Friday, January 23, 2009

$25 Bonus: ING Direct Savings

Sorry to stray off market topics for a post, but a friend just told me about this and I wanted to pass it along. If you are a new client at ING Direct and you are referred by an existing client (me), you can get a $25 bonus for opening an online savings account earning 2.4% interest. So, I figured I would offer my bonus links to my readers.

All you have to do is open with at least $250, and you'll get the $25 bonus deposited into your account. No fees, no catch, no crazy fine print. That's a 10% return in a matter of minutes. And, you can just withdraw it all after 30 days if you want.

The following links are for the $25 bonus. You have to use one of the links below and sign-up with $250 in order to get the bonus. Please note that if you see this message...

...then the particular link you clicked has been used by someone else and you should try a different link.

There are only 20 bonus links. After the links are used, they are gone for good.


  1. Used
  2. Used
  3. $25 Bonus
  4. $25 Bonus
  5. Used
  6. Used
  7. $25 Bonus
  8. Used
  9. $25 Bonus
  10. Used
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And now back to your regularly scheduled programming.

Comparing Historical Unemployment Rates During Recessions

Hat tip to Barry Ritholtz for posting this up earlier. In the chart below, the red highlighted areas obviously indicate recessions. What's interesting to note is that in each major recession, a peak in unemployment has pretty much signaled the end of that specific recession, give or take a few months. Within the current recession, you can see that unemployment has been peaking. The questions become: 'how long does the recession last?' and subsequently, 'where does unemployment peak?'

Using very rough estimates (emphasis on the 'very rough' part), you can ballpark that the rise in unemployment rates during recessions has topped off around 4% or so during each major recession. As such, the recession in the 80's saw unemployment surge from 7.5% to nearly 11%. During the late 40's we saw it spike from around 4% to nearly 8%. In the 70's it rose from 5% to 9%. And so forth.

(click to enlarge)

Within our current recession, we started with around 5% unemployment or so. And, by this argument, one could argue that we would need to see 9% unemployment to signal the beginning of the end of this pain. But, this assumption is problematic in that it leads us to yet another question: 'how does this recession compare in terms of severity?' We would argue that since we perceive it to be the worst crisis since the Great Depression that normal circumstances would not necessarily apply here. And, as such, we could possibly see unemployment rates as high as 10-11%. But, again, we must stress that this is mere speculation on our part based on very rough assumptions.

The one thing that resonates from the chart is the fact that a peak in unemployment is usually a leading signal that the recession is drawing to a close. So, look for the unemployment figures to turn rapidly in the other direction to tip you off. When this occurs, things will obviously be improving (duh, common sense). Just keep in mind that since markets are forward looking mechanisms, they typically lead the exit of the recession. If the markets start (and hold) a solid rally, look for this to be a leading indicator by 4-6 months or so.

Oh, and to all those wondering... No, we don't think that will be anytime in the near future.

Total Real Return Indexes 1802-2001

Now, although this chart doesn't include years 2002-2008, it still gets across a simple point. Stocks have outperformed over time with a constant after-inflation rate of return. The dollar, conversely, has slowly but surely been an excellent short over the years. Hat tip to Paul Kedrosky for initially highlighting Jeremy Siegel's book Stocks for the Long Run in one of his linkfests.

(click to enlarge)

How Some 2008 IPO's Fared

Courtesy of CNN Money, here's a quick list of some IPO's and how they have fared thus far. LOPE and V are the standouts, while HOO and BHRT are really struggling. V, also, has a large hedge fund presence by prominent funds, as we've noted in our hedge fund tracking series.

