This asset manager outperformed the market in Q4 as revealed in its recent 13F filing with the SEC. I take a closer look at Moore Capital’s trading activity which included purchases of Apple Inc. (Nasdaq: AAPL) and Microsoft Corporation (Nasdaq: MSFT).
Moore Capital's Latest Form 13F Filing
On February 14th, Louis Bacon's firm Moore Capital filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm's large portfolio.
Moore Capital's stock portfolio totals $5.5 billion according to the latest filing. The list value of stock holdings is up 6.2% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. Moore Capital's QoQ Turnover for the latest quarter was 43.7%, so the firm appears to trade a significant percent of its portfolio each quarter.
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Moore Capital page. The following table summarizes the firm's largest holdings reported in the last filing:
|Ticker||Name||Holding ($mil)||% Of Portfolio|
|SPY||SPDR S&P 500 ETF TR||$907.3||16.5%|
|BABA||ALIBABA GROUP HLDG LTD||$195.7||3.6%|
|AMZN||AMAZON COM INC||$105.8||1.9%|
|CCI||CROWN CASTLE INTL CORP NEW||$94.4||1.7%|
The seven positions above represent 34.6% of the fund's total portfolio. SPDR S&P 500 ETF Trust (ARCX: SPY) is its largest holding with a long position in the ETF worth $907.3 million.
Microsoft Corporation (Nasdaq: MSFT) is Louis Bacon's largest stock position and represents 3.9% of his firm's total portfolio.
Apple Inc. (Nasdaq: AAPL) is Moore Capital's second largest stock position and represents 3.6% of his firm's total portfolio.
Moore Capital's 7 Largest Purchases
I also used finbox.io to find Moore Capital's largest buys last quarter. Here's the list of the biggest stock purchases determined by comparing the last two filings:
|Ticker||Name||Purchased ($mil)||% Of Portfolio|
|SPY||SPDR S&P 500 ETF TR||$393.6||16.5%|
|APC||ANADARKO PETE CORP||$83.6||1.6%|
|COF||CAPITAL ONE FINL CORP||$62.2||1.1%|
The largest purchase for the quarter was the SPDR S&P 500 ETF. Moore Capital increased its position in the ETF by $393.6 million and which now represents 16.5% of the firm's portfolio.
The largest stock purchase was Apple. The investment manager increased its position in the company by $152.3 million. The second largest stock purchase was Microsoft with the investment manager increasing its position in the company by $130.4 million.
Moore Capital's 7 Biggest Sells
Here's the list of biggest position reductions determined by comparing the last two filings:
|Ticker||Name||Sold ($mil)||% Of Portfolio|
|JPM||JPMORGAN CHASE & CO||$111.7||2.2%|
|BAC||BANK AMER CORP||$98.0||0.5%|
|AMZN||AMAZON COM INC||$93.6||1.9%|
|CMG||CHIPOTLE MEXICAN GRILL INC||$84.3||1.6%|
|DPZ||DOMINOS PIZZA INC||$74.5||1.4%|
The largest sale for the quarter was iShares MSCI Emerging Markets ETF (ARCX: EEM). Moore Capital reduced its position in the ETF by $440.8 million and the ETF now represents 1.7% of the firm's portfolio. Interesting, this ETF accounted for 10.3% of Louis Bacon's portfolio and was his largest holding as of September 30th.
Moore Capital's Fastest Growing Stocks
Analysts often look at companies as either thriving, surviving or dying. Analyzing a company's revenue growth can help distinguish between these stages. Growth of over 10% typically signifies the core business is doing very well and the company's products and services are in demand.
The table below lists 7 stocks in Moore Capital's portfolio that have strong top-line growth.
|Ticker||Name||Revenue Growth||% Of Portfolio|
|TAL||TAL ED GROUP||69.4%||0.1%|
|BABA||ALIBABA GROUP HLDG LTD||59.0%||3.6%|
|LGF.A||LIONS GATE ENTMNT CORP||58.8%||0.2%|
|APC||ANADARKO PETE CORP||50.8%||1.6%|
|THO||THOR INDS INC||47.7%||0.3%|
TAL Education Group (ADR) (NYSE: TAL) is the fastest growing company in Moore Capital's portfolio. The company's LTM total revenue of $1,527 million is up 69.4% year-over-year. Very impressive. Note that the stock price is also up 155.5% over the last twelve months.
Louis Bacon's Path To Moore Capital
Louis Bacon was born in Raleigh, North Carolina on July 25, 1956. Bacon’s father, Zachary Bacon Jr., ran the North Carolina real estate operations of both Prudential and later Merrill Lynch & Co. Interestingly, Bacon received his BA in American Literature from Middlebury College in Vermont. His favorite professor, Horace Beck, saw no signs of a financial wizard back in those days. However, he did get a taste of Wall Street during his summer breaks, where he worked as a clerk for New York Stock Exchange specialist Walter N. Frank & Co.
The small taste of Wall Street apparently had Bacon hooked, and upon finishing college he landed a job as a clerk on the New York Coffee, Cocoa and Sugar exchanges. He subsequently received his MBA degree in finance at Columbia Business School in 1981, but continued to trade during his studies using his student loan as capital. Like many traders before him, Bacon lost all of his capital and had to work odd jobs or borrow money from his family.
By the time 1983 rolled around Bacon was at Shearson Lehman Hutton working as a futures broker. At 27 years of age, he had an impressive list of clients including some of the heavy hitters of the hedge fund industry. Thanks to these relationships with fund managers like Paul Tudor Jones, who ran some of his Soros funds orders through Bacon, he quickly became a top commission producer.
Most traders don’t get the types of opportunities that Bacon did, and even those that do aren’t as successful. One big advantage to trading on behalf of hedge funds was that he could learn their strategies. By 1986 Bacon had built up enough of a reputation that he began managing money, and in 1987, while still at Shearson, he set up a small fund called Remington Investment Strategies.
1987: Perfect Timing
Whether it was luck, skill, or a combination of both, Bacon hit a home run in the 1987 crash. Anticipating the crash he was short S&P futures, and then shifted long just as the market bottomed. Not only did this make his fund a ton of money, it also enhanced his reputation as a money manager. By 1989 he had a strong track record and decided to set up Moore Capital with $100 million under management.
Early investors were rewarded with an 86% return in the first year. His returns, plus the fact that Paul Tudor Jones closed his fund to new money and recommended Bacon, boosted his fund to $200 million by 1990. It has been reported that Moore Capital has returned 31% annually after fees since its inception.
Bacon is relatively tight-lipped about his macro-trading style. Forbes once described his investment strategy as “secretive, risk-conscious, a bit paranoid.” This is not entirely surprising given that Bacon had previously retreated to family and friends after losing all his capital once already.
However, investors can infer Bacon's current investment strategy by viewing his trading activity as discussed above.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
Matt can be reached at [email protected]
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.