Friday, December 3, 2010

John Griffin's Blue Ridge Capital Discloses MiddleBrook Pharmaceuticals Stake (MBRKQ)

John Griffin's hedge fund Blue Ridge Capital just filed a 13G with the SEC regarding MiddleBrook Pharmaceuticals (MBRKQ). Per portfolio activity on November 22nd, Blue Ridge has disclosed a 8.05% ownership stake in MBRKQ with 6,969,697 shares. You can see commentary and analysis of Blue Ridge's other investments in the just-released issue of our newsletter.

It's difficult to discern whether or not this is a brand new position for Griffin's hedge fund. Securities traded on the pink sheets (like MiddleBrook is) aren't deemed reportable assets on 13F filings. So in their most recent 13F, Blue Ridge doesn't show a position in MBRKQ. However, if an investment firm were to acquire over 5% of a company's shares outstanding, they would have to file the respective 13G/D with the SEC, even if it's traded on the pink sheets (just as Blue Ridge has done). Readers will recall a similar scenario in the past when Bill Ackman's Pershing Square did not disclose their General Growth Properties stake (GGWPQ back then) on their 13F filing, but did disclose it in a 13D.

So, while it's unclear as to when Blue Ridge originally purchased MBRKQ, they have quite a sizable stake now, with recent enough activity to force the disclosure of the position due to crossing the ownership threshold amount.

This transaction is intriguing for a few reasons. First, Blue Ridge files 13G's or 13D's on a much less frequent basis than many other hedge funds we track as they don't seem to take concentrated positions as frequently. Second, MiddleBrook Pharmaceuticals is a micro-cap company ($5 million market cap) and filed for Chapter 11 bankruptcy protection in April of this year. Their restructuring will be something to watch.

Griffin founded Blue Ridge after leaving Julian Robertson's Tiger Management and is known as one of the successful 'Tiger Cubs.' For more from his fund, check out Blue Ridge's recommended reading list.

Per Google Finance, MiddleBrook Pharmaceuticals is "a pharmaceutical company focused on commercializing anti-infective drug products that fulfill unmet medical needs. The Company has developed a delivery technology called PULSYS, which enables the pulsatile delivery, or delivery in rapid bursts, of certain drugs."

Lee Ainslie's Maverick Capital Sells Cardiovascular Systems (CSII) Warrants

Lee Ainslie's hedge fund firm Maverick Capital just filed a Form 4 with the SEC regarding Cardiovascular Systems (CSII). Per the filing, we see that the hedge fund sold CSII warrants on November 30th. They sold warrants expiring in September 2013 with an exercise price of $9.28 that represented 134,790 shares. Additionally, they sold February 2014 warrants representing 519,798 shares and a conversion price of $8.83.

As detailed in their most recent 13F filing, Maverick Capital also owned 1,366,817 CSII common shares as of September 30th. So while it's a little unclear if they still hold these shares, they no longer own warrants. (The rest of Maverick's portfolio is analyzed in our latest issue of Hedge Fund Wisdom).

Maverick has returned 14% annualized since inception in 1995 and we posted up their third quarter letter here. Ainslie currently thinks technology stocks are cheap and Maverick has its highest net long technology exposure ever.

Per Google Finance, Cardiovascular Systems is "a medical device company focused on developing and commercializing minimally invasive treatment solutions for vascular disease. The Company’s primary products, the Diamondback 360 PAD System (Diamondback 360) and the Diamondback Predator 360 PAD System (Predator 360), are catheter-based platforms capable of treating a range of plaque types in leg arteries both above and below the knee and address many of the limitations associated with existing treatment alternatives."

Andreas Halvorsen's Viking Global Reveals Short Position in KBC Groep NV (KBC)

Andreas Halvorsen's hedge fund Viking Global Investors just disclosed a short position in overseas markets. Viking has revealed they are short 0.38% of the shares outstanding in the KBC Groep NV (KBC). This disclosure seems to fall under the new regulatory rules regarding revelations of positions in financials in foreign markets.

Even as the financial crisis has begun to recess from a state of panic, it's interesting to see various hedge funds still pop up with short positions in certain financial companies. Paul Ruddock's hedge fund Lansdowne Partners had been short Aviva (AV) and Crispin Odey's firm Odey Asset Management disclosed a new short position in Provident Financial (PFG).

