Wednesday, December 31, 2008

Eminence Capital (Ricky Sandler): Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up, we have Eminence Capital. Eminence is a New York hedge fund ran by Ricky Sandler. As of this last quarter's filing, they held $4 billion in long US equity exposure. Sandler attended the University of Wisconsin and holds a CFA designation. Prior to Eminence, Sandler started his career as a research analyst for Mark Asset Management and then went on to start Fusion Partners at the age of 25 with Wayne Cooperman. As their investment styles started to differ, Sandler went on to start Eminence. Sandler employs a 'quality value' approach to running his portfolio, spending equal time on both the long and short sides of his portfolio. In the past, he has said they employ gross leverage and are typically around 120% long and 70% short.


The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Sunpower (SPWRB)
Lockheed Martin (LMT)
Rockwell Collins (COL)
Goldman Sachs (GS)
Ebay (EBAY)
Chipotle Class B (CMG-B)


Some Increased Positions (A few positions they already owned but added shares to)
Nike (NKE): Increased position by 2,954%
Agilent Technologies (A): Increased position by 105%
Eaton (ETN): Increased position by 83%
Charles Schwab (SCHW): Increased position by 50%
Qualcomm (QCOM): Increased position by 40%
Abbott Labs (ABT): Increased position by 37%
Cisco (CSCO): Increased position by 35%
Microsoft (MSFT): Increased position by 24%
Google (GOOG): Increased position by 23%
International Game Technology (IGT): Increased position by 16%
Oracle (ORCL): Increased position by 15%
Applied Materials (AMAT): Increased position by 12%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Koninklijke Philips Electronics (PHG): Reduced position by 43%
Laboratory Corp of America (LH): Reduced position by 42%
Quest Diagnostics (DGX): Reduced position by 38%
American Express (AXP): Reduced position by 34%
Ross Stores (ROST): Reduced position by 20%
Fiserv (FISV): Reduced position by 15%
America Movil (AMX): Reduced position by 12%
Grupo Televisa (TV): Reduced position by 9%


Removed Positions (Positions they sold out of completely)
Napster (inactive)
Herbalife (HLF)
SRA International (SRX)
Arbitron (ARB)
Staples (SPLS)
Western Union (WU)
Viacom (VIA-B)


Top 20 Holdings (by % of portfolio)

  1. Oracle (ORCL): 5.7% of portfolio
  2. Microsoft (MSFT): 4.8% of portfolio
  3. Cisco (CSCO): 4.5% of portfolio
  4. Sunpower (SPWRB): 4% of portfolio
  5. Fiserv (FISV): 3.9% of portfolio
  6. SAIC (SAI): 3.7% of portfolio
  7. Eaton (ETN): 3.7% of portfolio
  8. Abbott Labs (ABT): 3.5% of portfolio
  9. United Technologies (UTX): 3.5% of portfolio
  10. American Express (AXP): 3.3% of portfolio
  11. 3M (MMM): 3.2% of portfolio
  12. Qualcomm (QCOM): 3.1% of portfolio
  13. International Game Technology (IGT): 2.9% of portfolio
  14. Quest Diagnostics (DGX): 2.7% of portfolio
  15. Cintas (CTAS): 2.6% of portfolio
  16. Monster (MNST): 2.5% of portfolio
  17. Nike (NKE): 2.5% of portfolio
  18. Bed Bath & Beyond (BBBY): 2.5% of portfolio
  19. Zebra Technologies (ZBRA): 2.5% of portfolio
  20. Google (GOOG): 2.4% of portfolio


Assets from the collective long US equity, options, and note holdings were $4.45 billion last quarter and were $4 billion this quarter. As you can see, Eminence is heavily weighted in technology as a percentage of assets, based on their top 3 holdings. Oracle, Microsoft, and Cisco together account for around 15% of Eminence's portfolio. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Sandler, Eminence, & hedge funds:
- Prominent Hedge Fund manager interviews
- Hedge Fund investor letters
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers


Consumer Spending During Recessions

Todd Sullivan over at Value Plays takes a quick look at consumer spending from the 1990-91 and 2001-02 recessions. Surprisingly, Tobacco spending was down. We only point this one because in recessionary times, people are quick to point out plays like Altria (MO) and Philip Morris International (PM). When, in reality, the spending in their product category is down. The increase in education spending has already played out again this recession, as the number of MBA program applicants has been very high, if not at historical highs. Lastly, we want to highlight the massive decrease in the category: food away from home. This illustrates perfectly our thesis for shorting casualty dining restaurants in a deteriorating consumer environment and going long McDonald's (MCD) as a hedge. Because, after all, if people do go out to eat, they are going to the cheapest place out there, the golden arches.

(click to enlarge)



Tuesday, December 30, 2008

Pequot Capital Management (Art Samberg): Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Pequot Capital Management ran by Art Samberg. Pequot was founded by Art in 1986 with $3 million in assets and peaked with $15 billion in assets around the tech bubble. Today, he manages over $4 billion. They have 150 employees and employ multiple strategies, including private equity and venture capital, as Art believes equity returns will decline over time. Art holds a S.B. from Massachusetts Institute of Technology, an M.S. from Stanford University, and he received his MBA from Columbia University. Pequot Capital Management was recently ranked 93rd in Alpha's hedge fund rankings.


