Anand Parekh's Alyeska Investment Group Favors Tyson (TSN) Notes: 13F Filing Q1 2009

This is the 1st Quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings series preface.

Next up is Alyeska Investment Group ran by Anand Parekh. This is the first time we're tracking them in our portfolio series due to the fact that they're a newer fund on the scene. Before starting Alyeska, Anand Parekh was Citadel's head of equities, and was essentially who we were tracking at Citadel when we would examine their equity holdings. So, from here on out, we'll continue to track Citadel's movements and we'll also track Alyeska's movements as well, since we were essentially following Parekh's movements there anyways. Originally, Parekh's new firm was set to be named Highliner Investment Group which had raised $1.5 billion, as we noted when we started tracking spin-off and newer funds. But, somewhere along the line, the name was switched. David Stemerman's Conatus Capital was another newer fund that we mentioned back then, and we have already covered their portfolio. This is Alyeska's second 13F filing and we now have enough of a timeline to start tracking their movements effectively. You can view their original portfolio and 13F filing here.

The following were Alyeska's long equity, note, and options holdings as of March 31st, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Transocean (RIG) Note, Rohm & Haas (ROH), McDonald's, Walgreens (WAG), Walmart (WMT), Tyco (TYC), Raytheon (RTN), Legg Mason (LMI), Amgen (AMGN), Life Technologies (LIFE), Lowes (LOW), Liberty Media (LMDIA) Debt, Ametek (AME), BB&T (BBT), Liberty Media (LMDIA), Fifth Third Bancorp (FITB), First Horizon Bancorp (FHN), Bank of Hawaii (BOH), Medtronic (MDT), Hasbro (HAS), Henry Schein (HSIC), Cheesecake Factory (CAKE), Hologic (HOLX), DirecTV (DTV), Chesapeake Energy (CHK) Preferred, Wells Fargo (WFC), Foster Wheeler (FWLT), Time Warner (TWX), First American (FAF), Invesco (IVZ).


Some Increased Positions (A few positions they already owned but added shares to)
Goldman Sachs (GS): Increased position by 1,100%, but note that this position is only a mere 0.06% of their portfolio even after that increase
Radioshack (RSH): Increased position by 468%, but note that it is only 0.26% of their portfolio now
JPMorgan Chase (JPM): Increased position by 227%
Polo Ralph Lauren (RL): Increased position by 125%
Dreamworks Animation (DWA): Increased position by 117%
Tyson Foods (TSN) Bonds: Increased position by 110%
Macrovision (MVSN): Increased position by 102%
Danaher (DHR): Increased position by 44%
Resmed (RMD): Increased position by 42.5%
Millipore (MIL): Increased position by 40%
Massey Energy (MEE) Notes: Increased position by 40%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Navistar (NAV): Reduced by 42%
Illumina (ILMN): Reduced by 40%
Honeywell (HON): Reduced by 33%


Removed Positions (Positions they sold out of completely)
Puget Energy (PSD), Entergy (ETR-PA) Preferred, Meril Lynch (MER), Wachovia (WB), Nationwide Financial (NFS), Metlife (MEU), Vale Cap (CJA), National City (NCC), Gilead Sciences (GILD), UST (UST), Burger King (BKC), United Technologies (UTX), CVS Caremark (CVS), Pactiv (PTV), Wright Medical (WMGI), ITT (ITT), Urban Outfitters (URBN), Macys (M), Roper Industries (ROP), McGraw Hill (MHP), Hanesbrands (HBI), Lockheed Martin (LMT), Genentech (DNA), L3 Communications (LLL), Covidien (COV), Bristol Myers Squibb (BMY), Mattel (MAT), Supervalu (SVU), Delta Airliens (DAL).


Top 15 Holdings (by % of portfolio)

1. Tyson Foods (TSN) Bonds: 2.81% of portfolio
2. Transocean (RIG) Note: 2.43% of portfolio
3. Rohm & Haas (ROH): 2% of portfolio
4. McDonalds (MCD): 2% of portfolio
5. Massey Energy (MEE) Note: 1.96% of portfolio
6. Danaher (DHR): 1.9% of portfolio
7. Goodrich (GR): 1.86% of portfolio
8. Walgreens (WAG): 1.74% of portfolio
9. Walmart (WMT): 1.7% of portfolio
10. Tyco (TYC): 1.64% of portfolio
11. Raytheon (RTN): 1.63% of portfolio
12. Regal Beloit (RBC): 1.62% of portfolio
13. Pfizer (PFE): 1.6% of portfolio
14. Gen Probe (GPRO): 1.6% of portfolio
15. Legg Mason (LMI): 1.57% of portfolio

No real 'wow factor' changes in their portfolio, but there are definitely some things to pay heed to. Seven out of their top 11 positions are all brand new stakes, including Transocean, Rohm & Haas, McDonalds, Walgreens, Walmart, Tyco, and Raytheon. Also worth highlighting is the fact that three of their top five positions are debt positions rather than equity. They hold notes or bonds in Tyson, Transocean, and Massey Energy. The major move in their portfolio though was doubling down on their stake in Tyson's Notes, as it is now their largest portfolio position on the long side.