Now, this is not to say that these hedge funds aren't shorting American-based financials as well. The short selling disclosures in the UK and foreign markets require transparency regarding these stakes while funds are not required to reveal short positions publicly in US-based companies.

Regarding other position activity out of Viking, we highlighted their new position in Guess (GES) back in late August as well.

Per Google Finance, KBC Groep NV is "a Belgium-based company engaged in banking, insurance and wealth management for private banking clients, retail customers and medium-sized enterprises. It has expertise in asset management and the financial markets. The Company’s activity is composed of five divisions: the Belgium, the Central & Eastern Europe and Russia (CEER), the Merchant Banking, the European Private Banking, and the Shared Services & Operations business units."

You can see Viking Global's portfolio here.

What We're Reading ~ 12/3/10

Hedge funds like Apple (AAPL), institutional investors differ [Institutional Investor]

Highbridge co-founder prepares new hedge fund [FINalternatives]

Interview with fund manager Harris Kupperman [DistressedDebtInvesting]

Grand Master Capital spinning out from Clarium [WSJ]

7 websites a trader visits most often [KirkReport]

The boom in hedge fund mergers [Dealbook]

On Bill Ackman and short selling [WashingtonPost]

Criticisms of the above article on Ackman [GeoffGannon]

Interview regarding fund manager selection [FINalternatives]

Hedge fund manager Mark Hart wins big on Euro crisis [TheFirstPost]

Bridger Management's Roberto Mignone invests in science education [WSJ]

Hedge fund mutual funds will change the market [BusinessInsider]

New wave of hedge fund start-ups find life is tough [Reuters]

Intriguing profile of New Jersey Nets owner Mikhail Prokhorov [NYTimes]

Thursday, December 2, 2010

Dan Arbess' Xerion Fund Prefers Commodities Over Equities

Daniel Arbess' hedge fund Xerion is out with its latest letter to investors. The fund, a part of Perella Weinberg Partners, has returned 18.68% annualized net since inception in January 2003 and currently manages around $2.3 billion. Maybe the most impressive aspect about Arbess' numbers is the fact that he's done so with a correlation to the S&P 500 of only 0.34%.

The hedge fund "seeks to draw on fundamental valuation skills to identify opportunities that offer the potential for asymmetric returns--downside protection with upside potential." Xerion is named for an alchemy tool whose legend says it can turn base metals into gold. Apparently, it is also supposed to be an elixir of enlightenment. When markets crumbled in 2008, Xerion returned 0.31%, beating out numerous hedge funds that suffered. In 2009, the hedge fund was up 35.33%. Through October in 2010, Xerion is up 7.34% net.

Arbess has been positioned around 61.6% net long with equity strategies around 43.7% net long, credit strategies 35.6% net long and macro strategies -17.7% net. At the end of the month, their top 10 longs comprised 34.8% of equity. Some of the hedge fund's top performers included positions in HRT Participações em Petróleo (HRT), Abitibi (process driven distressed credit), LCORA (credit special situation), Solutia (SOA - thematic Asian growth equity), and Ivanhoe Energy (IVAN - special situation equity).

"Quantitative Easing May be Counter-Productive"

Arbess dedicates a decent portion of his commentary to the Federal Reserve, quantitative easing, and his belief that while QE may spur equity price advances, it will do little to make a real difference in the economy.

He writes, "The unintended consequences of QE are eroding confidence in the Dollar and the entire monetary system. We generally prefer commodities over equities as a medium term play on the 'Fed Put'. Equities may not keep going up if QE doesn't work, but it seems to us that commodity-related investments will have legs whether QE works and economies improve, or QE doesn't work and more Dollars are left chasing the same commodities."

This viewpoint is generally aligned with that of John Burbank's hedge fund Passport Capital as Burbank favors hard assets. However, their shared thinking contrasts with that of David Tepper and Appaloosa Management. Tepper doesn't want to 'fight the Fed' and thinks equities will continue to rally.

