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Paul Tudor Jones’ Tudor Investment Corp’s Return, AUM, and Holdings

Nina Zdinjak

One of the most successful investors in the world, Paul Tudor Jones II launched his firm called Tudor Investments Corp almost four decades ago. Paul Tudor Jones became widely famous after he predicted the October 19, 1987 stock market crash known as Black Monday. This prediction was one of his most important accomplishments, as Paul Tudor Jones tripled his money through large short positions. He was among just a few investors who managed to earn during the event when the Dow Jones Industrial Average fell 22%.

His fund, Tudor Investment Corp, is known for being among the most expensive hedge funds, which charge higher fees than the average. Naturally, the fund, usually achieves very high returns for its investors, so its high fees can be justified. Aside from his professional success and wealth he gathered (in February 2017, his net worth was estimated at $4.7 billion, and he was 22nd highest-earning hedge fund manager), Jones is also known for his philanthropy. Not only he had donated his alma mother (the University of Virginia) quite generously ($20 million), he also founded the Robin Hood Foundation, which aims to reduce poverty in New York. But, let’s start from the beginnings of his career.

TUDOR INVESTMENT CORP

After graduating from the University of Virginia with a Bachelor of Art/Science in Economics in 1976 he went on to work at the New York Stock Exchange where he was trading cotton futures. He got this job, thanks to his cousin William Dunavant (CEO of Dunavant Enterprises) who introduced him to commodity broker Eli Tullis, who then hired him, and taught him some of the most important and clever techniques in trading. One of those things is the fact that trading is competitive and that you need to be tough to handle it.

In 1980 he thought he gained enough professional experience and that it was the right time to start his own asset management firm, which he called Tudor Investment Corporation.  Not long after, he also founded the Tudor Group, a hedge fund holding company that mainly focuses on currencies, commodities, fixed income, and equities. Over a couple of decades, the fund grew big, providing its services not only in Connecticut, but also in New York, Palm Beach, Singapore, London, and Sydney.  At the end of December 2016, the fund, together with its relying advisers, held $39.66 billion in regulatory assets under management.

Tudor Investment Corp is known for a vast professional experience and expertise in discretionary macro trading. Nevertheless, over the years, its team has developed strong skills in systematic investment and model-driven approaches. Trying to keep up with the ever so fast-evolving markets, Tudor Investment Corp offers professional investment services applying multiple strategies, such as quantitative global macro, discretionary global macro, quantitative equity market neutral, growth equity, and discretionary equity long/short. Let’s take a look at some of the fund’s return figures.

Starting from the fund’s early years, in 1987 Tudor Investment Corp’s main fund brought back an eye-popping return of 125.9% after fees as Paul Tudor Jones expected a big downturn in the US Stock Market. Three years later it brought back an impressive 87.4% when the market in Japan dropped. Suddenly its trend of hitting high return marks stopped and from 2010 to 2012 it was delivering only about 5% on average annually. 2013 was somewhat better, as the fund posted gains of 14.3%.

In the same year (2013), its Tudor Momentum Fund Ltd. delivered 0.25%, and a much more impressive 21.72% in 2014, followed by a loss of 9.59% in 2015. It came back on its feet in the following year, returning 4.73%, and in 2017 it gained even better 11.55%. Last year brought some challenges to this fund as well, as it lost 4.22% through October. Tudor Momentum Fund Ltd had a total return of 24.15%, for a compound annual return of 2.24%. Its worst drawdown stood at 19.84. Its BVI Global Macro Fund lost 2.6% in 2016 (through May). In 2018, through May, its new fund that relies on machine-learning algorithms to conduct macro trades gained 13%, while in May alone it returned 7% making money on global currencies and European fixed income. In the same year, through October, Tudor Investment Corp gained 9%.

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At the end of December 2018, the fund’s portfolio was valued $5.06 billion, which represented an increase of 21.34% from the third quarter of 2018, when its portfolio carried a value of $3.98 billion. Tudor Investment Corp held the biggest long position in Twenty-First Century Fox Inc Class A (NASDAQ:FOXA), a famous multinational mass media corporation and one of the 30 most popular stocks among hedge funds. After the fund had raised its stake in the company by 118%, its position counted  1.54 million Twenty-First Century Fox’ shares, which carried a value of $74.10 million, amassing for 1.46% of the fund’s diversified equity portfolio. The company has a market cap of $93.67 billion, and it is trading at a price-to-earnings ratio of 6.79. Over the last 12 months, its stock gained 34.65%, and on March 5th it had a closing price of $50.55. Recently Buckingham Research boosted its price target on the stock to $54.00 from $52.00, while repeating its ‘Buy’ rating on it at the same time. At the beginning of February Vertical Group upgraded its rating on Twenty-First Century Fox’ stock, to ‘Buy’ from ‘Hold’.

