Fresh off its first year of losses, Aaron Cowen’s Suvretta Capital Management has heavily shaken up its entire portfolio.
On the long side, around two-thirds of its positions in common stock were newly established during the first quarter, according to its recently filed 13F document. What’s more, five of its nine largest longs are new positions.
As part of the shake-up, Suvretta liquidated eight positions, including its third largest long at year-end, according to the filing. Meanwhile, the firm now has more single-name short positions than in a long time, according to an investor in the firm’s funds. Since the end of last year, Suvretta has also sharply increased its gross and net exposures.
So far, Suvretta is on the right track amid a very strong stock market.
Through April, the hedge fund firm is up around 7 percent to 7.5 percent, according to an investor. Suvretta lost 8 percent in 2018, its first-ever down year, and is still slightly below its high-water mark.
Suvretta declined to comment.
The firm is a member of the so-called SAC Pack, as Cowen spent about two years as chief investment officer of SAC Capital Advisors, Steven Cohen’s former hedge fund firm. Over the years, Cowen has worked for other high-profile firms, including Seth Klarman’s Baupost Group, Michael Karsch’s Karsch Capital Management, and George Soros’ Soros Fund Management.
At the end of last year Suvretta’s long-short portfolio had a 60 percent gross exposure and 20 percent net exposure, according to an investor. Today the firm has a 140 percent gross exposure and a 55 percent or so net exposure. Suvretta also has sharply boosted its single name shorts, an area where the firm is increasingly focused these days, according to the investor.
On the long side, 23 of the 34 U.S. common stocks that Suvretta reported at the end of the first quarter were newly established during that three-month period, including five of the nine largest. They are a mixture of new economy companies, industrials and beaten-down stocks.
Its largest new position is Boeing, the embattled airplane maker whose 737 Max model was sidelined after two deadly crashes. The stock is now Suvretta’s third largest long. Shares of Boeing are up about 10 percent this year through May 23.
Suvretta’s fourth and fifth largest longs, as well as newly established positions, are media giant Comcast Corp. and Worldpay, a payment processing company, according to the filing. Shares of Worldpay are now up about 60 percent this year through May 23, while Comcast is up about 26 percent.
Other top new positions include streaming video giant Netflix and railroad giant CSX, according to the filing.
Suvretta’s two largest common stock longs have been held for years. Cloud specialist Salesforce.com remains its largest long, having established the position in the fourth quarter of 2016. Number two holding, software giant Adobe Systems, has been a part of Suvretta’s portfolio since the fourth quarter of 2013.
During the first quarter, Suvretta liquidated eight positions, including distilling giant Constellation Brands, its third largest long at year-end. The hedge fund no longer holds call options on the stock.