In this article, we discussed billionaire Chris Rokos’ investment strategy and how he generated billions of dollars for investors over the last two decades. We also highlighted billionaire Chris Rokos’ top 10 stock picks. Click to skip ahead and see Billionaire Chris Rokos’ Top 5 Stock Picks.
Billionaire Chris Rokos’ hedge fund created several new positions during the fourth quarter to extend his record-breaking profitability momentum into 2021. His macro hedge fund Rokos Capital Management, which posted a 44% gain for 2020, has been betting bigger on information technology stocks in 2021. The firm has also spread its investments across several other sectors including consumer discretionary, communication, and healthcare. Moreover, the London-based billionaire also seeks to hedge his stock positions through binary options. His call option position on Alibaba (NYSE: BABA) is valued at over $1 billion and represented almost 23% of the overall 13F portfolio of Rokos Capital Management at the end of the Q4.
Overall, Rokos Capital Management created 32 new stock positions during the final quarter of 2020 and added to its 3 existing positions. Chris Rokos, who is described as an “exceptional trader” by his former boss Alan Howard, seeks to make money through short-term price movements instead of holding a position for the long-term. The time held for his top ten positions averages around 0.55 quarters. Rokos Capital Management’s 13F portfolio market valued stood at around $4.56 billion at the end of last year, up from just $0.45 billion in the year-ago period. The top ten positions weighted around 66% of the overall portfolio.
Early in 2020, Chris Rokos announced a new fundraising round of as much as $1 billion. The firm has previously raised almost $3 billion in 2017 and $900 million in the last year to capitalize on profit-making opportunities.
In 2002, Chris Rokos co-founded Brevan Howard Asset Management with three former Credit Suisse directors Jean Philippe Blochet, James Vernon, and Trifon Natsis. Billionaire Chris Rokos had generated billions of dollars for Brevan Howard during his ten years with the macro hedge fund. For instance, he generated $1.11 billion in 2007 for Brevan Howard flagship Master Fund and $1.27 billion in 2011. Before forming Brevan Howard Asset Management, he worked for big names including UBS, Goldman Sachs, and Credit Suisse.
Chris Rokos was born in the UK and holds a MA degree from Oxford University. He founded Rokos Capital Management in 2015 using capital investments of $500 million from American private equity giant Blackstone Group and earned 20% gains in the first year of trading, thanks to his bet on stocks that gained momentum after Donald Trump’s victory. However, his hedge fund saw sluggish performances in the next two years. With a 44% return, fiscal 2020 was the best year for Roko Capital Management since its inception. The firm generated a 9% return in 2019. RCM is headquartered in London, with an economic research office in Washington DC.
While Chris Rokos’ 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 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 evaluating billionaire Chris Rokos’ top 10 stock picks to gauge his potential gains for the first quarter and fiscal 2021.
10. The Walt Disney Company (NYSE: DIS)
The London-based Chris Rokos’ hedge fund initiated a brand new position in the world’s largest entertainment giant The Walt Disney (NYSE: DIS) during Q4. Disney saw massive losses in 2020 due to the pandemic and lockdowns. Despite that, the investment appears to be working for the Rokos Capital in 2021 as DIS shares rallied 7% in the last three months, driven by economic reopening measures. Rokos’ firm held 247,198 shares of Walt Disney as of the end of 2020.
Semper Augustus Investments Group, an investment management firm, highlighted a few stocks including Disney in the fourth-quarter investors’ letter. Here is what Semper Augustus said:
“With few exceptions, portfolio activity added tremendous earning power. Sales were generally undertaken at high prices where price gains had outstripped fundamentals and thus as earnings yields diminished. Buys added wholesale earnings power. When numerous holdings plunged in price in March and later, we both added to and initiated positions at high single-digit expected earnings yields.
Portfolio activity in Disney provides an example of the opportunity the year brought. Disney was originally purchased in 2018 prior to the closing of their merger with Twenty-First Century Fox (21st Century Fox). Disney’s shares were weak during the prior four years, largely due to the well-known fact that cord cutting was harming Disney’s valuable ESPN franchise. Hard to believe in my household but some people evidently don’t enjoy watching televised sports, and as the highest priced platform in the traditional cable or satellite bundle, a loss of subscribers comes with a loss of revenue. Further, the merger-arbitrage community had bid up the price of Fox and down the price of Disney shares. At $100 per share, Disney traded for roughly 15 times then its earning power.”
9. FirstEnergy Corp. (NYSE: FE)
Billionaire Chris Rokos’ top 10 stock picks include electricity provider FirstEnergy Corp (NYSE: FE). The shares of the utility company rose 11% so far in 2021 amid Carl Icahn’s involvement in the management. Rokos Capital bought 1.55 million shares of FirstEnergy during the fourth quarter, representing 1.02% of the overall portfolio.
FirstEnergy was in 50 hedge funds’ portfolios at the end of December compared to the all-time high for this statistic of 59. FE shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 59 hedge funds in our database with FE holdings at the end of September.
8. Visa Inc. (NYSE: V)
Chris Rokos’ hedge fund bought 271,105 shares of Visa (NYSE: V) during the fourth quarter valued at $58.3 million. However, shares of the payment technology company are trading in the red so far this year despite a strong recovery from pandemic lows that it had hit last year.
Visa has seen an increase in hedge fund sentiment in recent months. It was in 166 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to the all-time high for this statistic of 160. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high. There were 160 hedge funds in our database with V holdings at the end of September.
7. Mastercard Incorporated (NYSE: MA)
Billionaire Chris Rokos’ top 10 stock picks include another payment technology giant Mastercard (NYSE: MA). Rokos’ firm bought 172,040 shares of Mastercard during the fourth quarter, accounting for 1.34% of the overall portfolio. The share price of the payment technology company grew more than 2% year to date, extending the six-month gains to 10%.
The number of bullish hedge fund bets went up by 21 recently. Mastercard Incorporated was in 154 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic was previously 147. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high.
6. Microsoft Corporation (NASDAQ: MSFT)
The world’s most prominent technology player Microsoft Corporation (NASDAQ: MSFT) is also among the billionaire Chris Rokos’ top 10 stock picks. Its shares are up 6.30% since the beginning of this year, accelerating the twelve-month gains to 51%. Rokos Capital Management initiated a new position in MSFT during the fourth quarter by purchasing 319,688 shares.
Bretton Fund, which returned 11.52% for the fourth quarter, highlighted a few stocks including Microsoft in the Q4 investors’ letter. Here is what Bretton Fund stated:
“Microsoft’s stock also had a great year, returning 42.4% on increased earnings per share of 30%. The main driver of their growth in recent years is their cloud computing business, and while it did see a bump in demand as office workers went remote, most of the growth is from the continued shift of corporate computing systems to “the cloud.” We think this shift is still in its early stages.”
Click to continue reading and see Billionaire Chris Rokos’ Top 5 Stock Picks.
Disclosure: None. Billionaire Chris Rokos’ Top 10 Stock Picks is originally published on Insider Monkey.