13 insights from Paul Tudor Jones [Ivanhoff Capital]
Barron's favorite stocks for 2013 [Barron's]
The case for Hewlett Packard to be broken up [CNNMoney]
Why spinoff stocks are sizzling [Forbes]
The value gene - Buffett, Klarman and evolution [Graham & Doddsville]
Do hedge funds manipulate stock prices? [WSJ]
Hedge funds fall out of love with equities [CNBC]
SocGen's 2013 global investment outlook [BusinessInsider]
Jeff Gundlach's latest DoubleLine presentation [BusinessInsider]
Hedge fund operations: a manager's view [Prohedge]
Barclays spins off $2b distressed debt fund [HedgeFundIntelligence]
Equity long/short funds capture over 60% of upside during Q3 [Hedgeweek]
Pension funds pulled $6.4b from hedge funds last month [NYPost]
The long case for Xerox [Graham Disciple]
The trail of cases leading to SAC Capital [Dealbook]
The student loan time bomb [Daily Reckoning]
Samsung, Apple & the new age of capital intensity [Asymco]
Wednesday, December 12, 2012
13 insights from Paul Tudor Jones [Ivanhoff Capital]
Hennessee Group LLC has released its November performance data for its Hedge Fund Index: it advanced +0.36% in November (+5.47% year to date). Below is some select commentary on what they're seeing from various funds and how they're positioned:
Stockpicking Environment Improved
Hennessee Group's Managing Principal Charles Gradante said that hedge funds gained during the month mainly due to alpha from stock selection (as well as managing exposure levels).
He went on to say that, "As correlation among securities has declined, the environment for stock selection has improved. That said, managers remained concerned about continuing fiscal and political uncertainty and have reduced net exposure levels."
Managing Principal Lee Hennessee also highlighted that many fund managers are "somewhat optimistic about 2013 due to an accommodative Fed, an increase in bank lending, a continued housing recovery supported by record low mortgage rates, and lower gasoline prices, which should help the consumer."
Hedgies Like Mortgages
Gradante also noted how many managers that initially were short subprime in 2007/08 have reversed course, building long positions via structured products earlier this year.
He pointed out that, "This has been a significant profit generator in 2012 and a lot of the easy money has been made. While we have seen some profit taking in recent months, managers believe that this will continue to be a profitable trade as we continue to see mortgage quality improving."
Kyle Bass of Hayman Capital recently shared that 90% of what he owns is in bonds via a ton of RMBS/subprime exposure.
Ken Griffin's investment firm Citadel has filed a 13G with the SEC regarding shares of Brinker International (EAT). Per the filing, Citadel has disclosed a 5.5% ownership stake in EAT with 4,014,981 shares.
This marks a sizable increase in their stake and the filing was required due to portfolio activity on December 7th. The number of shares they own has increased by 4,752% since the end of the third quarter as they only held a tiny position then.
Per Google Finance, Brinker International "owns, develops, operates and franchises the Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) restaurant brands."
Tuesday, December 11, 2012
Pershing Square Capital Management CEO Bill Ackman did a video for Floating University and The Big Think entitled "Everything You Need to Know About Finance and Investing In Under an Hour."
On Finance / Business
The first segment of the video is ideal for beginners and students as it combines concepts from introductory accounting, finance and business classes. He covers topics such as:
- How business works
- How to raise capital
- How to monetize your business investment
- Dynamics of investing in debt versus equity
- Assessment of risk
The second part of the video delves into investing, noting that "the most valuable asset in investing is time." He highlights the keys to successful investing:
1. Invest in public companies
2. Understand how the company makes money
3. Invest at a reasonable price
4. Invest in a company that could last forever
5. Find a company with limited debt
6. Look for high barriers to entry
7. Invest in a company immune to extrinsic factors
8. Invest in a company with low reinvestment costs
9. Avoid businesses with controlling shareholders
Ackman summarizes things by saying, "Find a business that you understand, has a record of success, makes an attractive profit, and can grow over time." He says the best investments don't require a lot of reinvestment capital and generate a healthy cashflow to pay out in dividends to shareholders
He also addresses other investing concepts such as compound interest, psychology of investing, and how to withstand volatility
Other takeaways: Ackman said that, "(The) key here is not just shooting for the fences, but avoiding losses." It's also worth highlighting that Ackman said he became interested in investing when he was 22 as he read The Intelligent Investor by Benjamin Graham.
Embedded below is Bill Ackman's video for Floating University:
We've also posted up a ton of other educational investment info (scroll through the list).
For more advanced topics, head to more from this hedge fund manager via Bill Ackman's recommended reading list.
Louis Bacon's global macro hedge fund firm Moore Capital Management has disclosed a new position in UK holding company Monitise (LON: MONI).
Moore now hold 3.28% of Monitise's voting rights (or equivalent). At first sight, we thought that Moore had bought their holding via the recent placing held on December 3rd. However, closer inspection of the notification of holdings document shows that their stake is held completely via contracts for difference (explanation of CFDs here).
