While many hedge funds struggled to earn their keep in 2014, the Senvest Master Fund was up 22.4% before fees, beating the S&P 500’s already strong 13.4% gains for the year, according to a January 28th letter to investors reviewed by ValueWalk. Avoiding huge energy-related losses is part of the reason Senvest had a strong year, but there weren’t any big winners. Instead, they had a string of consistently good investments and very few losers.

“No single investment represented an outsized contributor to the year’s profits, with the top ten contributors ranging from about 3% to 14% of total profits each,” write Richard Mashaal and Brian Gonickin the Senvest year-end letter. “We can’t help but point out the wide gap between the contribution of profitable investments compared to the drag from losing positions, which is larger by a factor of roughly 3x.”

Senvest 2014 returns

Long, short and currency positions all contributed to 2014 returns

Senvest started 2014 with a net long equity exposure of 122%, but pared that down to 85% over the course of the year as equity markets are becoming fully valued. The letter says that while the fund short opportunistically and doesn’t set a specific target net exposure, it found more opportunities in 2014 than it did in 2013.

Nearly 60% of Senvest’s profits came from long equity positions, 27% that came from short equity positions. Senvest also reports that it initiated short positions on the euro in 2014, adding to its big yen short, 8% and 10% of equity, respectively – and while it doesn’t get into specifics about the trades, short currency positions contributed 14% of profits. The hedge fund notes that while the US slows easing, the BOJ and ECB continue, which should help the dollar versus the two currencies. The fund also points out that the U.S. is much healthier than both the EU and Japan, and this should lead to a flight of capital to the U.S.

Senvest’s top gainers and losers

[drizzle]Senvest’s top gainers include a short position in an unnamed oil exploration company that contributed 14% to annual gross returns, a short position on three mortgage servicers that contributed 17% together, and long positions on Depomed and Take Two Interactive that contributed 12% and 8% respectively.

As the letter mentions, the fund’s top losing positions were all relatively small, including ERA Group, which cost Senvest 4% of gross return, Syneron Medical (-3%), a short position on an unnamed homebuilder (-3%), and unnamed long positions on a small cap oil and gas exploration company (-3%) and a branded apparel company (-3%).

Senvest’s new positions for 2014

Senvest has completely exited three long-term investments that it had made in Apple, which just hit a $700 billion market cap yesterday, YPF, and Genworth Financial, and mostly exited its position in Vera Bradly. New investments in 2014 include a short position in McDonald’s and long positions in less-than-truckload company YRC Worldwide, Take-Two Interactive (which has already paid off) and, Fiat Chrysler Auto, an unnamed analog semiconductor company, and the Bank of Cyprus via its Senvest Cyprus Recovery Investment Fund.

Senvest did not immediately respond to a request for comment.

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