Founded in 2017, Tor Minesuk's Mondrian Capital Management saw massive gains in 2020, thanks to big investments in fastest-growing companies from information technology, consumer discretionary, and communications sectors. Its all top ten positions outperformed the broader market returns in 2020. Despite that, the hedge fund has made several changes in its 13F portfolio during the fourth quarter to align the stock positions according to the changing market trends.
The New York-based hedge fund has initiated positions in 17 stocks during the fourth quarter including the largest positions in ServiceNow (NASDAQ: NOW) and Qorvo Inc (NASDAQ: QRVO) and Adobe Inc (ADBE). In addition, Tor Minesuk has also added to its 10 existing positions.
The hedge fund likes to take advantage of short-term price movements instead of holding positions for the long term. The firm sold out its 20 stock positions during the fourth quarter and reduced its stake in 9 stocks.
Former SAC Capital Portfolio Manager Tor Minesuk's Top 10 Stock Picks for 2021
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Tor Minesuk, who also worked for Ken Griffin's Citadel for more than 2 years, has sold its entire stake in Microsoft Corporation (NASDAQ: MSFT) during the fourth quarter after initiating the position during the second quarter of 2019. The firm has benefited from its MSFT stake because shares of the tech giant rallied significantly in the past couple of quarters.
Similarly, the firm also took advantage of MongoDB, Inc (NASDAQ: MDB) share price gains by selling its entire stake in the fourth quarter. MDB accounted for 4.27% of the overall portfolio at the end of the third quarter. The New York-based hedge fund had created a position in MongoDB in the fourth quarter of 2018 when it was trading below $100. MDB shares are currently trading around $420 level.
Besides past performance, Tor Minesuk continues showing confidence in technology, communication, and media companies. The investments in information technology stocks accounted for 75% of the overall 13F portfolio, according to the latest fillings. Consumer discretionary sectors represent 11% of the portfolio while investments in communication sectors stand around 6% of the portfolio. The majority of the companies in the fund’s portfolio are large-cap stocks.
While Tor Minesuk's reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 78 percentage points since March 2017. Between March 2017 and February 5th 2021 our monthly newsletter's stock picks returned 187.5%, vs. 75.8% for the SPY. Our stock picks outperformed the market by more than 111 percentage points. (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start examining former SAC Capital portfolio manager Tor Minesuk's top 10 stock picks for 2021 to determine whether these positions have the ability to outperform the broader market returns in 2021.
Tor Minesuk's strategy of initiating a position in the Chinese e-commerce platform JD.com (NASDAQ: JD) at the beginning of 2020 worked for his hedge fund. This is because shares of JD rallied more than 100% in 2020 and extended the upside momentum into 2021. Mondrian Capital Management has increased its stake by 13% in JD.com during the fourth quarter.
Argosy Investors, which generated 29.8% in select accounts in 2020, highlighted the strong business strategies of JD.com in an investor’s letter. Here’s what Argosy Investors stated:
“JD.com has been making conscious decisions to break its business up into its component parts, which in our opinion helps surface the value of each business. JD’s enterprise value is about USD $120 billion today. JD spun off its JD Health business worth USD $28 billion (like Teladoc in the US), may spin off its JD Cloud business (similar to AWS in the US), has sold shares in its JD Logistics business and is shooting for a valuation of USD$40 billion in 2021 via an IPO, and JD Digits which provides supply chain and consumer loans was expected to be valued at nearly USD $30 billion before Ant Financial was prevented by the Chinese government from completing its IPO. The combined values of these business segments within JD is about $98 billion, leaving $22 billion for JD’s core retail business (and its cloud business) which is on track for over USD $100 billion in sales this year and growing over 20% per year. Assuming a 5% long-term margin for JD Retail, that segment is generating USD $5 billion of operating profit (EBIT). Given their strong market position, investors could value JD’s retail business alone at 20x EBIT, valuing JD retail at $100 billion. By comparison, Amazon was valued at over $175 billion during the year in which it earned USD $100 billion in revenue, so we continue to believe JD is being undervalued, despite a more competitive environment with Alibaba in China than Amazon faces in the US.”
Mondrian Capital Management has also benefited from its Analog Devices, Inc (NASDAQ: ADI) position during 2020 and 2021. The shares of chipmaker grew 35% in the last twelve months, almost double the S&P 500 index returns. Moreover, the company also offers hefty dividends to shareholders.
Its dividend yield is currently hovering around 1.62%. Its returns are fully backed by strong financial numbers. The company has generated double-digit growth in Q4 EPS and expects to sustain the financial growth momentum in 2021. Analog Devices is the ninth-largest stock holding of Tor Minesuk's 13F portfolio, accounting for 3.79% of the overall portfolio.
Former SAC Capital portfolio manager Tor Minesuk's has also been holding a stake in the largest e-commerce platform Amazon.com (NASDAQ: AMZN) since the fourth quarter of 2018. The hedge fund is bullish on Amazon’s future prospects as the firm has raised its position in Amazon by 9% in the fourth quarter of 2020. The e-commerce giant is among the biggest contributor to its 2020 performance. Shares of Amazon are up 54% in the last twelve months.
L1 Capital International Fund has also presented strong remarks about Amazon’s business strategies in an investor letter. Here is what L1 Capital International Fund stated:
“Several investments in the technology sector were trimmed on valuation grounds with the proceeds used to increase our investment in Amazon. Amazon’s successful flywheel business model and Amazon Web Services are well known. However, we believe the current share price under?appreciates:
Tor Minesuk has expressed confidence in Intuit Inc. (NASDAQ: INTU) and added a big position in the stock during the fourth quarter, making it the seventh-largest stock holding of his hedge fund's 13F portfolio. Shares of Intuit outperformed the broader market index so far in 2021.
L1 Capital International Fund believes Intuit is a high-quality company. Here’s what L1 Capital stated in an investors letter:
“Intuit epitomises the consistency, predictability and longevity of growth we seek in high quality businesses. Intuit currently operates through 2 main divisions: Software for financial and business management as well as integrated payroll solutions, merchant payment processing solutions, and financing for small businesses in the US and key global markets; and Do?it?yourself and assisted income tax preparation software products and services sold in the U.S. and Canada."
The visual graphics software company Adobe Systems (NASDAQ: ADBE) is the sixth-largest stock holding of Tor Minesuk’s portfolio. The hedge fund has initiated a position in Adobe Systems during the fourth quarter and it accounts for 4.60% of the overall portfolio. Shares of Adobe Systems are up 33% in the last twelve months.
Polen Capital Management, which returned 10.15% for the fourth quarter, highlighted few stocks including Adobe Systems in an investor letter. Here’s what Polen Capital Management stated:
“For the full year 2020, one of the top performers was Adobe, which we have owned for many years, continues to benefit from being the gold standards of software in its respective areas, and the current environment has only served to accelerate customer demand and need for their products and services.”
