Friday, December 12, 2008

Top 10 Worst Recessions

Blain over at StockTradingToGo has a nice post up comparing the longevity of past recessions to the one we find ourselves in currently.

  1. 1929-1933, 43 months in duration (Great depression).
  2. 1981-1982, 16 months in duration.
  3. 1973-1975, 16 months in duration.
  4. 1937-1938, 13 months in duration.
  5. 1926-1927, 13 months in duration.
  6. 2007-2008, 12 months in duration.*
  7. 1970, 11 months in duration.
  8. 1948-1949, 11 months in duration.
  9. 1960-1961, 10 months in duration.
  10. 1953-1954, 10 months in duration.

Now, the question ultimately becomes: how long does the current recession last? Well, for one thing, this recession only needs to last 4 more months to become the second longest recession. With the current auto bailout nonsense still going on, and no real relief for consumers coming anytime soon, we could easily see this recession moving up into 2nd place. We've got real issues to deal with here and these are certainly unprecedented times.

We recently wrote about how the consumer savings will have to rise in order for things to stabilize. Such a deteriorating consumer environment will definitely play a large part in the longevity of the current recession. The destruction of wealth that many "main street" Americans have and will experience should reach astounding levels and will impact many psychologically. An overleveraged American consumer was the backbone of the American for quite some time. But, times change.

See also Paul Kedrosky's recent Economic predictions, as well as a comparison between the current crisis, the Nordic crisis, and the Great Depression.


Farallon Capital Management's Thomas Steyer

Interesting profile from Fortune on Thomas Steyer, founder of $33 billion Farallon Capital Management: read it here.


Thursday, December 11, 2008

Carlos Slim Discloses 17.8% Stake in Saks (SKS) - 13G Filing

In a 13G filed with the SEC, Carlos Slim has disclosed he has a 18% stake in Saks (SKS). Carlos has upped his stake from his previous 10.9% stake. Saks (SKS) responded to this action by essentially adopting a poison pill where a penalty is established for anyone who accumulates a 20% stake in the company without approval from the Board. Should be interesting to see how this plays out, seeing how Carlos is already close to that threshold.

Carlos Slim is a well-known Mexican businessman who amassed his wealth through telecom. He is known for his association with America Movil (AMX), Telcel, and Telefonos de Mexico (TMX) and was the second richest man in the world as of 2008. Slim has been busy in the markets recently. As we noted earlier, Carlos Slim had also taken a stake in Bronco Drilling (BRNC), among other actions.

Taken from Google Finance, "Saks Incorporated operates Saks Fifth Avenue (SFA), Off Fifth and Club Libby Lu (CLL). Previously, the Company also operated Saks Department Store Group (SDSG), which consisted of Proffitt’s and McRae’s (Proffitt’s) (sold to Belk, Inc. (Belk) in July 2005), the Northern Department Store Group (NDSG) (operated under the nameplates of Bergner’s, Boston Store, Carson Pirie Scott, Herberger’s and Younkers, and sold to The Bon-Ton Stores, Inc. (Bon-Ton) in March 2006), and Parisian (sold to Belk in October 2006). SFA stores are principally freestanding stores in exclusive shopping destinations or anchor stores in upscale regional malls, and the stores typically offer an assortment of luxury apparel, shoes, accessories, jewelry, cosmetics and gifts."


A Look at Ken Griffin (Citadel), Dan Loeb (Third Point), and Eric Bolling (Notable Trader)

- Fortune has an excellent interview with Ken Griffin & play-by-play of the recent troubles at Citadel.

- Background on Eric Bolling, whose commentary we have featured often on the blog (recently here and here).

- A look at Third Point hedge fund manager Dan Loeb. Also, you can now rent his plane. (We recently looked at his portfolio here).


New Leveraged Commodity & Currency ETFs

Here's a quick list of some new ETFs hitting the markets:

  • UCD ProShares Ultra DJ-AIG Commodity
  • CMD ProShares Ultra Short DJ-AIG Commodity
  • UCO ProShares Ultra DJ-AIG Crude Oil
  • SCO ProShares Ultra Short DJ-AIG Crude Oil
  • ULE ProShares Ultra Euro
  • EUO ProShares UltraShort Euro
  • YCL ProShares Ultra Yen
  • YCS ProShares UltraShort Yen
  • UGL ProShares Ultra Gold
  • GLL ProShares UltraShort Gold
  • AGQ Proshares Ultra Silver
  • ZSL Proshares UltraShort Silver
I find it highly ironic that in a time where everyone is deleveraging & concerned about leverage, that we continually see more and more leveraged ETFs popping up. Just what we needed! Oh, and if you missed it, the new triple levered ETFs take the cake!