Grand Canyon Education       LOPE        57%   $18.81  $12.00  20-Nov
Visa Inc. V 27% $55.73 $44.00 19-Mar
Hatteras Financial Corp HTS 7% $26.56 $24.00 25-Apr
Heritage-Crystal Clean HCCI 4% $12.01 $11.50 12-Mar
American Water Works AWK -4% $20.72 $21.50 22-Apr
IPC The Hospitalist Co. IPCM -5% $15.15 $16.00 24-Jan
Energy Recovery ERII -14% $7.34 $8.50 2-Jul
Western Gas Partners WES -15% $14.02 $16.50 8-May
RiskMetrics Group RMG -18% $14.38 $17.50 24-Jan
Pioneer Southwest Energy PSE -27% $13.90 $19.00 30-Apr
Intrepid Potash IPI -33% $21.38 $32.00 21-Apr
Fifth Street Finance FSC -48% $7.30 $14.12 11-Jun
RHI Entertainment RHIE -51% $6.87 $14.00 17-Jun
ATA Inc. ATAI -52% $4.60 $9.50 28-Jan
Safe Bunkers Inc. SB -53% $8.95 $19.00 28-May
RackSpace Hosting Inc. RAX -54% $5.81 $12.50 7-Aug
Navios Maritime Acquisition NM -60% $4.01 $10.00 25-Jun
Real Goods Solar RSOL -62% $3.77 $10.00 8-May
Pansoft Company PSOF -65% $2.45 $7.00 9-Sep
Cascal NV HOO -67% $3.93 $12.00 28-Jan
Bioheart Inc. BHRT -85% $0.79 $5.25 19-Feb

Thursday, January 22, 2009

Jana Partners (Barry Rosenstein) Portfolio Update: 13D & 13G Filings

Jana Partners, the hedge fund ran by Barry Rosenstein, has filed an amended 13D with the SEC and has disclosed a 4.6% ownership stake in Copart (CPRT). The 13D was filed due to their activity on December 5th, 2008. They have decreased their position to 3,864,494 shares. Previously, they owned 6,934,187 shares as of their last 13F filing (which shows positions as of September 30th, 2008). *2nd Update: And since filing this latest amended 13D, Jana has also filed a Form 4 with the SEC disclosing that they have sold an additional 13,150 shares of CPRT at a price of $26.89 on January 13th.

Jana has also filed an amended 13G with the SEC and has disclosed an 8.11% ownership stake in American Italian Pasta (AIPC). The 13G was filed due to their activity on November 30th, 2008. They have decreased their position to 1,575,000 shares. They previously had owned 3,026,223 shares back on September 30th, 2008. You can view the rest of Jana Partners' portfolio holdings here.

Ran by Barry Rosenstein, Jana was recently ranked 79th in Alpha's Hedge Fund Rankings. Jana was founded in 2001 and typically employs activist, market neutral, and long/short equity strategies in public equity markets. Rosenstein received his BS from Lehigh University and his MBA from the Wharton School of Business at the University of Pennsylvania. Jana has returned 20.9% each year annualized from 2001 til 2007. Rosenstein sees Jana's future in a strategy that uses management adjustments to force change at companies, which in turn can send shares higher.

Taken from Google Finance,

American Italian Pasta Company is "a producer and marketer of dry pasta in North America."

Copart is a "provider of vehicle remarketing services in United States, Canada and United Kingdom. The Company provides vehicle sellers with a range of remarketing services to process and sell vehicles over the Internet through the Company’s Virtual Bidding Second Generation Internet auction-style sales technology, which it refers to as VB2. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters and, at certain locations, it sells directly to the general public."

Where Are the Stock Buybacks?

We ask a simple question. If stocks are so 'cheap,' where are the buybacks? We continue to believe that earnings estimates were too high to begin with and need to come down to more realistic levels. Each subsequent earnings season will obviously help bring people back down to earth. The chart below, courtesy of Bloomberg, illustrates just how few buybacks there have actually been.

(click to enlarge)

Clearly a reversion to the mean under way. It's funny to note that the most buybacks occurred when everything was "all fine and dandy" on Wall Street. Either management was too high on life (or drugs) to realize they were buying back at astronomical valuations, or they are simply the worst investors ever.

"It's cool man, everyone's doing it... buy back your stock man!!"

Yet, here we are, approaching new levels of cheap each day. And where is management?


They're passed out from their binge and purge. It's cool though, they'll be back once things are rip-roaring again, buying at more expensive levels when they could have been buying back debt or stock on the cheap. Howard Lindzon shares our frustration, he's been preaching about this issue for months. But then again, maybe management teams of various companies are bearish like us and think they can get their stock even cheaper. Hard to give them the benefit of the doubt there, given their past investing performance.

