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Granite Point Capital’s Returns, AUM, and Holdings

Nina Zdinjak

Warren Lammert founded Granite Point Capital, a long/short hedge fund with a focus on small-cap companies, in January 2004. The fund is headquartered in Boston, Massachusetts, and Mr. Lammert is its portfolio manager. Prior to launching his own fund, Warren Lammert honed his investment acumen for 14 years at Janus Capital Management LLC as a portfolio manager. Prior to joining Janus Capital, Lammert worked as a Research Associate and then Associate Analyst at Fred Alger Management. He is a co-founder and director of The Epilepsy Project and Epilepsy.com, and also serves on the board of directors of the Epilepsy Foundation and of FACES (Finding a Cure for Epilepsy and Seizures) at New York University. Warren Lammert graduated with distinction from The London School of Economics and Political Science with an M.Sc. in Economic History, and holds a Bachelor's Degree in Economics from Yale University.

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Granite Point Capital’s Return, AUM, and Holdings

The fund uses a long/short investment strategy and mainly focuses on U.S companies, trying to uncover which of them have become mispriced and why. Granite Point Capital usually maintains around 60 positions and its approach has resulted in some seriously positive returns in recent years; it returned an amazing 42.52% in 2013, followed by 3.61% in 2014, 8.45% in 2015, 12.54% in 2016, 30.60% in 2017, and 36.22% in 2018 (through October 29). The fund’s total return was stood at 712.13% for a compound annual return of 15.35%, and its worst drawdown was 19.86. The fund managed $217.34 million of client assets on a discretionary basis on December 31, 2016 as disclosed in its Plain Brochure.

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At the end of the third quarter Granite Point Capital’s equity portfolio was valued at $1.51 billion, and it made several changes to it during Q3, adding 37 new positions while also dumping 38 companies. Among the fund’s third quarter holdings are some of the 25 Most Popular Stocks Among Hedge Funds in 2018, like Facebook, Inc. (NASDAQ:FB), though the social media giant lost its place atop that list despite Granite Point's continued support. More details about the most important changes to the fund's 13F portfolio can be found on the next page.

The largest position in Granite Point Capital’s equity portfolio on September 30 was a stake in Marinus Pharmaceuticals Inc (NASDAQ:MRNS), despite the fund slashing that position by 60% to 1.06 million shares. The second-biggest position was in another pharmaceutical company, Xenon Pharmaceuticals Inc (NASDAQ:XENE), in which the fund reported holding 464,300 shares valued at $6.13 million. Xenon Pharmaceuticals is a clinical-stage biopharmaceutical company dedicated to discovering treatments for neurological diseases. In its third-quarter financial report the company disclosed cash and cash equivalents and marketable securities of $127.1 million, compared to $43.8 million on December 31, 2017.  Year-to-date, the company’s stock is up by 173%.

Among the 37 new additions to its portfolio, the fund's most valuable new holding was in International Money Express Inc (NASDAQ:IMXI), acquiring 400,000 shares valued at $4.81 million. The Miami-based company offers a variety of money transfer services, such as wire transfer, cash checking services, and money orders, to name a few. Its technology enables clients to send money from the U.S to 17 countries in Latin America and the Caribbean, counting Guatemala and Mexico. It recently published its third-quarter financial report, in which it announced that its revenue grew by 28.6% when compared to the same period in 2017, mostly thanks to its outstanding performance in Guatemala and Mexico. Adjusted EBITDA increased by 50.7% to $13.4 million. Granite Point's second-largest new stake was in Opiant Pharmaceuticals Inc (NASDAQ:OPNT), with the fund obtaining 75,000 shares that were valued at $1.34 million at the end of September.

Granite Point Capital appears to have lost some conviction in some of the companies in its portfolio, significantly lowering its stakes in them. Two of those stocks are Ovid Therapeutics Inc (NASDAQ:OVID) and Marinus Pharmaceuticals Inc (NASDAQ:MRNS), with the fund reducing its stakes in both by 60%. That left it with 111,826 Ovid shares and 1.06 million Marinus shares. As for the biggest position sold out of, that was Vericel Corp (NASDAQ:VCEL), in which the fund previously held 243,700 shares worth around $2.36 million.

Disclosure: None