Thursday, January 30, 2014

2013 Hedge Fund Performance Numbers

Now that 2013 is over, we thought we'd aggregate how prominent hedge funds performed.  While some funds turned in solid numbers (Glenview & Appaloosa), others put in more marginal performances.

Some media members have bashed hedge fund performance, but it is worth noting that at least in the long/short equity segment this year, many of these funds captured 2/3rd's of the market upside while only being 30-40% net long.

After all, a true hedge fund is just that, hedged.  There's no question that short selling was tough in 2013 and by definition, many L/S hedge funds won't capture all the upside in big up years (like 2013).

As always, it's worth examining the entire picture (risk, exposure levels, etc) and the entire spectrum of returns.  Undoubtedly, there will be outperformers and underperformers.

Not to mention, it's probably more prudent to fixate on 3-year, 5-year, or even 10-year numbers anyways.  But in the short-term focused world, the 1-year performance number reigns.

The S&P 500 was up 29.6% in 2013.  Here's how prominent hedgies fared.

2013 Hedge Fund Performance Numbers

Glenview Capital Opportunity Fund: 84% (through end of Oct)

Appaloosa Palomino Fund: 42.1%

Bridgewater All Weather: -4%

Bridgewater Pure Alpha: 5.25%

Paulson Recovery: 63.18%

Paulson Advantage: 26.05%

Paulson Advantage Plus: 27.22%

Perry Partners: 20.25%

Pershing Square: 9.29%

Trian Partners: 40.06%

Owl Creek: 48%

Millennium: 13.07%

Visium Global: 16.93%

Eton Park: 22.3%

Children's Investment Fund: 47%

Theleme Partners: 19.41%

Whitebox MultiStrat: 18.09%

Lone Pine Cascade: 30.3%

Lone Pine Cypress: 18%

Lone Pine Dragon: 9.8%

Conatus Capital: 23.6%

Farallon: 15.3%

Matrix Capital: 56%

Elliott International: 11.6%

Discovery Global Opportunity: 27.5%

Marcato International: 26.16%

Luxor Capital: 17.6%

York Investment: 18.27%

Joho Capital: 29.46%

Lansdowne European Equity: 21.51%

Odey European: 25.78%

Kingdon Offshore: 23.69%

Passport Global: 18.98%

Passport LongShort: 19.89%

Passport Special Opportunities: 45.5%

Cobalt Offshore: 8.84%

Elm Ridge Capital: 22.28%

Eminence Capital: 14.64%

Highbridge LongShort: 15.34%

Ivory Capital: 17.07%

Ivory Enhanced Fund: 28.31%

Omega Advisors: 30.02%

Zweig-DiMenna: 17.33%

Greenlight Capital: 18.7%

Tosca Opportunity: 56%

JAT Capital: 30.6%

Tiger Global: 14%

Maverick Fund: 16.3%

Maverick Long: 32%

Hound Partners: 16%

Coatue Management: 20%

Viking Global Equities: 22.6%

Viking Long: 38.4%

Valinor Management: 23.4%

Glade Brook Capital: 19.76%

Falcon Edge Capital: 28%

Glenhill: 28.7%

Highfields Capital: 27.3%

Bridger Capital's Swiftcurrent Fund: 20.6%

White Elm Capital: 23.6%

MFP: 31.5%

Tybourne Capital: 16.04%

Fairholme: 33%

Jericho Capital: 33% (through end of Nov)

Beacon Light: 21.13%

2013 Credit Hedge Fund Performance

BlueCrest MultiStrat: 8.98%

BlueMountain LongShort Credit: 7.57%

Brevan Howard Credit Catalysts: 12.21%

Ellington Credit Opportunities: 15.55%

Kingdon Credit: 14.58%

Pine River Credit: 13.09%

Saba Capital: -3.61%

Canyon Value: 14.71%

Davidson Kempner: 19.98%

King Street: 11.43%

Monarch Debt Recovery: 16.12%

Paulson Credit Opportunities: 21.8%

Silver Point Capital Offshore: 15.88%

2013 Macro Hedge Fund Performance

Tudor BVI Global: 13.98%

Moore Global: 16.99%

Rubicon Global: 18.25%

Trend Macro: 11.88%

Sources: hedge fund performance reports, HSBC, II Alpha, WSJ, Bloomberg, NYMag

East Coast's Q4 Letter: Understanding the Mispricing of an Investment

Chris Begg's East Coast Asset Management is out with its 2013 year-end letter.  The Q4 missive walks further down their investment checklist.  Last quarter, we highlighted their letter on competitive advantage and this time they focus on understanding the mispricing of an investment

Through use of checklists, they categorize investment opportunities and identify the bull/bear cases, potential catalysts, long-term fundamentals, various sentiments, and more in order to understand what exactly is driving the mispricing.