We don't mean to just lump every single management team into a category like that. Because, after all, we do realize that each company faces specific challenges and levels of cash/debt. But, when hardly anyone steps up, it makes you wonder. If the management of the company itself does not have confidence to buy their own stock, why should we?

Stages of a Bear Market

Stewie outlines the stages of a bear market:

"Stage 1. Distribution

Just as accumulation is the hallmark of the first stage of a primary bull market, distribution marks the beginning of a bear market. As the "smart money" begins to realise that business conditions are not quite as good as once thought, and thus they begin to sell stock. There is little in the headlines to indicate a bear market is at hand and general business conditions remain good. However stocks begin to lose their lustre and the decline begins to take hand. After a moderate decline, there is a reaction rally that retraces a portion of the decline. Hamilton noted that reaction rallies during a bear market were quite swift and sharp . This quick and sudden movement would invigorate the bulls to proclaim the bull market alive and well. However the reaction high of the secondary move would form and be lower than the previous high. After making a lower high, a break below the previous low, would confirm that this was the second stage of a bear market.

Stage 2. Movement With Strength

As with the primary bull market stage two of a primary bear market provides the largest move. This is when the trend has been identified as down and business conditions begin to deteriorate. Earnings estimates are reduced, shortfalls occur, profit margins shrink and revenues fall.

Stage 3. Despair

At the final stage of a bear market all hope is lost and stocks are frowned upon. Valuations are low, but the selling continues as participants seek to sell no matter what. The news from corporate America is bad, the economic outlook is bleak and no buyers are to be found. The market will continue to decline until all the bad news is fully priced into the stocks. Once stocks fully reflect the worst possible outcome, the cycle begins again."

Based on the above descriptions, it would seem as if we are somewhere in the midst of Stage 3. The problem is, this stage could last a pretty long time. There's a ton of cash on the sidelines now, and many assets are cheap. But, that doesn't mean they won't get even cheaper. Everyone realizes we are in a recession now and the economic outlook is definitely bleak. So, the question becomes: how much more despair lies ahead? We'd say a decent amount, as it will take a while for America to work through the bad taste in its mouth. The whole process is only natural, though. And we'd also like to remind everyone that while there is panic to the downside, there is also panic to the upside. People don't want to miss out on "the bottom" when it finally comes.

Wednesday, January 21, 2009

Baupost Group (Seth Klarman) Portfolio Update: 13D & 13G Filings

Baupost Group, the hedge fund ran by Seth Klarman, has filed an amended 13D with the SEC and has disclosed a 30.21% ownership stake in RHI Entertainment (RHIE). The 13D was amended on December 1st, 2008 and then again on January 16th, 2009. They have increased their position in RHIE to 4,078,332 shares after purchasing an additional 416,633 shares on January 14th for $4.25. Previously, they owned 3,480,299 shares as of their last 13F filing (which shows positions as of September 30th, 2008).

Baupost Group has also filed an amended 13G with the SEC and has disclosed a 15.39% ownership stake in Theravance (THRX). The 13G was filed due to their activity on November 30th, 2008. They have increased their position in THRX to 8,071,841 shares. They previously had owned 6,269,891 shares back on September 30th, 2008.

Additionally, they filed an amended 13G on Acusphere (ACUS) and disclosed a 0% ownership stake. This was due to activity on December 31st, 2008 and so they have completely sold out of their position. They previously had held 2,600,582 shares.

Lastly, they also filed a 13G on Facet Biotech (FACT), disclosing an 11.6% ownership stake. This was due to activity on December 31st, 2008. They now own 2,772,092 shares after previously not showing it in their portfolio. You can view the rest of Baupost Group's portfolio holdings here.

Over the past 25 years, Baupost has seen an annual compound return of 20% and is ranked 49th in Alpha's hedge fund rankings. Klarman has always considered himself a value investor and has been patient through the market turmoil. The past few years they have had nearly half their $14 billion in assets in cash. But, with turmoil comes opportunity. And, as such, Baupost's cash has been gradually deployed by Klarman and Baupost's 100 employees, leaving them with around a fourth of assets left in cash. Klarman's investment process is detailed in his book Margin of Safety. In it, he lays out a "how-to" on risk-averse value investing. The book is no longer actively printed and is very hard to find. His take on recent market action can be viewed in his recent interview with Harvard Business School. For more information about Klarman, check out our post on hedge fund manager interviews.

