Eton Park Capital (Eric Mindich): Hedge Fund Tracking - 13F Filing Q3 2008 ~ market folly

Monday, December 22, 2008

Eton Park Capital (Eric Mindich): Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.

Next up is Eric Mindich's Eton Park Capital, who was ranked 53rd in Alpha's hedge fund rankings. Mindich received an Economics degree from Harvard and then worked at Goldman Sachs' risk-arbitrage desk. After becoming the youngest partner in the history of Goldman Sachs at the age of 27, it was clear he had a bright future. In 2004, he started his hedge fund Eton Park Capital with a record $3 billion in assets and a $5 million minimum investment required of investors. Today, Mindich manages over $6 billion. Typically, Eton Park invests in long/short equity and convertible arbitrage strategies. Additionally, as much as 30% of the fund can be invested in private investments. Back in September, Eton Park was only -1% for the year, as noted in our hedge fund performance numbers compilation. Recently, Mindich said he sees opportunity in the current markets in an excerpt from a recent investor letter.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
Spdr Gold Trust (GLD) Calls
Genentech (DNA)
Comcast (CMCSK) Calls
Potash (POT) Puts
Barr Pharma (BRL)
Alpha Natural Resources (ANR)
Alpharma (ALO)
UST (UST) Calls
Ikon Office (IKN)
Vale (RIO) Calls
Mobile Telesystems (MBT)
Deere (DE) Puts
VimpelComm (VIP)
Cisco (CSCO) Calls
AK Steel (AKS)
Newmont Mining (NEM)
News Corp (NWS)
Kinross Gold (KGC)
Ralcorp (RAH)

Some Increased Positions (A few positions they already owned but added shares to)
Comcast (CMCSA): Increased position by 131%
Wells Fargo (WFC) Puts: Increased position by 117%
Qualcomm (QCOM) Calls: Increased position by 100%
Merrill Lynch (MER): Increased position by 94%
Ishares Emerging Markets (EEM) Puts: Increased position by 75%
Qualcomm (QCOM): Increased position by 70%
Walter Industries (WLT): Increased position by 64%
Verisign (VRSN): Increased position by 48%
Ebay (EBAY): Increased position by 46%
Lorillard (LO): Increased position by 40%
Starbucks (SBUX): Increased position by 38%
News Corp (NWS-A): Increased position by 35%
Gold Fields (GFI): Increased position by 28%
Hansen Natural (HANS): Increased position by 26%
Beckman Coulter (BEC): Increased position by 23%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Lamar Advertising (LAMR): Reduced position by 34%
Cemex (CX) Puts: Reduced position by 29%
Kraft Foods (KFT): Reduced position by 8%
Goodyear Tire (GT): Reduced position by 6%

Removed Positions (Positions they sold out of completely)
Turkcell (TKC)
Bank of America (BAC)
Republic Services (RSG)
Weyerhauser (WY)
Yahoo (YHOO) Calls
BB&T (BBT) Puts
Ford (F)
America Movil (AMX) Puts
Wachovia (WB) Calls
Grey Wolf (GW)
Ebay (EBAY) Calls
Liberty Media (LCAPA)
Yahoo (YHOO)
American Express (AXP)
Encore Acquisition (EAC)
American Express (AXP) Calls
Harris (HRS)
WH Energy (WHQA) - inactive
Philip Morris International (PM)
DRS Technologies (DRS)
Mastercard (MA) Puts
Anheuser Busch (BUD)
Anheuser Busch (BUD) Calls

Top 20 Holdings (by % of portfolio)

  1. Spdr Gold Trust (GLD) Calls: 14% of portfolio
  2. Ishares Emerging Markets (EEM) Puts: 7.9% of portfolio
  3. Merrill Lynch (MER): 7.2% of portfolio
  4. Wells Fargo (WFC) Puts: 5.4% of portfolio
  5. Verisign (VRSN): 4.1% of portfolio
  6. Spdr Gold Trust (GLD): 3.7% of portfolio
  7. Qualcomm (QCOM): 3.6% of portfolio
  8. Genentech (DNA): 3.3% of portfolio
  9. Goodyear Tire (GT): 3.1% of portfolio
  10. Comcast (CMCSK) Calls: 2.9% of portfolio
  11. Hansen Natural (HANS): 2.8% of portfolio
  12. Hospira (HSP): 2.7% of portfolio
  13. Potash (POT) Puts: 2.6% of portfolio
  14. Cemex (CX) Puts: 2.1% of portfolio
  15. SLM (SLM): 1.7% of portfolio
  16. Barr Pharma (BRL): 1.7% of portfolio
  17. Ebay (EBAY): 1.5% of portfolio
  18. Qualcomm (QCOM) Calls: 1.4% of portfolio
  19. Alpha Natural Resources (ANR): 1.3% of portfolio
  20. Alpharma (ALO): 1.2% of portfolio

Assets from the collective holdings were $6.08 billion last quarter and were $6.04 billion this quarter. In contrast to numerous other hedge funds who were decreasing long US equity exposure across the board, Eton Park was pretty much flat in terms of exposure. In terms of positions they sold out of, Eton Park barely sold out of partial positions. Instead, they had a tendency to remove positions entirely. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on the Eton Park:
- Eric Mindich sees opportunity (excerpt from investor letter)
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers

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