Saturday, October 25, 2008

Wall Street Warriors

If you want some weekend entertainment that is market related, then you can check out the tv series, Wall Street Warriors. The series follows various people involved with the markets and so far there have been two seasons, with a third one supposedly in the works. You can watch episodes from the first 2 seasons online for free here.

Friday, October 24, 2008

George Soros Interview

Great interview of George Soros by Fareed Zakaria; always love to hear what's on Soros' mind. Here are all the clips (hat tip to 1440 Wall Street). Feed/email readers, you will have to come to the site to see the embedded videos.

Part 1

Part 2

Part 3

Thursday, October 23, 2008

More Hedge Fund Investor Letters

Courtesy of Dealbreaker, we've got even more hedge fund investor letters for September. Click the links to open up the respective .pdf files.

Eric Bolling Still in Cash

Well known trader Eric Bolling just posted up another update over at and basically, he's not doing much of anything. Here's an excerpt,

"In the meantime, I have been careful in my own portfolio. I have been tempted to add to an already razor-thin risk portfolio. As you know, I am heavily in Treasury bills. I am also in New Jersey state bonds and cash. Less than 5% is at risk in equities and being a trader I am looking for trades. There have been some that looked enticing as "cheap" but I have held off as the market continues to act irrationally. Good, cheap stocks are getting hit hard or harder than high-risk stocks. My gut is telling me that the day to implement cash is approaching but I would rather miss the first leg up than to catch another leg down in a bad position."

You can read the rest of his article here (although it doesn't have a whole lot to do with the markets).

Hedge Fund Forced Selling Equals Potential Opportunities

Through this mess, numerous opportunities will arise. As the saying goes, "buy when there is blood in the streets." Well, the streets are flooded and Warren Buffett has already begun buying, getting ridiculously good deals for himself that retail investors could only dream of. But, the point of all this is that there are indeed opportunities. The main caveat with these opportunities is time frame. More likely than not, investors will need a very long-term investment outlook in order to see stocks appreciate given the volatile market we are in and will continue to be in.

Veteran hedge fund manager Jeff Matthews of Ram Partners had recently said that numerous hedge funds had overly concentrated portfolios which ultimately led to their problems. Also, he notes that numerous shops were mainly long, or mainly short, instead of being truly hedged as a hedge fund is supposed to be by definition. You can see Jeff's commentary on a recent Tech Ticker video here.

It's easy to see where numerous hedge funds had stacked their bets. Energy and natural resources plays have just been absolutely hammered week after week. Some of these equities are already priced for global recession and the apocalypse. Yes, a slow down is imminent. But, a global recession, I'm not so sure. In any event, the caveat once again comes down to time frame. We have no idea of knowing how long it will take the market to deleverage, how long it will take the hedge funds to liquidiate, and how many more investor redemptions there might be.

But, we do know that names hedge funds typically favored have since been put on fire-sale due to forced selling. Some of these names include Potash (POT), Cleveland Cliffs (CLF), Freeport McMoran (FCX), and many other energy names. Hedge funds also favored tech giants Apple (AAPL) and Google (GOOG). Many hedge funds we track here on Market Folly have held large positions in those very names. You can view Boone Pickens' BP Capital portfolio here, Atticus Capital's portfolio here, Harbinger Capital's portfolio here, Lone Pine Capital's portfolio here, & many more hedge funds at Market Folly by simply searching the blog.

Wednesday, October 22, 2008

Hedge Fund Panel: Tiger Management / Tiger Cubs

Buck Woodford, author of ManyPeaks and Portfolio Manager of Teewinot Asset Management recently attended a discussion at the University of Virginia entitled "Investment Strategies in Turbulent Times," which consisted of a panel of five very prominent and successful hedge fund managers. The panel featured many ex-Tiger Management greats, including founder Julian Robertson. Also on board were some of his "Tiger Cubs," Paul Touradji, Chris Shumway, Rick Gerson (Blue Ridge Capital), and John Griffin (Blue Ridge). In the discussion, each was asked to present their best current investment thesis.