Taken from Google Finance,

RHI Entertainment, Inc. "develops, produces and distributes new made-for-television movies, mini-series and other television programming worldwide. The Company also selectively produces new episodic series programming for television. In addition to its development, production and distribution of new content, RHI Payment systems Ltd owns a library of existing long-form television content, which it licenses primarily to broadcast and cable networks worldwide."

Theravance is a "biopharmaceutical company with a pipeline of internally discovered product candidates. The Company is focused on the discovery, development and commercialization of small molecule medicines across a number of therapeutic areas, including respiratory disease, bacterial infections and gastrointestinal motility dysfunction."

Acusphere is "a specialty pharmaceutical company that develops drugs and formulations of existing drugs using its porous microparticle technology."

Taken from their company website, Facet Biotech is a "small but sophisticated biotechnology company. Combining our expertise in antibody engineering with a disciplined, biology-driven research approach, our company is dedicated to advancing our current pipeline of four clinical-stage products and leveraging our research and development capabilities to identify and develop new drugs."

Jim Rogers' Latest Thoughts: Bearish on British Pound (& More)

Grace Cheng over at DailyMarkets has interviewed Jim Rogers recently and we've highlighted some of the intriguing parts of the interview below.

"As you’ve said many times, the US government is printing a lot of money right now, when do you think inflation will come around and bite us?

Rogers: Well there is inflation now in many things. There’s temporary deflation in raw material prices and in some property. But throughout history, whenever you’ve had gigantic printing of money and spending of borrowed money, it has always led to higher prices. Unless something is dramatic, it’s going to happen again. When? I don’t know. It’s already happening in some things. I don’t know if you’ve bought any sugar recently or some other things, prices are up and that will continue and it will get worse.

You’ve been bullish on commodities for a long time, recently you said you’re buying the Rogers Metal Index. Do you think that the Obama stimulus plan will create more demand for commodities?

Rogers: Well of course, anything that causes a revival of economic activity causes a revival of demand for everything including commodities. I mean if you’re gonna build bridges you’ve got to build them out of something you cannot build virtual bridges you have to build real bridges, etc.

You’ve said that over the long term, the US dollar is doomed. What are your thoughts on the British Pound?

Rogers: More doomed. It will disappear sooner. If it weren’t for the North Sea, the British Pound would have already disappeared. It’s more doomed. The UK has been exporting oil for 26 years; within the decade, the UK will be a net importer of oil again, and they have nothing else to sell to the world once the oil dries up."

Rogers has been out in the media a lot lately, re-hashing numerous themes. Here are some of his theses, many of which we've highlighted on the blog before:

Make sure you check out the rest of Grace's interview here.

Earnings Estimates Still Too High (Just Like the Analysts)

Courtesy of a somewhat recent John Mauldin piece, we see that analysts have been far off the mark in their ability to forecast earnings.

They were way off in 2008:

(click to enlarge)

And you can bet 2009 will be no different, as already evidenced by the continual slide in their estimates.

(click to enlarge)

You would think that at some point, analysts would get the picture and face up to reality. That said, we respectfully ask: Are these guys on meth?!

Tuesday, January 20, 2009

How Contango Affects Crude Oil ETF's and ETN's (USO, OIL, DBO)

The following is a Guest post on Note this is part of a 2 article series in which we also examine how best to play crude oil via the various ETFs/ETNs. Below, you'll find the article relating to how contango affects these investment vehicles. In a follow-up article, we compare the crude oil investment vehicles.

'tradefast' is the nickname of an independent equity trader who has more than 20 years of market experience at a major financial institution and 2 hedge funds. He now trades for a private investment fund, using a combination of both fundamentals and technicals. (That sounds like our kinda guy!)

