Scott McLellan’s Marble Arch Investments, one of the many hedge funds started by former analysts at Julian Robertson’s TigerManagement (known as tiger cubs), did well in last year. The portfolio gained on average 13 percent through the year and AUM went above the $1 billion mark, however returns of the fourth quarter were impacted by losses in short positions. McLellan comments that last year was not as easy for short selling as was 2011. McLellan manages Marble Arch’s Long/Short strategy together. For information about Marble Arch Investments’ short positions, visit out European Short Positions page.
Marble Arch’s largest long positions are in, FleetCor Technologies, Inc. (NYSE:FLT), Liberty Global Inc. (NASDAQ:LBTYA), W.R. Grace & Co. (NYSE:GRA), Google Inc (NASDAQ:GOOG) and Discovery Communications Inc. (NASDAQ:DISCA). FleetCor Technologies was also one of the top gainers for the fund in Q4, the company has strong potential to grow in the North American region and is looking to deploy more capital in the area. The fund was also profitable on Tripadvisor Inc (NASDAQ:TRIP) which recovered from all negative projections after it posted surprisingly strong Q3 earnings, also Liberty Interactive bought voting stake in the company which bodes well for Tripadvisor’s future. W.R. Grace & Co. was also among the top gainers of Q4.
Marble Arch lost in its long positions in Google Inc (NASDAQ:GOOG) and SolarWinds Inc (NYSE:SWI) in Q4, however the managers believe that there is considerable upside and growth opportunity in both companies. Although not openly stated, we strongly believe that Marble Arch’s losing shorts were Heidelberger Druckmaschinen AG (FRA:HDD) (ETR:HDD), a printing services company, Home Retail Group Plc (LON:HOME) and Dixons Retail PLC (LON:DXNS).
In his book, The Dhandho Investor: The Low–Risk Value Method to High Returns, Mohnish Pabrai coined an investment approach known as "Heads I win; Tails I don't lose much." Q3 2021 hedge fund letters, conferences and more The principle behind this approach was relatively simple. Pabrai explained that he was only looking for securities with Read More
On the short side, Marble Arch gained from Pitney Bowes Inc. (NYSE:PBI), unlike David Einhorn who closed the position last year, McLellan believes that the stock will continue to decline as investors lose interest in the attractive dividend yield. Marble Arch gained from its short positions in SolarWorld AG (ETR:SWV) (FRA:SWV) and possibly United Internet AG (FRA:UTDI).
Overall in the year, the losers on the long side were, Market Vectors Gold Miners ETF (NYSEARCA:GDX), NRG Energy Inc (NYSE:NRG), Tempur-Pedic International Inc. (NYSE:TPX) and Fortress Paper Ltd. (TSE:FTP). In the short portfolio, other than the stocks mentioned above, the big winners of the year were positions in a PC components manufacturing company and a newspaper publishing company while the loser was a cellphone manufacturer.
Going forward the fund has picked up Colfax Corp (NYSE:CFX) and VIVUS, Inc. (NASDAQ:VVUS) as its favorites for long positions.