Here are their ideas as written by Buck,

"Chris Shumway said that buying stocks that were down huge primarily based mostly on hedge fund liquidations would be a long-term winning strategy. It’s always debatable why a stock is down, but this does make fundamental sense.

Paul Touradji layed out a thesis for shorting copper. He believes that base metals are priced based on the “velocity of money” - a measurement that’s likely to drop as the world generally de-leverages. Fair enough.

Julian - believe it or not - was bullish on a particular derivative bet. He believes the interest rate yield curve will steepen significantly, and discussed “steepener swaps” as his favorite investment right now. While chuckling, Griffin said that when Julian called to tell him about the idea, Julian joked that in his family this Christmas there would be “a steepener in every stocking.” Us finance people are really easily entertained. :)

Rick Gerson made a good point that United States corporations had really gone down the road of “professional” management — he compared it to outsourcing. Naming a few middle eastern companies that he deemed good investments, Rick made the case that in these frontier markets there are still plenty of “owner/operator” public companies in which the people running the show retain 70-80% ownership. He presumably has some of Blue Ridge’s money allocated to these situations.

John Griffin did not share any specific security that he liked, but ruminated that what he’d really like is the ability to “arbitrage time.” Basically that in a world dominated by short-term thinking, it’s hard to take a stand on a company or stock because even if you’re eventually right, the losses you may sit on during the interim can cause both your investors and employees to get hot & bothered. I hear what he’s saying, but that’s just the fact of life with public/listed company investing. If you don’t want a daily price quote, you’ve just got to get big enough (or partner with other funds) to buy the whole company and take it private. The practice of not marking to market is a different game."

Big thanks to Buck for his coverage of the event. If you are unfamiliar with some of the men mentioned above, or were just wanted more background on them, here are their biographies.

And, if you've missed them, we track numerous "Tiger Cub" hedge fund portfolios on the blog, including John Griffin's Blue Ridge Capital here, Stephen Mandel's Lone Pine Capital here, and Lee Ainslie's Maverick Capital here. Additionally, we noted that Julian Robertson recently made a media appearance in which he detailed some of his recent purchases.

Tiger Managment / Tiger Cub Biographies

This post is a supplement to our recent post on the Hedge Fund Panel, featuring numerous ex-Tiger Management and "Tiger Cub" fund managers. Here are their biographies as taken from the event announcement:

Rick Gerson

Rick Gerson is a Managing Director of Blue Ridge Capital. He was a founding member of the firm, which has been in operation since 1996. Mr. Gerson has been an integral part of the firm's investments since its inception in a wide variety of securities globally. Mr. Gerson is a Co-Founder of Blue Ridge China, a private equity firm that focuses on investments in China. He is a board member of Orascom Housing Communities, an Egypt-based homebuilder. Mr. Gerson has a B.S. from the University of Virginia's McIntire School of Commerce.

John Griffin


• M.B.A., Stanford University Graduate School of Business (1990)
• B.S. in Finance, University of Virginia, McIntire School of Commerce (1985)


• President and Founder of Blue Ridge Capital
• President of Tiger Management (1993 – 1996)
• Portfolio Manager, Tiger Management (1994 – 1996)
• Analyst, Tiger Management (1987 – 1994)
• Financial Analyst, Morgan Stanley Merchant Banking Group (1985 – 1987)

Academic, Philanthropic, and Community Activities

• Visiting Professor, University of Virginia, 1999-present. Classes taught include Securities Analysis and Idea Generation; Practical Behavioral Finance and The Analyst’s Edge
• Adjunct Professor of Finance, Columbia Business School, 1998-present. Class: Seminar in Advanced Investment Research: The Analyst’s Edge
• Member, Board of Directors, Michael J. Fox Foundation for Parkinson’s Research
• Founder of, a nonprofit online mentoring organization
• Founder of the Blue Ridge Foundation, which funds start-up, nonprofits
• Chairman of the Tiger Foundation 1992-1995, board member 1990 – present
• Chairman of the University of Virginia McIntire School of Commerce Foundation
• Member of Board of Trustees, Monticello (Charlottesville, Va.)