In terms of positions they sold completely out of, Alyeska Investment Group discarded their entire position of Puget Energy (PSD), which was previously quite a sizable stake for them at 6.7% of their portfolio. Additionally, they sold completely out of slightly smaller positions of Entergy and Merrill Lynch shares, which were previously 3.5% and 3% stakes for them respectively. For the most part, Alyeska preferred to sell completely out of positions, rather than just trim them down.

Assets from the collective holdings reported to the SEC via 13F filing were $834 million this quarter compared to $816 million last quarter. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. We've already covered:

- Gurus such as: Soros Fund Management (George Soros), and Jim Rogers.

- 'Tiger Cub' portfolios like: Andreas Halvorsen's Viking Global, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Shumway Capital Partners (Chris Shumway), Chase Coleman's Tiger Global,

- Outperforming funds like: John Paulson's hedge fund Paulson & Co, Eric Mindich's Eton Park Capital, Raj Rajaratnam's Galleon Group,

- Value and activist funds such as: David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Whitney Tison's T2 Partners, Philip Falcone's Harbinger Capital Partners, Ricky Sandler's Eminence Capital,

- Concentrated funds that play secular/macro themes such as: Timothy Barakett's Atticus Capital, Bret Barakett's Tremblant Capital Group, Boone Pickens' BP Capital Management, John Burbank's Passport Capital

- Global macro firms such as: Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital,

- And, newer funds on the scene: David Stemerman's Conatus Capital. Check back each day as we cover new fund portfolios!

Michael Lewis' AIG Article in Vanity Fair: The Man Who Crashed the World

Here's an excellent read in Vanity Fair from noted author Michael Lewis regarding the madness that is AIG. His piece is entitled 'The Man Who Crashed the World.' There has been a slew of intriguing journalistic pieces hitting the tabloids lately and its refreshing to see. Just last week, we brought you Matt Taibbi's piece on Goldman Sachs as well.

Below is the embedded AIG article. RSS & Email readers will need to come to the blog to view it. Again, our apologies for using Scribd as we know many of you dislike it. However, the other alternatives we have tried out have not been any better. As such, we are stuck using the lesser of many evils. If you need the actual .pdf of this article please let us know and we'll do our best to meet all the requests (we were inundated with requests for the GS article last week and are still sifting through all those!) Don't try to print the article directly from Scribd as it will mess up the margins and come out illegible. We recommend clicking on the Scribd logo, going to their page and selecting the 'download' option which will let you save the .pdf to your desktop. Do note that you'll need a free account there to do this.

World's 50 Safest Banks: Global Finance World's Rankings

While this list was released back in March 0f 2009, we wanted to publish it up as we forgot to at the time. Global Finance World publishes a list of the World's 50 Safest Banks and they edited it mid-year which reflects the turmoil within the financial markets worldwide. Interesting tidbits regarding the list: Only 4 American banks make the list, none of which are in the top 10. The closest is Wells Fargo (WFC) at 21st. This will certainly draw much criticism as there are many skeptics out there regarding Wells Fargo's stability.

Another interesting fact is that all of the major Canadian banks are included in the top 50, which confirms what many strategists and prominent investors have been speaking of throughout the turmoil. They have said that if you want to own banks at all, then your best bet is a Canadian entity. Specifically, Dennis Gartman has often noted his preference of Canadian banks. In addition to a large amount of Canadian banks on the list, there is quite a cluster of Australian banks within the top 25. Lastly, we'd also like to highlight the large amount of German banks on the list, especially ranked within the top 10.

Embedded below is the publication. (RSS & Email readers will need to come to the blog to view the embedded document). Here is Global Finance World's 50 Safest Banks list:




Now, while rankings lists like these might be fine and dandy, we're inserting an asterisk next to this one. Why? Well, because upon examination of the criteria for ranking, we were a bit surprised. Global Finance World ranked the banks according to long-term credit ratings and total assets. They used ratings from Moody's, Standard and Poor's, and Fitch. And there is your red flag right there. They are compiling a list based on ratings from the ratings agencies... the same ratings agencies that have appalled many of us with their reactionary movements and downgrades. What good are the ratings agencies if they can't even provide accurate ratings to give us a barometer as to the health of various institutions? But, we digress. We've attached the list for your perusal (or comic relief) anyways.

As always, take things like this with a nice grain of salt.

MarketFolly Custom Portfolio Update: 27.9% Annualized Returns

Now that our MarketFolly portfolio is in full flight, we're going to begin tracking its performance on a monthly basis so readers can see how it stacks up both against the indices and other hedge funds. Firstly, for those of you unaware, we've cloned a portfolio with Alphaclone that invests in the positions of three hedge funds assembled into a collective unit: Seth Klarman's Baupost Group, Eric Mindich's Eton Park Capital, and Chris Shumway's Shumway Capital Parters. Simply put, we've created our own custom hedge fund portfolio clone. For more background on all of this, you can view our portfolio introduction here, as well as an introduction to Alphaclone here as well.

