David Stemerman's Conatus Capital 13F Filing: Q4 2008 ~ market folly

Monday, March 9, 2009

David Stemerman's Conatus Capital 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is David Stemerman's Conatus Capital. This is the first time we've covered Conatus and it is a new addition to the group of funds we cover. They filed their first 13F this past quarter and so we finally get to see what they've been up to. David Stemerman left Stephen Mandel's Lone Pine Capital to run his own fund, as we noted here. The result is Conatus Capital which raised $2.3 billion and started trading last year. Numerous other prominent funds have seen managers leave to start their own funds and we're also monitoring those as well.

While 13F filings do not show cash or short positions, they do show the long positions. Conatus' filing shows them owning only a little over $621 million worth of long equity. Since this is literally the first 13F filed by them, we'll do things a little differently here. There are no 'changes' to report since we don't have a previous 13F to compare this to, so we'll simply just outline their entire long portfolio below.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Conatus' Entire Portfolio (by % of portfolio)

  1. People's United Financial (PBCT): 9.19% of portfolio
  2. Walmart (WMT): 7.75% of portfolio
  3. Apollo Group (APOL): 6.51% of portfolio
  4. Medco Health (MHS): 6.27% of portfolio
  5. Covidien (COV): 6.24% of portfolio
  6. Baxter (BAX): 6.14% of portfolio
  7. Cisco (CSCO): 5.94% of portfolio
  8. Visa (V): 5.93% of portfolio
  9. American Tower (AMT): 5.59% of portfolio
  10. C H Robinson (CHRW): 5.1% of portfolio
  11. Qualcomm (QCOM): 4.75% of portfolio
  12. Discovery Class C (DISCK): 4.36% of portfolio
  13. Express Scripts (ESRX): 4.19% of portfolio
  14. Carnival Paired Certificate (CVC1): 3.98% of portfolio
  15. Dicks Sporting Goods (DKS): 3.26% of portfolio
  16. Cognizant (CTSH): 3.26% of portfolio
  17. Strayer Education (STRA): 3.2% of portfolio
  18. Bed Bath & Beyond (BBBY): 3.09% of portfolio
  19. SBA Communications (SBAC): 3.07% of portfolio
  20. Discovery Class A (DISCA): 2.17% of portfolio

And, since this is their first ever filing, here is the 13F in its entirety for those curious:

(click to enlarge)

Overall, you can see hints of a Tiger Cub portfolio here. Obviously, Conatus is somewhat similar to Lone Pine in methodology since that's where Stemerman plied his trade. Conatus has a position in Visa (V) and Qualcomm (QCOM), like many of the other Tiger Cub hedge funds. Additionally, their large position in Apollo Group (APOL) is shared by Andreas Halvorsen's Viking Global. But, there are definitely some differences between their portfolios now that Stemerman runs Conatus. For instance, Conatus has a large position in People's United Financial (PBCT) and Walmart (WMT), two names not found in other similar portfolios. So, while their portfolio has hints of a Tiger Cub background, it is still unique in its own right.

This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Peter Thiel's Clarium Capital, and Bret Barakett's Tremblant Capital. Look for our updates as we will be covering a new fund each day.

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