"Shake Hands With China"

One of Arbess' ongoing themes has been to own what China's government and consumers desire. He argues that China is transforming itself from the world's factory into the world's consumer. As such, the Xerion fund is investing in hard assets that China and developing nations need to build infrastructure and fuel urban growth. The hedge fund has also been researching cheap producers in southeast Asia and retail distributors that will serve this rising consumer.

HRT Participações em Petróleo (HRT)

Arbess' letter also singles out their investment in newly IPO'd HRT. Xerion made an initial $20 million private investment back in November 2009 at a $360 million capitalization. HRT went public raising $1.5 billion at a pre-money valuation of $1.8 billion. It is a Brazilian exploration and development company formed by Petrobras seismic experts who provided consulting advice to large oil companies.

Of the company Arbess writes, "We think this Company is just getting started, with the IPO implying a reasonable valuation for HRT's known onshore oil assets, but discounting its substantial gas potential in the Amazon and offshore hydrocarbon blocks in Namibia. We like this investment at its current valuation and are looking forward to favorable news as the Company's drilling program ramps up over the next several months."

Xerion Portfolio Exposures

Interestingly enough, Arbess writes that, "Our net long corporate exposures are still weighted nearly 2:1 credit to equity. About three quarters of our equity exposures (and hedges) are leveraged to the global industrialization theme, mostly through what we intend to be asymmetric commodity plays like HRT. About a quarter of our equity exposures are more domestically-focused, playing for either idiosyncratic events or high operating leverage, strong free cash flow or secular strength in a weak economic environment (hotels, transportation, technology, etc.)."

Currently, the fund has 21.4% of assets under management dedicated to special situations equities (mainly hard asset-focused). Arbess makes a footnote that the Xerion fund has been looking at stressed credit situations in the arenas of food service, lodging, and technology. Lastly before everyone asks, unfortunately we can't post a copy of the actual letter due to revealing watermarks.

We'll continue to provide updates on Arbess' hedge fund, but in the mean time you can view a previous Xerion presentation: Investing as the foundation shifts.

Wednesday, December 1, 2010

Pershing Square Q3 Letter: Ackman Provides Updates on Positions

Bill Ackman's hedge fund Pershing Square's third quarter letter is pretty much an investor's dream. The manager provides commentary and updates on practically all of his positions and is the epitome of transparency. But then again, it's not necessarily that hard when you run such a highly concentrated book like Ackman does. Pershing Square of course is one of the 23 prominent hedge fund portfolios we detail and analyze in the new issue of our Hedge Fund Wisdom publication.

Pershing Square has returned 292.7% net of all fees since inception in 2004. For 2010, their main fund is up 7.6% year-to-date. The only real noticeable change in their portfolio is that they exited Landry's Restaurants, as the company was bought out.

Fortune Brands (FO)

A while back we highlighted Ackman's new position in Fortune Brands (FO). His letter highlights that he thinks their Spirits business is a great consumer niche as it has high barriers to entry, sustainable profit margins, and economic resiliency. What's comical here is that Ackman filed a 13D signifying his activist intent with the investment and even though he hasn't really done much in that regard yet, the stock is already up 40% since he purchased it. It appears though that management will work with Ackman to unlock value.

J.C. Penney (JCP)

The other new position in Pershing Square's portfolio is J.C. Penney (JCP). Ackman likes JCP's cheap valuation, solid assets, and brand name. Their average purchase price was $25.28 and the stock already trades north of $33. The hedge fund manager doesn't necessarily outline his thesis in the letter, though he does point out Vornado Realty Trust's (VNO) involvement in the stock. The publicly traded REIT also acquired a large ownership in JCP shares. In the past, we've highlighted Ackman's potential JCP real estate thesis.

Ackman notes that his firm sold some shares of their Kraft (KFT) and Target (TGT) positions to finance the purchase of their two new positions. The rest of Pershing Square's letter delves into updates regarding their positions in Automatic Data Processing (ADP), General Growth Properties (GGP), Howard Hughes (HHC), Corrections Corp (CXW), and Citigroup (C). This was interesting mainly because it's been a while since we heard from Ackman regarding his Corrections Corp position, a name we originally posted his investment thesis on.

