Louis Moore Bacon (Trades, Portfolio), who reported today he is returning outside capital to shareholders and consolidating his hedge fund, disclosed last week that his top five new stock buys for the third quarter were Apollo Global Management Inc. (APO, Financial), NetEase Inc. (NTES, Financial), Raytheon Co. (RTN, Financial), Advance Auto Parts Inc. (AAP, Financial) and US Foods Holding Corp. (USFD, Financial). Also, among his top six new buys is a holding in the iShares iBoxx $ Investment Grade Corporate Bond Exchange-Traded Fund (LQD, Financial).
According to the Institutional Investor, Bacon said in a letter that the time is "propitous" to privatize Moore Capital's three multi manager flagship funds and consolidate it into one proprietary fund. Reuters added that Bacon, known for his “prescient” macroeconomic bets, has been considered a legend among macro investors like Stanley Druckenmiller (Trades, Portfolio) and George Soros (Trades, Portfolio).
As of quarter-end, Bacon’s $2.5 billion equity portfolio contains 302 holdings, of which 84 represent new positions. The portfolio’s top three sectors in terms of portfolio weight are financial services, consumer cyclical and technology.
Apollo Global Management
Bacon purchased 1,130,400 shares of Apollo Global Management, giving the stake 1.71% weight in the equity portfolio. Shares averaged $36.40 during the quarter.
The New York-based company deploys its assets under management into alternative investments like private equity, credit and real estate strategies. GuruFocus ranks the company’s financial strength 5 out of 10: Although it has a strong Piotroski F-score of 7, Apollo has a moderately weak Altman Z-score of 2.63 and an equity-to-asset ratio that underperforms 86.47% of global competitors.
Other gurus with holdings in Apollo include Chase Coleman (Trades, Portfolio)’s Tiger Global Management and Tom Gayner (Trades, Portfolio).
NetEase
Bacon purchased 100,000 shares of NetEase, giving the position 1.06% weight in the equity portfolio. Shares averaged $254.57 during the quarter.
The Beijing-based company provides online and mobile games, media, email and e-commerce services. GuruFocus ranks NetEase’s financial strength 8 out of 10 and profitability 10 out of 10 on several positive investing signs, which include robust interest coverage, a strong Piotroski F-score of 7, a solid Altman Z-score of 5.51 and a five-star business predictability rank.
Raytheon
Bacon purchased 135,000 shares of Raytheon, giving the holding 1.06% weight in the equity portfolio. Shares averaged $185.04 during the quarter.
The Waltham, Massachusetts-based company operates five aerospace and defense segments: integrated defense systems, intelligence and information, missile systems, space and airborne systems and cybersecurity. GuruFocus ranks Raytheon’s profitability 9 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 7, a five-star business predictability rank and operating margins that have increased approximately 6.7% per year over the past five years and are outperforming 83.97% of global competitors.
Advance Auto Parts
Bacon purchased 125,000 shares of Advance Auto Parts, giving the position 0.83% weight in the equity portfolio. Shares averaged $150.26 during the quarter.
The Raleigh, North Carolina-based company retails aftermarket automotive parts, tools and accessories to do-it-yourself customers in North America. GuruFocus ranks the company’s profitability 8 out of 10: Even though the three-year revenue growth rate underperforms 61.39% of global specialty retail competitors, Advance Auto Parts’ business predictability ranks 2.5 stars out of five.
US Foods
Bacon purchased 500,000 shares of US Foods, giving the holding 0.82% weight in the equity portfolio. Shares averaged $38.60 during the quarter.
The Rosemont, Illinois-based company markets and produces fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S. GuruFocus ranks US Foods’ profitability 5 out of 10: Although the company’s return on assets outperforms 60.93% of global competitors, its operating margin outperforms just 50.54% of global food distribution companies. Additionally, US Food’s three-year revenue decline rate of 2.60% underperforms 79.63% of global peers.
iShares iBoxx $ Investment Grade Corporate Bond ETF
Bacon purchased 200,000 shares of the iShares iBoxx $ Investment Grade Corporate Bond ETF, giving the position 1.02% weight in the equity portfolio. Shares averaged $125.99 during the quarter.
According to the iShares website, the ETF seeks to track the results of an index composed of U.S. dollar-dominated, investment-grade corporate bonds.
Disclosure: No positions.
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