CRI Advanced Hound Partners in January. VRX dragged
Hound Partners Llc returns an estimated -6.85% for January 2016 - the fully hedged version returns -0.88%
Hound Partners Llc generated a -6.85% return on their publicly disclosed long portfolio for the month ending January 2016, underperforming the S&P500 by 686 basis points (bp). On a hedged basis, the portfolio would have returned -0.88% StockAlpha over the same period. Hound's StockAlpha reflects the return of the net return if each security in their portfolio was hedged with a sector ETF, such that the resulting portfolio was market, beta and sector neutral. StockAlpha in the Cons. Disc. sector contributed the most to StockAlpha during the month.
Positive Contributors to Hound's Returns
Hound’s position in Carters Inc. (CRI) contributed the most to the performance of the manager’s long-portfolio during the month. Over the month of January 2016, Hound's 7.8% position in Carters Inc. (CRI) increased in value by 3.7%, contributing 0.29% (7.8%*3.7%=0.29%)to the long portfolios overall return. Looking at Hound's portfolio through a fully hedged StockAlpha lens, the holding of Carters Inc. (CRI) also provided the largest contribution to fully hedged returns. Carters Inc. (CRI) returned 3.7% during the month compared to the Consumer Discretionary sector, which returned -5.8%. As a result, after taking into account Carters Inc. (CRI)'s beta relative to its sector, the position contributed 0.7% of StockAlpha to the Hound’s monthly performance.
Negative Contributors to Hound's Returns
Much of the drag on Hound’s long-portfolio during the month can be attributed to the holding of Valeant Pharmaceuticals International Inc (VRX). Over the month of January 2016, the manager's 17.6% position in Valeant Pharmaceuticals International Inc (VRX) returned -10.4%, contributing -1.83% (17.6%*-10.4%=-1.83%)to the long portfolios overall return. Looking at Hound's portfolio through a fully hedged StockAlpha lens, the holding of Valeant Pharmaceuticals International Inc (VRX) also provided the most negative contribution to fully hedged returns. Valeant Pharmaceuticals International Inc (VRX) returned -10.4% during the month compared to the Health sector, which returned -5.6%. As a result, the position contributed -0.6% of StockAlpha to the manager’s monthly performance.
Overlap with other hedge funds
Among Hound’s top 10 largest positions, Citigroup Inc. (C) is the name that is owned by most other hedge funds. 20.4% of hedge funds within Symmetric's universe had a position in Citigroup Inc. (C) as of March 31, 2015, making it a consensus name relative to other stocks. Hound initiated its position in Citigroup Inc. (C) 1.75 years ago. Other hedge funds that have significant ownership stakes in Citigroup Inc. (C) as a percentage of their portfolio include Delta Partners Llc (18.2% position initiated 1 year ago), Key Colony Management Llc (14.2% position initiated 2 years ago) and Tegean Capital Management Llc (13.4% position initiated 0.5 years ago). Overall, Hound's book is contrarian, with the average position held in the portfolio held by 9.9% of hedge funds.
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