Wednesday, December 10, 2008

Bruce Kovner's Caxton Associates: Hedge Fund Tracking Q3 2008 - 13F Filing

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. We've already covered:


Next up is Bruce Kovner's Caxton Associates. The $10 billion firm is one of many global macro oriented funds which we cover. This is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.

Kovner comes from the group of "offspring" of the legendary Commodities Corp. Kovner emerged as a successful offspring along with fellow great macro traders Paul Tudor Jones (Tudor Investment Corp), and Louis Bacon (Moore Capital Management). If you want to hear some insightful thoughts from Bruce Kovner himself, head over to our post on Hedge Fund manager interviews. Taken from Wikipedia, Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." As of the end of October, Caxton's Global Investment Fund was up 7.25%.

Before beginning, you might be interested in checking out Caxton's portfolio holdings from Q2 2008. Also, we noted that Caxton had recently boosted their stake in Ferro (FOE) to 5.2%. The following were Caxton's long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC.


New Positions (Brand new positions that they initiated in the last quarter):
Grey Wolf (GW)
Ikon Office (IKN)
Campbell Soup (CPB)
Scripps Networks (SNI)
JP Morgan Chase (JPM-PA)
PPG Industries (PPG)
Hewlett Packard (HPQ)
Lorillard (LO)
Waste Management (WMI)
Vivus (VVUS)
Lazard (LAZ)
NDS Group (NNDS)
Greenfield Online (SRVY)
Reinsurance Group of America Class B (RGA-B)
IAC Interactive (IACI)
HSBC Holdings (HBC)
Secure Computing (SCUR)
Genentech (DNA)
Winnebago (WGO)
Amgen (AMGN)
Penn National Gaming (PENN)
HILB Rogal & Hobbs (HRH) - no longer active on NYSE
Georgia Gulf (GGC)
Ishares Natural Resources (IGE)
Delta Airlines (DAL)
Financials ETF (XLF)
Scholastic (SCHL)
Northwest Airlines (NWA)
Anadarko Petroleum (APC)
Devon Energy (DVN)


Added to (Positions they already owned but added shares to)
JP Morgan Chase (JPM): Increased stake by 2991%
Freeport McMoran (FCX): Increased stake by 870%
Ferro (FOE): Increased stake by 824%
Charles Schwab (SCHW): Increased stake by 257%
Walmart (WMT): Increased stake by 242%
Metlife (MET): Increased stake by 145%
Symantec (SYMC): Increased stake by 145%
Medco Health (MHS): Increased stake by 92%
Altria (MO): Increased stake by 60%
Republic Services (RSG): Increased stake by 44%
Ariba (ARBA): Increased stake by 28%
Raytheon (RTN): Increased stake by 15%
XTO Energy (XTO): Increased stake by 5%


Some Reduced Positions (Positions they sold some shares of - note not all sales listed)
DirecTV (DTV): Reduced position by 51%
Coca Cola (KO): Reduced position by 42%
Estee Lauder (EL): Reduced position by 36%
Gilead Sciences (GILD): Reduced position by 32%
Schlumberger (SLB): Reduced position by 32%
General Mills (GIS): Reduced position by 26%
Union Pacific (UNP): Reduced position by 24%
Total (TOT): Reduced position by 20%
Omnicom (OMC): Reduced position by 16%
W.R. Grace (GRA): Reduced position by 7.5%
Berkshire Hathaway (BRK.A): Reduced position by 6%


Removed Positions (Positions they sold out of completely)
Oil Services ETF (OIH)
Kraft (KFT)
Alcoa (AA)
Gardner Denver (GDI)
Apple (AAPL)
Baldor Electric (BEZ)
Tesoro (TSO)
Taiwan Semiconductor (TSM)
Innophos Holdings (IPHS)
Deere (DE)
Brookfield Asset Management (BAM)
Liberty Media (LMDIA)
Clear Channel (CCU)
Electronic Data Systems (EDS-PI)
Navteq
Activision (old shares before merger with Blizzard)
Lowes (L)
WH Energy (WHQA) - inactive
Choicepoint (CPS)
Monsanto (MON)
Rural Cellular (RCCCO)
Research in Motion (RIMM)
Nucor (NUE)
Ansoft
NRG Energy (NRG)
US Steel (X)
Pioneer Natural Resources (PXD)
Mastercard (MA)
Exelon (EXC)
MGM Mirage (MGM)


Top 20 Holdings (by % of portfolio)