Julian Robertson

Julian H. Robertson Jr. is an investor, environmentalist, and philanthropist.

Mr. Robertson was born in Salisbury, N.C., in 1932. After graduating from the Episcopal High School in Alexandria, Va., in 1951 and the University of North Carolina in 1955, he served as an officer in the U.S. Navy.

Prior to co-founding Tiger in 1980, Mr. Robertson enjoyed a two-decade career with Kidder Peabody and Company, beginning as a sales trainee and rising to become CEO of Webster Management Corporation, Kidder Peabody’s investment advisory subsidiary.

From initial capital of $8 million, Mr. Robertson built Tiger into the world’s largest hedge fund, with capital of more than $23 billion. Tiger compounded at a gross rate of 31.5% between its founding in 1980 and its closing in 2000.

Mr. Robertson also trained and developed a generation of “Tiger Cubs,” a cadre of analysts and portfolio managers who
became some of today’s most successful hedge fund managers. Today, Mr. Robertson maintains Tiger to manage his own investments and to seed independent hedge funds, run by high-achieving young managers.

Chris Shumway

Chris Shumway is the Founding Partner of Shumway Capital Partners (“SCP”), an investment management firm founded in 2001. SCP, which manages a multibillion dollar group of private investment funds, uses a private equity-like research model for public market investment on a global basis. Prior to forming SCP, Mr. Shumway was a Senior Managing Director at Tiger Management (1992-1999), an Analyst at Brentwood Associates (1990-1991), and an Analyst at Morgan Stanley & Co. (1988-1990). He received an M.B.A. from Harvard Business School (1993) and a B.S. from the McIntire School of Commerce at the University of Virginia (1988). Mr. Shumway is a member of the boards of the McIntire School of Commerce Foundation (University of Virginia), Teach for America-Connecticut (Fairfield County), and The Shumway Capital Foundation.

Paul Touradji

Paul Touradji is the President and Chief Investment Officer of Touradji Capital Management LP, a New York-based hedge fund specializing in fundamental research and active investment in commodities and related assets. The firm manages approximately $3.5 billion and invests in both the public and private markets. Mr. Touradji has well over a decade of experience investing in the commodity, equity, and macro markets. Mr. Touradji began his commodities career at Tiger Management in the mid '90s, where he managed the commodities team; it was at Tiger that he developed his fundamental approach to analysis and investment in commodities. Prior to Tiger, Mr. Touradji’s specialty was quantitative arbitrage, principally with O’Connor Partners. Mr. Touradji is a 1993 graduate of the McIntire School of Commerce at the University of Virginia and a Certified Financial Analyst.

Jana Partners Discloses 13.52% Stake in Convergys (CVG) in 13D Filing

In a 13D filing made with the SEC on October 21st, hedge fund Jana Partners disclosed that they have a 13.52% stake in Convergys (CVG). They now own 16,468,399 shares of CVG. This is an increase from their 10.5 million shares they disclosed in the previous filing which detailed positions as of June 30, 2008. The 13D filing notes that the purchase of these shares was spread out on various days from September 17th, 2008 to October 16th, 2008, at prices ranging from $15.50 to $10.73.

Managed by Barry Rosenstein, Jana was founded in 2001 and typically employs activist, market neutral, and long/short equity strategies in public equity markets. Rosenstein received his BS from Lehigh University and his MBA from the Wharton School of Business at the University of Pennsylvania. Alpha magazine ranks Jana #79 in their hedge fund rankings. Jana Partners was -9% for the month of September, and find themselves -14.7% for the year, as I noted in my hedge fund performance update. Also, we recently noted that Jana has taken a 5.7% stake in Hayes Lemmerz (HAYZ).

