Third Point Still Net Long Distressed Debt & MBS: Latest Exposure & Positions

Dan Loeb's hedge fund recently sent out their performance update for their Offshore fund and in it we saw their latest exposure levels and top positions. Earlier today we learned that Third Point was up 15.58% for the year in our batch of first quarter 2010 hedge fund performance numbers. They were up 8.1% in March alone and had a solid month. Their $1.74 billion Offshore fund's cumulative performance is an astonishing 859% with annual standard deviation of 13.8% a correlation to the S&P of 0.39 and a Sharpe Ratio of 1.30, rounding out an impressive set of statistics. To learn to be a great investor like that, we point to Dan Loeb's recommended reading list.

Let's next check in on their exposure levels. In equities, they are net long consumer names at 12.2%, financials at 13.1%, and healthcare at 8.2%. They are ever so slightly net short the market indices and energy. In credit, they are net long distressed at 31.3%, Performing at 13.5%, and mortgage backed securities - MBS at 19.2%. The positive performance as of late can be attributed to their financial plays in equities and their distressed credit plays. Other exposure levels include a 6.5% net exposure to risk arbitrage and a 7.4% exposure to privates. In terms of geographic exposure, Loeb's hedge fund is net long America by 107%, net long Europe by 20% and neutral in Asia.

Third Point's top positions are as follows and keep in mind that they own multiple securities in all of these companies so it's not just simply an equity position or a debt position. Unfortunately, there is no further breakdown as to specifics:

- Chrysler
- Delphi Corp
- CIT Group
- PHH Corp
- Dana Holding Corp

So, they still own many of the names we saw referenced in their investor letter. Loeb's hedge fund also made note of some of their top winners and losers. Many of their losing stakes were un-named short positions which is understandable given the fact that the market doesn't seem to want to go down. They also lost on their Gartmore Group Ltd and Ford (multiple securities) positions. Their top winners include: PHH Corp, Delphi, Chrysler, SemCrude LP (multiple securities) and Liberty Media Corp Interactive. In terms of new portfolio activity, we saw they recently updated two positions and then reduced a position.

That wraps it up. To learn to invest like this fund manager, we defer you to Dan Loeb's recommended reading list. We'll continue to check in on Third Point each month to provide you updates. In the mean time, for more information you can head to Third Point's commentary, as well as our look at their equity portfolio.

Hedge Fund Performance Numbers: First Quarter 2010

Today we wanted to check in on how some of the prominent hedge funds have fared thus far in 2010. We've previously posted up some 2009 hedge fund performances and now it's time for the next update. Turning to this year, some hedgies just keep on chugging while others have surprisingly stumbled. Two days ago we noted how global macro funds have lagged, so let's see who else has been having trouble. Thanks to the anonymous investors who have sent us updates, HSBC, ZeroHedge, and CreditSuisse for the data.

Q1 2010 Performance


Third Point LLC: Dan Loeb's offshore fund was up 8.1% in March (and +15.58% for the year as of the end of March). Their Ultra fund was up 9.1% for the month (16.5% for the year), and their Partners fund was up 9% for the month (16.9% year-to-date). We recently took note that they were one of the best performing funds in 2010 thus far and we also posted up Third Point's commentary. Later this morning we'll post up an in-depth look at their portfolio & exposure levels as well.

Och-Ziff Capital Management: Their OZ Master Fund was up 1.14% in March and up 2.65% for the year. Their Asia Master Fund was up 4.01% in March and up 5.23% for the year. Their Global Special Investments fund was up 1.05% in March as well. Daniel Och and the Ziff brothers all appeared on the latest Forbes' billionaire list.

Greenlight Capital: David Einhorn's fund was down 1.33% for the year as of the end of March. We recently pondered whether Einhorn's Vodafone (VOD) thesis would would pan out or not and looked at Greenlight's investor letter.

Harbinger Capital Partners: Philip Falcone's hedge fund was up 1.77% for the year at the end of March. They also recently announced plans for a 4G wireless network.

Renaissance Technologies: Jim Simons' quant firm RenTec saw their RIEF (Class B) fund up 4.82% for the year as of the end of March. Simons is profiled in Scott Patterson's new book, The Quants.

Paulson & Co: John Paulson's various hedge funds have had mixed performance. His Advantage Plus fund was -1.18% for the year as of February, his Advantage fund -0.93%, his International fund up 0.47%, his Credit fund up 3.35%, and his Enhanced fund up 0.99%. In the past, we've also taken an in-depth look at John Paulson's new gold fund.