  1. JPMorgan Chase (JPM): 8.05% of portfolio
  2. Grey Wolf (GW): 4.5% of portfolio
  3. Metlife (MET): 3.9% of portfolio
  4. Ikon Office (IKN): 3.1% of portfolio
  5. Service Corp (SCI): 2.7% of portfolio
  6. Campbell Soup (CPB): 2.4% of portfolio
  7. Ferro (FOE): 2.0% of portfolio
  8. Autozone (AZO): 1.9% of portfolio
  9. Berkshire Hathaway (BRK.A): 1.8% of portfolio
  10. Altria Group (MO): 1.8% of portfolio
  11. Walmart (WMT): 1.8% of portfolio
  12. W.R. Grace (GRA): 1.7% of portfolio
  13. Wells Fargo (WFC): 1.7% of portfolio
  14. Scripps Networks (SNI): 1.7% of portfolio
  15. XTO Energy (XTO): 1.7% of portfolio
  16. Raytheon (RTN): 1.6% of portfolio
  17. Coca Cola (KO): 1.6% of portfolio
  18. Philip Morris International (PM): 1.6% of portfolio
  19. Union Pacific (UNP): 1.5% of portfolio
  20. Omnicom (OMC): 1.5% of portfolio



Assets from the collective holdings were $6.5 billion last quarter and were only $2.2 billion this quarter. Much like fellow Commodities Corp 'offspring' Paul Tudor Jones and Louis Bacon, Kovner was also decreasing exposure to equities all across the board. Please note that we have not detailed every single change 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 and 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. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point, Paul Tudor Jones' Tudor Investment Corp, and Louis Bacon's Moore Capital Management. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent November 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.

More on Kovner & Caxton:
- Caxton's portfolio holdings from Q2 2008
- Caxton boosts stake in Ferro (FOE)
- November hedge fund performance numbers
- October hedge fund performance numbers
- Hedge Fund Rankings


Jim Rogers' Latest Thoughts

CommodityBullMarket has done an excellent job of jotting down notes from Jim Rogers' recent interview with the FT. Here are some important points they highlighted:


"Part 1 - Global recession will be long and deep.
  • He has not yet exited his US dollar positions, as he believes the current rally is an artificial one driven by short covering.
  • It could go longer and higher than anyone expects.
  • Reiterated his opinion that the US dollar is a flawed and maybe doomed currency.
  • We're going to have the worst recession since World War II
  • Likely we'll see exchange controls at some point in the US
Part 2 - Market correction is good for commodities.
  • The way to make money now is to buy the things where the fundamentals have been unimpaired.
  • Not only are the fundamentals of commodities unimpaired, but they have been strengthened, as supply is going to take a serious hit across the board as a result of tight credit markets.
  • "Farmers can't get loans for fertilizer now."
  • In the 30's, commodities hit bottom first because there was no supply. The same thing happened in the 1970's - again because there was no supply.
Part 3 - China economic story still intact.
  • "Selling China in 2008 would be like selling America in 1908. You might have looked good in the short term...but who cares?"
  • He bought more Chinese shares in Oct/Nov of this year.
  • Also believes the fundamentals of China will come out of this recession unimpaired.
Part 4 - Inflation is coming - you'd better own real assets.
  • We're following the mistakes of Japan by bailing everyone out.
  • This is the first time in world history that every government in the world is printing money.
  • It will lead to much, much higher prices.
  • Don't sell your gold, cotton, or sugar, because prices will be much, much higher in a few years.
  • We are not experiencing deflation - this is forced liquidation. We're fighting the wrong battle by fighting deflation."

Thanks again to CommodityBullMarket for the great summary of his interview. And, if you want to check out the full interview, head to the FT. Lastly, we wrote about how Rogers dislikes bonds here, and about how he is bullish on agriculture here.


Eton Park Capital's Eric Mindich Sees Opportunity

In an investor letter sent out to Eton Park Capital investors a month or two ago, fund manager Eric Mindich describes the current financial landscape as an area ripe with opportunity.

(click to enlarge)



Tuesday, December 9, 2008

Hedge Fund Tracking: Moore Capital Management (Louis Bacon) - 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. We've already covered:


Next up, we have Moore Capital Management, ran by Louis Bacon. Moore, named after Bacon's middle name, is a $10 billion global macro set of hedge funds. The next few funds we will be covering are global macro oriented funds, which is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.

Louis Bacon is a famed trader and risk manager. He comes from the group of "offspring" of the legendary Commodities Corp. Bacon emerged as one of the great macro traders alongside the likes of Paul Tudor Jones (Tudor Investment Corp), and Bruce Kovner (Caxton Associates). And, interestingly enough, Bacon helped get his firm off the ground when Paul Tudor Jones stopped accepting capital from investors and instead turned them to Bacon's firm. Returning 31% annually since inception in 1990, Bacon can be very proud of his flagship fund, Moore Global Investments. But, it doesn't stop there. His returns have shown little correlation to the stock market and low volatility. He is the definition of a risk manager.