This ties in with their concept of 'investment longitude' in that they want to understand the critical data points that truly drive the business (and the stock).  The letter below walks you through how to do so.

In terms of how East Coast has been positioning themselves, they've been shifting more of their portfolio toward 'transformation' plays, or companies benefiting from secular tailwinds.  Begg's letter also details how they purchased a European cable business in Q4.  While they don't specifically identify the position, it certainly sounds like John Malone's Liberty Global (LBTYA/LBTYK).

Embedded below is East Coast's Q4 letter: Navigating Beyond the Pillars:

For more on their investment checklists, head to East Coast's letter on competitive advantage.

Glenview Capital Updates Community Health Systems Stake

Larry Robbins' hedge fund Glenview Capital has filed an amended 13G and 13D with the SEC regarding their positions in Community Health Systems (CYH) and Health Management Associates (former ticker HMA).

On January 27th, CYH announced it had completed its acquisition of HMA.  As such, Glenview received over 2.6 million shares of CYH in exchange for its 37.7 million shares of HMA at an exchange rate of 0.06942 CYH shares per each share of HMA owned (and adjusted for cash received in lieu of the fractional shares).

As a result of this transaction, Glenview now owns over 12 million shares of CYH, or 10.67% of the company.

Glenview has bet big on hospitals and profited handsomely from their wagers as a whole.  For more portfolio activity from this hedge fund, click here.

Wednesday, January 29, 2014

What We're Reading ~ Analytical Links 1/29/13

On position sizing in long/short equity hedge funds [Aleph Blog]

Report on measuring a company's moat [Credit Suisse]

How to read a 10-K like Warren Buffett [CNBC]

The myth of maximizing shareholder value [Naked Capitalism]

The second most expensive stock market in the world [John Mauldin]

A look at Post Holdings [Brooklyn Investor]

Dow Chemical is no bargain [Capital Observer]

A long pitch on SSD makers [Minyanville]

Sprint met with US government re: possible T-Mobile deal, Justice Dept skeptical [WSJ]

How Vietnam became a coffee giant [BBC]

5 takeaways from the emerging markets rout of 2014 [WSJ]

Visa Europe says end of physical currency a 'reality' [Telegraph]

Apple making a move into mobile payments? [WSJ]

Google and Samsung reach global patent license deal [GigaOm]

Odey Starts Wolfson Microelectronics Stake

Crispin Odey's firm Odey Asset Management has disclosed a new position in London listed Wolfson Microelectronics (LON:WLF).

Due to trading on January 28th, Odey own the equivalent of 5.95% of Wolfson's voting rights.  The whole position is held via CFDs/derivatives.

James Hanbury's Odey Absolute Return hedge fund appears to be the main holder.

Per Google Finance, Wolfson Microelectronics is "a semiconductor company.  Wolfson is principally engaged in the design, manufacture and supply of high performance mixed- signal integrated circuits for the consumer electronics market. It segments include Audio Hubs and   Discrete and Power Products. Audio Hubs includes the supply and sale of Wolfson’s Audio Hubs   high performance audio integrated circuit solutions. Discrete and Power Products includes the   supply and sale of integrated circuits, which are discrete components, such as Analogue-to-Digital   Converters; Digital-to-Analogue Converters, This segment also includes those components which   are power management integrated circuits and the silicon microphone devices based on Micro- Electro-Mechanical Systems (MEMS) technology. The Company focuses on high definition (HD) audio   systems-on-chip (SoC), and noise reduction and sound enhancement software. During the fiscal year   ended January 1, 2012 (fiscal 2012), it acquired Dynamic Hearing Pty Ltd.”

You can view other recent portfolio activity from Odey here.

Marcato Capital Management Adds to Lear Position

Mick McGuire's activist hedge fund Marcato Capital Management has filed an amended 13D with the SEC regarding their stake in Lear (LEA).

Per the filing, Marcato now owns 7.9% of the company with over 6.4 million shares.  This means they've boosted their notional exposure by 750,000 shares since the end of the third quarter.

The fine print indicates they own call options representing 7.6 million shares at prices ranging from $40 to $90 per share and expiration dates ranging from June 2014 to August 2014.  They've also sold puts representing 7.6 million shares with exercise prices ranging from $40 to $65 and the same expiration dates.

The filing was required due to activity on January 23rd.  You can view the exact details of their recent trades here.

We previously highlighted how Marcato disclosed a Lear stake just slightly over a year ago.