Embedded below is Pershing Square Capital Management's third quarter letter to investors:

You can download a .pdf copy here.

In other recent investment ideas from Ackman, he recently declared he is bullish on housing. And interestingly enough, John Paulson says to buy housing as well.

Harbinger Capital Sells New York Times (NYT) and Sable Mining (SBLM), Buys Crosstex Energy (XTXI)

Phil Falcone's hedge fund Harbinger Capital Partners has executed some sizable transactions recently. Rumors have swirled that the manager was winding down its Special Situations fund but that has been denied. Harbinger recently sold shares in two securities of note: New York Times Co (NYT) and Sable Mining Africa (LON: SBLM).

Regarding his New York Times stake, Falcone last week revealed he sold 7 million NYT shares at around $8.13 each. Harbinger originally acquired shares in 2008 when they were trading around $19 per share, so they've sold at a large loss. According to a 13D filed with the SEC, the filing was reported due to portfolio activity on November 24th.

Previously, Harbinger owned 7.4% of the company. With its latest sales, the hedge fund now owns only 2.6%, retaining 3.7 million NYT shares. This is the second time Harbinger has sold NYT in the past month or so. Not to mention, they sold some shares back in April of this year as well.

Turning next to Harbinger's next sale, the hedge fund has announced that it placed 205,756,827 Sable Mining Africa shares (LON: SBLM) with new and existing shareholders. Due to this transaction, Harbinger no longer owns an interest in SBLM shares. Previously, we highlighted Harbinger's Sable Mining stake here as they owned over 23% of the company. Alas, no more.

So Harbinger has definitely been selling positions off (they also sold some Inmarsat (ISAT) as well), possibly to free up cash for their concentrated bet on a 4G network via their LightSquared project, but that's pure speculation on our part.

Lastly, Falcone's hedge fund firm also recently filed an activist 13D on Crosstex Energy (XTXI). Due to portfolio activity on November 16th, Harbinger has disclosed a 9.6% ownership stake with 4,500,000 shares. This is an increase in their position as they owned 3.8 million shares when they added to their XTXI position in August. Over the past three months, Harbinger has ramped up its position size by 18.2%. Harbinger paid $33,091,533 for the total shares reported.

Per Google Finance, Crosstex Energy is "is engaged, through its subsidiary, Crosstex Energy, L.P. (Partnership), the gathering, transmission, processing and marketing of natural gas and natural gas liquids (NGL). The Partnership operates two segments: Midstream and Treating. Its combined midstream assets consist of over 3,300 miles of natural gas gathering and transmission pipelines, nine natural gas processing plants and three fractionators located in two primary regions: north Texas and Louisiana."

New York Times is "a diversified media company that includes newspapers, Internet businesses, investments in paper mills and other investments."

Stay up to date on the latest hedge fund movements by scrolling through our coverage of SEC filings.

Soros Buys More Exar Corp (EXAR)

Soros Fund Management's Quantum Partners has acquired more shares of Exar Corp (EXAR). In a Form 4 filed with the SEC, Soros has disclosed purchases on November 26th and November 30th of 21,044 EXAR shares at prices ranging from $6.64 to $6.6498 (weighted average). Soros has previously purchased EXAR shares in October and September.

While Soros Fund Management was the firm disclosing the transaction, the footnotes reveal that these securities are held for Quantum Partners (of which Soros is the principal investment manager). After the recent transactions, Soros owns 6,387,710 shares of EXAR. Just yesterday we saw that Soros updated its stake in Verigy (VRGY) as well.

From Google Finance, Exar Corp is "a fabless semiconductor company that designs, sub-contracts manufacturing and sells differentiated silicon, software and subsystem solutions for industrial, telecom, networking and storage applications. The Company’s product portfolio includes power management and interface components, datacom products, storage optimization solutions, network security and applied service processors."

Tuesday, November 30, 2010

David Gerstenhaber of Argonaut Capital on Risk Management (Interview)

David Gerstenhaber, founder of global macro hedge fund Argonaut Capital, recently sat down with Opalesque TV to discuss risk management, how global macro investing has changed over the years, as well as how he got his start in the business.