Viking Global: Andreas Halvorsen's hedge fund appears to be struggling as Viking was -0.1% for the first quarter. We've previously covered Viking Global's portfolio as well.

Shumway Capital Partners: Chris Shumway's fund was up 3.62% for the month of March and sat up 2.20% for the year at that time. For those interested, here's our coverage of Shumway's portfolio.

Pershing Square Capital Management: Bill Ackman's hedge fund was up 3.7% for the month of March and up 5.62% for the year. In the recent past we took a look at Pershing's economic exposure to General Growth Properties (GGP), one of their big-time winning positions.

Maverick Capital: Lee Ainslie's hedge fund was -0.30% for March and up 4.08% for the year at that time. We've previously taken a look at Maverick's portfolio.

Millennium Partners: Israel Englander's fund was up 0.98% in March and found themselves up 3.58% year to date for 2010. Israel recently appeared on Forbes' billionaire list.

Omega Advisors: Legendary hedgie Leon Cooperman saw his Overseas fund up 3.12% in March and up 3.26% for the year at that time. Fortune recently had a nice interview with Cooperman here.

Zweig-Dimenna: Down 2.18% for the year after gaining 0.81% in the month of March.

Eminence Capital: Ricky Sandler's hedge fund was up 1.70% gross for the first quarter. We recently took a look at Eminence's portfolio for those interested.

Everest Capital: Marko Dimitrijevic's Asia fund was -7.11% at the end of March and his China Opportunity fund was -6.69%. We covered Dimitrijevic's thoughts at a hedge fund panel and also covered a profile of Everest.

Altima: Their global special situations fund was -7.19% as of the end of March.

Bluecrest: Up 0.62% for March and up 5.10% for 2010.

Lansdowne: Their UK Equity fund was up 8.28% through the end of March. We've only covered Lansdowne's portfolio once in the past.

Bluemountain: Up 1.46% in March and 4.64% for the year at that time.

Owl Creek: Jeff Altman's overseas fund was up 7.98% through March. We previously posted up some of Altman's insight at a hedge fund panel and you can also read Owl Creek's latest letter here.

Tudor Investment Corp: Paul Tudor Jones' Global BVI Fund: -0.55% as of the middle of March. Their Tensor fund was -1.96% as well. We've covered Tudor's investor letter in the past.

Caxton Associates: Bruce Kovner's Alpha fund was up 6.34% for the year as of March and his Global fund was up 2.65% at that time.

Moore Capital Management: Louis Bacon's flagship fund: +1.58% YTD. Emerging Markets Fund -5.88% for the year as of the middle of March.

Clarium Capital: Peter Thiel's fund was -5.4% for the year after losing 6.1% in March. You can check out our coverage of Clarium here.

Brevan Howard Flagship fund: -0.53% YTD.

Perry Partners: This fund was up 2.70% for the month of February and found themselves up 6.99% for the year at that time. We previously posted up Perry's annual letter.

Traxis Partners: Barton Biggs' hedge fund was down 1.31% for the year at the end of March.

King Street: Up 1.18% in March and up 2.67% for the year at that time.

York Capital: Up 4.52% for the year after a boost of 3.6% in the month of March.

Capula Investment Management: Up 2.03% for the year at the end of March. They primarily run fixed-income arbitrage strategies and Goldman Sachs took a stake in this firm back in 2008. GLC Diversified Fund: -5.49% through March.

Odey European: They were up 2.52% for March and up 3.08% for the year at that time. We recently posted up Odey's investor letter for those interested.

Man AHL Diversified Fund: Up 5.40% in March and up 2.23% for the year at that time.

Toscafund: Up 0.97% for the year as of the end of March.

That wraps up the recent performance numbers thus far for 2010. Be sure to also check out the list of the world's largest hedge funds as well as our compilation of 2009 performance numbers.

Hedge Funds Aggressively Sell Japanese Yen: Trend Report

Bank of America Merrill Lynch is out with their latest iteration of the hedge fund monitor report where they check in on trends and exposure levels. Last time around, we saw that hedge funds were buying equities & re-shorting the euro. This time, we see that hedgies have been buying oil and copper, increasing their bullish bets there. Additionally, they've been selling the Japanese Yen (aggressively) and have added to their curve steepener trades.

Based on CFTC data, here's what various hedge funds were up to in various asset classes:

Interest Rates: As mentioned above, they continued to play a steep curve by adding to their shorts in the 10 year treasury and significantly adding to shorts in the 30 year treasury, all while buying 2 year treasuries. We've covered in the past how hedge fund Prologue Capital likes curve steepeners and how you can replicate legendary fund manager Julian Robertson's constant maturity swap play.