The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
XTO Energy (XTO) Calls
Chesapeake Energy (CHK) Calls
Wells Fargo (WFC)
Microsoft (MSFT)
Ishares emerging markets (EEM)
Exxon Mobil (XOM)
Petrohawk (HK)
Nasdaq (NDAQ)
Bank of NY Mellon (BK)
Union Pacific (UNP)
Lender Processing (LPS)
Moody (MCO)
State Street (STT)
CSX (CSX)
McGraw Hill (MHP)
Mohawk Industries (MHK)
Amgen (AMGN)
Burlington Northern (BNI)
XTO Energy (XTO)
Spdr S&P500 (SPY)
Ishares Russell 2000 (IWM)
JPMorgan Chase (JPM)
NYSE Euronext (NYX)
Intercontinental Exchange (ICE)
Schering Plough (SGP)
Chesapeake Energy (CHK)
St Jude (STJ)
CME Group (CME)
Chipotle (CMG)
Halozyme Therapeutics (HALO)


Some Increased Positions (A few positions they already owned but added shares to)
Spdr Gold Trust (GLD): Increased position by 997%
Ishares Emerging Markets (EEM) Puts: Increased position by 477%
Onyx Pharma (ONXX): Increased position by 179%
Bank of America (BAC): Increased position by 150%
Alexion Pharma (ALXN): Increased position by 100%
Apollo Group (APOL): Increased position by 36%
Cigna Corp (CI) Puts: Increased position by 30%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Petroleo Brasileiro (PBR): Increased position by 72%
Freeport McMoran (FCX): Increased position by 70%
Qualcomm (QCOM): Increased position by 33%
Occidental Petroleum (OXY): Increased position by 31%
Jack in the Box (JBX): Increased position by 29%
Helmerich & Payne (HP): Increased position by 29%
Southwestern Energy (SWN): Increased position by 23%
Halliburton (HAL): Increased position by 20%
JC Penney (JCP): Increased position by 11%


Removed Positions (Positions they sold out of completely)
Insulet (PODD)
SPDR S&P500 (SPY) Puts
Schering Plough (SGP) Calls
Cree (CREE)
New Oriental Education (EDU)
Companhia Vale (RIO) Calls
Netflix (NFLX) Calls
Elan (ELN) Puts
Burger King (BKC)
Akamai (AKAM) Calls
Spirit Aerosystems (SPR)
Wells Fargo (WFC) Puts
Broadcom (BRCM) Calls
First Solar (FSLR)
Focus Media (FMCN)
Energy Conversion Devices (ENER)
Map Pharma (MAPP)
Career Education(CECO)
Focus Media (FMCN) Calls
Google (GOOG)
Baidu (BIDU) Calls
First Advantage (FADV)
Apple (AAPL) Calls
Juniper Networks (JNPR) Calls
Intuitive Surgical (ISRG) Puts
Research in Motion (RIMM)
Sandisk (SNDK) Calls
Barrick Gold (ABX)
Arcelor Mittal (MT)
Powershares QQQ (QQQQ) Puts


Top 20 Holdings (by % of portfolio)

  1. Ishares Emerging Markets (EEM) Puts: 10.2% of portfolio
  2. Spdr Gold Trust (GLD): 9.9% of portfolio
  3. XTO Energy (XTO) Calls: 6.2% of portfolio
  4. Chesapeake Energy (CHK) Calls: 4.8% of portfolio
  5. Akorn (AKRX): 3.9% of portfolio
  6. Ultra Petroleum (UPL): 2.7% of portfolio
  7. Qualcomm (QCOM) Calls: 2.5% of portfolio
  8. JC Penney (JCP): 2.1% of portfolio
  9. Onyx Pharma (ONXX): 1.9% of portfolio
  10. McDonalds (MCD): 1.8% of portfolio
  11. Southwestern Energy (SWN): 1.8% of portfolio
  12. Wells Fargo (WFC): 1.6% of portfolio
  13. Chipotle Class-B (CMG-B): 1.5% of portfolio
  14. Healthcare Services (HCSG): 1.5% of portfolio
  15. Qualcomm (QCOM): 1.5% of portfolio
  16. Walmart (WMT): 1.5% of portfolio
  17. Microsoft (MSFT): 1.4% of portfolio
  18. Ishares Emerging Markets (EEM): 1.4% of portfolio
  19. Weatherford International (WFT): 1.3% of portfolio
  20. Exxon Mobil (XOM): 1.2% of portfolio


Assets from the collective long US equity, options, and note holdings were $4 billion last quarter and were $3 billion this quarter. Its interesting to see that Pequot started two new Call option positions in XTO and Chesapeake and brought them both up to very large positions, the 3rd and 4th largest fund positions respectively. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Samberg, Pequot, & hedge funds:
- Prominent Hedge Fund manager interviews
- Hedge Fund investor letters
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers


Quick Technical Analysis: S&P 500

Barry Ritholtz has posted up an excellent quick technical analysis overview of the S&P500, courtesy of his research firm Fusion Analytics and Kevin Lane. Kevin is one of the founding partners of Fusion and is the director of Quantitative Research.

Take a quick look at this snapshot of the S&P 500

(click to enlarge)


And here is their commentary that follows:

"The market is still is well off the lows yet it has remained rather lethargic of late with many rally attempts fading pretty easily. While we have had some interesting days on the upside over the last several months the market still has not been able to display any consistency on the upside. There is a minor, yet significant, short-term downtrend (red line) that comes into play near 900.

A close above 900 could lead to a move back towards the 1,000 level (a nice move from present levels) where the market peaked in early November (next serious upside resistance level). For the S&P to make any headway higher it needs to eclipse that level. Minor trading supports exist below the marker near 850 (green line) and 820 (lower red line). If we break these levels we can expect a retest of the mid November lows.

Given volume was so anemic leading up to the Christmas holiday we can’t really say whether that last two days were good or bad since there just was no volume and the “C” teams were in control of the trading desks. So we will just have to see this week if the “A” teams are back or larger firms are content to call 2008 closed and leave the substitutes at the controls. Our guess is we can expect the market to be volatile since trading should likely be thin (typical this time of year) with this being a shortened trading week and staff at major investment houses thinned for the holidays. That said we would continue to be to play small here until the market unfurls it next directional move a little better vis-à-vis better internals."


We wholeheartedly agree with their analysis, as we noted very similar thoughts ourselves earlier in our most recent quick view of some charts. We are slightly positioned to the short-side as we expect resistance to hold and trigger another sell-off. However, we are not 'anticipating' this move as much as we normally would, due to overall market conditions (weak volume, new year, etc). If we breach 900 on the S&P, we would expect the market to then rip higher and we would quickly relinquish our slight bias to the short-side.

