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Dorsal Capital Management’s Top Stock Picks

Sieni Kimalainen

Dorsal Capital Management was launched in 2009 by Ryan David Frick and Oliver Evans. Mr Frick is the fund’s Chief Investment Officer, while Mr. Evans retired in 2014. Ryan David Frick holds a MBA from Stanford University. Prior to launching Dorsal Capital Management, he gained rich experience working as an Analyst at Credit Suisse First Boston, Portfolio Manager at SAC Capital, generalist Equity Analyst and Portfolio Manager at CR Intrinsic. Dorsal Capital Management focuses on providing services to pooled investment vehicles.

The fund’s performance throughout the last several years was relatively steady and strong. In 2014 it returned 15.6%, followed by 10.1% in 2015. The following years showed a slight decline, with a return of 5.07% in 2016 and 2.87% in 2017. In 2018 the fund lost 1.88%, but it got back on the track in 2019, with a half-year return of 7.4% through June. With an annualized return of 7.5% the fund seems to be on a good fairly steady ground.

[caption id="attachment_783421" align="aligncenter" width="473"] Ryan Frick of Dorsal Capital[/caption]

Ryan Frick Dorsal Capital

Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. Our long strategy is based on the consensus picks of the 100 best performing hedge funds. This strategy was launched 5 years ago and generated a cumulative return of 115%. You can think of it as a mutual fund that returned 16.2% annually over the last 5 years, vs. 11.1% annual gain for the S&P 500 ETF (SPY). Basically we outperformed the S&P 500 Index by 5 percentage points annually by identifying the top stock picks of the best hedge fund managers (see the details here).

Our short strategy is based on shorting hedge fund hotels that are likely to experience large hedge fund sales during market weaknesses. We launched this strategy in February 2017. It’s been almost 2.5 years and the stock picks of this strategy lost a cumulative 24.7% vs. a cumulative gain of 30.8% for the S&P 500 ETF. This is an absolutely mind blowing performance. The annualized return of our short picks is -11.2%, vs. 11.8% annualized gain for the S&P 500 Index during the same period. The annual alpha of this strategy is 23 percentage points. Jim Chanos doesn’t generate this kind of performance. The best thing about this short strategy is that it provides an excellent hedge during market meltdowns. For example, in Q4 of 2018 when the S&P 500 Index lost nearly 14%, this strategy’s picks lost 25% protecting our premium subscribers from large losses.

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Our newsletters are successful because we follow hedge fund managers like Ryan David Frick l to identify the best and worst hedge fund stock picks. In this article we are going to take a look at Dorsal Capital Management’s top stock picks for Q2 2019.

At the fifth place in the fund’s portfolio was Mercadolibre Inc (NASDAQ:MELI), dropping from the third place since previous quarter, as the position was cut by 35%. On the other side, hedge funds seem to be interested more and more in the stock, since 52 shareholders were investing in the company, which is a change of 27% from Q1. Among them, Alkeon Capital Management held the largest stake in the company, worth $761.3 million. Other hedge funds bullish on the stock were Generation Investment Management, D E Shaw, and Tybourne Capital Management (read more detail here).

The fourth most valuable position in the fund’s last 13F fillings was Lowe’s Companies, Inc. (NYSE:LOW). Mr. Frick boosted the position by 17% in Q2, remaining at the same place in the fund’s portfolio. A total of 63 hedge funds tracked by Insider Monkey were bullish on the company, a change of 13% compared to Q1. The company’s top shareholder was Perishing Square, holding a stake worth $898.2 million. Other hedge funds fond of the company were D E Shaw, Citadel Investment Group, and Maverick Capital, as you can read more here.

Dorsal Capital Management’s third top stock pick for Q2 2019 was Facebook Inc (NASDAQ:FB), which is number one among 30 most popular stocks among hedge funds in Q2. Dorsal Capital Management followed the trend, boosting the position by 30%, which brought it up from the 8th place in its portfolio. At the end of the second quarter, a total of 182 hedge funds held long positions in Facebook Inc, which is 3% higher than in Q1. Tiger Global Management LLC was the company’s top shareholder, holding a stake worth $1.73 billion. Viking Global, AQR Capital Management and Eagle Capital Management were among other Facebook Inc’s top shareholders (see more detail here).

The second most valuable position in Dorsal Capital Management’s portfolio was Microsoft Corporation (NASDAQ:MSFT), the second among 30 most popular stocks among hedge funds. The fund boosted the position by 16%, which remained at the second place. A total of 167 hedge funds were bullish on the stock, which is a slight decrease of -2% compared to Q1 2019. Fisher Asset Management was the company’s top shareholder, which reported holding $2.8 billion worth of stock. Other Microsoft’s top investors for Q2 were AQR Capital Management, Tiger Global Management LLC, and Adage Capital Management, as you can read more here.

Finally, the fund’s top stock pick for the second quarter 2019 was Altaba Inc. (NASDAQ:AABA), a new addition from the previous quarter. The fund boosted this position by 52%, thus remaining at the first place in its portfolio. A total of 59 hedge funds held long positions in Altaba Inc, a decline of 22% since the previous quarter. The company’s top shareholder for this period was Farallon Capital, holding $1.9 billion worth of stock. Among other top investors were hedge fuds like Owl Creek Asset Management, Aristeia Capital, and HBK Investments (see more detail here).

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