Karsch Capital’s Long-Only investment portfolio gained 10 percent in the first quarter of this year, almost head-to-head with the 10.6 percent return on S&P 500 in the same period.
Karsch Capital Ltd. , the flagship offshore fund, however returned 4.4 percent in Q1, most of which was gained in the exuberant January that brought 5.2 percent return to S&P 500 and +3.8 percent for Karsch Capital Ltd.
Karsch Capital Ltd.’s 80 percent assets are invested in longs while -14 percent of the portfolio is concentrated in short positions.
Most of the major long holdings of Karsch were off to a great start in Q1. Karsch Capital’s favorite long holdings are in Norfolk Southern Corp. (NYSE:NSC). NSC’s shares rose 26 percent in Q1, Autodesk, Inc. (NASDAQ:ADSK) +18 percent, Express Scripts Holding Company (NASDAQ:ESRX) +9 percent, PPG Industries, Inc. (NYSE:PPG) +0.9 percent, AIA Group Ltd (HKG:1299) +12 percent, Viacom, Inc. (NASDAQ:VIAB) (NASDAQ:VIA), Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) -11 percent, Equinix Inc (NASDAQ:EQIX) +6 percent, Liberty Global Inc. (NASDAQ:LBTYA) +19 percent, CBS Corporation (NYSE:CBS) + 26 percent.
With the exception of PPG and Ultra Salon, all other long holdings returned significant profits in Q1.
Judging by the stark difference between Karsch’s long-only investment bucket and the overall performance of KCM, it is safe to assume that the short bets did not return well in Q1. In the short portfolio, Karsch has a position in SPDR S&P 500 ETF Trust (NYSEARCA:SPY) which was clearly not profitable as the ETF returned in the neighborhood of 11 percent in the first quarter.
The fund has a short in SYSCO Corporation (NYSE:SYY) which was again a loser, SYSCO gained 11 percent in the three months ending on March 28. Other shorts in E I Du Pont De Nemours And Co (NYSE:DD), Tim Hortons Inc. (NYSE:THI), Infosys Ltd (NYSE:INFY), Nordstrom, Inc. (NYSE:JWN) and Manpowergroup Inc (NYSE:MAN) detracted for the fund as stocks performed well in Q1.
Karsch’s short position that possibly made profits for the fund were LI & FUNG LTD (PINK:LFUGY) and C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).