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In this article we examine Maplelane Capital‘s top 10 stock holdings. You can skip our discussion of the hedge fund’s performance and its investment philosophy in this article, and go directly to Maplelane’s Top 5 Stock Holdings.

The $3.5 billion New York-based hedge fund Maplelane Capital fell 33% last month due to its short bets on several stocks including GameStop (((NYSE: GM))E). Founded in 2010 and run by Leon Shaulov and Rob Crespi, Maplelane invests in stock markets on a global scale, with a strategy of generating profits in the short term utilizing options trading. The firm makes both put and call bets along with holding a long position in stocks. It has been focusing particularly on high growth stocks from information technology, consumer discretionary, and communications sectors.

The hefty losses in January are mostly due to its short bets that include GameStop, American Airlines Group Inc., iRobot Corp., and National Beverage Corp. The social media-fueled rally has targeted several highly-shorted stocks by calling everyone to buy and hold, driving share prices of these stocks significantly higher in a matter of few weeks.

GameStop stock price rallied more than 1600% this year while new market movers have now shifted their focus towards several other sectors and assets. Reddit’s WallStreetBets army and other social media day traders are now heavily buying silver and a few distressed crypto coins. The second-largest cryptocurrency Ripple rallied more than 250% in just a few days amid heavy buying from day traders.

In a tug of war, the hedge funds initially lost the battle against the powerful social media market movers, who used Reddit and YouTube to drive prices higher. Melvin Capital has lost more than 50% of its value in January while big names like Steven Cohen and Dan Sundheim’s hedge fund also fell at a double-digit rate.

But the tables are turning as regulatory authorities begin investigating the main Reddit account that launched the GameStop stock hype. GameStop shares crumbled earlier this week after a massive selloff. Reports also show that several hedge funds took huge profits by playing the GameStop rally smartly. According to a Fintech Zoom report, Senvest Management LLC made a whopping $700 million from their GameStop stake.

Hedge funds have closed their several short positions to protect them from further losses. For instance, Melvin Capital, which started the year with $12.5 billion in assets, recently reported that it has closed several short positions due to increased volatility.

Maplelane Capital has also been working on a similar strategy. The firm is aggressively adjusting risk and altered its portfolio to avoid more losses.

The New York-based hedge fund held positions in 176 stocks according to the latest 13F filing. The hedge fund has initiated a position in 89 stocks and exited its stake from 39 stocks. Maplelane’s investment philosophy is based on fundamental analysis and the firm seeks to benefit from market trends and price volatility. The average time held for the top ten stocks stands around 1.20 quarters.

While Leon Shaulov and Rob Crespi’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as 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 78 percentage points since March 2017 (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 16. 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.

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Let start examining Maplelane Capital’s top ten stock holdings to determine whether the hedge fund has the potential to bounce back in the days ahead after posting massive losses at the beginning of the year.

10. Workday, Inc. (NASDAQ: WDAY)

The software application provider for boosting human resource management and critical business functions Workday, Inc. (NASDAQ: WDAY) outperformed the broader market trends in the last six months. Despite that, shares of Workday underperformed since the beginning of this year.

It ranks 10th on the list of Maplelane Capital’s top 10 stock holdings. The hedge fund is bullish on Workday as the firm raised its stake in software provider by 124% in the September quarter after initiating a position during the second quarter.

Cooper Investors, which has generated a return of 9.96% during the December quarter, stated in an investor letter that Workday has strong fundamentals. Here is what Cooper Investors stated:

“Workday (“WDAY”) is the Cloud leader in Human Capital Management (HCM) and Financials software. We first met WDAY 7 years ago as a much smaller enterprise but today it’s on the verge of reporting ~US$4bn in revenues. WDAY has had great success in its HCM offering particularly with the world’s largest companies. However its Financials product has seen more muted growth with customers reluctant to shift such a core function to the Cloud, success here tending to be in the mid-market. Financials comprise only 20% of company revenues today but with the pandemic forcing remote work and benefits, and reliability of Cloud applications becoming clear WDAY’s Financials solutions appear ripe for mainstream adoption.”

