Find Out What Hedge Funds Are Buying in This Volatile Market

Warren Buffett is famous for saying, "look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it." In fact, this quote is where MarketFolly.com got its name.

It's no secret that market volatility creates opportunity. So here's your chance to find out what top hedge funds have been buying (or shorting) during the recent market turmoil. Market Folly readers receive the early bird discount that expires in 7 days, so register for the Value Investing Congress.

Top managers will share their latest investments October 17th & 18th in New York City. A bunch of additional speakers were just announced, so here's the full list:

- Bill Ackman, Pershing Square
- Leon Cooperman, Omega Advisors
- Jim Chanos, Kynikos Associates
- Adam Weiss & James Crichton, Scout Capital
- Joel Greenblatt, Gotham Capital
- Alexander Roepers, Atlantic Investment Management
- Guy Gottfried, Rational Investment Group
- Bernard Horn, Polaris Capital Management
- Timothy E. Hartch, Brown Brothers Harriman
- Whitney Tilson & Glenn Tongue, T2 Partners

This is your last chance to save $1,500 off the regular price before the early bird rate expires. Click here for the discount.

Dan Loeb's Third Point Outperforming, Reduces Exposure Yet Again

In early August, we noted how Dan Loeb's Third Point reduced equity exposure for the third consecutive month. That decision has certainly paid off as Loeb's fund was only down 2.8% in August compared to the S&P 500 which was down 5.4%. Year-to-date as of the end of August, Third Point is up 3.9% while the S&P is down 1.8%.


Reduced Exposure for Fourth Straight Month

At the end of August, Third Point was only 17.7% net long equities, down even further from their 23.3% net long exposure back in July. Their largest net long exposure comes in technology at 6.5% and basic materials at 3.5%. Third Point is net short industrials (-1.5%) and utilities (-0.6%).

In credit, Loeb's Offshore Fund is 18.5% net long, a slight decrease from last month. They continue to be net short government securities (-10.3%) and have their largest net long exposure in asset backed securities (+17.3%).

Geographically, Third Point is net long the Americas at 50%, net short EMEA at -4% and net short Asia at -2%.


Third Point's Outperformance

So while decreased exposure to risk certainly has helped Loeb outperform in this volatile market, his winners the past month include gold, short A, CVR Energy (CVI), Barrick Gold (ABX), and short B.

It should come as no surprise that their gold related investments have helped them outperform as the precious metal rocketed higher as market volatility increased. Not to mention, gold has been one of Third Point's largest positions for some time now.


Top Positions

- gold
- Delphi
- CIT Group (multiple securities held)
- Technicolor (multiple securities held)
- El Paso (EP)

The most notable change in Third Point's top positions since last month is the absence of Mosaic (MOS). There's no way to know exactly why because they could have reduced their position size, other positions could have appreciated more, or they could have bought more of some of their top holdings.

Third Point originally bought MOS on the secondary when the Cargill family unloaded shares at $65 per share. The hedge fund subsequently 'bought the dip' in MOS when it traded down to around $60. During August, MOS traded as low as $55.70, and currently trades around $69.50.

Either way, Third Point's top holdings have largely been what you see above as they wait for Delphi to go public and El Paso to split up.

Chasing Madoff Trailer: Documentary About Harry Markopolos Exposing Bernie Madoff's Ponzi Scheme

Below is the trailer for the new documentary Chasing Madoff which was released on August 26th, 2011. It details the story of Bernie Madoff's $18 billion ponzi scheme and how Harry Markopolos spent ten years trying to expose the fraud.

Directed by Jeff Prosserman, it seems that the documentary is based on Harry Markopolos' book, No One Would Listen: A True Financial Thriller. You can also read our review of the book here.

The trailer for Chasing Madoff is embedded below (email readers come to the site to watch):



For more financial film trailers, check out the Margin Call movie trailer.

John Thaler's JAT Capital Buys More IMAX Corp (IMAX)

John Thaler's hedge fund JAT Capital just filed a 13G with the SEC regarding shares of IMAX Corp (IMAX). Per portfolio activity on August 22nd, JAT has disclosed a 4.6% ownership stake in IMAX with 2,979,280 shares.

Since the end of the second quarter in June, this marks a 349% increase in their position size as they've gobbled up shares. Since the end of June, shares of IMAX are down 48%.

Some managers have had somewhat of a '3D' pairs trade on by going long IMAX and short RealD (RLD), but we obviously can't see JAT's shorts.

Thaler's Background

Before he founded JAT, Thaler worked at Shumway Capital Partners (which returned capital this year). Chris Shumway himself invested in JAT's launch. Thaler covered technology, media and telecom and managed the internal Omni fund while at Shumway. Before that, he worked at Spectrum Equity Investors in private equity.

Due to his background, you'll see an emphasis on the TMT sectors in his portfolio. Thaler earned his BA in Economics from the University of Chicago. In 2008, JAT returned -5.9% and in 2009 returned 23.2% gross. This isn't the first time we've covered Thaler's fund as we've also detailed JAT's bet on social media via SINA.

Per Google Finance, IMAX is "is an entertainment technology companies, specializing in motion picture technologies and presentations. The Company’s principal business is the design and manufacture of digital theater systems (IMAX theater systems) and the sale or lease of IMAX theater systems."