On the next page, you can discover more about Tudor Investment Corp’s biggest positions and interesting investment moves from the fourth quarter of 2018.

Tudor Investment Corp held the second largest position at the end of December 2018 in NXP Semiconductors NV (NASDAQ:NXPI), a Dutch global semiconductor manufacturer, with headquarters in Eindhoven, Netherlands. The fund’s position in the company was valued $53.10 million, on the account of 724,607 shares outstanding. NXP Semiconductors NV is known globally as an expert in the industry, working on innovations in the following sectors: cybersecurity, the Internet of Things, connected cars, and portables & wearables. The company is operating in over 30 countries, and last year it reported revenue of $9.41 billion.

In its last financial report for Q4 of 2018, NXP Semiconductors NV disclosed revenue of $2.4 billion, which represents a 2% decrease on a year to year basis, and earnings per diluted share of $0.94 versus EPS of $2.17 for the corresponding quarter in 2017. Interestingly, in the third quarter of 2018, it has delivered much higher earnings per share - $5.60. In the same year, NXP Semiconductors NV returned $5.08 billion to shareholders via previously declared share repurchases and dividend payments, in that manner cutting its diluted share count by 15%. The company has a market cap of $30.67 billion, and it is trading at a price-to-earnings ratio of 13.60. Over the last six months, the company’s stock lost 0.73%, and on March 5th it had a closing price of $93.30. On February 8th, Needham  & Company LLC raised its price target to $105.00 with ‘Buy’ rating on the stock, while Mizuho downgraded its rating to “Neutral’ from ‘Buy’, and reduced its price target to $95.00 from $99.00.

The third largest stake Tudor Investment Corp held in Hanger Inc (NYSE:HNGR), one of the best providers of orthotic and prosthetic patient care, with a market cap of $731.81 million. The fund’s position in the company was worth $17.67 million, on the basis of 932,684 shares outstanding. Year-to-date, the company’s stock gained 5.19%, and on March 5th it had a closing price of $19.86.

When it comes to new positions, which Tudor Investment Management acquired in Q4 2018, one of the biggest was in BSB Bancorp Inc (NASDAQ:BLMT), a holding company for Belmont Savings Bank, which offers a variety of retail and commercial banking services to small enterprises. In this $344.12 million market cap company, the fund invested $12.84 million, purchasing 457,750 shares. The company is trading at a price-to-earnings ratio of 19.12, and over the last 12 months, its stock gained 15.03%, having a closing price of $35.20 on March 5th.

The second biggest new position the fund obtained during the fourth quarter of 2018 was in Tribune Company Common Stock  (NYSE:TRCO), a conglomerate company with headquarter ins Chicago, Illinois. Tudor Investment Corp bought 278,654 shares of the company, establishing in that manner a position that was worth $12.65 million. Tribune Company provides a wide range of services in publishing, production, broadcasting, reporting, internet and entertainment operations. It has a market cap of $4.06 billion, and it is trading at a price-to-earnings ratio of 9.91. Since the beginning of the year its stock price has gained 2.36%, and on March 6th it had a closing price of $46.25. In its last financial report Tribune Company reported consolidated revenues of $578.7 million for the fourth quarter of 2018 and $2,009.7 million for the full year. It disclosed adjusted diluted earnings per share from continuing operations of $1.55 in Q4 2018, compared to $0.81 for the corresponding quarter in 2017.

During the fourth quarter of 2018, Tudor Investment Corp dumped more than 400 companies. Among the biggest positions the fund had dropped were those in Apple Inc.  (NASDAQ:AAPL), in which it previously held 108,568 shares that were valued $24.51 million, and in Marathon Petroleum Corp  (NYSE:MPC) whose 272,985 shares with a value of 21.83 million the fund sold out. It also dumped its $20.22 million worth a position in Amazon.com, Inc. (NASDAQ:AMZN), which was based on 10,097 shares outstanding.

Disclosure: None

This article was originally published at Insider Monkey.