Taken from Google Finance, CVG is "a global player in relationship management. The Company provides its clients with solutions to support their customers (Customer Solutions) and employees (human resource (HR) Solutions). It has three segments: Customer Management, which provides outsourced customer care solutions, as well as professional and consulting services to in-house customer care operations; Information Management, which provides convergent rating, charging and billing solutions for the global communications industry, and Human Resources Management, which provides human resource business process outsourcing (HR BPO) solutions and learning solutions."

Tuesday, October 21, 2008

When Markets Collide By Mohamed El-Erian

The Financial Times and Goldman Sachs recently announced the winner of the Business Book of the Year for 2008 and Mohamed El-Erian's book When Markets Collide has won. The award was given to the book that provides ”the most compelling and enjoyable insight into modern business issues, including management, finance and economics”. Mr. El-Erian is of course the co-chief executive of PIMCO, the world's largest bond fund manager.

An FT article describes the book as,

"A 'lucid and prescient' explanation of the credit crisis, and how to survive it, has won the 2008 Financial Times and Goldman Sachs Business Book of the Year Award. When Markets Collide by Mohamed El-Erian was described by Lloyd Blankfein, Goldman’s chairman and chief executive and one of the judges, as 'extremely accessible and compelling'. The book explains how a collision between markets of yesterday, centred on the US and the developed world, and the emerging markets of tomorrow is creating new opportunities and risks."

I have been meaning to pick this book up after hearing my buddy Jeffrey McLarty say good things about it, but forgot to. This award has just given me an excellent reminder and incentive to read it, as everyone seemingly has good things to say about it.

So, readers, anyone up for a group read of the Business Book of the Year for 2008? I will be picking it up and highly suggest you all do the same. After all, a book that has received this much constant praise has to have some solid insight in it. I have high expectations, but given that it's written by Mr. El-Erian, I don't think I'll be let down.

When Markets Collide: Investment Strategies for the Age of Global Economic Change

Warren Buffett is Buying American

If you haven't heard about it yet, Warren Buffett recently addressed the public with an editorial piece in the NY Times. Here is an excerpt,

"THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.


A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: 'I skate to where the puck is going to be, not to where it has been.' "

It should also be noted that each time he has addressed the public like this in the past, it has seemingly marked a market top or bottom. But, with the caveat that he is usually a few months early. As I wrote about recently, Buffett has been selling puts on Burlington Northern (BNI). Also, Buffett recently sat down to talk with Charlie Rose in an interview about the economy and market. All this, combined with Berkshire's Goldman Sachs (GS) and General Electric (GE) buys have made him quite a busy man. You can read the rest of his NY Times editorial here.

Hedge Fund Withdrawals Continue & Citadel Feels the Pain

$43 billion. That was the number of withdrawals from Hedge Funds in the month of September, according to leading research house Trim Tabs Investment Research. And, given the volatility and market declines we've seen thus far in October, you can assume that this month will be much (if not more) of the same.

Taken from the FT,

"The chief executive of a leading alternative investment manager said he expected the hedge fund industry to shrink by 50 per cent in coming months – with half the decline coming from withdrawals and half coming from investment losses."

Even if that prophecy becomes only partially true, that is a massive amount of deleveraging, unwinding, and liquidation. Forced selling is driving this market and will continue to do so. Buying these dips in a scalable manner offers a very promising opportunity for longer-term investors. And, 'Tiger Cub' Chris Shumway of hedge fund Shumway Capital has argued just that at a recent hedge fund panel which I wrote about here. Barry Ritholtz, author of 'The Big Picture' blog has also recently put a small amount of capital to work on the long side. You can see his thoughts in a recent interview, courtesy of Agoracom. By no means should you rush out and invest 50% of your capital when the market plunges. Volatility should continue. But, by being constructive in small amounts, say 10-15% of capital, you can accumulate assets that are selling at fire-sale prices and are pricing in the apocalypse. That is not to say that assets cannot get cheaper; because they most likely will. But, we all know you cannot time the exact bottom and that the market does not bottom in a 'V' fashion.

