Friday, November 21, 2008

Wall Street Journal & Investors Business Daily Deals

Just wanted to take a minute and point out that this awesome economy has obviously affected the advertising industry and in turn all the major media/publications. So, you can save a ton of money and get cheap subscriptions to the two most popular financial publications: The Wall Street Journal & Investors Business Daily.

I had no idea it had gotten this cheap, but you can now get the Wall Street Journal for 75% off. That's ridiculously cheap, so take advantage of it.

Also worth mentioning is the fact that you can get $60 off Investors Business Daily, as well as 4 extra weeks free.

Gotta love the crappy economy! Enjoy.


Dennis Gartman's Rules of Trading

I've seen these rules numerous times but have never posted them up. So, I have to give a hat tip to Todd Sullivan over at Value Plays for posting them up recently and reminding me of them again. If you are unfamiliar with Dennis Gartman, he writes the famed Gartman Letter. Taken from his site, "The Gartman Letter is a daily commentary on the global capital markets subscribed to by leading banks, broking firms, hedge funds, mutual funds, energy and grain trading companies around the world." He also talks about his trades/plays and walks you through his thought-process. We definitely enjoy his commentary and if anyone is a subscriber, let us know. To the rules:

DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING


1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position… not ever, not never! Adding to losing positions is trading’s carcinogen; it is trading’s driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.

6. “Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent.” These are Keynes’ words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In “good times,” even errors turn to profits; in “bad times,” the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we’ve known have the simplest methods of trading. There is a correlation here!

11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, “When they are cryin’, you should be buyin’! And when they are yellin’, you should be sellin’!”

12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow… usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year… and our profits grow accordingly.

15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a “secret” to trading (and of life), this is it.

16. All Rules Are Meant To Be Broken…. but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.


Now that you've read the rules of trading, you could try foreign exchange trading with CMC Markets.


Thursday, November 20, 2008

Hedge Fund Tracking: Lee Ainslie's Maverick Capital - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, and Stephen Mandel's Lone Pine Capital. Next up, we have Maverick Capital. Lee Ainslie started Maverick Capital back in 1993 with $38 million. Nowadays, the fund is worth $10 billion. Ainslie, like many of the other fund managers we've profiled, has a background rooted in learning from legendary great Julian Robertson at Tiger Management. These proteges (nicknamd 'Tiger Cubs') learned from the best and have had great success running their own funds. Some contacts over at Maverick have explained that their strategy is straight up stock picking, both long and short. They made it clear though, that they do not employ pairs trades. Although, some of their long/short setups might be in the same sector.

They try to hedge their positions like the name hedge fund implies by picking out the shining stars in certain sectors, as well as identifying the pieces of garbage. Now, of course, this presents us with a problem in that the 13F filings only show long positions (unless they're holding puts on a name, we can see those). So, a good amount of Maverick's portfolio (the entire short side) is unbeknownst to us, because they have reported zero put positions. But, let's look on the bright side in that we can see all their long positions. Maverick uses a value approach (obviously learned from Julian) and one of their most popular metrics is finding companies and comparing their enterprise value to sustainable free cash flow.

As we noted in our October hedge fund performance numbers update, one of Maverick's funds was -6.34% in October and is now -26.47% year-to-date. (You can check out their most recent investor letter). We suggest checking out Maverick's 2nd quarter '08 portfolio holdings so you can get a sense as to how they were shifting around their portfolio recently. Also, we recently noted that Maverick recently sold out of their entire Under Armour (UA) position via a 13G filing.

So, now that we've got a background on Ainslie and Maverick, let's take a quick look at his portfolio highlights. We'd like to give a special thank you to Alex Prywes who has helped us with the 13f analysis so that we can cover more funds.

