Jeffrey Talpins, one of the highest earning hedge fund managers in 2017 according to Forbes, founded Element Capital Management in 2005 within Proxima Alfa Investments and then spun it off in 2009 which has grown into one of the biggest hedge funds that uses a global macro investing strategy. The fund is based in New York and London. Before Proxima Alfa, Jeffrey Talpins honed his investment acumen at Citigroup’s Fixed Income Options franchise, where he was a Head Trader. Prior to Citigroup, he worked at the Mortgage Backed Securities Department at Goldman Sachs, where he organized cash flows into MBS derivatives. He holds a B.S. summa cum laude and Phi Beta Kappa from Yale University with Distinction in Economics and Applied Mathematics (focus in Finance).
Element Capital Management utilizes a modern macro style of global macro investing, meaning it has a multi-process investment approach that combines many important forms of macro analysis. The fund’s investment team relies on its “proprietary base of technology, disciplined risk management, innovative trade structuring and advanced portfolio construction techniques to implement its strategies”. Its investment philosophy has proven to be very smart, as the fund delivered returns of more than 21% per year through the end of 2018. When many other hedge funds were struggling through 2016 with average returns of 2.3%, Element Capital brought back 19.4%. In 2015, which was even worse for the average macro-oriented fund (which lost 1.2%), Element Capital Management gained 23%. 2017 was also a good year for the fund, as it returned 5.46% to give it average returns of 15.61% between 2015 and 2017, placing it 23rd on Barron’s 2018 list of the top 100 Hedge Funds. Element Capital also returned 17.3% in 2018, 12% in 2019, and 18.8% in 2020. Element Capital has around $18 billion in assets under management.
Jeffrey Talpins of Element Capital
Jeffrey Talpins of Element Capital
While Jeffrey Talpins' stock-picking strategy is working, the broader hedge fund industry is struggling. 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 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 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 16th. 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 our list of Jeffrey Talpins' top 10 stock picks.
10. Health Assurance Acquisition Corp. (NASDAQ: HAACU)
Value: $22,040,000Percent of Jeffrey Talpins' 13F Portfolio: 2.3% No. of Hedge Fund Holders: 20
A total of 20 hedge funds tracked by Insider Monkey were bullish HAACU at the end of the fourth quarter of 2020. Element Capital Management owns 2 million shares of the company, worth $22 million.
According to its press release, "Health Assurance Acquisition Corp. is a newly organized blank check company sponsored by General Catalyst and established by Hemant Taneja, Quentin Clark, Stephen Klasko MD, MBA, Anita V. Pramoda, Jennifer Schneider, MD and Glen Tullman for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities". The SPAC raised $500 million from investors during the fourth quarter.
Hedge funds are taking advantage of the retail investors' SPAC craze by buying into these offerings at $10 and generating higher returns than that are offered by low-risk fixed income securities. Four of Jeffrey Talpins' top 10 stock picks are blank check companies. The next stock in Talpins' 13F portfolio is also another SPAC.
Value: $23,400,000Percent of Jeffrey Talpins' 13F Portfolio: 2.44% No. of Hedge Fund Holders: 28
Element Capital Management is one of the 28 hedge funds tracked by Insider Monkey having stakes in GRSV at the end of the fourth quarter. The fund owns over 2.25 million shares of the company.
In February GRSV entered into an agreement with Ardagh Group S.A, a global supplier of infinitely-recyclable metal beverage and glass packaging for the world's leading brands, to combine with Ardagh's metal packaging business that will be held by Ardagh Metal Packaging. According to the company's press release "Ardagh will retain an approximately 80% stake in AMP and receive up to $3.4 billion in cash in the transactions. Oliver Graham, CEO of Ardagh Metal Beverage, will be CEO of AMP. Paul Coulson, Chairman and CEO of Ardagh, will serve as Chairman and Shaun Murphy, COO of Ardagh, will serve as Vice Chairman of the Company following the closing of the transaction".
Investors didn't like this announcement much as GRSV's stock price declined by about 10% over the last month.
Value: $24,345,000Percent of Jeffrey Talpins' 13F Portfolio: 2.54% No. of Hedge Fund Holders: 53
The company is getting the attention of the smart money, as 53 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 46 funds a quarter earlier.
Among these funds, Coatue Management held the most valuable stake in Dynatrace, Inc. (NYSE:DT), which was worth $279.8 million at the end of the fourth quarter. On the second spot was SRS Investment Management which amassed $271 million worth of shares. HMI Capital, Citadel Investment Group, and Matrix Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position HMI Capital allocated the biggest weight to Dynatrace, Inc. (NYSE:DT), around 10.34% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, earmarking 7.82 percent of its 13F equity portfolio to DT.
DT shares returned nearly 50% over the last four months.
Value: $24,420,000Percent of Jeffrey Talpins' 13F Portfolio: 2.54% No. of Hedge Fund Holders: 32
A total of 32 hedge funds tracked by Insider Monkey were bullish PACE at the end of the fourth quarter of 2020. Element Capital Management owns 2.2 million shares of the company, worth $24.4 million.
PACE is the third blank check stock in billionaire Talpins' top 10 stock picks. To be honest, we could have also invested in SPACs and recommended them to our subscribers if there weren't a ton of stocks that were trading at deeply discounted prices because of the coronavirus induced pandemic. Talpins paid $10 a share for his PACE holdings and the stock currently trade at $10.39. That's not too shabby in a market where the short-term bonds yield next to nothing.
Value: $26,125,000Percent of Jeffrey Talpins' 13F Portfolio: 2.72% No. of Hedge Fund Holders: 38
Jeffrey Talpins' Element Capital Management is one of the 38 hedge funds tracked by Insider Monkey having stakes in CONX at the end of the fourth quarter. The fund owns over 2.5 million shares of the company. CONX is the fourth and the last SPAC among Talpins' top 10 13F holdings. The next stock in Talpins' portfolio is a tech giant that we expect to outperform the market by a large margin over the next couple of years.
