Melvin focuses on trading consumer discretionary stocks in the U.S., a sector that returned 10 percent in 2015 including reinvested dividends, more than any other in the S&P 500 Index.
Consumer Bets
Stan Altshuller, chief research officer at hedge fund analytics firm Novus Partners, says that Melvin also benefited from outstanding stock selection in that top-performing sector.
“The stocks that they picked outperformed the sector by a wide margin," he said.
Novus’s models, which are based on publicly available data, showed Melvin made the most money on positions in Amazon, Skechers U.S.A. Inc., Nike Inc. and McDonald’s.
Melvin boosted its position in Amazon in the second quarter of last year, according to a regulatory filing, benefiting from the stock’s gain of 118 percent in 2015. The fund cut back its stake in the fourth quarter, ahead of a decline in the shares this year. It built a position in Skechers, a stock with few hedge fund owners, while its shares rose more than 150 percent in 2015 through August. Melvin sold its stake during the third quarter, avoiding a plunge of 32 percent on Oct. 23 after sales missed estimates.
Jaundiced Eyes
Publicly disclosed winnings accounted for just 14 percentage points of Melvin’s total 2015 returns, Novus calculated. The filings don’t show shorts, foreign-listed stocks or accurately account for leverage.
The firm also may have made money wagering against stocks. It reported owning put options on Weight Watchers International Inc. at the start of 2015 and GoPro Inc., which it established in the third quarter of 2015, according to filings.
"Every manager spinning out from a big-name fund is new and shiny and interesting, but still often looked at with a jaundiced eye," said Michael Hennessy, managing director of investments at Morgan Creek Capital Management. "SAC spinouts are no exception, though they might be looked at in some cases with two jaundiced eyes. As time passes, so too does the level of jaundice."