The following were Maverick's long equity and options holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that Maverick initiated in the last quarter):
Apollo Group (APOL)
Amgen (AMGN)
Priceline (PCLN)
XTO Energy (XTO)
Activision Blizzard (ATVI)
Schering Plough (SGP)
Devry (DV)
HanesBrands (HBI)
Lender Processing (LPS)
BB&T (BBT)
Morgan Stanley (MS)
M&T Bank (MTB)
Yingli Green Energy (YGE)
Goldman Sachs (GS)
Freeport McMoran (FCX)
Las Vegas Sands (LVS)
J Crew (JCG)
Hudson City Bancorp (HCBK)
SalesForce (CRM)
Zale Corp (ZLC)
Nutrisystem (NTRI)
Sealy (ZZ)
Fortress Investment Group (FIG)
Hancock Holding Co (HBHC)
Bancorp Southern (BCSO)
Washing Mutual (WM)
Susquehanna Bancshares (SUSQ)


Added to (Positions Maverick already owned but added more shares)
Citizens Republic Bancorp (CRBC): Increased position by 293%
Berkshire Hathaway (BRK.B): Increased position by 112%
MSCI Inc (MXB): Increased position by 87%
Southern Financial Group (AFN): Increased position by 80%
Universal American Corp (UAM): Increased position by 58.5%
Marvell (MRVL): Increased position by 45%
Cigna (CI): Increased position by 43%
Netapp (NTAP): Increased position by 35%
Cognizant Tech (CTSH): Increased position by 33%
GMarket (GMKT): Increased position by 27%
First Solar (FSLR): Increased position by 22%
Lorillard (LO): Increased position by 21%
Dish Network (DISH): Increased position by 20%
MetroPCS (PCS): Increased position by 19%
CVS Caremark (CVS): Increased position by 14%
AthenaHealth (ATHN): Increased position by 12.7%
Leap Wireless (LEAP): Increased position by 12%
Textron (TXT): Increased position by 9.9%
Monsanto (MON): Increased position by 7%
Digital River (DRIV): Increased position by 4.6%
Thermo Fisher Scientific (TMO): Increased position by 3.8%
Gilead Sciences (GILD): Increased position by 1.3%
Berkshire Hathaway (BRK.A): Increased position by 0.16%
Cypress Biosciences (CYPB): Increased position by 0.05%


Reduced Positions (Positions Maverick sold some shares of)
Cardinal Health (CAH): Reduced by 55%
Covidien (COV): Reduced by 54%
Western Union (WU): Reduced by 51%
National City (NCC): Reduced by 51%
Marsh & Mclennan (MMC): Reduced by 44.7%
Potash (POT): Reduced by 44%
Baxter (BAX): Reduced by 36%
Burlington Northern (BNI): Reduced by 35%
Advanced Micro Devices (AMD): Reduced by 34%
America Movil (AMX): Reduced by 29%
Under Armour (UA): Reduced by 29% - Note: They have since sold off their entire position
DirecTV (DTV): Reduced by 28%
Dicks Sporting Goods (DKS): Reduced by 25%
Trubion Pharmaceuticals (TRBN): Reduced by 22%
Infinera (INFN): Reduced by 9.7%
Wyeth (WYE): Reduced by 9.6%
Home Inns & Hotels (HMIN): Reduced by 9.4%
Resmed (RMD): Reduced by 9%
Palm (PALM): Reduced by 7.8%
Citrix (CTXS): Reduced by 7.2%
Liberty Media (LMDIA): Reduced by 5.6%
Apple (AAPL): Reduced by 4.8%
Raytheon (RTN): Reduced by 3%
Fidelity National Info (FIS): Reduced by 2.9%
Comscore (SCOR): Reduced by 2.7%
Research in Motion (RIMM): Reduced by 2.2%


Positions with no change
Lamar Advertising (LAMR)
VMWare (VMW)
Newstar Financial (NEWS)
BPW Acquisition (BPW)
First Advantage Corp (FADV)
Bluefly (BFLY)
First Marblehead (FMHD)
Ultra Clean Holdings (UCTT)
Vivus Inc (VVUS)


Removed Positions (Positions Maverick sold out of completely)
American Capital Strategies (ACAS)
Amylin Pharma (AMLN)
Avon Products (AVP)
Bank of New York Mellon (BK)
China Nepstar (NPD)
Corcept Therapeutics (CORT)
Discovery Holdings (DISCA)
Forest Labs (FRX)
Gamestop (GME)
Genentech (DNA)
Google (GOOG)
Hansen Natural (HANS)
ITT Educational (ESI)
JP Morgan Chase (JPM)
Lexmark (LXK)
Lumber Liquidators (LL)
Macys (M)
Mylan (MYL)
Nordstrom (JWN)
Polo Ralph Lauren (RL)
Sohu (SOHU)
Suntrust Banks (STI)
Viacom (VIA)
Visa (V)
Zimmer Holdings (ZMH)