The main thing to take away here is to play it safe and wait for the market to give you a clear direction and then play it. There's nothing wrong with 'doing nothing' and being patient.


Monday, December 29, 2008

Seth Klarman & Baupost Group: Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Baupost Group ran by Seth Klarman. Klarman received his MBA from Harvard Business School and started working at Baupost at age 25. Over the past 25 years, Baupost has seen an annual compound return of 20% and is ranked 49th in Alpha's hedge fund rankings. Klarman has always considered himself a value investor and has been patient through the market turmoil. The past few years they have had nearly half their $14 billion in assets in cash. But, with turmoil comes opportunity. And, as such, Baupost's cash has been gradually deployed by Klarman and Baupost's 100 employees, leaving them with around a fourth of assets left in cash. Klarman's investment process is detailed in his book Margin of Safety. In it, he lays out a "how-to" on risk-averse value investing. The book is no longer actively printed and is very hard to find. His take on recent market action can be viewed in his recent interview with Harvard Business School. For more information about Klarman, check out our post on hedge fund manager interviews.


The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
IAC Interactive (IACI)
RHI Entertainment (RHIE)
News Corp (NWS)
Acergy (ACGY)


Some Increased Positions (A few positions they already owned but added shares to)
Breitburn Energy (BBEP): Increased position by 838%
Linn Energy (LINE): Increased position by 140%
Alliance One (AOI): Increased position by 105%
Liberty Media (LMDIA): Increased position by 50%
Ituran (ITRN): Increased position by 34%
Exterran Holdings (EXH): Increased position by 28%
Centerplate (CVP): Increased position by 13%
Viasat (VSAT): Increased position by 10%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
UnitedHealth (UNH): Reduced position by 83%
Claimsnet.com (CLA): Reduced position by 79%
Borders (BGP): Reduced position by 68%
Wellpoint (WLP): Reduced position by 63%
Horizon Lines (HRZ): Reduced position by 45%
NRDC Acquisition (NAQ): Reduced position by 35%
Prepaid Legal (PPD): Reduced position by 23%
Audiovox (VOXX): Reduced position by 12%
Triplecrown Acquisition (TCW): Reduced position by 10%


Removed Positions (Positions they sold out of completely)
Clearpoint Business (CPBR)
Overture Acquisition (NLX)
2020 ChinaCap (TTY)
Tremisis (TGY)
Seanergy Maritime (SHIP)
KBL Healthcare (KHA)
Victory Acquisition (VRY)
Interatlantic Financial (IAN)
TM Entertainment (TMI)
Golden Pond Healthcare (GPH)
Highlands Acquisition (HIA)
BPW Acquisition (BPW)
School Specialty (SCHS)
Coremark Holding (CORE)
Global BPO Services (OOO.U)
GSC Acquisition (GGA)
Liberty Acquisition (LIA)
Alternative Asset Management (AMV)
Hicks Acquisition (TOH)
Marathon Acquisition (inactive)
CapitalSource (CSE)
Global Consumer (GHC)


Top 20 Holdings (by % of portfolio)

  1. Linn Energy (LINE): 11.8% of portfolio
  2. Liberty Media (LMDIA): 9.2% of portfolio
  3. Domtar (UFS): 7.9% of portfolio
  4. Wellpoint (WLP): 7.3% of portfolio
  5. Exterran (EXH): 7.1% of portfolio
  6. Breitburn Energy (BBEP): 7.1% of portfolio
  7. Theravance (THRX): 6% of portfolio
  8. IAC Interactive (IACI): 4.7% of portfolio
  9. RHI Entertainment (RHIE): 4% of portfolio
  10. Sapphire Industrials (FYR): 3.7% of portfolio
  11. Syneron Medical (ELOS): 3.4% of portfolio
  12. Atlas Pipeline Partners (APL): 3.3% of portfolio
  13. Horizon Lines (HRZ): 2.9% of portfolio
  14. Viasat (VSAT): 2.2% of portfolio
  15. Alliance One (AOI): 1.8% of portfolio
  16. GHL Acquisition (GHQ): 1.6% of portfolio
  17. UnitedHealth (UNH): 1.5% of portfolio
  18. News Corp (NWS): 1.5% of portfolio
  19. Ituran (ITRN): 1.4% of portfolio
  20. Audiovox (VOXX): 1.4% of portfolio


Assets from the collective long US equity, options, and note holdings were $1.6 billion last quarter and were $1.3 billion this quarter. Baupost was selling out of nearly all of their acquisition holding company positions, which was interesting. Also, the additions they made to their positions in Linn Energy and Breitburn Energy were pretty substantial. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Klarman / Baupost:
- Seth Klarman's book: Margin of Safety
- Prominent Hedge Fund manager interviews
- Klarman's interview with Harvard business school
- Hedge Fund investor letters
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers


Jim Rogers on Long Term Bonds

"I was shorting the long bond in October and in November but I had to cover. I plan to sell them short again along the line. Bonds are the last bubble, its clearly a bubble. Everybody is pumping bonds like crazy." - Jim Rogers

Repeatedly, Rogers has said he is looking to buy Agriculture, to short U.S. long-term bonds, to short the US Dollar after its rise fully secedes, and to buy Japanese Yen. (See our rationale behind shorting long-dated treasuries)


100 Year Chart of the Dow

Barry Ritholtz has got another great chart up depicting the 100 Year Dow. Take a gander:

(click to enlarge)



Thursday, December 25, 2008

Happy Holidays From Market Folly!

Happy holidays from us here at Market Folly!

Oh, and Paul Tudor Jones of Tudor Investment Corp wishes you happy holidays as well. Below, courtesy of Greenwich Time, is his grandiose light display consisting of 15,000 lights synchronized to music. Not even joking.




Lastly, the stock market wanted to get in on the action and wish you happy holidays as well:





Merry Christmas, Happy Hanukkah, Happy Kwanzaa, Happy Festivus, Happy Holidays, and any others we may have left out!


