Mangrove Partners was founded by Nathaniel August, who is also the fund’s president and portfolio manager. Mr August holds a B.A. from Brown University, and prior to launching his fund, he worked as a director at White Eagle Partners, as an Investment Analyst at K Capital Partners, as a Senior Analyst at Brahman Capital Partners, and as an Analyst at Goldman Sachs in the Principal Investment Area. Mangrove Partners employs four principal strategies, long/short strategy, stressed and distressed, capital structure arbitrage, and liquidations and arbitrage.
During the last several years, the fund had periods of incredible performance, shifting with periods of abrupt drops. Starting from 2014, the fund returned 27.6%, followed by a drop of -2.28% in 2015. In 2016 the fund showed the best performance, with incredible return of 51.4%. The following years' returns were 8.6% in 2017 and -1.1% in 2018. Year to date, the fund returned a positive 7.59% (as of June 2019), and generated an annualized return of 13.2%. The most impressive fact about Mangrove Partners' returns is that it shows nearly zero correlation with the S&P 500 Index's return which is very rare to find these days. This means Mangrove Partners investors don't necessarily have to rely on hedge fund managers like this one betting on Dow hitting 40,000 to generate double digit returns.
Nathaniel August - Mangrove Partners
Insider Monkey’s mission is to identify promising (and also terrible) hedge fund stock pitches and share them with our subscribers. Our long strategy is based on the consensus picks of the 100 best performing hedge funds. This strategy was launched 5 years ago and generated a cumulative return of 115%. You can think of it as a mutual fund that returned 16.2% annually over the last 5 years, vs. 11.1% annual gain for the S&P 500 ETF (SPY). Basically we outperform the S&P 500 Index by 5 percentage points annually by identifying the top stock picks of the best hedge fund managers (see the details here). By tracking the best performing hedge funds we have been able to identify extremely attractive priced stocks.
Our short strategy is based on shorting hedge fund hotels that are likely to experience large hedge fund sales during market weaknesses. We launched this strategy in February 2017. It’s been almost 2.5 years and the stock picks of this strategy lost a cumulative 24.7% vs. a cumulative gain of 30.8% for the S&P 500 ETF. This is an absolutely mind blowing performance. The annualized return of our short picks is -11.2%, vs. 11.8% annualized gain for the S&P 500 Index during the same period. The annual alpha of this strategy is 23 percentage points. Jim Chanos doesn’t generate this kind of performance. The best thing about this short strategy is that it provides an excellent hedge during market meltdowns. For example, in Q4 of 2018 when the S&P 500 Index lost nearly 14%, this strategy’s picks lost 25% protecting our premium subscribers from large losses.
Our newsletters are successful because we follow hedge fund managers like Nathaniel August to identify the best and worst hedge fund stock picks. In this article we are going to take a look at Mangrove Partners top stock picks for Q2 2019.
The fifth most valuable position in the fund’s latest 13F fillings was Green Plains Inc (NASDAQ:GPRE), a big ethanol fuel producer company. The fund boosted the position by 74%, and it was the company’s top shareholder for Q2 2019. Mangrove Partners reported holding 4,000,991 shares worth $43.1 million. Among other top hedge funds investing in Green Plains Inc were Rubric Capital Management, Renaissance Technologies, and Carlson Capital. A total of 16 hedge funds were bullish on the stock, a change of -10% from one quarter earlier.
Ani Pharmaceuticals Inc (NASDAQ:ANIP) was the fund’s fourth top stock pick for Q2 2019. The company moved up one place higher since the previous quarter, comprising 5.1% of the fund’s portfolio. Like the previous quarter, Mangrove Partners was the company’s top shareholder in Q2 2019, holding a stake worth $45.2 million. Other 11 hedge funds tracked by Insider Monkey were bullish on the stock, which is a decrease of 5 hedge funds compared to the previous quarter. Among other Ani Pharmaceuticals Inc’s top shareholders were Renaissance Technologies, Consonance Capital Management, and Hawk Ridge Management.
Mangrove Partners’ third top stock pick for Q2 2019 was Penn Va Corp New (NASDAQ:PVAC), dropping from the second place in the fund’ portfolio since the previous quarter. Nevertheless, Mangrove Partners was the company’s top shareholder, holding $53 million position in the stock. A total of 17 hedge funds were interested in the company, a decrease of 30% from one quarter earlier. Other company’s top shareholders were Strategic Value Partners, Contrarian Capital, and Encompass Capital Advisors.
The second most valuable position in Mangrove Partners’ portfolio for Q2 2019 was Echostar Corp (NASDAQ:SATS), rising from the third place since the previous quarter. A total of 28 hedge funds tracked by Insider Monkey were bullish on the stock, which is a slight decrease of 1 hedge fund from one quarter earlier. Mangrove Partners was the company’s second top shareholder, and it reported holding $68 million worth of stock at the end of June. Echo Star Corp’s top shareholder for this period was Renaissance Technologies, holding a stake worth $157.4 million. Millennium Management, Park West Asset Management, and Indaba Capital Management were among the company's top shareholders as well.
The fund’s top stock pick for Q2 2019 was Pdc Energy Inc (NASDAQ:PDCE), remaining on the position since the previous quarter. There were 16 hedge funds interested in the stock during this quarter, which is an increase of 2 hedge funds compared to Q1 2019. Once again, Mangrove Partners was the company’s top shareholder, holding 2,022,217 shares worth $72.9 million. Other Pdc Energy Inc's investors during this period were Citadel Investment Group, Lion Point, and Deep Basin Capital.
Disclosure: None. This article was originally published at Insider Monkey.