Top 20 Holdings (by % of portfolio)

  1. Lorillard (LO): 3.98% of portfolio
  2. Apple (AAPL): 3.58% of portfolio
  3. First Solar (FSLR): 3.38% of portfolio
  4. America Movil (AMX): 3.29% of portfolio
  5. Raytheon (RTN): 3.22% of portfolio
  6. Marvell (MRVL): 3.2% of portfolio
  7. Apollo Group (APOL): 3.19% of portfolio
  8. Research in Motion (RIMM): 3.16% of portfolio
  9. Amgen (AMGN): 3.15% of portfolio
  10. Gilead (GILD): 2.8% of portfolio
  11. Netapp (NTAP): 2.79% of portfolio
  12. CVS Caremark (CVS): 2.76% of portfolio
  13. Baxter (BAX): 2.54% of portfolio
  14. Citrix (CTXS): 2.38% of portfolio
  15. Thermo Fisher Scientific (TMO): 2.33% of portfolio
  16. Advanced Micro Devices (AMD): 2.3% of portfolio
  17. Liberty Media (LMDIA): 2.09% of portfolio
  18. Monsanto (MON): 1.9% of portfolio
  19. Priceline (PCLN): 1.85% of portfolio
  20. XTO Energy (XTO): 1.79% of portfolio


This is the fifth hedge fund we've covered in our 3rd quarter 2008 edition of our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, and Stephen Mandel's Lone Pine Capital. Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds to look forward to that we will be tracking: David Einhorn's Greenlight Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Ainslie & Maverick:
- October Hedge Fund Performance numbers
- Maverick's recent Investor Letter
- Maverick's 2nd quarter '08 portfolio holdings & 13f analysis
- Ainslie's Maverick Capital sells entire Under Armour (UA) stake
- 'Tiger Cub' hedge fund panel
- Julian Robertson (Ainslie's mentor) reveals some recent buys


ETF Cheat Sheet

If you're ever in a hurry to place a trade based on a sector or specific grouping of stocks, then fear not. Bespoke is out with their handy ETF Cheat Sheet which breaks down the various ETFs and their tickers. Download the .pdf here.


Wednesday, November 19, 2008

Hedge Fund Tracking: Stephen Mandel's Lone Pine Capital - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis of each individual fund here in the coming weeks. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, and Bill Ackman's Pershing Square. Next up, we have Lone Pine Capital, managed by Stephen Mandel Jr. Lone Pine is an $8 Billion fund that has returned over 25% annually ever since its inception in 1997. Why is Mandel worth following you might ask? Well, he served as a consumer/retail analyst for Tiger Management back in the day for legendary investor Julian Robertson. Robertson's proteges/right-hand men have been nicknamed the "Tiger Cubs" and many have started their own funds. So, not only has Mandel learned from one of the best, but he has put up some very solid returns himself. Mandel is well versed in the ways of finding undervalued companies and his funds typically like to sniff out solid companies with good management that are trading below their intrinsic value.

A year ago, 1 of his funds was up 34% before fees while another was up 32% before fees. His track record speaks for itself. And, not to mention, he learned from one of the greats in Julian Robertson. However, 2008 has not been kind to Lone Pine, as they find themselves -26.5% for the year as of the end of September. You can also see how numerous other hedge funds have fared with our October hedge fund performance update. Before checking out their holdings from last quarter, you might be interested in checking out our analysis of Lone Pine's previous 13F (2nd quarter). Additionally, we noted that Lone Pine had recently taken a 6.8% stake in Dolby (DLB).

So, now that we've got a background on Mandel and Lone Pine, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Lone Pine's top holdings. Due to the time sensitive nature of the 13F material, we wanted to get this information posted as soon as possible. Also, we'd like to give a special thank you to Alex Prywes who has helped us with the 13f analysis so that we can cover more funds.

