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Kerrisdale Capital Management’s Return, AUM, and Holdings

Nina Zdinjak

Back in 2009, Sahm Adrangi decided it was time to launch his own hedge fund, and so he founded Kerrisdale Capital Management, a New York-based investment management firm with the main focus on long-term value investments and event-driven special situations. The fund had successful investments throughout the years and in July 2017 it managed around $150 million, whereas its initial capital was less than $1 million. Mr. Adrangi cut his teeth at Deutsche Bank, and Chanin Capital Partners, and he also worked at Longacre Management, a multi-billion-dollar hedge fund. He earned his Bachelor of Arts in Economics from Yale University. What sets him apart from other portfolio managers is sharing his research with the public, openly writing about his fund’s opinion on stocks; and, he is mostly known for short selling.

Sahm Adrangi Kerrisdale Capital

Throughout the years, Mr. Adrangi and his team at Kerrisdale Capital Management have become quite skilled in analyzing specific sectors such as biotechnology, mining, and telecommunication, to name a few. Mr. Adrangi doesn’t shy away from going activist if he finds the need for it, and all this makes him one of the most prominent hedge fund managers and his fund the best performing fund in Insider Monkey’s database during the Q3. Our ranking of the best performing hedge funds is based on their quarterly returns coming from the investments in the companies with market caps above $1.0 billion. Not only that his fund had this year’s third quarter good performance, but it has also generated high returns throughout the years. It’s Kerrisdale Partners LP fund returned strong 27.15% in 2013, 14.03% in 2014, 16.39% in 2015. Then, in 2016 it had less luck, as it has lost 1.89%, but it came back on track in the following year with a notable return of  19.92%. 2018 seem to be the best for the fund, as until October 29th, it has brought back an amazing 44.66%. Its total return is of whopping 2326.38% for a compound annual return of 41.16% and its worst drawdown is 17.30.

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).

At the end of the third quarter of 2018, Kerrisdale Capital Management’s portfolio was valued at $102.01 million, after the fund has initiated two positions and dumped two other stocks. The most valuable position it held on September 30 was in Luxoft Holding Inc (NYSE:LXFT), and, after it has lowered its stake in it by 44% it counted 554,235 shares outstanding, with a value of $26.24 million, occupying 25.72% of its equity portfolio. The fund doesn’t look for the favorite companies among hedge funds – there was not a single stock out of those 30 most popular stocks among hedge funds in Q3 of 2018 in its equity portfolio at the end of September. More details about the rest of the fund’s third quarter long positions you can find on the next page.

The second largest holding the fund had at the end of Q3 2018 was in a satellite telecommunications company, Intelsat SA (NYSE:I). Its position consisted of 687,295 shares that were worth $20.62 million, occupying 20.21% of the fund’s portfolio. It is interesting to note that Kerrisdale Partners actually lowered its stake in Intelsat SA by a large 92% during the third quarter. In its recent financial report for three months ended on September 30, the company disclosed revenue of $536.92 million versus revenue of $538.76 million in the third quarter of 2017, and diluted loss per share of $2.74 compared to a diluted loss per share of $0.26 in Q3 of 2017. Over the past 12 months, the company’s stock gained 476.26% and it is currently trading at $19.42. The number of hedge funds bullish on Intelsat SA increased by 14 in recent months, and at the end of the third quarter, there were 37 smart money investors long the stock. The company has a market cap of 2.68 billion.

The biggest new stake the fund initiated in Electronic Arts Inc. (NASDAQ:EA) by acquiring 58,650 shares, worth around $7.07 million. This is a video game company based in Redwood City, California, widely known for its video games such as FIFA and Madden. Electronic Arts Inc was recently in the news for its senior director being fired for making an inappropriate remark during a conference call. In the meantime, the company’s stock price was almost halved over the past six months, and it is now trading at $76.49. The hedge fund sentiment towards Electronic Arts Inc hasn’t changed in the past months, hence at the end of the third quarter, there were 79 investors with long positions in the company. The second new addition to the fund’s portfolio was an Internet company, Sea Ltd (NYSE:SE), which runs in three different sectors – E-commerce, Digital Entertainment and Digital Financial services. Kerrisdale Capital Management purchased 100,000 Sea’s shares, which were valued $1.39 million.

Out of the two positions the fund decided to completely sell out during the third quarter, the biggest one was in Habit Restaurants Inc (NASDAQ:HABT), as the fund said goodbye to 85,000 shares with a value of $850,000. The second company in which Kerrisdale Partners lost faith during the third quarter was PTC Therapeutics, Inc. (NASDAQ:PTCT), as the fund dropped 40,122 shares that were worth $1.35 million.

Disclosure: None

This article was originally published at Insider Monkey.