TW Drove ValueAct’s Performance in January. VRX did not
Valueact Holdings Lp returns an estimated -7.41% for January 2016 - the fully hedged version returns -0.74%
Jeff Ubben's Valueact generated a -7.41% return on their publicly disclosed long portfolio for the month ending January 2016, underperforming the S&P500 by 742 basis points (bp). On a hedged basis, the portfolio would have returned -0.74% StockAlpha over the same period. Valueact'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 Tech sector contributed the most to StockAlpha during the month. Of note, Symmetric.io reported earlier that they were among the top ten funds at risk of being "squeezed" in the market turmoil.
Positive Contributors to Valueact's Returns
Valueact’s position in TOWERS WATSON & CO (TW) contributed the most to the performance of the manager’s long-portfolio during the month. Over the month of January 2016, Valueact's 0.2% position in TOWERS WATSON & CO (TW) increased in value by -4.3%, contributing -0.01% (0.2%*-4.3%=-0.01%)to the long portfolios overall return. Looking at Valueact's portfolio through a fully hedged StockAlpha lens, the holding of TOWERS WATSON & CO (TW) also provided the largest contribution to fully hedged returns. TOWERS WATSON & CO (TW) returned -4.6% during the month compared to the Energy sector, which returned -7.1%. As a result, after taking into account TOWERS WATSON & CO (TW)'s beta relative to its sector, the position contributed 0.3% of StockAlpha to the Valueact’s monthly performance.
Negative Contributors to Valueact's Returns
Much of the drag on Valueact’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 15.6% position in Valeant Pharmaceuticals International Inc (VRX) returned -10.4%, contributing -1.62% (15.6%*-10.4%=-1.62%)to the long portfolios overall return. Looking at Valueact'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 Valueact’s top 10 largest positions, Microsoft Corp. (MSFT) is the name that is owned by most other hedge funds. 22.2% of hedge funds within Symmetric's universe had a position in Microsoft Corp. (MSFT) as of March 31, 2015, making it a consensus name relative to other stocks. Valueact initiated its position in Microsoft Corp. (MSFT) 2.5 years ago. Other hedge funds that have significant ownership stakes in Microsoft Corp. (MSFT)as a percentage of their portfolio include Smithwood Advisers Lp (25.8% position initiated 1.3 years ago), Eton Park Capital Management (17.5% position initiated 0.5 years ago) and Deccan Value Investors Lp (17.1% position initiated 0.5 years ago). Overall, Valueact's book is neither consensus or contrarian, with the average position held in the portfolio held by 10.9% of hedge funds. Use Symmetric to surface managers with unique sources of alpha, flag those that may be in trouble, and track the stocks in which they're invested. For in-depth reports on Valueact or other managers, click here.
