Senvest Partners was adding to its short portfolio a couple of months back, however both short and long positions suffered a loss in May. The fund was down 2% in last month, trimming down the year-to-date gain to 6.7%, according to a monthly letter reviewed by ValueWalk. The Canadian based, value oriented hedge fund, had a spectacular 2013 with a return of 80%.
The earnings season did not prove to be a good time for the hedge fund. The fund’s largest losers on the long side were, Depomed Inc (NASDAQ:DEPO), Gain Capital Holdings Inc (NYSE:GCAP) and Senomyx Inc. (NASDAQ:SNMX). Depomed, a pharmaceutical company specializing in pain management, fell 15% in May after reporting disappointing earnings.
Senvest to buy more of Senomyx
Senomyx makes flavor ingredients and announced a two-year extension of its sweet-taste technology project with PepsiCo, Inc. (NYSE:PEP). The stock fell 16% in last month after a bad run of Q1 numbers. Senvest said in the letter that their investment in Senomyx is not about this year’s performance but is rather based on a long-term strategy. The fund reached an agreement with Senomyx to increase its position above 15%.
Senvest lost in its position in Gain Capital, an online currency broker, after the company missed expectations in Q1 earnings. Sevest remains positive about the future outlook for the company. They believe that the increasing divergence between interest rates in the US, UK, Japan and Europe will boost the trading environment. In addition, Senvest believes as rates are hiked and customers earn interest, Gain Capital will benefit further.
Senvest buys positions in Greece’s top lender
Senvest initiated a new position in National Bank of Greece (ADR) (NYSE:NBG) in May. The largest Greek lender successfully completed an equity offering of EUR 2.5 billion at EUR 2.2/share which gave it the ammunition to cover the requirements set by Bank of Greece. According to Reuters, funds managed by George Soros, Fidelity and Pimco were also among the funds who participated in the capital raise. Senvest notes that National Bank of Greece (ADR) (NYSE:NBG) was trading at approximately €4 a shareprior to offering, but after dilution the deal was priced at €2.20. Senvest believes that National Bank of Greece (ADR) (NYSE:NBG) compares favorably with other re-capped Greek banks while only trading at 1.2x book.
Senvest started an investment in NBG as the shares were sold on a significant discount. The hedge fund said that the trends are improving in Greece and National Bank of Greece (ADR) (NYSE:NBG) is well-positioned against its competitors. Greek banks have attracted many value hedge funds in recent months including, David Einhorn, Seth Klarman ,Prem Watsa and John Paulson , among others.
The hedge fund profited in long positions in NutriSystem Inc. (NASDAQ:NTRI), Aegean Marine Petroleum Network Inc. (NYSE:ANW), RadNet Inc. (NASDAQ:RDNT) and Tower Semiconductor Ltd. (USA)(NASDAQ:TSEM) in May. The fund closed out its position in Genworth Financial Inc (NYSE:GNW) with a profit. Senvest said that there is no near-term catalyst after Genworth’s Australian IPO.
In the short portfolio, Senvest lost money in an undisclosed oil and gas company and a beverage company.