He sat down to explain how contango affects the crude oil ETF's and ETN's many investors and traders usually play, including USO, OIL, & DBO. He writes,

"The US Oil Fund (Ticker: USO) holds long positions in West Texas Intermediate crude oil futures contracts, and rolls these contracts forward each month. Like most futures traders, USO buys futures with leverage, putting up a small portion of the money to buy the contracts. The rest of the money is invested in Treasuries, which generates interest income for the fund.

Three factors play a role in determining the performance of USO: 1) changes in the spot price of crude oil, 2) interest income on un-invested cash, and 3) the 'roll yield'. The first two factors are easily understood, but the third factor, 'roll yield' should be examined further in order to determine the extent, if any, to which traders of USO will be surprised by its performance in relation to spot crude oil.

First some background: Oil futures are available for each month of the year, so you can buy a futures contract right now which gives you the right to buy oil in February 2009, March 2009, April 2009, and so on. Currently, the price of oil in February 2009 is less than the price of oil in April 2009, a condition which is referred to as 'contango'. (If the opposite were true, the market for crude oil would be in backwardation.) Most commodity funds, including the US Oil Fund (USO) buy what is called the 'near month' contract and, because they do not want to take physical delivery of the commodity, they sell the current month's contract before it expires and buy into next month's contract. This process is called 'rolling forward', and it can result in the ETF paying up if the forward month contract is higher than the current month (contango), or cashing out if the opposition condition exists (backwardation).

To investigate the issue, I read through the 'risk factors' section of the USO prospectus. The following is relevant:

in the event of a crude oil futures market where near month contracts trade at a lower price than next month contracts, a situation described as ‘‘contango’’ in the futures market, then absent the impact of the overall movement in crude oil prices the value of the benchmark contract would tend to decline as it approaches expiration. As a result the total return of the Benchmark Oil Futures Contract would tend to track lower. When compared to total return of other price indices, such as the spot price of crude oil, the impact of backwardation and contango may lead the total return of USOF’s NAV to vary significantly. In the event of a prolonged period of contango, and absent the impact of rising or falling oil prices, this could have a significant negative impact on USOF’s NAV and total return.

In essence, the USO prospectus is warning traders that USO may experience a negative 'roll yield' which may cause the NAV of USO to deviate significantly from the spot price of crude. Is there historical precedence for USO deviating from spot oil by a material amount? As it turns out, the answer is 'yes'.

During the past two years, including 2006, these markets have experienced contango. This has impacted the total return on an investment in USOF units during the past year relative to a hypothetical direct investment in crude oil. For example an investment made in USOF units on April 10 and held to December 31, 2006 decreased, based upon the changes in the closing market prices for USOF units on those days, by 23.03%, while the spot price of crude oil for immediate delivery during the same period decreased 11.18%

The conclusion, at this stage of analysis, is that USO is not a direct play on the spot price of crude oil - it is, instead, a play on the spot price, forward prices, and the relationship between spot and forward (the slop of the futures curve).

For a trader who is long USO, my instinct is that maintenance or aggravation of the contango in crude oil will cause impairment of the value of USO in relation to spot crude - whereas, any mitigation of the contango situation (including a shift to a flatter curve or backwardation) will enhance the performance of USO.

I plan to study this issue more extensively. But, in the mean time, I will not consider USO to be a good proxy for the spot price of crude oil - and I will be particularly leery of participating in USO for anything other than a short term trade."

'Tradefast' highlights an issue that many have overlooked or just not taken the time to research. Many perceive that USO is the "best way to play oil" since it's the front-month contract. But, as he points out, there are some issues with this ETF, depending on how crude oil is trading in the front month and beyond. So, as always, read the prospectus of each fund you're trading or investing in. It's important to understand what exactly it is you're dealing with.

In the comments section of his original article, he goes on to address similar issues in other crude oil ETF's and ETN's. Regarding ticker OIL, he writes,

"Here is a link to the prospectus for OIL, the IPath crude Oil ETN.

The 'contango issue' is discussed on PS-10. Short answer: yes, a contango market in crude oil will result in negative roll yields - similar to USO.

Also, be aware that OIL is an ETN (exchange traded note), rather than an ETF (exchange traded fund). With ETNs, you are an unsecured creditor of Barclays (the issuer of the note), so you have credit risk overlaid on the risk of the commodity.