Bacon credits his risk management skills to the futures markets, where he learned to be sensitive to market action. And, he learned such skills at an early age. While getting his MBA at Columbia, he used his student loan money to trade. And, he lost it all. Clearly, he learned a lesson he would never forget. Such a lesson stuck with him as he worked various jobs in the financial industry before eventually starting his own firm. And, in his first year managing Moore Capital Management, he returned 86%. Bacon strives to identify long running macro trends. While he has a longer-term macroeconomic view, he won't let that stop him from making money by trading around the position in the mean time. If you want to hear some insightful thoughts from Louis Bacon himself, head over to our post on Hedge Fund manager interviews. Also, its worth pointing out that Stanley Shopkorn, formerly of Moore Capital, has started his own fund.

Before beginning, you might be interested in checking out Moore's portfolio holdings from the second quarter of 2008. The following were Moore's long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC.


New Positions (Brand new positions that they initiated in the last quarter):
Energy ETF (XLE) Calls
Energy ETF (XLE) Puts
Energy ETF (XLE)
Ishares Emergin Markets (EEM)
Ace (ACE)
Goldman Sachs (GS)
Homebuilders ETF (XHB)
Sandisk (SNDK) Calls
KLA Tencor (KLAC) Calls
Rohm & Haas (ROH)
Data Domain (DDUP) Calls
Applied Materials (AMAT) Calls
Imclone (IMCL)
Cameco (CCJ)
Barr Pharma (BRL)
Activision Blizzard (ATVI)
Lennar (LEN) Puts
Citrix (CTXS)
Rio Tinto (RTP)
Informatica (INFA) Calls
Teradata (TDC) Calls
Wells Fargo (WFC)
Hewlett Packard (HPQ) Puts
Citigroup (C)
Cemex (CX)
Siderurgica (SID)
Foundry (FDRY)
Bucyrus (BUCY) Calls
Texas Instruments (TXN) Calls
International Rectifier (IRF)


Added to (Positions they already owned but added shares to)
Travelers (TRV): Increased by 1920%
SYMS (SYMS): Increased by 236%
EnergySolutions (ES): Increased by 100%
Chevron (CVX): Increased by 48%
Cisco (CSCO) Puts: Increased by 14%


Some Reduced Positions (Positions they sold some shares of - note not all sales listed)
Petroleo Brasileiro Cl A (PBR-A): Reduced by 79%
Electronic Arts (EA): Reduced by 95%
Tyson Foods (TSN): Reduced by 77%
Limelight networks (LLNW): Reduced by 55%
Walter Industries (WLT): Reduced by 84%
Crown Holdings (CCK): Reduced by 43%
Freeport McMoran (FCX): Reduced by 98%
Alpha Natural Resources (ANR): Reduced by 83%
Nvidia (NVDA): Reduced by 94%
Vale (RIO): Reduced by 94%
JP Morgan (JPM): Reduced by 38%
Powershares Water Resource (PHO): Reduced by 35%
Petroleo Brasileiro (PBR): Reduced by 9%
Barclays Bank Preferred Shares (BCS-PD): Reduced by 56%
Hewlett Packard (HPQ): Reduced by 57%
Qualcomm (QCOM): Reduced by 83%
Anheuser Busch (BUD): Reduced by 43%
Informatica (INFA): Reduced by 48%
Formfactor (FORM): Reduced by 50%


Removed Positions (Positions they sold out of completely)
Chesapeake (CHK) Calls
Chesapeake Energy (CHKDO) Convertible Bonds
Petrohawk (HK)
Powershares QQQ (QQQQ) Puts
Lehman Brothers (LEHMQ)
Philip Morris International (PM)
Merrill Lynch (MER) Puts
Sandridge Energy (SD)
Google (GOOG)
Petroleo Brasileiro (PBR) Puts
Marathon Oil (MRO)
Sotheby (BID)
Coca Cola (KO)
Potash (POT)
Comstock (CRK)
Ishares Transports (IYT) Puts
Goodrich Petroleum (GDP)
Terra Industries (TRA)
Arch Coal (ACI)
Agrium (AGU)
Teva Pharma Convertible Bonds (TEVA)
Target (TGT) Puts
Apple (AAPL)
Activision (converted into new shares of Activision Blizzard - ATVI)
Massey Energy (MEE)
Fomento Economico (FMX)
Goldman Sachs (GS) Puts
Mosaic (MOS)
Univanco (UBB)
Grupo Televisa (TV)


Top 20 Holdings (by % of portfolio)