Equities: It should come as no surprise that hedgies continued to press their crowded longs. After all, this is the market rally that just won't end. What's interesting here is the dynamic between the various markets. They continued to buy the NDX futures (Nasdaq) but marginally added to SPX shorts (S&P 500).

Energy: Crowded longs in crude oil became that much more crowded as large specs bought more. Additionally, we see that they were modestly covering natural gas shorts.

Forex: Hedge funds were recently back to pressing crowded shorts in the Euro last week. Maybe more interesting is the fact that they've sold the Japanese Yen and have gone net short. BofA notes that the appetite for risk is clearly rising as the Yen is on the verge of a technical breakdown.

Turning next to various strategy exposure levels, we thought we'd check in with what market neutral and long/short equity hedge funds have been up to. We see that market neutral funds still have above average exposure and are net long. They are losing their appetite for low quality names and are overall favoring growth and large cap plays. Long/short equity funds, on the other hand, are now well below their typical net long exposure. While they still favor value and large cap stocks, it's clear that they are taking profits and protecting from any possible impending downside risk.

Embedded below is the latest edition of Bank of America Merrill Lynch's hedge fund monitor report:



You can directly download a .pdf here.

For more BofA hedge fund research, head to their list of most concentrated stock positions: the hedge fund generals list. And as always, venture over to our hedge fund portfolio tracking for the latest movements in the most prominent long/short equity portfolios.

Falcone's Harbinger Acquiring Spectrum Brands (SPB) Shares

We have some transactions to update you on regarding shares of Spectrum Brands (SPB), Philip Falcone's hedge fund Harbinger Capital Partners, as well as hedge fund D.E. Shaw & Co's Laminar Portfolios. Firstly, we see that Harbinger filed an amended 13D with the SEC and now shows a 39.68% ownership stake in SPB with 12,153,819 shares. The filing was made due to activity on March 30th and we also have some color on recent transactions. We initially covered when Harbinger went activist on Spectrum back in 2009 as the company was reorganizing from Chapter 11 bankruptcy. Shares of Spectrum recently switched from ticker symbol SPEB in the over-the-counter (OTC) market and began trading under ticker SPB on the NYSE.

In the fine print of the recent filing, we see that Falcone's hedge fund has entered into a 10b5-1 purchase instruction with Credit Suisse Securities, "pursuant to which the parties thereto established a trading plan to effect purchases of up to 100,000 shares per week." These purchases can be made Monday through Thursday of each week at a price not to exceed $31.50. This plan will exist until either August 6th or the mailing of a definitive proxy statement to stockholders in connection with the merger, whichever date comes first.

Secondly, we see that Harbinger has entered an agreement with fellow hedge fund D.E. Shaw & Co (Laminar Portfolios) where Harbinger acquired Shaw's 89,300 shares at a price of $30 per share. This transaction was reflected in Form 4's filed with the SEC by both D.E. Shaw Laminar and Harbinger. In addition to this, Falcone's hedge fund updates us on the amount of SPB shares they purchased on March 31st and April 1st. Here is a breakdown of their transactions and keep in mind that the purchases executed at $30 are the D.E. Shaw transactions:

(click to enlarge)

So, Harbinger is slowly but surely scooping up the shares of Spectrum Brands (SPB). Overall, Falcone's hedge fund firm has been quite busy as of late. They of course recently announced plans for a 4G wireless network and completed the SkyTerra merger. Additionally, we took note that they've been selling some New York Times (NYT) shares as well. They've definitely been active in the SEC filing department, that's for sure. In terms of other activity out of fellow hedge fund D.E. Shaw, we saw they recently updated a position and we covered their research on leverage as well.

Taken from Yahoo Finance, Spectrum Brands "together with its subsidiaries, operates as a consumer products company worldwide. The company offers consumer batteries, including alkaline and zinc carbon batteries, rechargeable batteries and chargers."

To see what other equity positions Falcone owns, you can view Harbinger's portfolio here.

Carl Icahn Continues Acquiring Take Two Interactive (TTWO) Shares

Yet again, Carl Icahn has bought more shares of Take Two Interactive (TTWO). In a Form 4 filed with the SEC, we see that Icahn's various investment vehicles purchased 168,700 shares of TTWO at $9.98 per share. The transaction took place on April 1st, 2010 and he now collectively owns 11,789,226 shares through his mix of investment funds and partnerships. This comes after we recently covered how Icahn has been adding TTWO shares repeatedly as he looks to shake-up things at the company to increase shareholder value.