The following were Lone Pine's long equity and options holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that Lone Pine initiated in the last quarter):
Crown Castle (CCI)
Dolby Labs (DLB)
First Horizon National Corp (FHN)
Precision Cast Parts (PCP)
Sears Holdings (SHLD) Puts
National City Corp (NCC)
Hansen Natural (HANS)


Added to (Positions LP already owned but added more shares)
Visa (V): Increased position by 180%.
Priceline (PCLN): Increased position by 154%.
Weatherford (WFT): Increased position by 61%.
Qualcomm (QCOM): Increased position by 57%.
Mastercard (MA): Increased position by 51%.
XTO Energy (XTO): Increased position by 40%.
America Movil (AMX): Increased position by 26%.
Sandridge Energy (SD): Increased position by 12%.
Lorillard (LO): Increased position by 3%.


Reduced Positions (Positions LP sold some shares of)
Sears Holdings (SHLD) Puts: Reduced by 99.85%.
Bunge (BG) Puts: Reduced by 99%.
Sears Holdings (SHLD) 2nd set of Puts: Reduced by 93%
Dicks Sporting Goods (DKS): Reduced by 49.5%.
Eagle Materials (EGLE): Reduced by 38%.
SAIC (SAI): Reduced by 25.7%.
Fastenal (FAST): Reduced by 24.95%.
Teradata (TDC): Reduced by 6.73%.
MSC Industrial (MSM): Reduced by 4.84%.


Positions with no change
Deltek (PROJ): 4.34% of portfolio


Removed Positions (Positions LP sold out of completely)
Amazon (AMZN)
Entergy (ETR)
Monsanto (MON)
CB Richard Ellis (CBG)
New York Times (NYT) Puts
Brookfield Asset Mgmt (BAM)
Infosys (INFY)
Google (GOOG)
Illumina (ILMN)


Top 20 Holdings (by % of portfolio)

  1. America Movil (AMX): 15.9% of the portfolio
  2. Qualcomm (QCOM): 14.8% of the portfolio
  3. XTO Energy (XTO): 10.6% of the portfolio
  4. Visa (V): 5.46% of the portfolio
  5. Sandridge Energy (SD): 5.17% of the portfolio
  6. Priceline (PCLN): 4.72% of the portfolio
  7. Lorillard (LO): 4.67% of the portfolio
  8. Fastenal (FAST): 4.34% of the portfolio
  9. MSC Industrial (MSM): 4.34% of the portfolio
  10. Crown Castle (CCI): 4.10% of the portfolio
  11. Precision Cast Parts (PCP): 3.78% of the portfolio
  12. Weatherford (WFT): 3.73% of the portfolio
  13. Mastercard (MA): 3.34% of the portfolio
  14. Teradata (TDC): 3.22% of the portfolio
  15. Dolby Labs (DLB): 2.98% of the portfolio
  16. Hansen Natural (HANS): 2.49% of the portfolio
  17. SAIC (SAI): 1.2% of the portfolio
  18. Eagle Materials (EGLE): 1.1% of the portfolio
  19. Sears Holdings (SHLD) Puts: 0.31% of the portfolio
  20. Dicks Sporting Goods (DKS): 0.76% of the portfolio

This is the fourth hedge fund we've covered in our 3rd quarter 2008 edition of our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, and Bill Ackman's Pershing Square. Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds to look forward to that we will be tracking: David Einhorn's Greenlight Capital, Lee Ainslie's Maverick Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Stephen Mandel and Lone Pine Capital:
- Lone Pine takes 6.8% stake in Dolby (DLB)
- Lone Pine's 2nd quarter 2008 portfolio holdings & 13f analysis
- October Hedge Fund performance numbers
- Julian Robertson (Mandel's mentor) reveals some recent buys
- 'Tiger Cub' Hedge Fund Panel (investment ideas)
- September Hedge Fund performance numbers


Apple (AAPL): Steve Jobs' Replacement?

Fortune has a must-read piece out for anyone who is invested in or thinking about investing in Apple (AAPL). Steve Jobs is arguably the most important person associated with a publicly traded company these days. His time to step down will come at some point, but the question remains "Who will succeed him?" Fortune has postulated (as have many others) that Tim Cook is the man for the job. Read the full article here.


Tuesday, November 18, 2008

Hedge Fund Tracking: Bill Ackman's Pershing Square - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We'll be bringing you the long equity portfolios of numerous prominent hedge funds. Hedge funds we track here at MarketFolly.com include: Tudor Investment Corp, Maverick Capital, Greenlight Capital, Blue Ridge Capital, Moore Capital Management, Lone Pine Capital, and literally many, many more. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis of each individual fund here in the coming weeks. We've already covered Whitney Tilson's T2 Partners and Peter Thiel's Clarium Capital.

