Farallon Capital Management (Thomas Steyer): Hedge Fund Tracking - 13F Filing Q3 2008 ~ market folly

Monday, January 5, 2009

Farallon Capital Management (Thomas Steyer): Hedge Fund Tracking - 13F Filing Q3 2008

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

Next up, we have Thomas Steyer's Farallon Capital Management. Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate. For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and has recently suspended 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. Farallon's recent portfolio performance is available here. Additionally, you can also read one of their recent investor letters. Lastly, you can check out this profile on Steyer for more information on him and his firm.

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

Some New Positions (Brand new positions that they initiated in the last quarter):
Wendy's/Arby's Group (WEN)
Exco Resources (XCO)
Applied Biosystems (ABI)
Visa (V)
Barr Pharma (BRL)
Symantec (SYMC)
Abbott Labs (ABT)
Sciele Pharma
Imclone (IMCL)
Microsoft (MSFT)
Thermo Fisher Scientific (TMO)
Crown Castle (CCI)
Vertex Pharma (VRTX)
Hansen Medical (HNSN)
Baxter (BAX)
China Medical (CMED)
Priceline (PCLN)
Cepheid (CPHD)
Cardiome Pharma (CRME)
Imclone (IMCL) Puts
Old Dominion Freight Line (ODFL)
Intermune (ITMN)
Medivation (MDVN)
Savient Pharma (SVNT)
Mueller Water (MWA-B)
GT Solar (SOLR)
Magna Entertainment (MECA)

Some Increased Positions (A few positions they already owned but added shares to)
Ishares Emerging Markets ETF (EEM) Puts: Increased position by 220%
Mastercard (MA): Increased position by 81%
Burlington Northern (BNI): Increased position by 49%
Research in Motion (RIMM): Increased position by 42%
Netapp (NTAP): Increased position by 15%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Fidelity National Information (FIS): Reduced position by 54%
Qualcomm (QCOM): Reduced position by 49%
JB Hunt Transport (JBHT): Reduced position by 47%
Sherwin Williams (SHW): Reduced position by 46%
Marriott (MAR): Reduced position by 45%
Oracle (ORCL): Reduced position by 38%
America Movil (AMX): Reduced position by 37%
Ishares Russell 2000 (IWM) Puts: Reduced position by 35%
Amylin Pharma (AMLN): Reduced position by 35%
Ishares Biotechnology ETF (IBB) Puts: Reduced position by 31%
Cablevision Systems (CVC): Reduced position by 29%
Sealed Air (SEE): Reduced position by 25%
Hospira (HSP): Reduced position by 24%
Gilead Sciences (GILD): Reduced position by 22%
Apple (AAPL): Reduced position by 20%
Sandridge Energy (SD): Reduced position by 14%

Removed Positions (Positions they sold out of completely)
Magna Entertainment (MECA)
Seattle Genetics (SGEN)
YRC Worldwide (YRCW)
Hologic (HOLX)
Pfizer (PFE)
Isis Pharma (ISIS)
Chart Industries (GTLS)
Hub Group (HUBG)
Informatica (INFA)
Dentsply (XRAY)
Gatx (GMT)
Carnival (CCL)
Qualcomm (QCOM) Calls
MetroPCS (PCS)
Arch Capital (ACGL)
Tibco Software (TIBX)
Fedex (FDX)
Schlumberger (SLB) Puts
Starwood Hotels (HOT)
Wyndham (WYN)
Capella Education (CPLA)
Citrix Systems (CTXS)
Celgene (CELG)
Select Sector Technology ETF (XLK) Puts
Hilltop Holdings (HTH)
Staples (SPLS)
Walgreen (WAG)
Wendys (old shares)

Top 20 Holdings (by % of portfolio)

  1. Capitalsource (CSE): 14.1% of portfolio
  2. Sherwin Williams (SHW): 6.5% of portfolio
  3. Ishares Russell 2000 (IWM) Puts: 5.8% of portfolio
  4. Mastercard (MA): 3.8% of portfolio
  5. Williams Companies (WMB): 3.7% of portfolio
  6. America Movil (AMX): 3.5% of portfolio
  7. Cablevision (CVC): 3.4% of portfolio
  8. Schlumberger (SLB): 3.4% of portfolio
  9. Sandridge Energy (SD): 3.1% of portfolio
  10. Ishares Emerging Markets ETF (EEM) Puts: 3% of portfolio
  11. Research in Motion (RIMM): 2.6% of portfolio
  12. JB Hunt Transport (JBHT): 2.5% of portfolio
  13. Wendy/Arby Group (WEN): 2.4% of portfolio
  14. Burlington Northern (BNI): 2.3% of portfolio
  15. MI Developments (MIM): 2% of portfolio
  16. Oracle (ORCL): 1.9% of portfolio
  17. Apple (AAPL): 1.7% of portfolio
  18. Marriott (MAR): 1.7% of portfolio
  19. Hospira (HSP): 1.5% of portfolio
  20. Gilead (GILD): 1.3% of portfolio

Assets from the collective long US equity, options, and note holdings were $5.8 billion last quarter and were $3.69 billion this quarter. As you can see, Farallon decreased long equity and options exposure pretty significantly. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

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

More on Sandler, Eminence, & hedge funds:
- Prominent Hedge Fund manager interviews
- Hedge Fund investor letters
- Hedge Fund Rankings
- Profile on Thomas Steyer (Farallon)
- November hedge fund performance numbers
- October hedge fund performance numbers

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