The legendary rabblerouser and corporate activist has been quite active in the investment arena lately as he recently dumped his Blockbuster (BBI) shares and has been seeking to acquire Lions Gate Entertainment (LGF). You can read some of his investment theses and insight in Icahn's investor letter if you're interested in learning more. In the mean time, we'll continue to watch if he can institute change at TTWO and will monitor the SEC filings for the next time he purchases shares. Because if his rate of buying is any indication, it doesn't look like he's done yet.

Taken from Google Finance, Take Two Interactive is "a global publisher, developer and distributor of interactive entertainment software, hardware and accessories. The Company’s publishing business consists of Rockstar Games, 2K Games, 2K Sports and 2K Play publishing labels. The Company develops, markets and publishes software titles for gaming and entertainment hardware platforms."

For more from hedge fund Icahn Partners, check out Carl Icahn's portfolio.

Value Investing Congress Almost Sold Out: Last Chance

We just received word from the Value Investing Congress that the event on May 4th & 5th in Pasadena is 90% sold out. Register for one of the remaining seats and you can save $300 off the regular price of admission. Use discount code P10MF11 to receive the discount and sign-up here. At the event you'll receive actionable investment ideas from some of the top investment managers out there and be able to network with a ton of great industry professionals. Here's the list of speakers:

• Bruce Berkowitz, Fairholme Capital Management
• Eric Sprott, Sprott Asset Management
• Mohnish Pabrai, Pabrai Investment Funds
• Paul Sonkin, The Hummingbird Value Funds
• Thomas Russo, Gardner, Russo & Gardner
• David Nierenberg, The D3 Family Funds
• Lloyd Khaner, Khaner Capital
• J. Carlo Cannell, Cannell Capital
• Patrick Degorce, Thélème Partners
• Whitney Tilson and Glenn Tongue, T2 Partners
• Guy Spier, Aquamarine Fund
• Amitabh Singhi, Surefin Investments
• Richard Vogel, Alatus SA
• Lei Zhang, Hillhouse Capital Management


This is your last chance to attend the event and we highly recommend it. Click here to receive $300 off with discount code: P10MF11.

Hedge Fund Lone Pine Capital Discloses New Stake in Longtop Financial Technologies (LFT)

Due to activity on March 25th, 2010 Stephen Mandel's hedge fund Lone Pine Capital filed a 13G with the SEC regarding shares of Longtop Financial Technologies (LFT). In the filing, we see that they now have a 5.5% ownership stake in LFT with 3,093,594 shares (via the ADR shares traded on the NYSE). This is a brand new position for them as they previously did not own shares when we looked at Lone Pine's portfolio.

It seems Mandel's hedge fund has been busy as of late because just yesterday we noted that Lone Pine started a new Live Nation Entertainment (LYV) stake. Yet, their newly initiated LFT position is intriguing because we've seen fellow Tiger Cub hedge funds active in this stock. Lee Ainslie's Maverick Capital started a new LFT position in the fourth quarter. At the same time, Chase Coleman's Tiger Global has been slowly selling shares of LFT and we've taken note of this several times. More often than not, you'll see Tiger Cub hedge funds share similar positions in their portfolios, so this is one of the somewhat rare occurrences when there is a divergence of opinion. That said, Coleman's hedge fund could merely have been reducing their position size as they still own LFT as far as we're aware. We'll have to see if any other funds begin adding shares.

For 2009, Lone Pine's main fund Lone Cypress was up 17.7% as noted in our hedge fund performance numbers post. Additionally, their Lone Kauri was up 12.1%, Lone Cascade up 44.4%, and Lone Dragon Pine up 72.9%. For other investment ideas from Mandel's hedge fund, we previously saw that they are bullish on education plays as well.

Taken from Google Finance, Longtop Financial Technologies is "ogether with its subsidiaries, provides a range of software solutions and services to the financial institutions in the People’s Republic of China (PRC), including the development, licensing and support of software solutions, the provision of maintenance, support, and other services, and system integration services related to the procurement and sale of third party hardware and software."

Hedge Fund T2 Partners: Long & Short Positions (March Letter)

Whitney Tilson and Glenn Tongue's hedge fund T2 Partners was up 4.6% for March and is up 10.1% year-to-date for 2010. In their brief March investor update letter posted below, we get a glimpse as to how some of their portfolio positions are faring.

If you're looking for long ideas, T2 is long General Growth Properties (GGP), Iridium (IRDM), Borders (BGP), Winn Dixie (WINN), Resource America (REXI), and Yahoo (YHOO). In the past, we've also posted up T2's presentations on their investment ideas.