Next up we have Pershing Square Capital Management. If you're unfamiliar with them, Bill Ackman runs Pershing Square Capital, a well known value/activist based hedge fund. The fund started in 2003 after Gotham Partners broke up. The past few years, he has had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). Some of his activist positions include Target (TGT) and Borders (BGP). Simply put, Ackman is a smart man. Recently, he detailed his plans for Target to spin-off its real-estate to unlock value. We'll see if this proposal picks up any steam. We recently noted Pershing Square's portfolio performance, which was included in our September hedge fund performance update. Additionally, we've updated the performance of various hedge funds in October. Also, we wrote about Mr. Ackman's recent speech at the Value Investing Congress. Furthermore, you can view Pershing Square's most recent investor letter here. Lastly, Ackman recently sat down with Charlie Rose for an interview.

So, now that we've got a background on Ackman and Pershing, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Pershing's top holdings. Due to the time sensitive nature of the 13F material, we wanted to get this information posted as soon as possible. The following were Pershing's holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that Pershing initiated in the last quarter):
American International Group (AIG)
American International Group (AIG) Calls
Mastercard (MA)
Visa (V)
Wachovia Bank (WB)

Removed Positions (Positions Pershing sold out of completely last quarter):
MBIA (MBI) Puts
Cadbury (CBY)

Notable Position Changes
- Sold 92.5% of their Sears Holdings (SHLD) Position

Pershing Square's Entire Portfolio (based on % of portfolio):

  1. Target (TGT): 24.7% of portfolio
  2. EMC Corp (EMC): 18% of portfolio
  3. Dr. Pepper Snapple (DPS): 15% of portfolio
  4. Wachovia (WB): 8.7% of portfolio
  5. Wendy's/Arby's (WEN): 7.5% of portfolio
  6. Long's Drugstores (LDG): 6.1% of portfolio
  7. Barnes & Noble (BKS): 4.4% of portfolio
  8. Visa (V): 4.2% of portfolio
  9. American International Group (AIG): 2.8% of portfolio
  10. Mastercard (MA): 2.6% of portfolio
  11. Target (TGT) Calls: 2.5% of portfolio
  12. Borders (BGP): 1.8% of portfolio
  13. Sears Holdings (SHLD): 1.2% of portfolio
  14. Greenlight Capital RE (GLRE): 0.1% of portfolio
  15. American International Group (AIG) Calls

Keep in mind that we have not detailed every tiny maneuver they have made with their portfolio. In some of their holdings they added shares, others they sold some shares, and some of their positions were left unchanged from last quarter. We are essentially capturing the major moves Pershing has made over the past quarter with regards to their portfolio.

This is the third hedge fund we've covered in our 3rd quarter 2008 edition of our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners and Peter Thiel's Clarium Capital. Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds to look forward to that we will be tracking: David Einhorn's Greenlight Capital, Lee Ainslie's Maverick Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Pershing Square and Bill Ackman:
- Pershing Square's 3rd qtr '08 investor letter
- Bill Ackman's recent interview with Charlie Rose
- Pershing Square's Bill Ackman speaks at Value Investing Congress
- Recent update on Pershing Square


Jim Rogers Dislikes Bonds, George Soros Doesn't Rule Out Depression

Our old Quantum Fund buddies are up to no good again, chiming in wherever the media outlets can pick them up. Recently, Jim Rogers was out saying that he thinks bonds will be a terrible investment for the next 10 or 20 years. Additionally, George Soros, in his Congressional testimony, said we are in a deep recession, and would not rule out the possibility of a depression.


Monday, November 17, 2008

Bill Ackman's (Pershing Square) Recent Interview With Charlie Rose

Great commentary from Bill Ackman of Pershing Square Capital Management from a recent Charlie Rose interview. Hat tip to Earnings Breakout for finding it. (Note: Email readers will have to come to the blog to view the embedded video).


Bill Ackman's Pershing Square Investor Letter (3rd Quarter 2008)

Full credit to Todd Sullivan at Value Plays for digging this gem up. Here's Pershing Square's 3rd quarter '08 investor letter, as written by Bill Ackman.