Wednesday, December 24, 2008

What We're Reading (12/24/2008)

- The Federal Reserve's balance sheet (Econbrowser)

- Brazil needs $75 oil to support investment (Bloomberg)

- T2 Partners (Whitney Tilson's hedge fund) says more pain to come (.pdf housing analysis)

- Hedge Fund legend Steinhardt says now's a good time to buy stocks (Reuters)

- Profile on Jim Chanos, notable short-seller & hedge fund manager (NY Mag)

- Videos: Nouriel Roubini's predictions for 2009 (Value Plays)


Tuesday, December 23, 2008

Barry Rosenstein's Jana Partners: Hedge Fund Tracking - 13 F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Jana Partners. Ran by Barry Rosenstein, Jana was recently ranked 79th in Alpha's Hedge Fund Rankings. Jana was founded in 2001 and typically employs activist, market neutral, and long/short equity strategies in public equity markets. Rosenstein received his BS from Lehigh University and his MBA from the Wharton School of Business at the University of Pennsylvania. Jana has returned 20.9% each year annualized from 2001 til 2007. Rosenstein sees Jana's future in a strategy that uses management adjustments to force change at companies, which in turn can send shares higher. A few months back in our hedge fund performance numbers update, we noted that Jana's piranha fund was -19.2% for October and was -21.7% for the year at that time. Additionally, their Nirvana fund fell 13.2% in October and was down 21.9% ytd at that time. Lastly, the Jana Partners fund had a much better October than their other funds, being down 6.6% for that month, but was still down 20.4% for the year at that time. As you can see, a big chunk of their losses came solely from the month of October. As we posted earlier, Jana has hit a rough patch this year and is on track for its first yearly loss ever. We've also recently covered some of Jana's big moves, including taking a 13.52% ownership stake in Convergys (CVG) and a 5.7% ownership stake in Hayes Lemmerz (HAYZ).

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Aetna (AET)
Wells Fargo (WFC)
Pfizer (PFE)
Marathon Oil (MRO)
Bank of America (BAC)
Ace (ACe)
Regional Bank Holdrs (RKH)
Cigna (CI)
Telephone & Data (TDS)
KBW Regional Banking ETF (KRE)
Select Sector Financial ETF (XLF) Calls
Quanex Building (NX)
Microsoft (MSFT) Calls
Medarex (MEDX)
Teletech Holdings (TTEC)
John Bean Tech (JBT)
T Rowe Price (TROW)
Holly (HOC)
McDonalds (MCD)
JDA Software (JDAS)
X-rite (XRIT)
Lehman Brothers (LEHMQ)


Some Increased Positions (A few positions they already owned but added shares to)
Hanover Insurance (THG): Increased position by 117%
Medicis Pharma (MRX): Increased position by 76%
Invitrogen (IVGN): Increased position by 62%
Williams Companies (WMB): Increased position by 33%
Commscope (CTV): Increased position by 32%
Graphic Packaging (GPK): Increased position by 28%
Convergys (CVG): Increased position by 50%
Health Net (HNT): Increased position by 29%
Corel (CREL): Increased position by 19.5%
Hayes Lemmerz (HAYZ): Increased position by 12%
Agilysys (AGYS): Increased position by 10%
Maximus (MMS): Increased position by 9%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)

Focus Media (FMCN): Reduced position by 73%
KBR (KBR): Reduced position by 68%
AK Steel (AKS): Reduced position by 62%
Shire (SHPGY): Reduced position by 61%
Xerium Tech (XRM): Reduced position by 51%
M&F Worldwide (MFW): Reduced position by 42%
Chubb (CB): Reduced position by 23%
MF Global (MF): Reduced position by 20%
HCC Insurance (HCC): Reduced position by 9%



Removed Positions (Positions they sold out of completely)
Comstock Resources (CRK)
Cisco Systems (CSCO)
Anadarko Petroleum (APC) Calls
Taiwan Semi (TSM)
Conoco Phillips (COP) Puts
United Health (UNH)
Forest Oil (FST)
Nokia (NOK)
Devon Energy (DVN)
Hess (HES) Calls
National Oilwell Varco (NOV)
Equitable Resources (EQT)
First American (FAF)
Genentech (DNA)
Century Aluminum (CENX)
Oracle (ORCL)
Omnicare (OCR)
Sandridge Energy (SD)
Microsoft (MSFT)
Transocean (RIG)
Peabody Energy (BTU)
Consol Energy (CNX)
Anadarko Petroleum (APC)
Commercial Metals (CMC)
Cnet - inactive
Talisman Energy (TLM)
Hess (HES)
Calpine (CPN)
Select Sector Energy (XLE) Puts
iShares Russell 2000 index (IWM) Puts


Top 20 Holdings (by % of portfolio)

  1. Copart (CPRT): 12.3% of portfolio
  2. Convergys (CVG): 10.8% of portfolio
  3. Health net (HNT): 7.5% of portfolio
  4. HCC Insurance (HCC): 5.1% of portfolio
  5. Invitrogen (IVGN): 4.8% of portfolio
  6. Commscope (CTV): 4.6% of portfolio
  7. Williams Companies (WMB): 4% of portfolio
  8. Aetna (AET): 3.9% of portfolio
  9. Chubb (CB): 3% of portfolio
  10. Wells Fargo (WFC): 2.8% of portfolio
  11. American Italian Pasta (AITP): 2.3% of portfolio
  12. Pfizer (PFE): 1.9% of portfolio
  13. Ak Steel (AKS): 1.9% of portfolio
  14. Marathon Oil (MRO): 1.9% of portfolio
  15. Bank of America (BAC): 1.8% of portfolio
  16. MF Global (MF): 1.8% of portfolio
  17. Ace (ACE): 1.8% of portfolio
  18. Regional Bank Holdrs (RKH): 1.8% of portfolio
  19. NBTY (NTY): 1.7% of portfolio
  20. Maximus (MMS): 1.6% of portfolio


