Springbok Capital’s Top Picks: General Motors Company (GM) and Constellium NV (CSTM)
Springbok Capital is a long/short equity hedge fund that employs a fundamental-value strategy. It was founded in 2004 –headquarter in New York- by Gavin Saitowitz, who used to be a portfolio manager at Jonathon Jacobson’s Highfields Capital, and Cisco del Valle, formerly a mergers-and-acquisitions specialist at Bank of America Corp (NYSE:BAC). Over the past ten years, Springbok Opportunity Fund has retrieved an average annual return of 14.6%. The firm’s current portfolio is worth more than $600 million.
A few days ago, Springbok Capital filed its 13F form for the fourth quarter of 2013, in which it discloses many of its long equity positions as of the end of December. Thus, in this article, I will briefly look into the fund´s biggest bets.
Although Springbok’s most valuable assets are 'Put' and 'Call' options (respectively) in SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA), we like to look at long stock holdings.
Leaving the options aside, the fund is most bullish on General Motors Company (NYSE:GM). The $58 billion market cap automaker escalated from the third position in Springbok's list to the first one. The fund held, by the end of the fourth quarter, 162,800 shares of the company, worth more than $6 million. The stakes were raised by 9% over the quarter, and now comprise 1.09% of the fund´s portfolio. This move makes sense as the company looks on the right track to a full recovery. In fact, analysts expect it to deliver average annual EPS growth rates around 17%-18% over the next five years (versus an industry average of -2%), widely outperforming its peers. Moreover, other major funds, including Warren Buffett’s Berkshire Hathaway and David Einhorn’s Greenlight Capital, hold huge stakes in General Motors Company (NYSE:GM) - 40 million and 17 million shares, respectively. This kind of institutional sponsorship only supports Springbok’s and the analysts' position.
Mr. Saitowitz and Mr. Del Valle’s fund showed a particularly bullish sentiment about Starwood Property Trust, Inc. (NYSE:STWD), a mortgage REIT with a market cap of approximately $4.7 billion. The fund upped its bets by more than 1,400%, and now owns nearly 171,700 shares of the company, valued at more than $4 million. The stock is already up more than 8% since the end of 2013 and is expected to continue on this track.
Constellium NV (NYSE:CSTM), came in third, after experiencing a 248% increase in Springbok's stakes. As of the end of December, the fund declared to hold to 203,800 shares, valued at approximately $5.6 million. This $2.9 billion market cap aluminum products designer and manufacturer boasts narrow margins and returns, but is still loved by analysts. For instance, Morningstar expects the company to deliver an average annual EPS growth rate around 19% over the next five years.
With an industry-leading growth history, wide margins and a cheap valuation (13x P/E versus an industry mean of almost 20x), this stock certainly looks like a catch. Not only analysts and research firms love this company, but also hedge funds do. For instance, John Paulson’s Paulson & Co holds 25 million shares of the company.
Finally, we should highlight two other companies, in which Springbok has boosted its positions: Life Technologies Corp (NASDAQ:LIFE) and Halliburton Company (NYSE:HAL), two large-cap firms. The fund raised its bets on these companies by 133% and 207%, respectively, and now holds 61,900 and 118,700 shares in each of them. Israel Englander's Millennium Management, also holds a $77 million stake in Life Technologies and $90 million, worth of Halliburton Company shares.
Disclosure: Javier Hasse holds no position in any stocks mentioned