In a former life, I used to enter into total return swaps on various indices with Lehman as the counterparty. I halted this practice long before LEH became a troubled credit. My sense is that the popularity of ETNs have fallen in relation to ETFs, because of the credit risk.

I have no strong opinions regarding Barclay's default risk, but it might be worthwhile to consider that Barclays CDS widened by a meaningful 98 bps on Friday, and the stock declined 24%. Although the current CDS spread of 265 bps is not indicative of extremely high default risk, the level and direction are cause for some concern. (Barclays credit risk can be hedged with CDS, but this is a market for instititional investors - and shorting Barclays stock against a long position in OIL exposes the OIL holder to unacceptable basis risk. Ergo, I would prefer ETFs (such as USO) over this specific ETN (OIL)."

He also addresses the Powershares ETF: DBO, writing,

"I took a quick glance at DBO from PowerShares. In the prospectus, PowerShares notes the following:

Rather than select a new futures contract based on a predetermined schedule (e.g., monthly), each Index Commodity rolls to the futures contract which generates the best possible ‘implied roll yield.’ The futures contract with a delivery month within the next thirteen months which generates the best possible implied roll yield will be included in each Index. As a result, each Index Commodity is able to potentially maximize the roll benefits in backwardated markets and minimize the losses from rolling in contangoed markets.

My interpretation of this statement is that the manager of the ETF utilizes a certain amount of discretion with respect to the futures roll. If the forward curve were humped (i.e. backwarded to some point, and contango thereafter), a skillful manager might be able to take advantage. I do not claim expertise in this area, but my observation is that the current market in Crude Oil is in contango as far as the eye can see, and there does not appear to be any immediate advantage to having a selection of forward contracts with which to complete the roll. Also, keep in mind that with active management comes potential advantages (the manager may make a skillful maneuver) and potential risks (the manager may screw up and underperform the benchmark).

Currently, I am not commenting on the leverage associated with DBO, it is beyond the scope of this particular topic (contango effects on crude oil ETFs and ETNs)."

Great insight from tradefast. We definitely appreciate his effort to research and write about each of the various popular ways to play crude oil in equity markets. We feel this is an important topic that needed to be addressed, seeing how so many people trade or invest in these ETF's/ETN's without even blinking an eye. So, thanks again to tradefast for the guest post. Note that a follow-up article was also posted where we examine how to play crude oil via ETFs & ETNS as we compare the different vehicles such as DBO, USO, & OIL. You can view the article on how to play crude oil here.

For some of our coverage of crude oil, check out the recent slide presentation: Cheap Oil = Over. Additionally, we've commented on cheap oil ourselves, and have covered energy trader Eric Bolling's latest oil trades and thoughts.

You can follow
tradefast on Twitter, and catch his thoughts on his blog.

Paulson & Co (John Paulson) Portfolio Update: 13G Filing on Mirant (MIR)

Paulson & Co, the hedge fund ran by John Paulson, has filed an amended 13G with the SEC and has disclosed an 11.7% ownership stake in Mirant (MIR). The 13G was filed due to their activity on November 7th, 2008 and they now own 18,394,000 shares. You can view the rest of Paulson & Co's portfolio holdings here.

Paulson & Co is famous for making a fortune by betting against sub-prime when this whole mess began to unfold. And, it appears as if Paulson is still up to his fortune-making ways. One of his funds has generated a 589% return, which could easily be up there amongst the largest returns by a single hedge fund in a year. Recently, it was announced that one of Paulson's co-portfolio managers would be leaving to start his own fund.

Taken from Google Finance,

Mirant is "an energy company that produces and sells electricity in the United States. The Company owns or leases 10,280 megawatt of electric generating capacity located in markets in the Mid-Atlantic (5,244 megawatt) and Northeast regions (2,689 megawatt) and in California (2,347 megawatt). Mirant also operates an integrated asset management and energy marketing organization based in Atlanta, Georgia. Its customers are independent system operators (ISOs), investor-owned utilities, municipal systems, aggregators, electric cooperative utilities, producers, generators, marketers and industrial customers."