In terms of shorts, Tilson's hedge fund has been short Lululemon (LULU), DineEquity (DIN), MBIA (MBIA), and Palm (PALM). Unfortunately, the only short that hasn't ripped higher with the market is Palm. In the past, we'd also gotten a look at some of T2's other short positions. Again we see evidence that hedge funds are struggling to find many profitable short positions as the market continues its overextended run.

If you're looking for more analysis, head to T2's annual letter but embedded below is T2 Partners' March letter to investors which is pretty brief:



You can directly download a .pdf here.

You can hear investment insight from Tilson at the upcoming Value Investing Congress where plenty of hedge fund managers will present investment ideas and we highly recommend attending. In terms of other recent coverage, Tilson was also on television where he talked about his positions and the market.

Global Macro Hedge Funds Lagging (Tudor, Moore, Brevan Howard, Clarium)

We've recently seen some performance numbers from some of the top dogs in the global macro hedge fund game. And, it's not what you'd expect. After all, these funds typically have free reign and can trade in interest rates, currencies, futures and sovereign debt... areas ripe with opportunity given the ever-changing dynamic of global economies. Yet, some of the world's largest hedge funds seem to be struggling.

As the FT notes, Paul Tudor Jones' flagship hedge fund Global BVI at Tudor Investment Corp was down 0.55% for 2010 as of the middle of March. Also, fellow global macro titan Louis Bacon seems to be seeing mixed results. His Moore Capital Management flagship fund is up 1.58% for the year. You'll remember that Moore Capital was recently raided by the FSA for alleged insider trading by one of their traders for his personal account (not for trades made on behalf of the fund). However, Moore's emerging markets fund was down 5.88% as of the middle of March. This fund is run by famed trader Greg Coffey (formerly of GLG). For more on Bacon's hedge fund, we've posted up some recent portfolio activity out of Moore, as well as some of their UK positions.

Even more shocking perhaps is that the downward spiral at Peter Thiel's hedge fund Clarium Capital has continued. ZeroHedge noted that Clarium lost 6.1% in the first three weeks of March and was now down 5.4% for the year. This all comes as US equity markets are up over 6.4% for 2010. We're not quite sure what's going on over there but after a fantastic start to the fund, the last few years have been quite rough on them, to put it politely. They were down 25% in 2009 according to our hedge fund performance numbers post. However, as of the recent performance data, they were still up 210% since inception.

In the past, we've posted up some of Clarium's research and have been impressed with the ideas and viewpoints expressed. However, it seems that they have had issues with market timing and converting those ideas into tradeable strategies. For more on this hedge fund, you can check out our Clarium coverage.

Additionally, we learn that Brevan Howard's flagship fund is down 0.53% year-to-date. As far as we're aware, it is Europe's largest fund at £13.3 billion. Keep in mind that many of these gentlemen of course graced the recently updated Forbes' billionaire list so they've certainly made plenty of money in the past. That said, their recent performance is not necessarily what you'd expect in an environment many have deemed as ripe with global macro opportunity.

Stephen Mandel's Lone Pine Starts New Position in Live Nation Entertainment (LYV)

Stephen Mandel's hedge fund Lone Pine Capital just filed a form 13G with the SEC regarding shares of Live Nation Entertainment (LYV) due to activity on March 22nd, 2010. In the filing, we learn that Lone Pine now has a 5.6% ownership stake in LYV with 9,585,320 shares. This is a brand new position for them as they did not previously own shares when we looked at their Lone Pine's quarterly portfolio update which shows positions as of December 31st, 2009. So, they've started their new stake somewhere in the past three months.

For 2009, Lone Pine's main fund Lone Cypress was up 17.7% as noted in our hedge fund performance numbers post. Additionally, their Lone Kauri was up 12.1%, Lone Cascade up 44.4%, and Lone Dragon Pine up 72.9%. In terms of other portfolio activity, we learned that Mandel's hedge fund is bullish on education plays. Additionally, Lone Pine apparently is focused on investments in outsourcing, smartphones, emerging market consumer-driven companies, national and global financial service leaders and internet-enabled business disrupters. Conversely, they've been shorting companies that have been hurt by technological obsolescence and companies in industries with global overcapacity. For more of our coverage on this hedge fund, head to our post on Lone Pine's UK positions as well as their US equity portfolio.

