CAZ Investments’ 24 Stock Portfolio: Top 10 Holdings Analyzed

Up to date on April sixth, 2021 by Nikolaos Sismanis

CAZ Investments is an funding administration firm situated in Houston, Texas that focuses on giving excessive web value people entry to unique funding alternatives.

CAZ Investments was based in 2001 by Christopher Zook. It has grown to handle ~$1.45 billion in property and was the 16^th largest Houston asset supervisor on the finish of 2020.

Traders following the corporate’s 13F filings during the last 3 years (from mid-February 2018 via mid-February, 2021) would have generated annual complete returns of 12.20%. For comparability, the S&P 500 ETF (SPY) generated annualized complete returns of 12.50% over the identical time interval.

Observe: 13F submitting efficiency is completely different than fund efficiency. See how we calculate 13F submitting efficiency right here.

You possibly can obtain an Excel spreadsheet with metrics that matter of CAZ Investments present 13F fairness holdings beneath:

Maintain studying this text to be taught extra about CAZ Investments.

Desk Of Contents

CAZ’s Investing Technique

The final thought behind CAZ Investments is to supply traders with entry to funding alternatives they in any other case wouldn’t have. This sometimes means non-public fairness, hedge fund, and enterprise capital offers.

CAZ Investments creates non-public funds which have a particular funding theme and put money into alternatives that match the precise funding theme. Latest funding themes CAZ Investments has recognized are proven within the picture beneath.

A short description of a sampling of CAZ Investments funds is beneath. The corporate at the moment has 29 completely different funds based mostly on its most up-to-date ADV brochure:

• CAZ AI Fund, L.P., which invests in varied securities (inventory, convertible notes, warrants, and so forth.) of Lucid Holdings.
• CAZ Co-Funding Alternatives Fund, L.P. – Didi Portfolio, which invests as a restricted accomplice in Paulson Funding Firm LP, which in flip invests in shares of Xiaoju Kuaizhi, doing enterprise as Didi Chuxing, a Chinese language transportation community with important cellular taxi and personal automotive companies market share in China.
• CAZ Co-Funding Alternatives Fund, L.P. – Lyft Portfolio, which invested as a restricted accomplice in Paulson Funding Firm II LP, which in flip invested in Lyft earlier than it went public. This fund is now in liquidation mode as a result of Lyft is publicly traded.
• CAZ Co-Funding Alternatives Fund, L.P. – VEP Portfolio, which invests with Vista Fairness Companions. Vista Fairness Companions is an funding agency targeted solely on enterprise software program.
• CAZ Distressed Secondary Fund, L.P., which invests in Dorchester Capital Secondaries III, L.P. Dorchester Capital is a Houston-based hedge fund.
• CAZ Vitality Infrastructure Fund, L.P., which invests within the EnCap Vitality Infrastructure Fund, L.P. EnCap Investments L.P., which manages the EnCap Vitality Infrastructure funSUMOd, is a enterprise capital agency for impartial power firms.

CAZ Investments has invested straight or not directly within the notable firms and funds proven within the picture beneath, amongst others.

CAZ’s Portfolio & Prime 10 Holdings

In the course of the interval masking CAZ’s newest 13F submitting, the fund initiated and ditched the next entries:

New Buys:

• Sprott Inc (SII)
• Sixth Avenue Specialty Lending Inc (TSLX)
• Owl Rock Capital Corp (ORCC)
• Ares Capital Corp (ARCC)

New Sells:

• Aberdeen Customary Platinum ETF (PPLT)

CAZ’s portfolio is kind of concentrated, comprising solely 30 particular person shares, the highest 10 of which account for practically 86% of its complete weight. The fund’s largest single holding is Lyft, which accounts for round 37.4% of the entire portfolio.

Supply: f13 filings, Creator

When it comes to sector publicity, as a result of restricted variety of shares held, financials and client discretiony (which incorporates the Lyft stake) collectively account for 86% of the entire portfolio.

Supply: 13F filings, Creator

CAZ’s 10 most vital holdings are the next:

Lyft (LYFT):

The fund’s largest funding, by far, is its $25.2 million fairness stake in Lyft, which at the moment accounts for 37.4% of CAZ’s complete public-equity holdings. It’s additionally value noting that CAZ holds little interest in Uber, which might have been a good choice by way of diversification. CAZ’s place has remained comparatively regular because the firm’s IPO, inserting a powerful conviction in the direction of the transportation large.

CAZ’s guess is somewhat dangerous, as the corporate continues to be struggling financially, with no clear path on attain a constructive backside line. Throughout This fall, the corporate recorded revenues of $569M, a -44% decline year-over-year, as the continued pandemic has lowered customers’ demand for transportation. In that regard, the corporate is below excessive stress, as its progress has been completely worn out. Income per lively rider elevated by 14% in comparison with Q3.

Nonetheless, the corporate nonetheless recorded -51% few rides in comparison with final yr, suggesting that it’s nonetheless a great distance from reaching its pre-pandemic trip quantity ranges, not to mention delivering a constructive backside line. For that reason, traders mustn’t anticipate a Lyft dividend any time quickly.