Per Google Finance, Lear is "a tier 1 supplier to the global automotive industry. The Company supplies its products to automotive manufacturers with automotive seat systems and related components, as well as electrical distribution systems and related components. The Company has two segments: seating and electrical power management systems (EPMS). The seating segment includes seat systems and related components, such as seat frames, recliner mechanisms, seat tracks, seat trim covers, headrests and seat foam." 

Monday, January 27, 2014

MHR Fund Management Files 13D on Titan International

Mark Rachesky's hedge fund MHR Fund Management has filed a 13D with the SEC regarding Titan International (TWI).  Per the filing, MHR now owns 10.9% of the company with 5.84 million shares.

This is a newly disclosed position and the filing was made due to activity on January 9th.  The position is comprised of both common stock as well as $8.1225 July 2014 call options.

The 13D filing contains the standard boilerplate that MHR intends to seek discussions with management concerning the business and operations of the company.

About MHR Fund Management

If you're unfamiliar with this name, here's what you need to know:  prior to founding MHR Fund Management, Rachesky previously worked as a senior investment officer and managing director to Carl Icahn.  

Rachesky received his B.S. in molecular aspects of cancer from the University of Pennsylvania and an M.D. from Stanford University School of Medicine. Additionally, he also holds an MBA from the Stanford Graduate School of Business.

About Titan International

Per Google Finance, Titan International "through its subsidiaries, is engaged in the manufacturing of wheels and tires. The Company operates in three segments: agricultural, earthmoving/construction and consumer. Titan produces a range of specialty products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving/construction and consumer markets. Titan’s earthmoving/ construction market includes wheels and tires supplied to the mining industry, while the consumer market includes products for all-terrain vehicles (ATVs) and recreational/utility trailers. The Company’s customers include AGCO Corporation, CNH Global N.V., Deere & Company and Kubota Corporation."

Corvex Management Starts Activist Signet Jewelers Position

Keith Meister's activist firm Corvex Management has filed a 13D with the SEC regarding Signet Jewlers (SIG).  Per the filing, Corvex now owns 7.8% of the company with over 6.2 million shares. 

This is a newly revealed stake and the filing was required due to activity on January 14th.  As has been customary with Corvex's other recent positions, they've bought both common stock and call options, as well as sold puts. 

It looks like they were buying November 2014 $53 calls and February 2015 $51 calls as well as selling November 2014 $53 puts and February 2015 $51 puts.

Activist Talks

The filing indicates Corvex has already talked with management and found talks to be "constructive." 

Corvex has approached Signet about "options for enhancing shareholder value through various strategic alternatives including, but not limited to, leveraging the Issuer's credit receivables, optimizing capital structure, accelerating M&A and/or return of capital to shareholders, utilizing the Issuer's offshore corporate structure, and general corporate matters."

About Signet Jewelers

Per Google Finance, Signet Jewelers is "a specialty retail jeweler by sales in the United States and United Kingdom, and also has stores in the Republic of Ireland and Channel Islands. The Company is engaged in the retailing of jewelry, watches and associated services. The business is managed as two geographical operating divisions: the US division and the UK division. Its stores trade nationally in malls and off-mall locations as Kay Jewelers (Kay), and regionally under a number of mall-based brands. Destination superstores trade nationwide as Jared The Galleria Of Jewelry (Jared)."

You can view more of Corvex's recent portfolio activity here.

Pershing Square Discloses Platform Specialty Products Stake

In a 13G filed with the SEC, Bill Ackman's hedge fund Pershing Square Capital Management has disclosed a 30.9% ownership position in Platform Specialty Products (PAH) with 33,333,332 shares. 

Ackman's position is broken down into over 28.1 million shares and over 4.1 million shares via October 2016 Warrants.  Pershing owns around 12.5 million warrants and every three warrants gives them the right to buy 1 share of common stock for $11.50.

Longtime followers of Pershing Square will know that this is not a new stake for the hedge fund, but they've disclosed it because PAH is newly listed on the NYSE.  The filing was made due to activity on January 23rd.

Platform was formed with the intent to acquire companies and their first deal was MacDermid, a specialty chemicals manufacturer for $1.8 billion.  Martin Franklin of Jarden (JAH), Nicolas Berggruen of Berggruen Holdings and Ackman's Pershing all own significant Platform stakes.

This isn't the first time Berggruen and Ackman have worked together, either.  While the Platform deal is a bit different, Ackman and Berggruen teamed up on Justice Holdings.  Justice then bought Burger King and relisted the stock, a position Ackman still held at the end of Q3.

Click here for more recent activity from Bill Ackman's fund.