Taken from Google Finance, Live Nation Entertainment is "is a producer of live music concerts worldwide. Live Nation owns, operates, and has booking rights for, and has an equity interest in 142 venues, including House of Blues music venues and locations, such as The Fillmore in San Francisco, the Hollywood Palladium, the Heineken Music Hall in Amsterdam and the O2 Dublin. The Company operates in three business segments: North American Music, International Music and Ticketing."

For more of our daily coverage of investment managers, head to our hedge fund portfolio tracking series.

Ken Griffin's Citadel Investment Group Boosts Leap Wireless (LEAP) Stake

In a recent filing with the SEC, Ken Griffin's hedge fund firm Citadel Investment Group has updated their stake in Leap Wireless (LEAP). In a 13G filed due to activity on March 23rd, 2010, we see that Citadel now shows a 5.5% ownership stake in LEAP with 4,246,177 shares. This is an increase in their position as they previously held 1.6 million shares back on December 31st, 2009. This means they've increased their position size by over 160% in the past three months.

This increase is intriguing mainly because we've seen a lot of hedge fund interest in wireless plays as of late. Philip Falcone's hedge fund Harbinger Capital recently announced plans for a 4G wireless network and in the fourth quarter we noticed they added a large position in Sprint (S). Additionally, Greenlight Capital's David Einhorn has a potential catalyst play with his position in Vodafone (VOD). So, we'll have to see what Ken Griffin's firm has in store for this Leap Wireless position. Many analysts and investors have long pondered whether or not LEAP is a takeover/merger target within the wireless provider space but obviously that has yet to materialize.

To learn more about Citadel, we recommend checking out Scott Patterson's new book The Quants as Ken Griffin is featured in it. We also recently noted that Ken Griffin landed on Forbes' billionaire list as well.

Taken from Google Finance, Leap Wireless is "is a wireless communications carrier that offers digital wireless services in the United States under the Cricket brand. Its Cricket service offerings provide customers with unlimited wireless services for a flat rate without requiring a fixed-term contract or a credit check."

Steven Cohen's SAC Capital Discloses InterMune (ITMN) Position

In a 13G filed with the SEC, Steven Cohen's hedge fund SAC Capital has disclosed an updated position in InterMune (ITMN). Due to activity on March 22nd, 2010, SAC Capital now shows an 8.2% ownership stake in ITMN with 4,465,400 shares. This is a new position for Cohen's hedge fund as they previously did not own it as of December 31st, 2009 in their last 13F filing. However, SAC has owned shares of ITMN in the past. So, it appears as if they are fond of the name again. After all, shares of ITMN are up huge (over 200%) in the month of March.

Please keep in mind though that Cohen's hedge fund is a trading oriented firm and as such moves in and out of positions much quicker than the other hedgies we cover on Market Folly. In terms of other recent portfolio activity, we also saw SAC boost their Psychiatric Solutions stake (PSYS). SAC Capital finished 2009 up over 28% as noted in our post on hedge fund 2009 performance numbers. Famed manager Stevie Cohen of course was recently featured in Forbes' billionaire list as well.

Taken from Google Finance, InterMune is "a biotech company focused on developing and commercializing therapies in pulmonology and hepatology. In November 2008, InterMune together with Roche and Pharmasset, Inc. (Pharmasset) announced the initiation of INFORM-1, a dual combination clinical trial investigating the combination of two oral antiviral molecules in the absence of interferon."

For those of you interested in more portfolio activity out of this hedge fund, head to our posts on SAC Capital.

What We're Reading ~ 4/3/10

Steven Drobny's new hedge fund book: The Invisible Hands [Steven Drobny]

If you haven't read his first book, definitely check out his interviews with top hedge fund traders: Inside the House of Money [Steven Drobny]

The wisdom of short selling [NYTimes]

And on that note, many hedge funds have recommended reading The Art of Short Selling [Kathryn Staley]

Morgan Stanley thinks the rally is about to end [Pragmatic Capitalist]

Don't focus too much on the oil to natural gas ratio [Reformed Broker]

Analyzing insurance stocks: the income statement [StreetCapitalist]

The CRE time bomb [Humble Student of the Markets]

Jim Chanos is wrong on China [Eric Jackson, The Street]

We've previously posted up Chanos' thoughts on China [MarketFolly]

Why wine isn't an investment [Felix Salmon] (A long time ago we posted about a wine hedge fund.)