As I wrote a few weeks ago, the hedge fund redemption bloodbath was just starting. Such forced selling essentially triggers other funds to sell, as they watch their holdings evaporate in value. And, all data thus far points to this trend to continue. Recently, in our hedge fund performance update, we noted the horrid performance of nearly every hedge fund we covered. This is all the evidence you need as to whether or not this trend will continue. The main thing to take away here is that we have absolutely no idea how long it will take for the deleveraging and liquidation to cease. But, the selling won't stop until all the players are wiped out and only the strongest have survived. Paul Kedrosky has recently tossed out his estimates on the hedge fund outflows. He writes,

"In essence, I'm aging hedge fund inflows and saying that we will see a blended 40% (higher in later years, lower in earlier years) demand for redemptions from investors in the 2005-2008 period. I'm not worrying about pre-2005 assets under management, so we could see lower redemptions on new assets and more on the older stuff, taking us to the same place. I'm also positing that initial capital has shrunk by a blended 20% on inflows, which is admittedly on the high side. I then figure that turns into almost $200-billion in outflows, or a little less than $2-trillion in asset sales at an average of 10x leverage. Some say the leverage is lower, some higher. Some argue we will see lower/higher redemptions, or that median versus mean losses will be wildly different. Other say it's inherently a state change issue, where the paradox of delevering is that everyone doesn't get to shrink -- some firms just fail outright."

Also, Todd Harrison, former hedge fund trader and now CEO of recently was on Tech Ticker discussing this very problem, saying he thinks that 50% of the hedge fund space will fall victim. Hence, keep capital invested smaller, be nimbler, be hedged, and have patience.

Case in point: even Citadel, the oft respected firm started by Ken Griffin is seeing its worst year in its history, down anywhere from 26-30%. They are well known for their solid 18-20% annualized returns. From the WSJ,
"On Wednesday, Kenneth Griffin, head of Citadel, sent a letter to investors.

September, he wrote, was the "single worst month, by far, in the history of Citadel. Our performance reflected extraordinary market conditions that I did not fully anticipate, combined with regulatory changes driven more by populism than policy."

In coming weeks, Mr. Griffin wrote, the firm's earnings will continue to be volatile, "as the world manages the unfolding crisis."

Overall, the numbers are pretty staggering. After recently coming across data from Eurekahedge, DealJournal writes,

"According to its preliminary estimates, hedge-fund losses totaled roughly $79 billion in September, including $44.5 billion of investment losses and $34.5 billion of investor withdrawals. That was only partially offset by about $10.5 billion of new money flowing into the more successful strategies, Eurekahedge figures. In the third quarter, hedge-fund assets shrank by a record $210 billion, or more than 10%, estimates Hedge Fund Research. To put that in perspective, the decline in assets for the quarter exceeded the entire amount of money that flowed into the industry in 2007, which was a record $194 billion. Of those third-quarter declines, more than $31 billion was attributed to investors taking out their money, the largest net capital redemptions on record, says Hedge Fund Research. That left total hedge-fund assets at $1.72 trillion, down from $1.93 trillion at the end of the second quarter."

So, while one could definitely argue a tradeable bottom is in the cards, it still seems as if the unwind from mutual funds and hedge funds still might have control of this market.

Sources: WSJ, DealJournal, & FT

Monday, October 20, 2008

Analyst Calls & Goldman Sachs Conviction Buy List

I've said before that I typically don't place too much weight on analyst calls, but today numerous analyst calls caught my eye and I wanted to post them up.