2008 Hedge Fund Performance Numbers: December & Year-End

We're back with our monthly aggregation of performance numbers from some noteworthy hedge funds. If you missed it, you can check out our November update as well. 2008 was a rough year for hedge funds, as evidenced by their year-end performances listed below. In no particular order:

  1. Hedge Funds in general finished 2008 -18.3%, compared to S&P -37%.
  2. Jeffrey Gendell's Tontine Associates: Simply put, Tontine had a year to forget. Their Tontine Partners LP fund was -12.1% for December and finished the year -91.5%. Yes, you read that correctly. Their Tontine 25 LP fund was -2.2% for December and ended 2008 -63.6%. Earlier, Gendell announced that he would be closing two of his funds: Tontine Capital Partners LP and Tontine Partners LP. That leaves two of his funds still open: Tontine 25 and Tontine Financial. In addition to those funds, Gendell will be opening up a new fund in February, the Tontine Total Return Fund. This new fund will not use leverage and will invest in assets deemed undervalued. We just recently covered Tontine's portfolio holdings here.
  3. Bill Ackman's Pershing Square: Ackman's main fund, Pershing Square International Ltd, ended was -0.2% for December and ended 2008 -12%. Ackman's Pershing Square IV fund, which invests solely in Target (TGT) with 2x leverage, was -68% for 2008, following their -43% performance in 2007 Pershing owns 9.5% of TGT. We've detailed the rest of Pershing Square's portfolio holdings here. and posted the video of Ackman's lengthy interview with Charlie Rose here.
  4. David Einhorn's Greenlight Capital: Their Offshore fund finished '08 -16.5% and their Greenlight LP finished down over 22%. If you're curious, their portfolio holdings are listed here. Also worth checking out is Einhorn's book, where he details his battle shorting Allied Capital. In it, you learn about Greenlight's theses formation and investment process: Fooling Some of the People All of the Time.
  5. Ken Griffin's Citadel: According to preliminary estimates, Citadel's main funds, Kensington and Wellington, were -9% through most of December, leaving their main fund -53% for 2008. Keep in mind these were estimates as of around December 24th. This means that the pain continued for Griffin's team, even after a painful October and November. You can view Citadel's recent portfolio holdings here.
  6. Jim Chanos' Kynikos: Their Opportunity fund was up 3.2% for December and finished the year up 15.1%.
  7. Tudor Investment Corp (Paul Tudor Jones): Their Raptor global equities fund finished 08 -20%, their flagship Global BVI fund finished -4.9%, and their Tensor fund (quant) ended +35.4%. Here are their recent holdings.
  8. Louis Bacon's Moore Capital Management: Their Global Investments fund finished 2008 -4.3%, their Global Fixed Income fund finished +1.3%, and their Emerging Markets Fund finished -17.6%. We covered their portfolio here.
  9. Bruce Kovner's Caxton Associates: Their global investment fund was +0.1% for 2008 and here are their portfolio holdings. Kovner is also featured in Jack Schwager's book, Market Wizards.
  10. BlueGold Global: They've put in a solid year, ending up +5.1% for December and +209.7% for 2008.
  11. Perry Partners: Down 1.8% for December, down 28.36% for the year.
  12. Lee Ainslie's Maverick Capital: A rough year for them, as their Maverick Fund finished -26.2% for 2008. Their portfolio here.
  13. Andreas Halvorsen's Viking Global: Their Viking Global Equities III fund was +1% for December and finished the year -1.14%. Solid stuff, all things considered. You can view their month by month performance breakdown here and their Q3 investor letter in .pdf format. Lastly, in our recent hedge fund tracking series, we've covered Viking's portfolio holdings.
  14. Pabrai Investment Funds: Mohnish Pabrai's funds were -59.1%, -60.9%, and -60% for 2008, as detailed in their recent investor letter.
  15. Paulson & Co (John Paulson): Their Credit Opportunities I & II funds were up about 15% for the year as of the middle of December. Paulson's Advantage fund was up 2.2% for December and up 24.1% for 2008. His Advantage Plus fund finished +37.58% for the year. We've covered Paulson's recent portfolio holdings here.
  16. Art Samberg's Pequot Capital Management: Their main fund was -17.5% for 2008, while their health care fund finished -27.9%. Here are their holdings.
  17. Children's Investment Fund: They were -1.6% for December and find themselves -42.8% for the year.
  18. Philip Falcone's Harbinger Capital Partners': Offshore fund finished -22.7% for the year. Harbinger's portfolio available here.
  19. Deephaven Capital Management: Their European Event Driven fund's onshore class shares returned 17.47% through November.
  20. TPG-Axon Partners Ltd. were -1.5% for December and finished the year -34%
  21. Highbridge Capital: Four of their twenty funds were up on the year, all Statistical Opportunities funds, all ending the year up between 17% and 22%. For a great graphic of all their fund performance figures, head here.