A sports betting hedge fund starts up [FINalternatives]

Inside the personal life of Steven Cohen [NYMag]

Americans back to the overconsumption norm [CreditWritedowns]

Ospraie's Dwight Anderson lures back commodities investors [Reuters]

And a past look at how Anderson got broadsided in 2008 [Fortune]

Is Paulson & Co now too big to succeed? [BusinessWeek]

Fannie/Freddie may fill Fed's mortgage void [Reuters]

Hedge fund manager pay roared back last year [NYTimes]

What March Madness teaches us about survivorship bias [AllAboutAlpha]

MarketClub Free Trial for 2 Weeks

Occasionally, we'll post up insightful technical analysis from the guys over at MarketClub. They've just informed us that they're giving away their premium content for free for a bit, so we thought we would share. So, here's a free 2 week trial to MarketClub for those interested.

Through the freebies you'll have access to their trade school, chart analysis, smart scan and data center. It's a great way to refine your technical analysis skills for those interested. Take advantage of the free trial as we're not sure how long it will last.

Cazenove's Listed Hedge Funds Dispatch

Expanding further upon 'document dissemination' day here at Market Folly, we'll turn next to JPMorgan & Cazenove's listed hedge funds dispatch report. Earlier today we've already posted up Credit Suisse's monthly hedge fund report as well as QB Asset Management's shadow price of gold report. The below document was produced by JPMorgan Cazenove in London and hasn't been produced in the United States, so this particular piece might be of more relevance to our UK based readers.

An interesting takeaway from their research is that in 2009, out of all the publicly listed hedge funds in the UK, Dan Loeb's Third Point was the best performing fund. For 2009, Third Point's listed product was up 41% compared to a gain of 20% for the HFRI Fund Weighted Composite.

We've of course covered Third Point's portfolio in-depth and just recently posted up one of their recent portfolio maneuvers. (Additionally, we've also posted up Third Point's commentary for those interested as well). Other solid performers in 2009 included Cayenne as well as Boussard & Gavaudan. Cazenove's research is an intriguing look at the listed hedge fund space with some comprehensive data.

Embedded below is the full report:



You can directly download the .pdf here.

Overall, Cazenove concluded that there are plenty of quality names in the listed hedge fund space and that these solid names will be "the bedrock for the sector's survival and growth." Be sure to check out all the rest of the hedge fund research we've been posting up recently.

Credit Suisse Monthly Hedge Fund Commentary

Continuing document dissemination day here at Market Folly, we wanted to present you with Credit Suisse's monthly hedge fund commentary. Though the report is from February, it still does an excellent job of framing how hedge funds have positioned themselves from the year and where their gains or losses have been coming from. Additionally, you'll get a look at Credit Suisse's Tremont hedge fund index and its performance. This research joins the commentary we posted up yesterday where we saw hedgies were re-shorting the euro and buying equities.

In the report, they present findings relating to various fund strategies and we just wanted to quickly touch on some highlights. One of the interesting things we took away from their research was their data on managed futures funds. They note that from the period of 2007 to 2009, managed futures correlation to equities dropped. As such, these funds saw positive performance in the crisis but negative performance during the great equities rally in 2009.

Turning to event driven funds, they found that many managers in this arena felt that 2010 would be much more conducive to deal-making and as such would provide them with ample portfolio opportunity. Dan Loeb of hedge fund Third Point LLC certainly agrees with this and made special note of event driven opportunities in his recent investor letter. In regards to global macro funds, Credit Suisse actually found that many funds held fewer strategic positions as there was a range of uncertainty surrounding governments and central banks toward the beginning of the year. We've covered the thoughts of a few global macro funds on the site including Prologue Capital's recent commentary and some past thoughts from Woodbine Capital where they thought that the most important macro issue was global rebalancing.

Overall, the report is an interesting glimpse at how various fund strategies have been positioned in the first quarter of the year. Embedded below is monthly research from Credit Suisse and their Tremont hedge fund index:



You can directly download a .pdf here.

For more hedge fund research that we've covered, check out Bank of America Merrill Lynch's recent hedge fund trend report as well as Goldman Sachs' list of most important stocks for hedge funds.

The Shadow Gold Price: Research From QB Asset Management

Today is a bit of a 'document dissemination' day here at Market Folly and we wanted to highlight two pieces from Lee Quaintance and Paul Brodsky's QB Asset Management regarding gold. Below you'll find Nouriel Roubini's argument, "The New Bubble in the Barbaric Relic that is Gold" as well as QB's counterargument to Roubini's points. But first, we'll begin with QB's stance on the precious metal through their original research.