However, the corporate’s future will not be utterly darkish. Rideshare restoration continues, regardless of being removed from the pre-pandemic ranges. Moreover, Lyft’s contribution margins (per-ride revenue metric) stood at practically 55.5%, which signifies that the corporate has nice prospects to change into worthwhile if it reaches a adequate scale of month-to-month rides.

The corporate ended the yr with $2.25 billion in money and equivalents ($2.45 billion in Q3) by way of liquidity, which ought to assist maintain some extra short-term losses earlier than the corporate is in want of additional raises. Nonetheless, this could solely final for a few years, at which level traders ought to anticipate additional dilution.

General, Lyft stays a dangerous funding. Together with its peer Uber (UBER), the corporate faces elevated scrutiny by way of driver/rider rights, in addition to elevated stress by the native authorities. The duo lately received a reprieve in California, amid media experiences that the order on classifying its drivers as workers somewhat than contractors has been delayed. Nonetheless, regulation stays very fluid and will simply flip both in favor or hostile for rider-sharing firms.

CAZ’s daring guess may find yourself reserving huge losses, or probably huge beneficial properties, sooner or later. Whereas constructive catalysts stay, the inventory is in fairly a speculative place as nicely. As of CAZ’s newest 13F submitting, Lyft’s place was held regular.

Brief-Time period ETFs

As of its newest 13F submitting, CAZ was holding three completely different ETF positions in short-term funds, switching its capital allocation from its tech holdings in the direction of extremely liquid property, presumably anticipating for correction to happen quickly.

These embody:

• Janus Henderson Brief Length Earnings ETF (VNLA)
• JPMorgan Extremely-Brief Earnings ETF (JPST)
• Blackrock’s iShares Extremely Brief-Time period Bond ETF (ICSH)

The three ETFs collectively occupy practically 30% of the fund’s portfolio.

Invesco (IVZ), JPMorgan Chase & Co (JPM), & The Blackstone Group (BX)

Invesco, JPMorgan Chase & Co, and The Blackstone Group occupy round 5.4%, 3.1%, and a couple of.0% of CAZ’s portfolio, respectively. Invesco’s place was trimmed by simply 1% whereas the 2 different holdings have been left intact. Nonetheless, they rose to CAZ’s largest positions as a result of fund trimming its beforehand increased holdings. A shift to increased publicity in financials looks as if a prudent transfer by CAZ because the sector at the moment stays fairly undervalued in comparison with its historic valuation multiples.

The three firms delivered sturdy outcomes throughout This fall, with hefty backside strains. Ought to these earnings finally translate to increased inventory costs, CAZ ought to considerably profit.

Stryker Corp (SYK):

Holding a simply over $2 million place, Stryker Corp is CAZ’s sixth-largest holding, and the one notable holding within the healthcare sector, making up round 3.2% of its portfolio. CAZ held its place regular from the earlier quarter. Within the meantime, Stryker reported a superb FY2020, reporting $1.6 billion in earnings, as its important medical units are of prime significance through the present surroundings. Amid an excellent yr, shares are at the moment buying and selling close to all-time highs, round $243/share.

PayPal (PYPL)

PayPal is CAZ’s eighth-largest place and its largest fintech holding, accounting for round 2.2% of the entire portfolio. The pandemic elevated the necessity for on-line funds, boosting Paypal’s community of customers and the entire variety of transactions to new all-time highs. Therefore, revenues for the yr achieved a brand new report of $21.45 billion.

PayPal is a mega-cap inventory with a market cap above $200 billion.

Web earnings was additionally the very best within the firm’s historical past, at $4.20 billion, retaining sturdy margins. Paypal’s constant and rising efficiency makes it a really enticing decide within the tech sector. Nonetheless, traders ought to be cautious of the inventory’s present valuation, which is means above its historic ranges, at 53.3 instances its ahead web earnings.

CAZ held the place regular through the quarter.

iShares MSCI Rising Markets ETF (EEM)

Round 2.1% of CAZ’s portfolio is invested in iShares’ Rising Market ETF. The place was trimmed by 39% through the quarter. With the U.S. markets arguably overvalued, it is smart that CAZ would search for extra attractively priced securities, presumably abroad. The fund additionally makes for an excellent diversification car holding some worldwide blue-chips similar to Alibaba (BABA), Tencent (TCEHY), and Taiwan Semiconductor Manufacturing (TSM).

The ETF is at the moment buying and selling round 0.85% increased than its web asset worth (NAV), so traders ought to be cautious to not overpay for its property.

Last Ideas

CAZ Investments worth proposition is to offer traders entry to alternatives they in any other case wouldn’t have. Consequently, the agency seeks to accomplice with top-tier non-public fairness, enterprise capital, and hedge funds to supply the most effective alternatives to its purchasers.

The agency’s February 2021 13F submitting exhibits that it has solely ~$67 million invested in particular person equities not together with ETFs. That is below 5.0% of the corporations’ property.

You possibly can obtain an Excel spreadsheet with metrics that matter of CAZ Investments present 13F fairness holdings beneath:

Extra Assets:

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Akre Capital’s 26 Inventory Portfolio: Prime 10 Holdings Analyzed