Pershing Square Q3 2008 Investor Letter



(Note: Email readers you will probably have to come to the blog to read the embedded letter)


Hedge Fund Tracking: Peter Thiel's Clarium Capital - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We'll be bringing you the long side of the portfolios of numerous prominent hedge funds. Hedge funds we track here at MarketFolly.com include: Tudor Investment Corp, Maverick Capital, Greenlight Capital, Blue Ridge Capital, Moore Capital Management, Lone Pine Capital, and literally many, many more. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis here in the coming weeks on each individual fund. We've already covered Whitney Tilson's T2 Partners here.

The second fund in the 3rd quarter edition of our 2008 hedge fund tracking series is Clarium Capital Management, LLC. Clarium is a $6 billion global macro hedge fund run by Peter Thiel, the co-founder of PayPal. 2008 has been a roller coaster year for Thiel and company. Earlier in the year, they were up over 45%. But, as market volatility increased, they began to give back their gains and now find themselves -2.8% for the year. This was in part due to a rough October, in which they were down 18% for the month, in part due to their recent shift into equities. Assets under management had recently ballooned to the highest amount in Clarium's history and it will be interesting to see how effective Clarium will be at deploying this new capital going forward. Thiel's fund employs a slightly different management fee structure than most of the hedge fund world. Typical funds charge a flat 2% management fee and then a 20% performance fee. Clarium, on the other hand, does not charge a management fee, but charges a 25% performance fee. They obviously have more incentive to perform well, to ensure they get paid. Before reading this quarter's update, you might be interested in reading our coverage of Clarium's 2nd quarter portfolio holdings. And, to those who want a little more background on Thiel & his investment style, we first wrote about him here.

So, now that we've got a background on Thiel and Clarium, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Clarium's top holdings. Due to the time sensitive nature of the 13F material, we wanted to get this information posted as soon as possible. The following were Clarium's holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that Clarium initiated in the last quarter):
PIMCO Municipal Income Fund (PMF)
Oracle (ORCL)
PIMCO Floating Rate Strategy Fund (PFN)
Iron Mountain Incorporated (IRM)
Consolidated Edison (ED)
Kimberly-Clark Corporation (KMB)
T-3 Energy Services (TTES)
Natus Medical (BABY)
National Municipal Bond Fund (MUB)
United States Oil Fund (USO)
ishares Brazil ETF (EWZ)
Interval Leisure Group (IILG)
Exxon Mobil (XOM)
Mastercard (MA)
United States Natural Gas Fund (UNG)
Microsoft (MSFT)
Yahoo (YHOO)
Google (GOOG)
Financial Select Sector ETF (XLF)

Removed Positions (Positions Clarium sold out of completely last quarter):
Cabot Oil & Gas (COG)
Petroleo Brasileiro (PBR)
Honeywell (HON)
ITT Corporation (ITT)
Aircastle Limited (AYR)
Frontier Oil (FTO)
Marathon Oil (MRO)
ONEOK (OKE)
Royal Caribbean (RCL)
Berkshire Hathaway (BRK.B)
Foster Wheeler (FWLT)
Nucor (NUE)
Pinnacle Airlines (PNCL)
Sothebys (BID)
Black & Decker (BDK)

Top 20 Holdings (based on % of portfolio):

  1. Financial Select Sector ETF (XLF): 38.5% of portfolio
  2. Google (GOOG): 28.8% of portfolio
  3. Yahoo (YHOO): 28.7% of portfolio
  4. Hewlett Packard (HPQ): 0.4% of portfolio
  5. Microsoft (MSFT): 0.3% of portfolio
  6. McDonalds (MCD): 0.3% of portfolio
  7. Procter & Gamble (PG): 0.3% of portfolio
  8. Burlington Northern (BNI): 0.27% of portfolio
  9. Philip Morris International (PM): 0.27% of portfolio
  10. United States Natural Gas Fund (UNG): 0.1% of portfolio
  11. Mastercard (MA): 0.1% of portfolio
  12. Conoco Philips (COP): 0.1% of portfolio
  13. Fairfax Financial (FFH): 0.1% of portfolio
  14. Occidental Petroleum (OXY): 0.1% of portfolio
  15. Exxon Mobil (XOM): 0.1% of portfolio
  16. Schering Plough (SGP)
  17. Altria (MO)
  18. Interval Leisure Group (IILG)
  19. Canadian Superior Energy (SNG)
  20. NRG Energy (NRG)
First, we need to cover the odd construction of Clarium's portfolio, which may be puzzling some of you reading. Clarium employs a global macro strategy and therefore invests across multiple markets (commodities, currencies, debt, bonds, global markets, etc). And, due to the fact that SEC 13F filings only require equity holdings to be disclosed, we only get to see a small slice of their overall portfolio. We track Clarium's equity holdings simply because Thiel is very intelligent and they could enter equity markets at any moment. For instance, in our 2nd quarter analysis of Clarium's holdings, we noted that they only had $93 million invested in equities as detailed in the filing. And, considering they had over $6 billion AUM (assets under management) at the time, the equities detailed in the filing were miniscule positions compared to their overall fund size. But, as we recently noted, Clarium shifted to equities in late September. And thus, we see part of this reflected in the current 13F filing. In the 2nd quarter, they had $93 million invested in equities. But, this time around (3rd quarter), they had over $2.8 billion invested in equities.