Their research, entitled "The Shadow Gold Price" focuses on the hotly debated precious metal of ages. The first thing you'll notice about this piece is that it is dated November 2008, right in the heart of the crisis. What's intriguing here is that they take a look at the current monetary system and compare it to one anchored to gold. Elaborating on their research, they then go on to develop the shadow gold price (a hypothetical intrinsic value for money/gold). Lastly, they apply this shadow gold price to the US equities market to establish relative value. In the piece, they also made the case for buying equities "hand over fist" which obviously turned out to be an excellent market call.

Overall, QB concluded that there is extraordinary risk in holding paper money and long term bonds. (We've long noted how many prominent investors have at some point been short long term bonds in one form or another). Additionally, they felt that commodity markets were cheap across the globe in nominal terms back then. While the letter itself is dated, the fundamental research and theoretical framework are still very relevant and worth reading.

Embedded below is QB Asset Management's research, "The Shadow Gold Price":



You can directly download a .pdf here.


Then, turning to more recent research out of QB Asset Management, we see that Lee Quaintance and Paul Brodsky have penned a response to Nouriel Roubini's December 2009 report on "The New Bubble in the Barbaric Relic that is Gold." QB takes issue with Roubini's comments, arguing that "gold's terminal value in this cycle will be multiples higher than current pricing." Below you will find a document that both presents Roubini's argument on gold as well as QB's counter-argument in a fascinating 'back and forth' style debate which we highly recommend reading:



You can directly download this .pdf here.

No matter your viewpoint on this often talked about precious metal, you have to admit that there has been a massive amount of in-depth research and rational arguments made on both sides of the coin (no pun intended) from a fundamental standpoint. If you're looking for even more resources, we've posted up a plethora of gold related hedge fund research and below you'll find the archives:

- Societe Generale's research: gold as an insurance policy (& when to sell it)
- An in-depth look at John Paulson's new gold fund
- The dynamic between gold, the dollar & gold equities
- Global macro hedge fund Woodbine Capital's thoughts on gold
- John Burbank & hedge fund Passport Capital's rationale for owning physical gold

And if technical analysis is more your style, you can head to a recent video analysis of gold here as well.

Hedge Fund Harbinger Capital Consummates Skyterra Communications Merger

Just a few days ago we touched on how Philip Falcone's hedge fund Harbinger Capital Partners announced plans for a 4G wireless network as spectrum is apparently the hottest new asset class out there. They are doing so via their stakes in TerreStar (TSTR) and Skyterra Communications (SKYT) and yesterday after the market close we see that they filed an amended 13D and a Form 4 with the SEC, providing us an update as to what's going on behind the scenes. Simply put, Harbinger acquired 45,147,477 shares of stock and paid $5.00 in cash per share for each totaling $225,737,385. Upon the completion of this transaction, the stock was canceled and ceased to exist (i.e. merger complete). As such, the company is now privately held with no public market for stock.

Before we dive into the legal jargon, we'll just preface this in layman's terms by saying that all you really need to know is that the merger between SKYT and Harbinger was consummated. On March 29th, Harbinger acquired 23,042,077 shares of voting common stock at $5 per share and 22,105,400 non-voting shares at the same price. This transaction was part of Harbinger's acquisition of Skyterra through a merger and all shares of common stock not previously held by Falcone's hedge fund firm were "converted into a right to receive $5.00 in cash, subsequently canceled and ceased to exist." Additionally, all warrants were canceled and ceased to exist as well. So, this appears to be one of the first major steps towards their play on spectrum and make sure you head to their plans for a 4G wireless network.

Other recent activity out of hedge fund Harbinger includes selling some New York Times (NYT) shares and you can view the rest of Falcone's equity portfolio here.

Tom Brown's Second Curve Files Form 4 on Shares of Taylor Capital Group (TAYC)

We just wanted to post up a quick minor portfolio update from Tom Brown's hedge fund Second Curve Capital. In a Form 4 filed with the SEC, we see that they were adding shares of Taylor Capital Group (TAYC). Keep in mind that this transaction represents indirect ownership for Second Curve. As noted on the filing, the nature of this indirect ownership is "By advisory clients of Second Curve Capital, LLC." At any rate, we see they acquired 10,000 shares at a price of $12.46 on March 29th, 2010. After this transaction they now show ownership of 1,330,191 total shares. We recently also posted up some other position updates out of Tom Brown's camp for those interested and you can also view the rest of Second Curve's portfolio here. Brown of course runs a fund focused specifically on the financial services sector.

Taken from Google Finance, Taylor Capital Group "serves as the holding company for Cole Taylor Bank, primarily engaged in commercial banking. The Bank provides a range of products and services primarily to closely-held commercial customers and their owner operators in the Chicago metropolitan area."