Assets from the collective holdings were $5.89 billion last quarter and were $2.14 billion this quarter. So, they definitely decreased their long US equity exposure by a good amount, like many other hedge funds we've covered. And, for the most part, they were selling entire positions rather than partial positions. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on Rosenstein / Jana Partners:
- Jana has hit a rough patch this year
- Jana takes 13.52% ownership stake in Convergys (CVG)
- Jana discloses 5.7% ownership stake in Hayes Lemmerz (HAYZ)
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers


Interview With Seth Klarman of Baupost Group

Special thanks to Todd Sullivan over at Value Plays for finding and posting this great interview. Seth Klarman of hedge fund Baupost Group sits down to talk with Harvard Business School:


"While other money managers scrambled to survive the financial market meltdown, value investor extraordinaire Seth Klarman (MBA ’82), president of The Baupost Group in Boston, cautiously pursued buying opportunities. After sitting patiently on the sidelines with a mountain of cash — 40 to 50 percent of Baupost’s $14 billion–plus in assets — for several years, the firm’s recent investments have cut its cash stash in half. Distress selling, it seems, breeds the kind of bargains Klarman lives for.

Fresh out of HBS, Klarman didn’t hesitate when Adjunct Professor Bill Poorvu recruited him to help manage a $27 million pool of capital in the newly formed Baupost. While the starting salary was an underwhelming $35K, it turned out to be the opportunity of a lifetime. In 26 years, Baupost has racked up an enviable 20 percent annual compound rate of return, earning Klarman entry into the Alpha magazine Hedge Fund Hall of Fame. The firm has grown from 3 to 100 employees.

A consummate team player, Klarman rarely uses his private office, choosing instead to sit at the trading desk where he works closely with analysts on investment decisions. But work isn’t all-consuming. He makes time for family and outside pursuits. As his three children grew, he coached his daughters’ soccer teams and attended his son’s recitals. And he is deeply committed to a number of philanthropic causes. Klarman recently took time to discuss investing, the credit crisis, and his approach to philanthropy.

When you started with Baupost at age 25, did you already consider yourself a value investor?
Yes. After my junior year in college and right after graduating, I worked for Mutual Shares Corporation, which was run by a wonderful gentleman named Max Heine. I learned a huge amount about value investing. It turns out that value investing is something that is in your blood. There are people who just don’t have the patience and discipline to do it, and there are people who do. So it leads me to think it’s genetic.

Did you ever waver in your investment style?
Never once.

What gave you the resolve to say no to all the other investment approaches?
There are several answers. First, value investing is intellectually elegant. You’re basically buying bargains. It also appeals because all the studies demonstrate that it works. People who chase growth, who chase highfliers, inevitably lose because they paid a premium price. They lose to the people who have more patience and more discipline. Third, it’s easy to talk in the abstract, but in real life you see situations that are just plain mispriced, where an ignored, neglected, or abhorred company may be just as attractive as others in the same industry. In time, the discount will be corrected, and you will have the wind at your back as a holder of the stock.

Do you set an annual return target?
We think it’s madness to target a return. Return lies in some relationship to risk, albeit there are moments when it’s out of whack, when you can make a high return with very limited risk. My view is that you can target risk versus return. So you can say, I’ll take the very safe 6 percent, I’ll take the somewhat risky 12, or I’ll take the enormously risky 20, knowing that 20 might actually be minus 20 by the time the actual results are known. We just don’t think targeting a return is smart.

You are lead editor of the new edition of Security Analysis, the bible of value investing by Benjamin Graham and David Dodd, first published in 1934. Is their advice still relevant 75 years later?
At no time since 1934 has it been so relevant given the financial turmoil and distress in the world and the possibility that we could be reliving some sort of serious economic downturn. What’s wonderful about Graham and Dodd is that their advice is timeless. And it is not just about investing; it’s also about thinking about investing. It basically teaches you the questions that you should ask, and it makes endless references to the foibles of human nature in the markets.

Given the recent credit market meltdown, have we made much progress in figuring out how to avoid the pitfalls pointed out by Graham and Dodd?
No. What happens is that people always want to believe that this time is different, that there’s something new under the sun, and that through their own ingenuity they can wish away risk. The idea that risk premiums would go to zero, that we’re somehow overcoming human nature, is absurd. The whole reason that our capitalist system works the way it does is because there are cycles, and the cycles self-correct. With too much excess, eventually you get a downturn.

So the explosion in securitized assets was a ticking time bomb?
It’s not amazing that securitized products were created. There are huge financial incentives for the people involved. What’s amazing is that anybody actually bought them. That’s because they’re created with a one-dimensional idea of what the economy and the world are going to do. If you have nothing but good times, then securitization makes tremendous sense. But securitization, for all of the commingling and diversification it gives you, also gives you a lack of transparency. So if you have an environment like the one we have now, the assets that have been securitized actually make you worse off than if they were just held as whole loans.

The unanswered question is how did the smartest people in the world who run the major Wall Street firms not understand that these products were toxic and end up getting caught with them on their books?

As Fed chairman, did Alan Greenspan have a hand in creating the current credit market crisis?
Until recently, Greenspan seemed unaware of his role in influencing markets. As Fed chairman, when he advised people not very many years ago to take out variable rate mortgages, he aided and abetted the housing market excesses. When he said there was irrational exuberance in the market [in 1996], he was basically right. But then he didn’t act even though he had plenty of levers he could have pulled that didn’t have to do with changing interest rates. He could have raised margin requirements, for example. But instead, he came up with the ridiculously lame idea that bubbles need to be allowed to run and that the Fed can clean up the mess afterward, which only had the effect of inflating subsequent bubbles, most notably the housing bubble that came as a result of the easy money. So he’s just been unaware of the impact of his encouragement, and his inaction got us into the terrible mess we’re in today. It’s not all his fault, but I hold him largely responsible for it.