Gerstenhaber was interested in markets at an early age and pursued economics as a result of it. He was working at Morgan Stanley in London when he started helping Julian Robertson's Tiger Management with some macro-oriented trades. Robertson then offered him a job and he accepted. After working for three years at Tiger Management, Gerstenhaber went on to found Argonaut Capital.

Risk Management

At Argonaut, he argues that one of their key advantages is their internal psychology about using options. He says, "We love to have asymmetric risk/reward in our favor, but not against us. And so, when we see themes that we have determined are likely to prevail for an extended period of time, we will do our best to structure our investments through options so that we have significant upside but limited downside ... We have a longstanding history of using options to reflect our positions rather than just buy directional risk."

On How Global Macro Investing Has Changed

In the interview, he emphasizes how making "big bets" was almost encouraged back in the day as investors were more tolerant of volatility in search of high returns. He also notes that risk management was not very developed and many investors didn't place a large emphasis on it. After shock events in 1998, the internet bubble, and housing bubble, it's very clear that risk management is very prevalent in global macro investing these days. Louis Bacon of Moore Capital has been known to place emphasis on risk first.

Practicing global macro investing now, Gerstenhaber identifies it as a four-asset class business: foreign exchange, fixed income, commodities, and equity indicies. Ideally, Argonaut wants to have positions in each asset class and offsetting value at risk (VaR) in each one of the asset classes so they aren't exposed to systemic risk. And interestingly enough, Argonaut's typical timeframe for holding an investment is identified as around "half a business cycle."

What is the future for global macro investing?

Gerstenhaber believes the global macro universe is expanding, rather than contracting like other strategies. For instance, he argues that the long/short US equity opportunity set is declining, yet there are more and more managers investing in that strategy each year.

One interesting quote from the interview is when Gerstenhaber said he sees a potential for a "muted rate of return for the long-only investor" in stocks or fixed income. While he's obviously biased since he is in the hedge fund industry and doesn't run long-only money, it's an interesting notion that investors shouldn't expect the same annual returns as they have seen in the past.

Embedded below is a video interview with David Gerstenhaber of hedge fund Argonaut Capital (RSS & Email readers may need to come to the site to watch it):

It's clear that Argonaut places a lot of emphasis on primary research and traveling the globe to craft and refine their investment theses. To see some of the hedge fund's thoughts from this year, check out Argonaut's thoughts on what went wrong in the markets. And for further global macro insight, we posted up Paolo Pellegrini's PSQR Capital last letter to investors before closing.

David Einhorn Talks Gold, Apple (AAPL), Pfizer (PFE), CareFusion (CFN), St. Joe (JOE) & Moody's (MCO)

David Einhorn, manager of hedge fund Greenlight Capital, recently sat down for a rare interview with Consuelo Mack on WealthTrack. The interview encompasses topics ranging from quantitative easing 2, his worries about the financial system, as well as many of his current positions including gold, Pfizer (PFE), Apple (AAPL), CareFusion (CFN) and his shorts of St. Joe (JOE) and Moody's (MCO). Einhorn has returned 22% annualized so it's always worth paying attention to what he has to say.

CareFusion (CFN)

We'll first start with a position that Einhorn hasn't talked much about previously: CareFusion (CFN). This medical device maker was spun-off from Cardinal Health (CAH) and is essentially a mix of various high multiple, high growth, high margin businesses. CFN has an infusion business which Einhorn thinks will benefit due to a competitor (Baxter ~ BAX) having to recall equipment. The Greenlight manager likes that CFN has an opportunity to take market share and a year later receive recurring revenue.

Einhorn says that, "so we think there's an opportunity here for them to expand their revenues, to expand their margins, obviously expand their earnings, and we don't believe that this has been fully adopted by Wall Street, which is very focused on medical devices and health care reform, and all the problems that go within that sector." Interestingly enough, we published an in-depth research report on CareFusion in our new issue of Hedge Fund Wisdom for those of you interested in the full investment thesis.

Apple (AAPL)

Another new position for Einhorn is Apple and we wanted to highlight his comments since he's only briefly mentioned it in a past investor letter. He's admired the company for a while, but has always had a hard time grasping the valuation. Over the summer when shares dipped (he purchased around $248 per share), he was comfortable with the value and pulled the trigger. Overall, he likes the company's growth profile as it has a multiple in the low teens and is unlevered.

