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1060 Capital Management’s Returns, AUM, and Holdings

Nina Zdinjak

1060 Capital LLC is a young hedge fund launched in 2013 by Brian Gustavson and Andre Haley. Its headquarters are in Chicago, Illinois. Before starting his own firm, Brian Gustavson was employed at Balyasny Asset Management, first as an analyst, and then later as a Senior Portfolio Manager. While at Balyasny, Mr. Gustavson sharpened his investment philosophy, concentrating on the industrial and consumer sectors. He also worked for Coe Capital Management and Arthur Anderson. Brian Gustavson, who is a Chartered Financial Analyst, earned his B.S. in Finance from the University of Illinois and is currently a portfolio manager at 1060 Capital LLC. The fund’s other co-founder and current Chief Operating Officer, Andrew Haley, cut his teeth at First Chicago NBD in the First Scholar’s Program, and later on, broadened his investment acumen at J.P. Morgan where he spent more than 12 years amid various positions. He is also a Chartered Financial Analyst, and earned a B.A. in Pre-Med Economics from the University of Notre Dame, and an M.B.A. in Finance, Strategic Management and Entrepreneurship from the University of Chicago Booth School of Business.

1060 Capital Management’s Return, AUM, and Holdings

1060 Capital employs a long/short investment strategy, with its main targets being equities from the industrial and consumer sectors. Its investment approach is catalyst-guided and the fund prefers to have a concentrated portfolio of stocks. Active risk management is a crucial part of its investment procedure. 1060 Capital LLC’s investment philosophy must be very sharp, as the fund has had great performance since its launch.

Over the last five years, its 1060 Capital Opportunity Fund has delivered strong returns, with only one down year. It generated a return of 13.86% in 2013, and an even better 19.84% in 2014. It continued in a positive manner in 2015 when it brought back 8.90%, and in 2016 with a return amounting to 9.52%. Then, 2017 brought some disappointment, with a decline of 6.88%. In the current year, the fund has made a solid comeback, being up by 8.86% on a YTD basis (through October 29). The 1060 Capital Opportunity Fund has had a total return of 64.98%, a compound annual return of 10.01% and its worst drawdown was 12.77. According to the fund's plain brochure, on December 31, 2015, 1060 Capital LLC had around $164.71 million in assets under management on a discretionary basis.

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On the next page, you can read about the most important portfolio changes the fund made during Q3 of 2018.

At the end of the third quarter, during which 1060 Capital LLC added 11 new positions and dumped around 31 stakes, its 13F portfolio was valued at $213.35 million. The biggest position the fund held on September 30 was in MasTec, Inc. (NYSE:MTZ), which it boosted by 109% to 600,000 shares, worth $26.79 million, accounting for 12.55% of the portfolio's value. Some of the other smart money investors tracked by our database are also getting more bullish on MasTec, Inc. (NYSE:MTZ), as the number of hedge funds long the stock climbed to 30 from 22 during the previous quarter.

Among the biggest third-quarter additions to 1060 Capital Management’s portfolio were Vail Resorts, Inc. (NYSE:MTN) and Foot Locker, Inc. (NYSE:FL), with the fund acquiring 95,000 shares worth $26.07 million and 500,000 shares worth $25.49 million, respectively. Vail Resorts is a company that runs many luxury ski resorts across the country, while Foot Locker is a footwear retailer. At the end of the third quarter, 30 smart money investors were long Vail Resorts, up by one from the previous quarter, while 26 hedge funds owned Foot Locker shares, down from 30 in the second quarter.

Among 1060 Capital's new additions was Wynn Resorts, Limited (NASDAQ:WYNN), which is a stock that is very popular with the wealthy elite, being sixth among the 25 Stocks Billionaires Are Piling On. The fund purchased 47,500 shares that were valued $6.04 million on September 30. Wynn Resorts runs destination casino resorts across the globe, including in gambling hotspots Las Vegas and Macau. Over the past six months, the company’s stock price has lost 41.25%.

When it comes to the companies in which 1060 Capital Management seemingly lost faith, as it decided to sell all of its holdings, we are going to name those three in which it had the biggest stakes. Starting with the biggest dropped position, Kimco Realty Corp (NYSE:KIM), the fund sold off 1.2 million shares in Q3 that had been valued at $20.39 million at the end of June. The next in line is Martin Marietta Materials, Inc. (NYSE:MLM) 85,000 shares of which the fund dumped during the third quarter. The third-largest position the fund said goodbye to was Watsco Inc (NYSE:WSO), with its former holding containing 105,000 shares with a value of $18.71 million on June 30.

Disclosure: None