How have Ben Bernanke and Henry Paulson (MBA ’70) done in managing the financial crisis?
They have been dealt an unimaginably bad hand. If any of us were in their shoes, we would be doing similar things, although it is reasonable to assume that part of the problem we are facing today is a result of previous government actions, and today’s government actions will give rise to future problems as well.


The lesson should be that we need to get to a point where we don’t need to intervene in the future, because we realize that intervention also delivers incredibly dangerous messages and creates a giant moral hazard. Bernanke and Paulson have to realize that if we’re going to intervene when things are bad, we’re also going to intervene when things are good and take away the punch bowl before the party gets too far along. One-sided intervention is even more dangerous. It will create an ever bigger bunch of excesses that will require an even bigger bailout next time.

Was the $700 billion federal rescue package, sold as a plan to buy toxic mortgage-backed securities from banks, the right way to go?
Defining the problem you are trying to solve is critical in knowing whether this plan will solve it. The bailout does almost nothing to solve the specific problem of declining housing prices. If the government really wants to tackle that problem, making capital available so that banks can make safe loans is crucial. Injecting $250 billion into the nation’s banks is a big step in that direction.

How do you approach philanthropy?
I’m a big believer in giving back. We all have an obligation to leave things better than where we found them.

I have more than I’ll ever need, and more than my family will ever need. I’m only working now for philanthropy. So everything I do is about giving back. In fact, one of the things we did at Baupost when we recently took on some additional clients was to accept only educational endowments and foundations. We figured we would further benefit the world by helping these organizations rather than individuals. That decision was very important for me and for all the firm’s partners.

Also, given the extremely difficult financial environment we are in, I expect charities will be greatly affected. That’s why it’s incumbent on those who can to step up and help fill the void."




Monday, December 22, 2008

Eton Park Capital (Eric Mindich): Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Eric Mindich's Eton Park Capital, who was ranked 53rd in Alpha's hedge fund rankings. Mindich received an Economics degree from Harvard and then worked at Goldman Sachs' risk-arbitrage desk. After becoming the youngest partner in the history of Goldman Sachs at the age of 27, it was clear he had a bright future. In 2004, he started his hedge fund Eton Park Capital with a record $3 billion in assets and a $5 million minimum investment required of investors. Today, Mindich manages over $6 billion. Typically, Eton Park invests in long/short equity and convertible arbitrage strategies. Additionally, as much as 30% of the fund can be invested in private investments. Back in September, Eton Park was only -1% for the year, as noted in our hedge fund performance numbers compilation. Recently, Mindich said he sees opportunity in the current markets in an excerpt from a recent investor letter.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Spdr Gold Trust (GLD) Calls
Genentech (DNA)
Comcast (CMCSK) Calls
Potash (POT) Puts
Barr Pharma (BRL)
Alpha Natural Resources (ANR)
Alpharma (ALO)
UST (UST) Calls
Ikon Office (IKN)
Vale (RIO) Calls
Mobile Telesystems (MBT)
Deere (DE) Puts
VimpelComm (VIP)
Cisco (CSCO) Calls
AK Steel (AKS)
Newmont Mining (NEM)
News Corp (NWS)
Kinross Gold (KGC)
Ralcorp (RAH)


Some Increased Positions (A few positions they already owned but added shares to)
Comcast (CMCSA): Increased position by 131%
Wells Fargo (WFC) Puts: Increased position by 117%
Qualcomm (QCOM) Calls: Increased position by 100%
Merrill Lynch (MER): Increased position by 94%
Ishares Emerging Markets (EEM) Puts: Increased position by 75%
Qualcomm (QCOM): Increased position by 70%
Walter Industries (WLT): Increased position by 64%
Verisign (VRSN): Increased position by 48%
Ebay (EBAY): Increased position by 46%
Lorillard (LO): Increased position by 40%
Starbucks (SBUX): Increased position by 38%
News Corp (NWS-A): Increased position by 35%
Gold Fields (GFI): Increased position by 28%
Hansen Natural (HANS): Increased position by 26%
Beckman Coulter (BEC): Increased position by 23%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Lamar Advertising (LAMR): Reduced position by 34%
Cemex (CX) Puts: Reduced position by 29%
Kraft Foods (KFT): Reduced position by 8%
Goodyear Tire (GT): Reduced position by 6%


Removed Positions (Positions they sold out of completely)
Turkcell (TKC)
Bank of America (BAC)
Republic Services (RSG)
Weyerhauser (WY)
Yahoo (YHOO) Calls
BB&T (BBT) Puts
Ford (F)
America Movil (AMX) Puts
Wachovia (WB) Calls
Grey Wolf (GW)
Ebay (EBAY) Calls
Liberty Media (LCAPA)
Yahoo (YHOO)
American Express (AXP)
Encore Acquisition (EAC)
American Express (AXP) Calls
Harris (HRS)
WH Energy (WHQA) - inactive
Philip Morris International (PM)
DRS Technologies (DRS)
Mastercard (MA) Puts
Anheuser Busch (BUD)
Anheuser Busch (BUD) Calls


Top 20 Holdings (by % of portfolio)

  1. Spdr Gold Trust (GLD) Calls: 14% of portfolio
  2. Ishares Emerging Markets (EEM) Puts: 7.9% of portfolio
  3. Merrill Lynch (MER): 7.2% of portfolio
  4. Wells Fargo (WFC) Puts: 5.4% of portfolio
  5. Verisign (VRSN): 4.1% of portfolio
  6. Spdr Gold Trust (GLD): 3.7% of portfolio
  7. Qualcomm (QCOM): 3.6% of portfolio
  8. Genentech (DNA): 3.3% of portfolio
  9. Goodyear Tire (GT): 3.1% of portfolio
  10. Comcast (CMCSK) Calls: 2.9% of portfolio
  11. Hansen Natural (HANS): 2.8% of portfolio
  12. Hospira (HSP): 2.7% of portfolio
  13. Potash (POT) Puts: 2.6% of portfolio
  14. Cemex (CX) Puts: 2.1% of portfolio
  15. SLM (SLM): 1.7% of portfolio
  16. Barr Pharma (BRL): 1.7% of portfolio
  17. Ebay (EBAY): 1.5% of portfolio
  18. Qualcomm (QCOM) Calls: 1.4% of portfolio
  19. Alpha Natural Resources (ANR): 1.3% of portfolio
  20. Alpharma (ALO): 1.2% of portfolio