Per Google Finance, Monitise is "a United Kingdom-based holding company. The principal activity of the Company is as a technology company delivering mobile banking, payments and commerce networks worldwide. The Company’s segments include Live Operations, Investment in future operations and Investment in technology platform. Live operations include both territory deployments and development contracts, which consist of Monitise United Kingdom, Monitise Americas and Global accounts. Investment in future operations segment represents the Company’s operations which are not live operations covering both pre-sales and start-up period. Investment in technology platform segment comprises the ongoing development, enhancement and maintenance costs of the Monitise technology platform."
Moore's Other UK Positions
Moore Capital Management's other disclosed holdings in UK markets which are greater than 3% of voting rights are as follows:
Brightside Group 8.21%
Camper and Nicolsons Marina 5.81%
Helphire Group 5.06%
Loudwater Trust 9.84%
Max Property Group 4.55%
NBNK Investments 8.76%
NewRiver Retail 3.93%
The hedge fund currently has not disclosed any short positions in the UK market. We recently posted up a list of hedge fund short positions in European markets.
For more on the history of Louis Bacon's hedge fund, head to one of Moore Capital's 2010 letters.
Steve Mandel's hedge fund firm Lone Pine Capital filed a 13G with the SEC regarding its position in Dollar Tree Stores (DLTR). Per the filing, Lone Pine has disclosed a 5.2% ownership stake in DLTR with 11,804,692 shares.
This marks a 203% increase in the number of shares they own since the end of the third quarter. The filing was required due to portfolio activity on November 28th. Lone Pine first started building its Dollar Tree Stores stake in the third quarter.
This makes them one of the largest institutional holders of DLTR shares, along with Blue Ridge Capital, who also increased their position in the third quarter.
Per Google Finance, Dollar Tree is "an operator of discount variety stores offering merchandise at the fixed price."
We've recently highlighted additional Lone Pine portfolio activity here.
Monday, December 10, 2012
Sean Cullinan's hedge fund firm PointState Capital filed a 13G with the SEC regarding shares of Verisign (VRSN). Per the filing, PointState has disclosed a 3% ownership stake in the company with 4,666,670 shares.
The filing was made due to trading activity on November 29th and marks an increase of 158% in the number of shares they own since the end of the third quarter.
The November 29th date is relevant here, mainly because the day after that, shares dropped from $40 to $34 on news that Verisign won the .com domain renewal, but wasn't going to be allowed to raise prices by the government. Since then, shares have slightly rebounded back to around $37.
Hedge fund Lone Pine Capital has also been long Versign and we've highlighted Steve Mandel's pitch on VRSN from the Invest For Kids Chicago event last month. Mandel argued that even if no price increases are allowed by the government, the downside is low.
The company recently announced it would double its stock repurchase plan to $1 billion.
About PointState Capital
This is the first time we've highlighted this fund, so here's some background: Point State was founded with around $5 billion a few years ago by former colleagues of Stan Druckenmiller's at Duquesne Capital. Druckenmiller himself invested in the fund but does not have an ownership stake.
Sean Cullinan is the CEO of Point State while other former Duquesne portfolio managers are there as well. Point State is named after a park in Pittsburgh by the location of the old Fort Duquesne.
Per Google Finance, Verisign is "a provider of Internet infrastructure services. The Company provides domain name registry services and infrastructure assurance services. VeriSign segment includes Naming Services, which consists of Registry Services and Network Intelligence and Availability (NIA) Services. The Company has operations inside, as well as outside the United States. Registry Services operates the directory of all .com, .net, .cc, .tv, and .name domain names and the back-end systems for all .gov, .jobs and .edu domain names."
Seth Klarman's hedge fund firm Baupost Group filed a 13G with the SEC regarding shares of NovaCopper (NCQ). Per the filing, Baupost now owns 10.73% of the company with 5,005,298 shares.
This filing was made due to portfolio activity on November 30th and marks almost a 9% increase in the number of shares they own since the end of the third quarter.
Our Hedge Fund Wisdom newsletter a few weeks ago pointed out how Baupost was buying in Q3 as well. While they've added to the stake, it's still a small position relative to their other equity holdings and overall assets under management.
They originally received shares of NCQ in the spin-off from NovaGold Resources (NG), which they also own and have consistently been buying this year as it trades lower.
Per Google Finance, NovaCopper is "a base metals exploration company. The Company is focused on exploring and developing the Ambler mining district, which VMS deposits containing copper, zinc, lead, gold and silver and carbonate replacement deposits containing copper, cobalt and silver."
We recently posted up an old profile of Klarman for those interested as well.
Berkshire Hathaway's Charlie Munger gave a speech at Harvard University back in the 1990's on the topic of the psychology of human misjudgment. T2 Partners' Whitney Tilson was kind enough to transcribe it and we've posted up below.
It seems that outside of the requisite financial analysis, investors are often faced with two other keys to success: mastering emotions and making good decisions. In a sense, both of those can be intertwined as you often have to set aside emotion to make smart decisions. Munger tackles some of these issues in his speech by focusing on the biases we often have to overcome.
Embedded below is the transcript of Munger's Harvard speech:
You can download a .pdf copy here.
For more reading on behavioral finance and decision making, head to Blue Ridge Capital's recommended reading list.