This drastic jump in capital allocated to long positioned equities also helps to describe their lopsided portfolio. Keep in mind they also probably had equity short positions as well, which we cannot see. As you'll notice in the top 20 holdings listed above, the top 3 holdings make up a vast percentage (%) of the portfolio relative to their other positions. Those positions included: Financial select sector ETF (XLF), Google (GOOG), and Yahoo (YHOO). Clarium definitely felt that the financials and specific tech names were vastly beaten down and due for a correction. The rest of the positions are small relative to their overall equity exposure at only 0.1%-0.3% of the equity portfolio. These smaller positions reflect the minimal equity exposure Clarium had in the quarter prior, where they were hardly invested in equities.

We will have to wait until next quarter to see whether or not Thiel was building up core positions in Google (GOOG) and Yahoo (YHOO), or simply trading them. We have a feeling though, that these position sizes will be reduced in size come next quarter. After all, they are a global macro fund and they will quickly allocate their money to the markets and positions they feel are poised to benefit. But, that is merely speculation on our part.

Keep in mind that we have not detailed every tiny maneuver they have made with their portfolio. In some of their holdings they added shares, and with others they sold some shares. We are essentially capturing the major moves Clarium has made over the past quarter with regards to their portfolio.

This is the second hedge fund we're covering in our 3rd quarter 2008 edition of our series of tracking 35+ prominent hedge funds. We've already covered Whitney Tilson's T2 Partners here. Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds we will be tracking to look forward to: David Einhorn's Greenlight Capital, Lee Ainslie's Maverick Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Clarium Capital & Peter Thiel:

- Overall hedge fund performance numbers update: October 2008
- Clarium's October 2008 performance update
- Thiel & Clarium Shift to Equities
- Clarium's August 2008 performance update
- Clarium's 2nd quarter 2008 portfolio holdings/analysis
- More on Peter Thiel


Julian Robertson Interview (Hedge Fund legend, Tiger Management founder)

Julian Robertson, founder of legendary hedge fund Tiger Management, recently sat down on Bloomberg to discuss some of his recent buys that we covered here. In the interview, he talks about the markets in general, as well as his specific picks of Google (GOOG), Baidu (BIDU), Mastercard (MA), and Visa (V). Don't let his long picks fool you though. He mentions in the interview that he is pretty short overall at the moment. Those longs are just a glimmering light of hope to complement/hedge his pessimism. Also, if you missed it, we posted about a hedge fund panel that took place recently which included the likes of Robertson and numerous of his 'Tiger Cub' prodigies. (Note: Email readers will have to come to the blog to view the embedded video).


Video of Hedge Fund Managers' Testimony

If you missed it, we recently wrote about numerous prominent hedge fund managers going before Congress to give their testimony regarding hedge funds and the current market. Here are some of their testimonies via video, courtesy of the NYT.


Sunday, November 16, 2008

Hedge Fund Tracking: Whitney Tilson's T2 Partners - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

Well, here we are again, right back in the swing of things. This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We'll be bringing you the long side of the portfolios of numerous prominent hedge funds. Hedge funds we track here at MarketFolly.com include: Tudor Investment Corp, Maverick Capital, Greenlight Capital, Blue Ridge Capital, Moore Capital Management, Lone Pine Capital, and literally many, many more. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis here in the coming weeks on each individual fund.