Of his AAPL position Einhorn says, "Looking at Apple today, the stock is about $310, or $320 a share. There's about $45 a share in cash. So you're paying about $265 for the business. I think they're going to earn well over $20 a share in the next year, so you're looking at a PE net of the cash in the low teens, which is below a market multiple."

Pfizer (PFE)

This has been a longstanding position for Greenlight Capital so it's always intriguing to re-visit his thesis on this name. He highlights that everyone knows PFE's main issue is that its biggest drug, Lipitor, is coming off of patent. Einhorn feels that after this event the company will still see a lot of earnings. He feels that the company will be able to "sort of cost cut themselves to maintain the profitability that they're promising people, and then when people see that there's still more than two dollars a share of earnings, even without patented Lipitor driving the results, I think there'll be an opportunity for the multiple to improve on those earnings."

St. Joe (JOE)

And lastly, Einhorn revisits his short of St. Joe (JOE). Readers will recall that Einhorn laid out the bear case for JOE at the Value Investing Congress that sent shares spiraling downward. This has been an interesting saga mainly because another guru we track on the site, Bruce Berkowitz of Fairholme Capital, has taken the other side of the trade and is long JOE in size. Einhorn feels that the company trades well above the value of its land.

Embedded below is the video of David Einhorn's entire WealthTrack interview with Consuelo Mack (RSS & email readers will need to come to the site to watch it):

Interesting thoughts from Einhorn all around and it's good to hear elaborations on the theses of some of his investments. You can see what else Einhorn is investing in via our Hedge Fund Wisdom newsletter (new issue just released!) And for more thoughts from this talented hedge fund manager, check out his book: Fooling Some of the People All of the Time.

Soros Fund Management Updates Position in Verigy (VRGY)

George Soros' hedge fund firm has just filed a 13G with the SEC regarding shares of Verigy (VRGY). Per portfolio activity on November 18th, Soros Fund Management has disclosed a 7.24% ownership stake in VRGY with 4,681,790 shares. This is not necessarily a new position for Soros if you drill down the specifics.

The hedge fund disclosed ownership of Verigy 5.25% senior convertible notes due 2014 at the end of the third quarter in their 13F filing. This most recent SEC disclosure notes that Soros owns 6,100 common shares of VRGY and that the other 4,675,690 shares they 'own' are represented should Soros convert their senior notes. So, the hedge fund purchased new common shares recently but still owns convertible notes as well.

Interestingly enough, David Einhorn's Greenlight Capital disclosed a new position in Verigy (VRGY) in the most recent quarter as we already noted in the new issue of our newsletter that was released early last week. You can view the rest of Soros' portfolio in our new issue as well.

Lastly, keep in mind that while Soros Fund Management bears his name, George Soros has recently confirmed that he has no involvement in the day-to-day activity at the fund as those responsibilities fall to Chief Investment Officer Keith Anderson. Soros' sons, as well as other managers, are also responsible for the portfolio activity you see disclosed. For thoughts from George himself, we recommend reading one of his books: The Alchemy of Finance or his other title, The New Paradigm for Financial Markets.

According to Google Finance, Verigy "designs, develops, manufactures and sells advanced test systems and solutions for the semiconductor industry. The Company offers a single platform for each of the general categories of devices being tested: its V93000 Series platform, designed to test System-on-a-Chip (SOC), System-in-a-Package (SIP) and high-speed memory devices; its V6000 Series platform, which is the successor to the V5000 platform, designed to test both flash memory and dynamic random access memory (DRAM) devices, and its V101 platform, designed to test devices, such as 4, 8 and 16-bit micro-controller units (MCUs)."

Other recent portfolio activity from Soros includes boosting its stake in InterOil (IOC) and buying other positions as well.

Monday, November 29, 2010

Hedge Funds Pile Into QR National IPO (ASX: QRN)

A recent Australian initial public offering (IPO) has caught the eye of many prominent hedge funds. QR National (ASX: QRN), Queensland Rail's primarily coal network in Australia, recently became public with the backing of various new hedge fund owners. Shares IPO'd at AUD $2.55 and are now trading around AUD $2.77. It priced at the low end of the range and the Queensland government is left with a 40% ownership stake after the IPO raised $4.5 billion.