9. Tencent Holdings Limited (OTCPK: TCEHY)

Maplelane Capital has gained from its strategy of creating a big position in the Chinese internet advertising services provider Tencent Holdings Limited (TCEHY) during the September quarter. This is because shares of Tencent rallied more than 20% since the end of the September quarter.

The company’s aggressive growth strategy has been backing its share price momentum. Reports are hinting that Tencent is seeking to acquire gaming business Zynga. KeyBanc analyst Tyler Parker recently said that Tencent could increase its international growth with Zynga.

8. Advanced Micro Devices, Inc. (NASDAQ: AMD)

Maplelane Capital is bullish over the future fundamentals of chipmaker Advanced Micro Devices, Inc. (NASDAQ: AMD). The hedge fund has raised its stake in AMD by almost 500% during the September quarter and it appears that the hedge fund has benefited from its investment strategy. This is because shares of AMD rallied 9% in the last three months despite its underperformance since the beginning of this year.

Carillon Eagle Mid Cap Growth Fund has also presented a bullish case for AMD in an investor’s letter. Here is what Carillon stated:

“Advanced Micro Devices produces semiconductor products and devices. The stock outperformed due to healthy growth in the personal computer and data center server markets. The company also continues to gain share against its major competitor, which is having significant issues in its next generation products. Furthermore, investors have appreciated the margins and profitability the company has been posting in addition to the topline strength.”

7. T-Mobile US, Inc. (NASDAQ: TMUS)

The hedge fund has capitalized on the massive share price rally of T-Mobile US, Inc. (NASDAQ: TMUS) during the September quarter. Maplelane initiated a position in T-Mobile US during the second quarter and reduced its stake by 68% during the third quarter. Despite that, T-Mobile accounts for 1.99% of the overall portfolio. Its shares rallied 57% in the last twelve months.

Oakmark Funds has also initiated a position in T-Mobile US during the second quarter. Here is what Oakmark stated in an investors letter:

“We initiated a position in T-Mobile after the company announced that regulators would approve its merger with Sprint. AT&T and Verizon have long dominated the market for wireless services due to their incumbent network quality advantage. The recently closed merger of T-Mobile and Sprint creates the first opportunity for a challenger to build the fastest, most reliable and highest capacity wireless network in the United States. We believe the impact of this combination will be non-linear from not only a network perspective but also a financial one. Our long-term investing horizon enables us to look several years ahead to assess the benefits of scale, synergy and low-incremental cost growth, which should generate more subscribers, faster revenue growth and higher margins. We like that the company will be led by veteran T-Mobile managers who have successfully integrated previous acquisitions and have gained impressive market share, despite a previously inferior network. A secondary offering by a large, non-economic seller gave us the opportunity to purchase our stake at a below market price.”

6. Pinterest, Inc. (NYSE: PINS)

The New York-based hedge fund’s strategy of creating a position in Pinterest, Inc. (NYSE: PINS) worked for them because shares of visual discovery engine rallied more than 200% in the last twelve months.

Argosy Investors, which has generated 29.8% in select accounts for 2020, stated in an investor letter that they have capitalized the price gains. Here is what Argosy Investors stated:

“With that in mind, we trimmed Pinterest (PINS) multiple times during the fourth quarter as the price increased over 200% from our initial purchase price in November 2019. This was a starter position for us at the time, and this is one of those stocks that investors kept buying because of Pinterest’s perceived benefit from stay-at-home orders. We agree that the lockdowns likely forced people globally to try things they wouldn’t have normally. As the CEO of Post Holdings (POST), Rob Vitale, said on a recent conference call about customers trying cereal while stuck at home, “that level of trial would have been extremely expensive and challenging to obtain”. Similarly, we believe people tried and liked Pinterest at a rate that would be extremely expensive for them to acquire through advertising.”

Click to continue reading and see Maplelane’s Top 5 Stock Holdings

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Disclosure: No position. The article Maplelane’s Top 10 Stock Holdings is originally published on Insider Monkey.