  1. JPMorgan Chase (JPM): 9.1% of portfolio
  2. Energy ETF (XLE) Puts: 7% of portfolio
  3. Energy ETF (XLE) Calls: 7% of portfolio
  4. Ishares Emerging Markets (EEM): 6.8% of portfolio
  5. Powershares Water Resource (PHO): 4.2% of portfolio
  6. Max Capital (MXGL): 4% of portfolio
  7. Ace (ACE): 3.7% of portfolio
  8. Goldman Sachs (GS): 3.6% of portfolio
  9. Homebuilders ETF (XHB): 3.4% of portfolio
  10. Energy ETF (XLE): 3.4% of portfolio
  11. Sandisk (SNDK) Calls: 2.9% of portfolio
  12. Petroleo Brasileiro (PBR): 2.4% of portfolio
  13. KLA Tencor (KLAC): 2.3% of portfolio
  14. Rohm & Haas (ROH): 2% of portfolio
  15. Barclays (BCS-PD) Preferred Shares: 1.8% of portfolio
  16. Hewlett Packard (HPQ): 1.7% of portfolio
  17. Data Domain (DDUP) Calls: 1.5% of portfolio
  18. Applied Materials (AMAT) Calls: 1.5% of portfolio
  19. Imclone (IMCL): 1.4% of portfolio
  20. Cameco (CCJ): 1.4% of portfolio


Assets from the collective holdings were $4.45 billion last quarter and were only $1.36 billion this quarter. Much like Tudor, Moore was decreasing exposure to equities all across the board. Please note that we have not detailed every single change 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 and do not reflect the cash or short portions of their portfolio. This is just one of many funds in 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, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point, and Paul Tudor Jones' Tudor Investment Corp. 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.

More on Louis Bacon & Moore Capital Management:
- Stanley Shopkorn (ex-Moore Capital) starts new fund
- Moore's second quarter of 2008 portfolio
- October hedge fund performance update
- Hedge Fund Rankings


November Hedge Fund Performance Numbers

We're back with our monthly aggregation of performance numbers from some noteworthy hedge funds. If you missed it, you can check out our October update as well. Enjoy.

  1. Overall, hedge funds were -1.1% last month and are now -17.7% for the year.
  2. Paul Tudor Jones' Tudor Investment Corp had been one of the few funds faring decently well in this carnage. His flagship Global BVI Fund, however, has recently frozen withdrawals as they try to separate illiquid assets. That fund is -5% year to date. Their equities fund, Raptor, is -16.5% for the year. The manager of the Raptor fund, James Palotta, will be leaving Tudor to start his own fund.
  3. David Einhorn's Greenlight Capital had a solid November, where they were up 3.9% for the month. This now leaves them -19.8% for the year. You can view Greenlight's recent portfolio update here. Also, Einhorn has a book out detailing his battle with Allied Capital, a company he shorted. In the book, you learn about Greenlight's theses formation and investment process: Fooling Some of the People All of the Time.
  4. Ken Griffin's Citadel was -13% in November and is now -47% for the year. Their flagship $10 billion combined Kensington and Wellington funds have been the hardest hit, due to losses from convertible bonds, and bank loans, among others. These funds have seen $1 billion in withdrawal requests for the end of the year. Citadel's pain continues, after having a rough October. Citadel's other funds, however, are faring nicely. Those funds (around $3 billion or so) are up around 40% this year. Citadel has only posted one losing year since being founded in 1990. Recently, Ken Griffin sat down to testify before Congress with numerous other prominent hedge fund managers.
  5. Paulson & Co ran by John Paulson was up 3.2% last month in his Advantage Plus Fund. The fund now sits up 33.5% on the year. We've recently covered Paulson & Co's updated portfolio portfolio here.
  6. Peter Thiel's Clarium Capital was -5.4% for November and is now -8.1% for the year. You can view their most recent portfolio here. Even the global macro guys are finding it tough out there. Just a few months back, global macro funds like Clarium and Tudor were weathering the storm relatively well. However, they have begun to slip with the rest of the crowd, as Thiel's crew find themselves close to down double digits. The pain continues after Clarium had a rough October, in part due to their shift into equities at an unfortunate time. It's all relative, as they say. Clarium is still up 322% since inception. Assets under management are currently a little over $3 billion and Thiel has not frozen redemptions (well, at least not yet). You can read more about Thiel/Clarium here.
  7. Jim Simon's Renaissance Technologies has had a pretty good year, all things considered. His flagship $8 billion Medallion fund is up 58% on the year as of last quarter, which makes its 5% management and 44% performance fees very tolerable. Too bad that this fund is pretty much limited to only former and current Renaissance employees. Simons other funds, which are open to other investors, the Institutional Futures and Institutional Equities funds are -15.6% and -14.8% year-to-date respectively. Mr. Simons recently testified before Congress with numerous other hedge fund managers. Renaissance is ranked #4 in the hedge fund rankings.
  8. David Shaw's D.E. Shaw & Co sees their Oculus fund up around 10% for the year, as they have profited from their global macro strategy. Their Composite fund, on the other hand, is -4% year to date, having pursued multiple strategies. The firm manages around $36 billion and you can view a video about the firm's work culture here. In Alpha's latest hedge fund rankings, D.E. Shaw is ranked 6th in the world.
  9. Lee Ainslie's Maverick Capital was 0% for November and is -27% for the year. We recently covered their portfolio holdings here.
  10. Fortress Investment Group's Drawbridge Global Macro fund was -2.3% for the month and find themselves -23% on the year. Fortress is among many prominent hedge funds whom recently have suspended withdrawals from their funds.
  11. Thomas Steyer's Farallon Capital Management is suspending redemptions until January. Farallon's past portfolio performance is available here and you can read their latest letter here.
  12. Dan Loeb's Third Point LLC was -2.9% last month and is now -31.1% for the year. We recently updated Third Point's portfolio holdings here.
  13. Glenview Capital Partners find themselves -8.9% for November and -47.8% for the year. Glenview Capital Partners LP was -9.9% for November and is now -50.4% for the year. Lastly, their Institutional Partners LP was -9.4% in November and -40.1% year-to-date.
  14. London Diversified Management LLP was -5.45% last month and is now -27.8% for the year in their main fund.
  15. Highbridge Capital has had it rough with numerous funds. Their Capital fund was -2.98% for November and is now -28% on the year, while their Convertible Arbitrage fund was -9.4% for the month and finds itself -43.7% on the year

