John Griffin's Blue Ridge Capital Bets Big on Google (GOOG): 13F Filing Q1 2010 ~ market folly

Thursday, May 20, 2010

John Griffin's Blue Ridge Capital Bets Big on Google (GOOG): 13F Filing Q1 2010

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up is John Griffin's hedge fund Blue Ridge Capital. Griffin attended the University of Virginia for undergrad and Stanford for his MBA. Prior to founding Blue Ridge, Griffin served as Julian Robertson's right-hand man at legendary hedge fund Tiger Management.

Blue Ridge invests in companies that dominate their industry and shorts those that have fundamental problems. They generally classify an investment as either catalyst driven or time arbitrage. They point out that there are times when markets will be mis-priced as investment time horizons compress more than normal. Blue Ridge looks to exploit this by taking advantage of situations where people 'stop thinking.' To learn to invest like John Griffin, check out hedge fund Blue Ridge's recommended reading list.

The positions listed below were Blue Ridge's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:

Brand New Positions
Apollo Group (APOL)
Banco Santander (BSBR)
Boston Scientific (BSX)
CIT Group (CIT)
Citrix Systems (CTXS)
General Growth Properties (GGP)
Google (GOOG)
Morgan Stanley (MS)
Nvr (NVR)

Increased Positions
Market Vectors Gold Miners (GDX): Increased position by 180.5%
TD Ameritrade (AMTD): Increased by 158.6%
Iberiabank (IBKC): Increased by 64.1%
Teva Pharmaceutical (TEVA): Increased by 28.8%
Mastercard (MA): Increased by 17%
Ares Capital (ARCC): Increased by 14%
JPMorgan Chase (JPM): Increased by 11.3%
Amazon (AMZN): Increased by 3.7%

Reduced Positions
iShares Silver Trust (SLV): Reduced by 41.2%
Millipore (MIL): Reduced by 35.4%
Discovery Communications (DISCK): Reduced by 25%
Discovery Communications (DISCA): Reduced by 25%
Green Mountain Coffee Roasters (GMCR): Reduced by 21.9%
Crown Castle International (CCI): Reduced by 8.72%

Positions They Sold Out of Completely
Berkshire Hathaway (BRK.A)
Charles Schwab (SCHW)
Redwood Trust (RWT)
Pfizer (PFE)
Petrohawk Energy (HK)
Equinix (EQIX)
First Niagara Financial Group (FNFG)
Washington Federal (WFSL)

Top 15 Holdings (by percentage of assets reported on 13F filing)

1. JPMorgan Chase (JPM): 7.03%
2. Apple (AAPL): 5.34%
3. Amazon (AMZN): 4.83%
4. Google (GOOG): 4.45%
5. Crown Castle (CCI): 4.25%
6. McDonald's (MCD): 4.20%
7. MarketVectors Gold Miners (GDX): 3.74%
8. Thermo Fisher Scientific (TMO): 3.62%
9. Teva Pharmaceuticals (TEVA): 3.42%
10. Western Union (WU): 3.41%
11. CME Group (CME): 3.39%
12. Millipore (MIL): 3.37%
13. Express Scripts (ESRX): 3.19%
14. CIT Group (CIT): 3.16%
15. Microsoft (MSFT): 2.66%

John Griffin's Blue Ridge Capital has probably the most intriguing set of portfolio moves we've covered this far. Starting with his new positions we see he added numerous hedge fund favorites including Apollo Group (APOL), a stock owned by many fellow Tiger Cub hedge funds. Keep in mind that while it shows they also started a new stake in General Growth Properties (GGP), they could have possibly already owned shares because GGP previously traded on the pink sheets and in previous quarters was not a security required for disclosure by the SEC. General Growth of course is the emerging-from-bankruptcy REIT play that Bill Ackman, Bruce Berkowitz, and Whitney Tilson all have large stakes in. Thirdly, they started a new CIT position just as Seth Klarman was selling out of it. On the other hand though, David Einhorn added to his CIT stake in the first quarter as well. However, Einhorn and Griffin differ in their view on Boston Scientific as John Griffin was starting a brand new stake in that company just as Einhorn was exiting. It's very interesting to see so many prominent managers take different views on hotly traded stocks.

Blue Ridge also started a new position in Citrix (CTXS), a cloud computing play. As we've covered in the past, David Stemerman's hedge fund Conatus Capital is bullish on cloud computing as well. And staying with technology for a second, Griffin started a hefty new position in Google (GOOG). Market participants will be well aware that GOOG has been trading down for quite some time now and believe it or not, some managers are actually touting it as a 'value' play now. Clearly Griffin sees something there, but shares are now trading below any level he could have purchased at in the first quarter.

Some readers will take note of Griffin's increase in his gold miners exchange traded fund stake (GDX) given that gold has been in the headlines so much recently. Griffin also added to hedge fund favorite names Mastercard (MA) and Teva Pharmaceutical (TEVA). In terms of sector dispersion, Blue Ridge currently has its largest allocations within financials and technology.

On the selling side of Blue Ridge's portfolio, they notably exited Pfizer (PFE), Berkshire Hathaway (BRK.A), and Equinix (EQIX). PFE is owned by a lot of hedgies, BRK.A is owned by a lot of value players, and EQIX is owned by a lot of Tiger Cub hedge funds as well. So, it's interesting to see Griffin's divergence from the pack here on these names and we'll have to see if he revisits them in the future. Yet at the same time, Blue Ridge still owns some of the 'consensus' hedge fund holdings such as Apple (AAPL), JPMorgan Chase (JPM), and Express Scripts (ESRX). That wraps up the notable changes to their portfolio. Make sure to check out Blue Ridge's extensive reading list if you're looking to become a more successful investor.

Assets reported on the 13F filing were $6.1 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for hedge fund tracking, replicating, and performance backtesting (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, and Mohnish Pabrai's Investment Fund. Be sure to check back daily for new hedge fund updates.

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