U.S. Markets open in 1 hr 31 mins

Louis Moore Bacon Buys Ross, Bets on Corporate Debt

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Louis Moore Bacon (Trades, Portfolio)'s Moore Capital Management recently disclosed its portfolio updates for the first quarter of 2020, which ended on March 31.


New York-based Moore Capital Management was founded by Bacon in 1986. The firm uses a global, bold macro-based approach to investing. After 30 years of operation, the hedge fund closed itself to outside investors in late 2019 and consolidated its three flagship funds into one proprietary fund. Regarding the new arrangement, Bacon wrote, "now I am once again concentrating on my personal investment account while overseeing a large multi-asset alternatives platform."

Moore Capital Management established new common stock positions in JPMorgan Chase & Co. (NYSE:JPM) and Ross Stores Inc. (NASDAQ:ROST) during the quarter. However, the firm's biggest buys were in exchange-traded funds, most notably the Vanguard Short-Term Corporate Bond ETF (NASDAQ:VCSH), the SPDR Select Sector Fund - Utilities (XLU) and the iShares 1-3 Year Credit Bond ETF (NASDAQ:IGSB).

JPMorgan Chase

The firm established a new position in JPMorgan after selling out of its previous holding in the company in the fourth quarter of 2017. The trade had a 3.15% impact on the equity portfolio. During the quarter, shares traded for an average price of $122.27.

667ee56e37dfa0cf01d1b4e15d605329.png
667ee56e37dfa0cf01d1b4e15d605329.png

By assets, JPMorgan is the largest bank in the U.S. and the sixth-largest bank in the world. Based in New York, the company offers a full range of traditional and investment banking services to individual and corporate clients worldwide.

On May 27, shares of JPMorgan traded around $101.37 for a market cap of $308.88 billion and a price-earnings ratio of 11.46. According to the Peter Lynch chart, the stock is trading below its intrinsic value.

00df503c36f746c4b8ae3edc9c94b1ed.png
00df503c36f746c4b8ae3edc9c94b1ed.png

GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 4 out of 10. The cash-debt ratio of 1.05 is slightly lower than the industry median of 1.13. Quarterly earnings data shows that while revenue remains fairly steady, the bank's net income dropped for the first quarter of 2020.

a6997dd07fb474f6e27a47a7c0cc1769.png
a6997dd07fb474f6e27a47a7c0cc1769.png

Ross Stores

Moore also bought 533,681 shares of Ross after selling out of its previous investment in the company in the first quarter of 2019. The trade had a 1.93% impact on the equity portfolio. Shares traded for an average price of $107.35 during the quarter.

a3f23dc457ca237498fc0249e9e0d845.png
a3f23dc457ca237498fc0249e9e0d845.png

Ross is an American discount chain store company based in Dublin, California. It operates under the brand name "Ross Dress for Less." The company buys seasonal surplus items in bulk from fashion companies and is then able to offer them to its customers at discount prices.

On May 27, shares of Ross traded around $96.49 for a market cap of $34.29 billion and a price-earnings ratio of 37.39. According to the Peter Lynch chart, the stock is trading slightly above its intrinsic value.

85519bd96599ad477925b7d18ef6e66e.png
85519bd96599ad477925b7d18ef6e66e.png

GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rating of 9 out of 10. The cash-debt ratio of 0.42 is in line with the industry median, while the Altman Z-Score of 4.44 indicates the company is unlikely to go bankrupt. Revenue and net income have both increased steadily throughout the company's history, the only significant exception being in the first quarter of calendar 2020.

16e48061784e87c5c88f02178eb43483.png
16e48061784e87c5c88f02178eb43483.png

Vanguard Short-Term Corporate Bond ETF

The firm's biggest buy for the quarter was 3,381,774 shares of the Vanguard Short-Term Corporate Bond ETF, which impacted the equity portfolio by 11.13%. During the quarter, shares traded for an average price of $80.57.

297bb25fb53e38a653681f67ab43a21b.png
297bb25fb53e38a653681f67ab43a21b.png

The ETF seeks to track the performance of the Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index. On May 27, shares traded around $81.81 for a market cap of $25.81 billion and a dividend yield of 2.81%.

49144d5f20bb47e0a337a99b0b3a1dc1.png
49144d5f20bb47e0a337a99b0b3a1dc1.png

SPDR Select Sector Fund - Utilities

The firm also invested in 1,310,000 new shares of the SPDR Select Sector Fund - Utilities after selling out of a previous investment in the ETF in the first quarter of 2018. The trade had a 3.02% impact on the equity portfolio. Shares traded for an average price of $64.36 during the quarter.

f79dc557906eac9fc3a03f440f9ef8d2.png
f79dc557906eac9fc3a03f440f9ef8d2.png

The ETF seeks to track the performance of the S&P 500 companies that operate in the utilities sector. On May 27, shares traded around $57.53 for a market cap of $11.55 billion and a dividend yield of 3.4%.

6863b29cf1e23675c2eef95eb3f43fb1.png
6863b29cf1e23675c2eef95eb3f43fb1.png

iShares 1-3 Year Credit Bond ETF

Moore established a 939,390-share holding in the iShares 1-3 Year Credit Bond ETF, impacting the equity portfolio by 2.05%. During the quarter, shares traded for an average price of $52.84.

ad0f21282f7faec8bf1827af216d37a9.png
ad0f21282f7faec8bf1827af216d37a9.png

The ETF seeks to track the performance of the ICE BofAML 1-5 Year US Corporate Index. On May 27, shares traded around $54.18 for a market cap of $16.51 billion and a dividend yield of 2.96%.

57ba0c84055ccab70ed0785f51b23604.png
57ba0c84055ccab70ed0785f51b23604.png

Portfolio overview

As of the quarter's end, the common stock equity portfolio consisted of 152 holdings valued at $2.4 billion. The top positions were the Vanguard Short-Term Corporate Bond ETF with a 11.13% portfolio weight, Netflix Inc. (NFLX) with 3.21% and JPMorgan Chase & Co. with 3.15%.

In terms of weighting, the firm was most invested in the consumer cyclical, financial services and technology sectors.

f64500a7fd26837792cbcdf28b2b9090.png
f64500a7fd26837792cbcdf28b2b9090.png

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

Read more here:

  • Top 1st-Quarter Buys of Steven Cohen's Firm

  • Julian Robertson's Top 1st-Quarter Trades

  • Philippe Laffont's Firm Buys JD, Sells Mastercard



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.