Its worth noting that two prominent funds liquidated funds last month. Parkcentral Capital, which controls the investments of Ross Perot, closed one of its funds. Also, Jeffrey Gendell liquidated funds of his Tontine Associates, whom we covered last quarter here. Additionally, numerous prominent funds have recently suspended withdrawals, which we noted yesterday here. We're in the midst of our hedge fund portfolio tracking series where we're covering the 3rd quarter 2008 13F filings of various prominent hedge funds (including many listed above) in order to breakdown the changes they've made to their portfolios. You can view the portfolios of the funds we've analyzed thus far here.



Sources: Investor Letters, WSJ, Bloomberg, 1440, Portfolio, Dealbreaker


Citadel Opens Fund & Bill Fleckenstein Closes Short Fund

Two interesting tidbits in the hedge fund world we've seen recently. Firstly, Bloomberg is out reporting that Citadel is looking to open up its $2 billion Tactical Trading Fund to investors again, in hopes of raising around $500 million in capital. The fund is up 40+% this year and will aim to purchase the stocks currently held in Citadel's 2 main funds, Wellington and Kensington. Those two funds are down considerably this year, which we noted in our November hedge fund performance numbers update.

Secondly, notable short-seller and hedge fund manager Bill Fleckenstein will be closing his short only hedge fund. Taken from Todd Sullivan's Value plays, Bill writes,

"After considerable thought and deliberation I have decided to make a major change in my life: I am going to close my hedge fund. I have several reasons for no longer wishing to run a short-only fund as I have for the past 12 years. First, my original reason for starting the fund was because of developments I saw occurring in the late 1990s that I wanted no part of. I felt that Greenspan was fomenting an environment that would lead to disaster, as consultants, financial advisors, and the public at large were losing all respect for risk. Of course, the reckless behavior carried far higher and lasted much, much longer than I ever imagined it could. However, the recent carnage in the stock market, real estate market and the financial system (as well as the job losses) has washed away those excesses to a large degree and it has violently demonstrated the risks associated with investing.

A future goal of mine, when I set up the fund in 1996 -- as I attempted to step aside from the madness -- was to return to the long side of the business at some point in time when I felt that investors had become more rational regarding risk and stocks offered a more favorable risk/reward proposition. I considered this option very briefly in 2002 after the stock bubble imploded, but the cleansing process was postponed due to the burgeoning real-estate bubble.

Second, though I think that the stock market still has unfinished business on the downside, I believe that 2009 is the year to prepare for a return to managing money in a more balanced fashion, with longs (and some shorts), as there are currently plenty of interesting ideas that appear to offer a margin of safety. On the flipside, compelling opportunities on the short side are not as abundant as they were just a few months ago (though there still are plenty.)"



Such words and actions could provide reason for investors to get a little bit bullish. After all, if a noted short seller is switching teams, he's got to be intrigued by something, right?


Interesting Reads

- Dealbreaker has posted some more hedge fund letters: Highbridge letter & Farallon letter

- Mebane over at World Beta has an excellent guest post by the guys at BlackStar Funds, entitled: The Capitalism Distribution - The Realities of Individual Common Stock Returns

- Buck over at ManyPeaks says that the Bond Market is sending worrisome signals

- Hedge Fund manager Peter Thiel of Clarium Capital discusses deflation (then reflation) in this video

- The Economist wonders: Where have all your savings gone?

- The Great Slump of 1930 by John Maynard Keynes (via The Big Picture)

- Get ready for the Commodity comeback: Casey Research (via CommodityBullMarket)

- Barry Ritholtz's interview with Barron's


Monday, December 8, 2008

Hedge Fund Tracking: Tudor Investment Corp (Paul Tudor Jones) - 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. We've already covered:


Next up, we have Paul Tudor Jones' Tudor Investment Corp. Tudor is a $17.7 billion global macro oriented set of hedge funds. The next few funds we will be covering are global macro oriented funds, which is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Global macro funds differ from value funds in that they seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.

