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BlueMountain Capital Management’s Returns, AUM and Holdings

Jelena Martinovic

BlueMountain Capital Management, LLC is a New York-headquartered privately- held diversified alternative asset management firm co-founded by Andrew Feldstein and Stephen Siderow, back in 2003. With specific expertise in credit markets, the fund deals with equity, credit, private investments and global markets while using an interdisciplinary approach. Besides providing its services to pooled investment vehicles operating as private investment funds, the fund is also focused on institutional accounts which generally operate as foreign companies or single-investor limited partnerships. With approximately 250 employees and an office in London, the fund is covering European, Middle Eastern and Australian market as well.

Mr. Andrew Feldstein holds a B.A. from Georgetown University and a J.D. from Harvard Law School. During his studies, he was particularly interested in politics, government, and history. The fact that he is multidisciplinary educated enables him to "look at problems rigorously through multiple lenses." Besides being BlueMountain’s Co-Founder, Mr. Feldstein is its Chief Investment Officer, as well as a member of the Risk Committee and the Chair of the Firm’s Management and Investment Committees. He was a Managing Director at J.P. Morgan, where he spent over a decade. While there he also served as Head of High Yield Sales, Trading and Research, Head of Global Credit Portfolio, and Head of Structured Credit. He co-founded the Darfur Project in 2007. For more than five years he has been an Independent Director at The PNC Financial Services Group, Inc. and PNC Bank NA. Mr. Feldstein is a dedicated philanthropist since he is a Trustee of a number of such associations and organizations including Third Way, Santa Fe Institute, etc. He's also a member of the Harvard Law School Leadership Council.

BlueMountain Capital Management's Returns, AUM and Holdings

Mr. Stephen Siderow, the fund's Co-founder, is also its Co-President and Partner while he served as its Managing Partner as well.  He earned a B.A. degree, Magna Cum Laude, in Philosophy from Amherst College and a J.D. degree, Cum Laude, from Harvard Law School. Prior to co-founding BlueMountain Capital Management, Mr. Siderow's focus was on the financial services industry, and issues such as business organization, strategy, and operations. In that time he worked at McKinsey & Company, where he served as a Senior Consultant. For a while, he was at Cleary, Gottlieb where he worked as a Corporate Attorney. His involvement in a number of charitable organizations is noticeable, being a Member of the Board of the New York City Council of Taglit Birthright Israel, and a Member of the Advisory Board of the Hertzberg Palliative Care Institute at Mt. Sinai Hospital, to name a few.

BlueMountain Capital Management is founded on the "principles of integrity, excellence, collaboration, and transparency" and besides investing in public equity, it also invests in fixed income and alternative investment markets worldwide such as distressed and special situations, volatility, CLOs, etc. The fund's investment process is based on the integration of a number of methods of analysis including fundamental research, quantitative analysis of price relationships within different markets, taking a grasp of the technical dynamics of diverse equity and credit markets and comprehensive research of the portfolio managers. As for its investment strategies, they are grouped into twelve categories. Firstly, there are long/short credit North America strategy and European Credit strategy utilized (on both continents) in cases of relative value positions. Then there's distressed and special situations strategy, long/short equity and mortgages strategy, and Commercial Real Estate strategy, to name a few. According to its Form ADV from January 2019, the fund managed around $ 17.4 billion in regulatory assets under management.

Even though the fund experienced some rough times over the past couple of years, since it posted discouraging results in 2017, followed by a departure of a few of its executives during the last year, its BlueMountain Credit Alternatives Fund L.P. fund, a relative value credit fund pursuing structured, fundamental credit and arbitrage & technical, can boast with returns which were mostly positive over the last five years. In 2013, it gained 7.87%, while in 2014  it delivered a return of 2.67%. Unfortunately, 2015 was a down year for the fund, since it lost 0.06%, only to make a comeback in 2016, being up by 6.02%. In 2017 the fund returned 1.05%, while in 2018, its returns were up by 2.60% from January until October 31st. Its total return amounted to 190.00%, and compound annual return was 7.4%, while its worst drawdown was 11.81.

Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Since its inception in May 2014, our flagship strategy generated a cumulative return of 74%, beating the S&P 500 ETF (SPY) by 24 percentage points (see the details here). Our short strategy outperformed the market by 45 percentage points since its inception less than 2 years ago.

And now, let’s scroll through the most significant changes the fund made to its portfolio on the next page.

During the third quarter, the fund has made a lot of changes to its substantial equity portfolio valued at $5.51 billion, by adding 260 new positions and dropping 267 companies, pushing its total down to 1143 holdings. Topping the list of newcomers to the fund's portfolio is the position in Hanger Inc. (NYSE:HNGR), a provider of orthotic and prosthetic patient care, as well as the position in Retail Value Inc. (NYSE:RVI), a firm that owns and operates retail shopping centers, which occupy 0.85% and 0.29%, respectively. The fund purchased 2,265,525 shares of Hanger Inc. (NYSE:HNGR) for $47.19 million and 500,000 shares of Retail Value Inc. (NYSE:RVI) worth $16.34 million.

The third most valuable holding at the end of the third quarter the fund reported in Pg&e Corp (NYSE:PCG), an American investor-owned utility which provides natural gas and electricity in northern California. The fund purchased 4,307,967 of the company’s shares, with a value of $198,21 million that way raising its stake in the company by 2497%. Over the past 12 months, Pg&e Cor’s (NYSE:PCG) stock lost 67.54%, and it is now trading at $12.70. Shares in the company lost 43.6% of its value in November, due to the potential losses company suffered during the 2018 California wildfires. The similar happened back in 2017. However, last week, the price of the company's stock increased by 75 percent to $13.95 after it's been cleared from any responsibilities regarding 2017 Tubbs wildfire. So, Pg&e Corp's (NYSE:PCG) stock is still popular among hedge funds since there were 60 smart money investors from Insider Monkey’s database long the stock on September 30th, 2018, down by one from the previous quarter.

The fund boosted its stake in Paypal Holdings Inc. (NASDAQ:PYPL) as well, by 58% to 99,209 shares worth $8.71 million, what doesn't come as a surprise, knowing that it was one of the most popular stocks among hedge funds in Q3 of 2018. When it comes to its stock price, over the past six months, some fluctuations have been recorded, and it's actually raised by 10%, trading at $93.05, at price-to-earnings (PE) ratio of 58.29 at the moment of writing. In addition, it has a market cap of $111.1 billion. BlueMountain Capital substantially increased its stake in Core-Mark Holding Company Inc. (NASDAQ:CORE), a North American wholesale distributor to the convenience retail industry, by an astonishing 81727%, that way owning 21,275 of its shares valued at $722 000. In additions, on September 30th, 2018, there were 19 smart money investors from Insider Monkey’s database long the stock, what's up by one from the previous quarter.

As we already mentioned, the fund lost faith in a number of companies, entirely selling out its positions. The second biggest position the fund decided to dump in this period was in CVR Energy Inc (NYSE:CVI) by completely selling its 167 shares, while it also said goodbye to 220 shares of Veritone Inc (NASDAQ:VERI).

Disclosure: None This article was originally published at Insider Monkey.