First up in the 3rd quarter edition of our 2008 hedge fund tracking series is T2 Partners. T2, as of the current filing, is a $132 million value fund ran by Whitney Tilson. In addition to running his fund, Tilson is very active in the value investing community, releasing his Value Investor Insight newsletter and organizing the Value Investing Congress, which we covered a few weeks earlier. We also recently covered Tilson's latest thoughts on this volatile market here.

Tilson launched his investment career in 1999. Taken from his Tilson Funds website, "Mr. Tilson received an MBA with High Distinction from the Harvard Business School, where he was elected a Baker Scholar (top 5% of class), and graduated magna cum laude from Harvard College, with a bachelor’s degree in Government. Mr. Tilson writes a regular column on value investing for the Financial Times and Kiplinger's, has written for the Motley Fool and TheStreet.com, and teaches financial statement analysis and business valuation for the Dickie Group. He was one of five investors included in SmartMoney’s Power 30, and was named by Institutional Investor as one of 20 Rising Stars."

So, now that we've got a background on Tilson and T2, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of T2's top holdings. Due to the time sensitive nature of the 13F material, we wanted to get this information posted as soon as possible. The following were T2 Partners holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that T2 initiated over the past quarter)
Contango Oil & Gas (MCF)
Goldman Sachs (GS)
Atlas Pipeline Partners (APL)
Anheuser Busch (BUD)
GHL Acquisition Corp (GHQ)
Chesapeake Energy (CHK)
Research in Motion (RIMM)
Annaly Capital Management (NLY)
Fannie Mae (FNM)
Chipotle (CMG-B)
Premier Exhibitions (PRXI)

Removed Positions (Positions T2 sold out of completely last quarter):
Birthday Chocolates (BDAY)
Jamba (JMBA)
American Italian Pasta (AITP)
Ebay (EBAY)
Whole Foods (WFMI)
ATP Oil & Gas (ATPG)
Hennessy Advisors (HNNA)
Clearpoint Business Resources (CPBR)
Starbucks (SBUX)
Kinross Gold (KGC)
Universal Stainless & Alloy Products (USAP)

Top 20 Holdings (based on % of portfolio):

  1. Fairfax Financial (FFH) - 19% of portfolio
  2. Resource America (REXI) - 7.8% of portfolio
  3. Winn Dixie Stores (WINN) - 7.1% of portfolio
  4. Berkshire Hathaway (BRK.B) - 6.9% of portfolio
  5. Borders (BGP) - 6.3% of portfolio
  6. Echostar (SATS) - 5.7% of portfolio
  7. Delia's (DLIA) - 5.6% of portfolio
  8. EMC Corp (EMC) - 4.7% of portfolio
  9. Barnes & Noble (BKS) - 4.3% of portfolio
  10. Contango Oil & Gas (MCF) - 3.9% of portfolio
  11. Goldman Sachs (GS) - 3.1% of portfolio
  12. Target (TGT) - 2.8% of portfolio
  13. Sears Holding (SHLD) - 2.4% of portfolio
  14. Weyco Group (WEYS) - 2.1% of portfolio
  15. Winthrop Realty (FUR) - 1.7% of portfolio
  16. Odyssey Re Holdings (ORH) - 1.7% of portfolio
  17. Berkshire Hathaway (BRK.A) - 1.5% of portfolio
  18. Greenlight Capital RE (GLRE) - 1.2% of portfolio
  19. Ambassadors International (AMIE) - 1% of portfolio
  20. Atlas Pipeline Partners (APL) - 0.8% of portfolio

Keep in mind that we have not detailed every tiny maneuver they have made with their portfolio. Some of the holdings they added some shares, others they sold. We are essentially capturing the major moves T2 has made over the past quarter with regards to their portfolio.

This is the first hedge fund we're covering in our 3rd quarter 2008 edition of our series of tracking 35+ prominent hedge funds. Stay tuned this week and next week as we detail the portfolio holdings of these funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. So, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Some funds we will be tracking to look forward to: David Einhorn's Greenlight Capital, Lee Ainslie's Maverick Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

Lastly, make sure to check out T2 Partners' Whitney Tilson's latest thoughts on the market and check back with us at MarketFolly.com in the coming days to follow all the hedge fund portfolio holdings.