Taken from Wikipedia, the bio of PTJ is as follows: "In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems." So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of THE macro trader.

If you want to hear some insightful thoughts from Paul Tudor Jones himself, head over to our post on Hedge Fund manager interviews. Also, you can check out some additional thoughts from Paul here. Tudor hasn't had a bad year, relatively speaking, as his BVI Fund is only -5% for the year. Recently, Tudor was forced to halt withdrawals from their BVI Global Fund. Additionally, its worth noting that James Pallotta, who runs Tudor's equity focused Raptor fund (and is largely responsible for most of the holdings below), will be leaving to start his own fund.

Before beginning, you might be interested in checking out Tudor's portfolio holdings from the second quarter 2008. The following were Tudor's long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC.


New Positions (Brand new positions that they initiated in the last quarter):
Ishares Japan (EWJ)
KBW Bank ETF (KBE)
Technology ETF (XLK)
Ishares Korea (EWY)
Activision Blizzard (ATVI)
Fomento Economico (FMX)
Financials ETF (XLF)
Macrovision Solutions (MVSN)
Ishares China (FXI)
Energy ETF (XLE)
NBTY (NTY)
Gold ETF (GLD)
Anixter International (AXE)
Hubbell Class B Common Stock (HUB.B)
Coach (COH)
Hartford Financial (HIG)
Utilities ETF (XLU)
Merck (MRK)
3Com (COMS)
Dell (DELL)
Ingram Micro (IM)
Lehman Brothers (LEHMQ)
Financials ETF (XLF) Calls
Jamba (JMBAW) Warrants
Lehman Brothers (LEHMQ) Calls


Added to (Positions they already owned but added shares to)
Petroleo Brasileiro (PBR): Increased position by 6800%
Cisco (CSCO): Increased position by 47%
Accenture (ACN): Increased position by 39%
Viacom (VIA-B) Class B: Increased position by 8%


Some Reduced Positions (Positions they sold some shares of - note not all sales listed)
Anadarko Petroleum (APC): Decreased position by 81.5%
Jamba (JMBA): Decreased position by 80%
Plains Exploration (PXP): Decreased position by 79%
Fidelity National (FIS): Decreased position by 79%
Healthcare ETF (XLV): Decreased position by 74%
Invesco (IVZ): Decreased position by 71%
ICO Global (ICOG): Decreased position by 62%
Heinz (HNZ): Decreased position by 57%
Ishares Emerging Markets (EEM): Decreased position by 47%
Consumer Staples ETF (XLP): Decreased position by 47%
Wyeth (WYE): Decreased position by 27%
Switch & Data (SDXC): Decreased position by 20%
Terrestar (TSTR): Decreased position by 14%


Removed Positions (Positions they sold out of completely)
Elan (ELN)
Mirant (MIR)
S&P500 (SPY)
Entergy (ETR)
Occidental (OXY)
NRG Energy (NRG)
Alcoa (AA)
Mastercard (MA)
Calpine (CPN)
Wellpoint (WPN)
Williams Companies (WMB)
Biogen Idec (BIIB)
Frontier Oil (FTO)
UST (UST)
Apple (AAPL)
Knight Capital (NITE)
Activision (old shares converted into new ATVI combined company shares)
Walter Industries (WLT)
Steel Dynamics (STLD)
Priceline (PCLN)
Southwestern Energy (SWN)
Covidien (COV)
Devon Energy (DVN)
CSX Corp (CSX)
Verisign (VRSN)
Allegheny (AYE)
Marvell (MRVL)
DirecTV (DTV)
Qualcomm (QCOM)


Top 20 Holdings (by % of portfolio)

  1. Plains Exploration (PXP): 12.5% of portfolio
  2. Ishares Japan (EWJ): 11% of portfolio
  3. Anadarko Petroleum (APC): 8.6% of portfolio
  4. Heinz (HNZ): 7.9% of portfolio
  5. Progenics Pharma (PGNX): 6.9% of portfolio
  6. Wyeth (WYE): 4.8% of portfolio
  7. Invesco (IVZ): 4.1% of portfolio
  8. KBW Bank ETF (KBE): 3.7% of portfolio
  9. Fidelity National (FIS): 3.7% of portfolio
  10. Fibertower Corp (FTWR): 3.2% of portfolio
  11. Technology ETF (XLK): 2.8% of portfolio
  12. Taleo Corp (TLEO): 2.8% of portfolio
  13. Mako Surgical (MAK): 2.8% of portfolio
  14. Home Inns & Hotels (HMIN): 2.2% of portfolio
  15. Ishares Korea (EWY): 1.7% of portfolio
  16. Activision Blizzard (ATVI): 1.7% of portfolio
  17. Fomento Economico (FMX): 1.5% of portfolio
  18. Switch & Data (SDXC): 1.4% of portfolio
  19. Financial ETF (XLF): 1.4% of portfolio
  20. Terrestar (TSTR): 1.0% of portfolio


Assets from the collective holdings were $5.7 billion last quarter and were only $452 million this quarter. As you can see, Tudor shifted out of equities in a dramatic fashion. Please note that we have not detailed every single change 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 and do not reflect the cash or short portions of their portfolio. This is just one of many funds in 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, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point. 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.