Assets from the collective holdings were $6.08 billion last quarter and were $6.04 billion this quarter. In contrast to numerous other hedge funds who were decreasing long US equity exposure across the board, Eton Park was pretty much flat in terms of exposure. In terms of positions they sold out of, Eton Park barely sold out of partial positions. Instead, they had a tendency to remove positions entirely. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on the Eton Park:
- Eric Mindich sees opportunity (excerpt from investor letter)
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers


Put/Call Ratio, Volatility Index (VIX), and 50 Day Moving Average

Over on his blog, Stewie has pointed out that the put/call ratio has leveled off and implies a level of comfort from the bulls.

(click to enlarge)


But, we are also seeing a decline in volatility (VIX). Typically, such a move triggers a rise in stocks. But, instead, you have a market which is basically churning sideways.

(click to enlarge)


So, the combination of a declining put/call ratio, a declining VIX, and sideways market action could actually be a bad sign for the bulls. Not to mention, you've got the end of a year, the holidays, and typically light volume in the markets. Lastly, don't forget that we're also trading right around an area of resistance as many stocks and indexes run right into their 50 day moving averages.


(click to enlarge)

We've noted that as everything trades up into their 50 day moving averages and overall levels of technical resistance, we think it sets the market up for another leg down. And, as always, we would love to be proved wrong by some catalyst or spike above resistance with volume. But, until we see that, we will continue to await the next drop. Overall, we think this is a very key point in the markets. We are in an overall downtrend, and have seen a counter-trend rally up into resistance. If the market can break through, it could really change the game up. We are weighted slightly to the short-side as it is our inclination that resistance will hold. We would normally be more heavily weighted to the short side here, but we don't feel comfortable "anticipating" a move due to the circumstances (holidays, light volume, new administration, & crazy market in general). Instead, we'll wait for miss market to tip her hand, and then play in that direction.


Friday, December 19, 2008

Thank You to Our Readers

First and foremost: Thank you, readers! We are proud to announce that we have recently reached 1,000 RSS/Email subscribers! Additionally, we are now seeing around 3,500+ visitors to the blog daily.

This blog started due to my passion for investing, the hedge fund industry, and the markets in general. The goal was to serve a niche in the finance community by tracking hedge funds as a means to share my passion and provide a resource to others. We feel we've done just that and will continue to make improvements in whatever way we can. Thanks very much for your support!

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Thursday, December 18, 2008

Tiger Global (Chase Coleman) Hedge Fund Tracking: 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Chase Coleman's Tiger Global. Chase Coleman is yet another 'Tiger Cub,' or manager who learned their trade under the watch of Julian Robertson while at Tiger Management. We've already covered many of the 'Tiger Cub' funds' portfolios including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Andreas Halvorsen's Viking Global, Chris Shumway's Shumway Capital Partners, and Touradji Capital (Paul Touradji). And, recently, many of these managers gathered at a 'Tiger Cub' hedge fund manager panel, where they laid out investment theses for the future.

Chase Coleman attended Williams College and started Tiger Global with the blessing of Julian Robertson after learning the ways of success at Tiger Management. His focus has always been on smaller cap names and on technology. Although, he has since expanded his horizons with time. In 2007, Tiger Global returned 70%, and from 2001-2007, Coleman bolstered an average return of 47%. In terms of recent performance, they were down 14.3% in the month of September and were down 13.7% for the year at that time.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Zions Bancorp (ZION)
Gushan (GU)
Huntington Bancshares (HBAN)
Marshall & Isley (MI)
Data Domain (DDUP)
Synaptics (SYNA)
Service Corp (SCI)
True Religion (TRLG)
Cavium Networks (CAVM)
Regions Financial (RF)
LDK Solar (LDK)
Comerica (CMA)
Under Armour (UA)
Istar Financial (SFI)
Vocus (VOCS)
Washington Mutual (WAMUQ)
Graco (GGG)
Beazer Homes (BZH)


Some Increased Positions (A few positions they already owned but added shares to)
Longtop Fin (LFT): Increased position by 3,438%
Apple (AAPL): Increased position by 426%
Visa (V): Increased position by 201%
Coach (COH): Increased position by 139%
General Motors (GM): Increased position by 105%
First Horizon (FHN): Increased position by 98%
Discovery Holding Class A (DISCA): Increased position by 66%
Lorillard (LO): Increased position by 51%
Mastercard (MA): Increased position by 22%
CSX (CSX): Increased position by 20%
American Tower (AMT): Increased position by 14%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
China Security (CSR): Reduced position by 55%
America Movil (AMX): Reduced position by 51%
Fifth Street Finance (FSC): Reduced position by 48%
Ambac Financial (ABK): Reduced position by 44%
Hovnanian (HOV): Reduced position by 36%
SBA Comm (SBAC): Reduced position by 30%
A-Power Energy (APWR): Reduced position by 23%
Transdigm (TDG): Reduced position by 13%
Sina Corp (SINA): Reduced position by 8%
Emcore (EMKR): Reduced position by 8%
Qualcomm (QCOM): Reduced position by 7%


Removed Positions (Positions they sold out of completely)
Ctrip (CTRP)
Luminex (LMNX)
Fairpoint Comm (FRP)
Omnivision (OVTI)
ETrade (ETFC)
Conceptus (CPTS)
Utstarcom (UTSI)
Nalco Holding (NLC)
Popular (BPOP)
First Bancorp (FBP)
Sierra Wireless (SWIR)
Stec (STEC)
Greenhill (GHL)
China Finance (JRJC)
China Nepstar (NPD)
Agfeed (FEED)
Google (GOOG)
Baidu (BIDU)
Priceline (PCLN)
New Oriental Educ (EDU)
Level 3 Communications (LVLT)
Research in Motion (RIMM)
Mentor Corp (MNT)
Trustmark Corp (TRMK)
Starent Networks (STAR)
Polaris (PII)
Pachex (PAYX)
American Superconductor (AMSC)
Middleby Corp (MIDD)
Watts Water (WTS)