Adam Weiss and James Crichton's Scout Capital has disclosed a 5.1% ownership stake in QRN with 124 million shares (around a $316 million stake). We also recently detailed how Scout boosted its stake in Coca-Cola Enterprises (CCE). The Children's Investment Fund has also disclosed a 6.1% ownership stake in QRN with a $316 million position. Overall, 46% of QRN's recently IPO'd shares went to overseas investors with the buzz being that numerous other hedge funds have smaller positions.

Interestingly enough, a lot of domestic Australian long-only fund managers avoided the IPO as many argued it was overpriced. Hedge funds have clearly disagreed. Although we haven't been able to verify it yet, it's been rumored that Richard Perry's hedge fund Perry Capital had also taken a stake in the IPO. QRN is Australia's largest IPO since Telstra (Australia's monopoly phone carrier).

The propensity for hedge funds and investment managers in general to gravitate toward railroad plays is interesting. Some see these companies as attractive due to the oligopolistic nature of the business. Others fancy rails as plays on commodities, energy, or an economic recovery. Hell, Warren Buffett's Berkshire Hathaway even acquired rail company Burlington Northern Santa Fe in its entirety. And in the just released new issue of our Hedge Fund Wisdom newsletter, we see that many managers own shares of rival rail Union Pacific (UNP). And in Australia, this theme continues as QR National seems to be a play on coal.

Taken from the company's website, QR National is "QR National is the largest rail freight haulage operator in Australia by tonnes hauled, operating in key freight sectors and supply chains across the country. We are focused primarily on large, heavy haul rail tasks such as the transportation of coal, iron ore, other minerals, agricultural products and general freight as well as containerised freight."

John Paulson Reduces Cheniere Energy (LNG) Stake

John Paulson's hedge fund firm Paulson & Co has filed an amended 13D with the SEC regarding Cheniere Energy (LNG). Due to portfolio activity on November 22nd through 24th, Paulson has disclosed a 7.3% ownership stake in LNG with 4,209,985 shares. This is a reduction in their stake as they owned 7,461,191 shares back on September 30th at the end of the third quarter.

In the past two months, Paulson has sold 43.5% of its position. The hedge fund firm sold the bulk of the shares at prices of $6.4809 and $6.3208 per share. So while the famed manager has axed his position almost in half, he does still own shares. Keep in mind that you can see the rest of Paulson's latest investments in the just released issue of our newsletter. Additionally, the issue examines the investment thesis of a position Paulson was buying in the quarter. You can check out our latest issue here.

Taken from Google Finance, Cheniere Energy is "an energy company primarily engaged in liquefied natural gas (LNG)-related businesses. The Company owns and operates the Sabine Pass LNG receiving terminal in Louisiana through its 90.6% ownership interest in and management agreements with Cheniere Energy Partners, L.P. (Cheniere Partners). It also owns and operates the Creole Trail Pipeline, which interconnects the Sabine Pass LNG receiving terminal with downstream markets."

Lastly, in other recent commentary from Paulson, he recently said to buy stocks and sell bonds.

Louis Bacon's Moore Capital Starts New Position in Mecom (LON: MEC)

Louis Bacon’s Moore European Capital has opened a new position in publisher, Mecom (LON: MEC). Due to trading on the 16th of November, Moore now control the voting rights of over 5,039,870 shares or 4.45% of outstanding shares. This is not the only position that Moore European Capital have opened recently via the London market. They also started a new position in Collins Stewart (LON: CLST), a financial advisor.

Regarding other recent positions hedge funds have taken in UK markets, we detailed how Larry Robbins' Glenview Capital increased its Punch Taverns (PUB) position and that Odey Asset Management disclosed a short position in Provident Financial (PFG).

Taken from Google Finance – “Mecom Group plc (Mecom) is engaged in the operation of content and consumer businesses in Europe. The Company owns over 300 printed titles and over 200 Websites in its four divisions, with operations in the Netherlands, Denmark, Norway and Poland."