Firstly, in the oil arena, there were a few active analysts who revealed a myriad of opinions. Firstly, Morgan Stanley upgraded Transocean (RIG) to Overweight, citing that they think the credit crunch gives them an advantage, as smaller drillers will struggle to finance projects. This makes sense to me just given the fact that RIG is a behemoth in the drilling space now. But, I wouldn't cite it as one of the main reasons they will outperform. They've got tons of rigs already and have other ones scheduled to come off construction in coming years. RIG is easily one of my favorite long-term plays due to their dominant market positioning, their ability to raise dayrates fairly consistently, and the armada of rigs that they will have coming online in the near future.

Back in September, RIG was added to Goldman Sachs' Conviction Buy List. Shares have been demolished as of late, offering a possible opportunity for those with a long-term bullish thesis on oil and deepwater drilling. Boone Pickens' BP Capital had RIG as their 2nd largest holding as of last quarter. RIG has been trampled partly due to the decrease in the price of oil and partly due to forced selling by various hedge fund and mutual fund names. Overall, I figure RIG is a solid buy as long as oil remains above $70 a barrel, which gives them enough room to still maintain or increase the high dayrates they charge. They are seeing operating margins of 46% and return on equity of 38%. Their valuation is absurdly cheap, but I won't dwell on that given the fact that in this market, valuation got thrown out the window a long time ago. And, the cheap can always become even cheaper. But, the fact is that this company has solid fundamentals going forward long-term. They are seeing quarterly revenue growth of 116% and quarterly earnings growth of 101% on a year over year basis. They do have a lot of debt, but their strong cashflow generation should alleviate any major stress from that.

There was also a bevy of other oil related calls today by an analyst from Deutsche Bank. They downgraded tons of oil names, citing a worldwide recession in 2009. They have cut oil price forecasts to $60 per barrel in '09 and $58 per barrel in '10. They wrote, "This view implies that the marginal oil company will make zero profit for the next two years. It implies leveraged oil companies may go bankrupt. It implies GDP-sensitive (ie refiners/chemicals) companies will suffer. Ultimately, it strongly suggests upheaval in oil-revenue dependent states." While anything is possible considering the grave state of numerous economies worldwide, I still do not think a worldwide recession is in the cards. This will have to be continually evaluated as we receive new data each quarter, but I think this is a slightly harsh call. Should a worldwide recession emerge though, their call makes sense in that the leveraged companies will find it increasingly difficult. They have downgraded a myriad of names, including Marathon (MRO), Conoco Phillips (COP), Suncor (SU), and Hess (HES) among others. Its interesting to now note that they only have "buys" on two oil names: Occidental (OXY) and Canadian Natural Resources (CNQ). OXY is a name that has seen vast hedge fund ownership, including by that of Atticus Capital, Caxton Associates, Tudor Investment Corp, and BP Capital, among many others.

Lastly, Goldman Sachs was out making changes again to its Conviction Buy List. They added Waste Management (WMI) to the list, and removed Allied Waste (AW) from the list. However, they still maintain a 'buy' rating on AW (just not a 'conviction buy'). Additionally, they also added Marsh & McLennan (MMC) and Applied Materials (AMAT) to their Conviction Buy List.

Short Term Arbitrage Play: Rohm & Haas (ROH)

Todd Sullivan over at Value Plays has just posted up an excellent idea for a short-term arb play. He writes,

"Dow Chemical will purchase Rohm & Haas (ROH) for $78 a share and the deal will close in early 2009.

Berkshire Hathaway (BRK.A) is investing $3b in the deal and it is an all-cash transaction. Currently shares trade at $70 a share under the current credit environment. Purchasers of shares today will get a 10% 4 month return (30% annualized). Downside is minimal.

What could go wrong?
Kuwait, who is buying 1/2 Dow's commodity business for $9.5b could back out of the deal. That cash is being used for funding the ROH transaction. How likely is this? Well, when one considers that the newly formed JV is in the process of hiring personnel and setting up shop in Michigan, not very.

Berkshire could back out. Again, can anyone come up with a scenario when this has happened? Me either."

Overall, it looks like this could be a solid play in terms of risk/reward. Head over to Value Plays to read the rest of his post.

