BOSTON (Reuters) - Eric Mindich’s Eton Park hedge fund posted 22.3 percent returns in 2013 thanks to its holdings in collateralized debt obligations, media company 21st Century Fox, and residential mortgage-backed securities, it told investors, adding the fund has already exited some of last year’s winning positions.
But there is plenty that Mindich likes for the start of 2014 as well, saying the fund owns some mid-to-large cap stocks where some catalyst should help push prices up. This includes Sotheby‘s, where activist hedge fund managers are pressing for an overhaul of operations, and Marathon Petroleum as well as aerospace supplier Spirit Aerosystems. The fund owns all three stocks.
“We feel very good about the strength of our investment engine across all areas of our business,” the $10 billion hedge fund wrote in a letter to investors dated January 16 and seen by Reuters on Friday.
The average hedge fund rose 9 percent last year.
Some of last year’s biggest winners have already been removed from the portfolio as the stocks’ share prices climbed, Eton Park said. The firm exited 21st Century Fox after the stock rose 57 percent in 2013 and was up 150 percent from when Eton Park first bought the shares in 2011.
Similarly the firm sold out of Liberty Global , another top contributor to last year’s gains, after shares rose 42 percent last year, and retailer Dollar Tree, having achieved a 40 percent gain on that stock.
It also exited Chipotle, Priceline and Ralph Lauren last year.
A spokesman for the fund declined to comment.
“Over the course of 2013, we shifted the portfolio considerably, allocating capital to areas with greater risk/reward prospects,” the letter said.
Investment picks at Eton Park are widely followed in the industry after the 10-year old fund put up strong numbers. It was so popular at its launch that Mindich was able to impose some of the toughest investment conditions in the industry.
The fund was up 12.6 percent in 2012 after falling 11 percent in 2011.
Eton Park’s so-called short bets, where the fund expects stocks to fall, hurt performance. The Standard & Poor’s 500 index gained 32.4 percent.
Short bets against Vestas Wind, unidentified U.S. auto-related companies and a U.S. consumer discretionary company the fund also did not identify, were listed as Eton Park’s top “losers” for 2013.
For this year, Eton Park also sees the chance for more mergers and acquisitions as interest rates are expected to remain low for some time and corporate balance sheets are healthy.
Late last year Eton Park told investors that it would cut management fees and create a more liquid share class this year, moving in line with a general trend in the $2.5 trillion industry.
Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis and Paul Simao