earnings, despite the strong performance of a majority of stock in 2012. He also cited that the result of the presidential election would affect the markets to move forward until the government would provide clarity on how to address the imminent fiscal cliff.