U.S. Markets closed

Element Capital Management’s Returns, AUM, and Holdings

Nina Zdinjak

Jeffrey Talpins, one of the highest earning hedge fund managers in 2017 according to Forbes, launched Proxima Alfa Investments USA LLS two years ago, before converting it into Element Capital Management, a spun-off hedge fund which has grown into one of the biggest hedge funds that uses a global macro investing strategy. The fund is based in New York and London. Before he started Proxima Alfa, Jeffrey Talpins honed his investment acumen at Citigroup’s Fixed Income Options franchise, where he was a Head Trader. Prior to Citigroup, he worked at the Mortgage Backed Securities Department at Goldman Sachs, where he organized cash flows into MBS derivatives. He holds a B.S. summa cum laude and Phi Beta Kappa from Yale University with Distinction in Economics and Applied Mathematics (focus in Finance).

Element Capital Management’s Return, AUM, and Holdings

Element Capital Management utilizes a modern macro style of global macro investing, meaning it has a multi-process investment approach that combines many important forms of macro analysis. The fund’s investment team relies on its “proprietary base of technology, disciplined risk management, innovative trade structuring and advanced portfolio construction techniques to implement its strategies”. Its investment philosophy has proven to be very smart, as the fund delivered returns of more than 19% in three of the last four years. When many other hedge funds were struggling through 2016 with average returns of 2.3%, Element Capital brought back 19.4%. In 2015, which was even worse for the average macro-oriented fund (which lost 1.2%), Element Capital Management gained 23%. 2017 was also a good year for the fund, as it returned 5.46% to give it average returns of 15.61% between 2015 and 2017, placing it 23rd on Barron’s 2018 list of the top 100 Hedge Funds. In the first nine months of 2018, the fund gained an impressive 25%. According to its plain brochure, at the end of December 2016, Element Capital Management had around $55.88 billion of regulatory assets under management on a discretionary basis on behalf of the Element Funds.

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 96.9%, beating the S&P 500 ETF (SPY) by over 40 percentage points (see the details here).

During the third-quarter, Element Capital Management made many changes to its large equity portfolio, which includes several of the 25 Most Popular Stocks Among Hedge Funds in 2018, including Microsoft Corporation (NASDAQ:MSFT), which now tops that list after displacing Facebook, Inc. (NASDAQ:FB). You can read about those changes on the next page.

On September 30, Element Capital Management reported its largest stake as being in New York-based investment company, Altaba Inc (NASDAQ:AABA). During the quarter, the fund actually reduced its position in it by 28% to 15.78 million shares worth around $1.08 billion. The second-largest position owned by the fund was in Microsoft Corporation (NASDAQ:MSFT), counting 713,445 shares valued at $81.6 million, after raising its stake by 196% in Q3.

Among the greatest additions to the fund’s 13F portfolio were Kraft Heinz Co (NASDAQ:KHC), in which it acquired 2.41 million shares worth around $132.95 million, and First Hawaiian Inc (NASDAQ:FHB), 2.76 million shares of which the fund obtained during the third quarter.

As for the companies in which Granite Point Capital seemed to lose faith, deciding to dump its positions, those counted Kroger Co (NYSE:KR), in which it previously held 2.44 million shares worth around $69.34 million, and Macerich Co (NYSE:MAC), in which it had previously owned 343,614 shares worth around $19.53 million.

Disclosure: None