Lastly, Richard Wilson has a great chart up showing the performance numbers of the Credit Suisse/Tremont hedge fund index and the various strategies. Short-bias and managed futures strategies were the standouts, while risk arbitrage and global macro fared quite well on a relative basis:

(click to enlarge)

Sources: Investors, Investor Letters, Bloomberg, CNN, FinAlternatives, & Dealbreaker (who also has a bunch more performance numbers).

Portfolio Update: Jeffrey Gendell's Tontine Associates Files 13D's

Tontine Associates, the hedge fund ran by Jeffrey Gendell, has filed an amended 13D with the SEC and has disclosed a 57.3% ownership stake in Patrick Industries (PATK). The 13D was filed due to their activity on December 11th, 2008 and they now own 5,174,963 shares. You can view the rest of Tontine's portfolio holdings here.

Additionally, they recently filed an amended 13D and have disclosed a 48.7% ownership stake in Broadwind Energy (BWEN). Also worth noting from the filing is the fact that they have

"extended the date by which the Company is required to file the shelf registration statement to March 31, 2009... and the Reporting Persons have begun to explore alternatives for the disposition of their equity interests in the Company, which alternatives may include, without limitation: (a) dispositions of Common Stock through open market sales, underwritten offerings and/or privately negotiated sales by the Reporting Persons, (b) a sale of the Company, or (c) distributions by the Reporting Persons of their equity interests in the Company to their respective investors. The Reporting Persons expect to engage in discussions with the Company’s management and Board of Directors in the evaluation of such alternatives."
As we've covered before on the blog, Tontine has had a very rough year and will be closing two of its hedge funds. The problem with their struggles is that they are the largest shareholder of some 8 companies (including BWEN). So, they are obviously evaluating their options.

Gendell & Tontine specialize in macro investing and take very large, concentrated positions in companies he feels will benefit from those macro themes. Additionally, he will take on an activist role when necessary, to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005. Conversely, this year has been the year from hell for Tontine. Recently, they announced they would be closing two of their hedge funds: Tontine Capital LP and Tontine Capital Partners LP. Two of Tontine's funds will remain open: Tontine-25 and Tontine Financial. It has definitely been an astonishing year for Gendell, whose Tontine firm is named after an annuity invented by Lorenzo de Tonti. In such an annuity, investors contribute and collect dividends. As investors each die off, their share is left to the remaining partners. Therefore, the last man alive receives all the money. Gendell's desire is clearly to be that 'last investor' remaining. Such a goal becomes slightly ironic when you consider his firm suffered monumental losses and almost 'died' this past year. Gendell explains the turmoil they faced in his October letter to investors (.pdf format).

Taken from Google Finance,

Patrick Industries is "a manufacturer and supplier of building products and materials to the manufactured housing and recreational vehicle industries. In addition, the Company is a supplier to certain other industrial markets, such as kitchen cabinet, furniture manufacturing, office furniture, commercial fixtures and furnishings, marine, architectural, and the automotive aftermarket."

Broadwind "formerly Tower Tech Holdings Inc., through Tower Tech Systems, Inc. (Tower Tech), is engaged in the manufacturing of fabricated towers for wind turbines that are sold to a limited number of customers for use in the support of wind turbines. These wind turbines are used in the generation of electricity throughout the United States. It offers customers wind tower support structure and monopiles."