We are very proud to say that our MarketFolly custom portfolio has been included into Alphaclone's funds list and you can easily pull up our clone and invest alongside it. Why is our portfolio worth checking out? We have one answer for you: 27.9% annualized returns.

Performance

Yes, you read that correctly. Our portfolio has seen absolutely fantastic results over an expanded timeline. Our clone has been backtested from January 3rd, 2000 and has returned 27.9% on an annualized basis in our 'top 3 holdings' strategy with a 50% hedge. Our MarketFolly portfolio has seen a total return of 918.4% compared to an S&P500 total return of -25.2% over the course of the past 9 years.

The MF clone has an Alpha of 25.8, a Beta of 0.3, a Sharpe Ratio of 1.2, and a correlation to the index of 0.2. We cannot stress enough how pleased we are with this performance. Thus far in 2009, the MF clone is up 8.2% compared the S&P500 being up 3.1%, so you also have outperformance by this metric as well. Our portfolio generates alpha, is not highly correlated to the markets, and has solid annualized returns. What more could you ask for? Here is a graphic of our performance:

(click to enlarge)

As you can see, the numbers continue to speak for themselves. The green line is our portfolio and the blue line is the S&P 500. Our custom hedge fund portfolio has seen a lower max drawdown, but more volatility than the indices. There's not much else we can say at this point. We're obviously confident in our selection and are personally invested in the positions generated by our custom portfolio. Stay tuned in the coming months for further updates and head over to Alphaclone to see what positions our MarketFolly portfolio currently holds.

Art Samberg's Pequot Capital Unwinds Positions: 13G Filings

Just yesterday we saw a barrage (yes, a barrage) of amended 13G SEC filings from Art Samberg's hedge fund Pequot Capital. As you're well aware, Pequot Capital will be shutting down due to the negative effect ongoing investigations have had on the firm. Last week, we saw initial signs of the firm winding down as they sold the vast majority of their Akorn (AKRX) position. While Pequot's shuttering undoubtedly means many positions will be liquidated, not all of them will be. This is due to the fact that their Matawin and Special Opportunities funds will remain open under their current managers. So, while you'll see ample selling, you won't quite see a complete wipeout of their portfolios. And, with that in mind, let's get to what they have been selling.

As per all of the amended 13G filings, Pequot no longer holds a position in the following companies: Essex Rental (ERNT), IMAX Corporation (IMAX), GP Strategies Corporation (GPX), STAAR Surgical (STAA), Electronic Game Card (EGMI), Vicor Corp (VICR), Chipotle Mexican Grill (CMG), Ballantyne Strong (BTN) and Shells Seafood Restaurants (SHLLQ). While they completely sold out of those positions, there were 3 remaining 13G/13D filing amendments made to positions they still hold.

Due to activity on June 30th, Pequot filed an amended 13G on Health Fitness Corporation (FIT) and they now show a 3.08% ownership stake in the company with 319,770 shares. Previously, Peuot had owned upwards of 523,400 shares. While they have not sold their entire stake, they definitely have been selling. Additionally, Pequot also filed an amended 13G on Velocity Express (VEXP) where they are now showing a 0.3% ownership stake with only 13,790 shares reported. Lastly, they are now showing a 0.2% ownership stake in MedClean Technologies (MCLN) with 1,192,589shares. That sums up everything Pequot filed with the SEC yesterday and we'll continue to bring you any other major updates in this regard. Because, after all, they are not liquidating everything... just *mostly* everything. When the dust settles, we'll have to see what positions their 2 remaining funds will hold. As we've mentioned before, Pequot is just another name to add to the list of prominent funds that have fallen during these rough times. Check out a list of 2008 hedge fund closures here.

If you're unfamiliar with this hedge fund, we've given background on Samberg & Pequot here. For more on Pequot, check out our past coverage of Pequot's March commentary from Byron Wien. Lastly, for those of you curious as to which other positions Pequot could possibly liquidate, you can check out their portfolio here as filed with the SEC which details their holdings as of March 31st, 2009.

What We're Reading 7/2/09

The Next Great Bubble [The Pragmatic Capitalist]

CNBC's Dennis Kneale Versus Zero Hedge & other bloggers [Zero Hedge]

Hey, Banks, S&P About to Downgrade $235 Billion Of Your Crappy CMBS [BusinessInsider]

The Big Squeeze re: endowments [Barron's - you'll need a subscription to view the article, but you can get 40% off here]

Answers from Joel Greenblatt [GuruFocus]

On giving Goldman a chance (Matt Taibbi's follow-up to his initial article in Rolling Stone re: GS) [TrueSlant]