Tremblant Capital Discloses 5.2% Stake in Advanced Medical Optics (EYE) in 13G Filing

In a 13G filing made with the SEC on October 17th, Tremblant Capital has disclosed a 5.2% Ownership Stake in Advanced Medical Optics (EYE). Tremblant is a $4.1 billion hedge fund ran by Bret Barakett. This adjustment to the position was made on October 7th and they have disclosed that they now own 3,152,157 shares of EYE. In their most recent 13F filing disclosing positions as of June 30th, they had previously held 2,703,709 shares of EYE as well as 329,400 shares worth of calls on EYE. So, they have since increased their common share position in EYE by 448,448 shares. You can view all of Tremblant's portfolio holdings here. Additionally, Tremblant recently disclosed an ownership stake in PharmaNet Development (PDGI), which you can read about here. And, lastly, you can find Tremblant's year-to-date performance (along with numerous other hedge fund numbers) here.

Taken from Google Finance, Advanced Medical Optics (EYE) is "engaged in the development, manufacture and marketing of medical devices for the eye. The Company has three product lines: cataract / implant, laser vision correction, and eye care. In the cataract and implant market, it focuses on four products required for cataract surgery: foldable intraocular lenses (IOLs), implantation systems, phacoemulsification systems and viscoelastics. In the laser vision correction market, the Company markets excimer and femtosecond laser systems, related treatment cards and disposable patient interfaces, and diagnostic devices. The Company’s eye care product line provides a range of contact lens care products for use with most types of contact lenses."

You can view the 13G as filed with the SEC here.

Hedge Fund Linkfest

Strategy Results (Naked Shorts)

Economic Developments (EconBrowser)

Hedge Fun (The Economist)

Hedge Fund Index is Down (Marketwatch)

Highland Capital Shuts Down Funds (Bloomberg)

Chopping the Hedge Fund Industry (All About Alpha)

Lahde Capital Shuts Down, Sends Investors Final Letter

If you've somehow missed it already, Andrew Lahde, who last year saw his hedge fund (Lahde Capital) gain 866% due to his correct bets on the sub-prime meltdown has called it quits and is shutting down his fund. But, the interesting part of his fund closing was the last letter he sent to investors. Here is an excerpt,

"Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.
Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it." I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job.
I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established."

And, if you thought that was crazy enough, then you shouldn't be surprised when I tell you that he ends his letter with a plea for legalizing marijuana (I'm not joking). You can read the entire Lahde Letter here (.pdf download).

Sunday, October 19, 2008

Tudor Investment Corp Discloses 0.4% Stake in Plains Exploration (PXP) in 13G Filing

In a recent 13G filed with the SEC on October 17th, Tudor Investment Corp has disclosed its 0.4% ownership stake in Plains Exploration & Production (PXP). Tudor Investment Corp is a global macro set of hedge funds ran by Paul Tudor Jones. The 13G details changes held to the position that took place on October 9th. In this filing, they show a position of 410,843 shares of PXP. In their previous 13F filing (disclosing positions as of June 30th), they had held 7,680,918 shares. So, as you can see, they have sold off the vast majority of their PXP position. In that last filing, PXP was their top equity holding. But, as of now, it obviously is no longer. You can view all of Tudor's portfolio holdings here. And, if you want to hear some thoughts from Paul Tudor Jones himself, check out some of his interviews here and here. And, you can read about the performance of one of Tudor's funds here and numerous other hedge funds here.

Taken from Google Finance, Plains Exploration & Production (PXP) is "an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas properties primarily in the United States."

You can view the 13G as filed with the SEC here.

LIBOR Illustrated

Gotten a lot of questions about LIBOR recently, and if you were ever confused about it, now's a good time to learn. Bloomberg presents LIBOR Illustrated:

(click to enlarge)

If it's still too small after enlarging, then here's the giant version.

Lots of Leverage and a Big Mess

A chart of how sub-prime became a recipe for disaster:

(click to enlarge)

Read more here.