More on Tudor Investment Corp:
- Tudor halts withdrawals from its Global BVI Fund
- James Pallotta leaving Tudor to start own fund
- Tudor's 2nd quarter portfolio
- October hedge fund performance update
- Hedge Fund Rankings


Prominent Hedge Funds Restrict Withdrawals

Recently (and unsurprisingly) numerous hedge funds have begun to restrict withdrawals as they fight off the barrage of investors who want their money back. In an environment where seemingly everyone needs cash, this can be a problem. But, those investors entered into those funds knowing full well that their money could be locked up at some point. And, that time has come.

Rounding up the info, we've seen that some fairly prominent and large hedge funds are battening down the hatches. Here's a quick summary.

  • We already wrote that Tudor Invesment Corp has frozen withdrawals from its $10 billion Global BVI Fund. This fund has some illiquid assets that they are trying to spin off into a separate fund and they need some time to get it approved and sorted. They had reported seeing redemption requests for 14% of the fund's capital.
  • D.E. Shaw & Co, the firm ran by David Shaw, has locked up redemptions from its Oculus fund and its Composite fund. Their Oculus fund saw redemption requests for 8% of their capital, while the Composite fund saw requests equal to 6%. The firm manages around $36 billion and you can view a video about the firm's work culture here. In Alpha's latest hedge fund rankings, D.E. Shaw is ranked 6th in the world.
  • $30 billion Farallon Capital Management is also suspending withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. In Alpha's latest hedge fund rankings, Farallon was ranked #3. Farallon's portfolio performance is available here and you can read their latest letter here.
  • Fortress Investment Group froze withdrawals from an $8 billion fund of theirs, after they received requests for withdrawals for a staggering 40% of the fund's capital.


Also, we're currently in the middle of our hedge fund portfolio tracking series. We're covering the 3rd quarter 2008 13F filings of various prominent hedge funds (including those above) in order to breakdown the changes they've made to their portfolios. You can view the portfolios of the funds we've analyzed thus far here.



Source: Bloomberg


Some Interesting Charts

First off, let's start with some macro charts.

The Wall Street Journal has posted up a great chart showing the "Race for Zero Interest Rates" around the globe.

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Secondly, Barry over at The Big Picture has a great collection of charts including a comparison of the 2008 bailout to all other large government projects. This one really is quite astounding:

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Next, moving onto market related charts, we see that Barry also has noted how the S&P has been "kissing" the 30 day moving average and then selling off recently. As they say, the trend is your friend.

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Next, Kevin has posted some great chart setups that you can play in the markets. He responded to a reader's question regarding Yahoo (YHOO)'s bullish divergence on the MACD. Kevin believes that while the divergence is a positive signal for YHOO, he would need to see confirmation from another signal or a breakout of the current downtrend to get long the name. I'd completely agree with that assessment. The dominant trend is down in that name. Positive divergences are great, but until that name breaks out of its descention, I wouldn't get long. Not to mention, the only real catalyst YHOO has these days is selling part of all of itself to MSFT... a saga that has been ongoing for ages.

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Kevin also points out a possible short setup in the Canadian dollar, as it forms a descending triangle. You can short the break of $77. At the same time, the CAD could possibly reverse and break its pattern to the upside, where you could play it from the long-side. Typically though, these types of setups make great shorts. The main point is that the triangle has formed and gives you an easy way to play a break in either direction, most likely to the shortside.

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Crude Oil Has Strong Support at $40

As the excellent chart from Barry Ritholtz's blog points out, Crude Oil has a ton of support at $40, both technically and fundamentally. We look at it as a make or break point really. Support at $40 could setup a snapback trade which would establish a new range for crude to trade in. However, it breaks $40 to the downside, look out below. You can play the price of crude oil without having to be in commodities markets. The ETFs for your consideration are USO, DBO, OIL, and DXO (leveraged double-long) among others.

Treat it as a technical trade, or treat it as a long-term believer in peak-oil theory. Either way, oil is becoming very compelling at these levels. Just keep in mind that price action that overshoots expectations (i.e. oil > $140), can also overshoot to the downside.


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