Top 20 Holdings (by % of portfolio)

  1. American Tower (AMT): 12% of portfolio
  2. CSX (CSX): 11.9% of portfolio
  3. Mastercard (MA): 10.2% of portfolio
  4. Lorillard (LO): 8.7% of portfolio
  5. Visa (V): 6.9% of portfolio
  6. Qualcomm (QCOM): 5.2% of portfolio
  7. Longtop Finl (LFT): 4.2% of portfolio
  8. Transdigm (TDG): 4% of portfolio
  9. Apple (AAPL): 3.7% of portfolio
  10. America Movil (AMX): 3.6% of portfolio
  11. SBA Comm (SBAC): 2.9% of portfolio
  12. Mercadolibre (MELI): 2.6% of portfolio
  13. Coach (COH): 2.5% of portfolio
  14. Sina Corp (SINA): 2.5% of portfolio
  15. Zions Bancshares (ZION): 1.9% of portfolio
  16. General Motors (GM): 1.3% of portfolio
  17. Gushan (GU): 1.2% of portfolio
  18. Huntington Bancshares (HBAN): 1.1% of portfolio
  19. Marshall & Isley (MI): 1.1% of portfolio
  20. First Horizon National (FHN): 1.1% of portfolio


Assets from the collective holdings were $4.4 billion last quarter and were $3.3 billion this quarter. Its interesting to note that numerous other 'Tiger Cubs' have similar top positions including Lorillard (LO), Mastercard (MA), Visa (V), Apple (AAPL), and America Movil (AMX). Julian Robertson himself was even out buying some of those names as well. You can definitely see similarities in the investment process between these funds. Although Tiger Global decreased overall long equity exposure last quarter, they did so in a less severe manner than many of the other funds we've tracked. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on the 'Tiger Cubs':
- 'Tiger Cub' biographies
- Hedge fund manager panel (Tiger Cubs)
- November hedge fund performance numbers
- Julian Robertson's recent buys
- October hedge fund performance numbers
- Hedge Fund Rankings


Videos of Peter Thiel's Latest Comments (Clarium Capital)

Peter Thiel of hedge fund Clarium Capital recently spoke about numerous topics in videos linked below:

Video 1: On whether the US is the next Japan.

Video 2: Four theories on the bubble and bust economy

Video 3: What the decline of hedge funds means for main street

Video 4: On the history of economic bubbles

And don't forget to check out Clarium Capital's latest equity portfolio holdings changes, which we recently detailed here.


Wednesday, December 17, 2008

Touradji Capital (Paul Touradji) Hedge Fund Tracking: 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Touradji Capital ran by Paul Touradji. Touradji is one of many well-known 'Tiger Cubs' who started their own firms after leaving Julian Robertson's Tiger Management. We've already covered many of the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Andreas Halvorsen's Viking Global, and Chris Shumway's Shumway Capital Partners. Taken from our post on 'Tiger Cub' biographies, "Paul Touradji is the President and Chief Investment Officer of Touradji Capital Management LP, a New York-based hedge fund specializing in fundamental research and active investment in commodities and related assets. The firm manages approximately $3.5 billion and invests in both the public and private markets. Mr. Touradji has well over a decade of experience investing in the commodity, equity, and macro markets. Mr. Touradji began his commodities career at Tiger Management in the mid '90s, where he managed the commodities team; it was at Tiger that he developed his fundamental approach to analysis and investment in commodities. Prior to Tiger, Mr. Touradji’s specialty was quantitative arbitrage, principally with O’Connor Partners. Mr. Touradji is a 1993 graduate of the McIntire School of Commerce at the University of Virginia and a Certified Financial Analyst." Recently, at a 'Tiger Cub' hedge fund manager panel, Touradji advocated shorting Copper as the world deleverages and the velocity of money drops.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Hess (HES)
McDermott (MDR)
Transocean (RIG)
Whiting Petroleum (WLL)
XTO Energy (XTO)
Range Resources (RRC)
Terra Industries (TRA)
Apache (APA)
Talisman Energy (TLM)
Anadarko Petroleum (APC)
Encana (ECA)
Nucor (NUE)
Noble Energy (NBL)
Nexen (NXY)
Steel Dynamics (STLD)
Continental Resources (CLR)
FMC Tech (FTI)
Tesoro (TSO)
Frontier Oil (FTO)
S&P 500 (SPY)


Some Increased Positions (A few positions they already owned but added shares to)
Baker Hughes (BHI): Increased position by 504%
Delta Petroleum (DPTR): Increased position by 38%
Chesapeake Energy (CHK): Increased position by 2.3%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Hornbeck Offshore (HOS): Reduced position by 98%
Oil States Intl (OIS): Reduced position by 94%
Comstock Resources (CRK): Reduced position by 83%
Encore Acquisition (EAC): Reduced position by 74%
BMB Munai (KAZ): Reduced position by 72%
Mosaic (MOS): Reduced position by 66%
Petrohawk Energy (HK): Reduced position by 62%
Cano Petroleum (CFW): Reduced position by 62%
Devon Energy (DVN): Reduced position by 52%
CVR Energy (CVI): Reduced position by 49%
Sandridge Energy (SD): Reduced position by 38.5%
Storm Cat Energy (SCU): Reduced position by 30%


Removed Positions (Positions they sold out of completely)
Alpha Natural Resources (ANR)
BP (BP)
Gasco (GSX)
Thompson Creek Metals (TC)
Cano Petroleum (CFW)
National Oilwell Varco (NOV)
McMoran Exploration (MMR)
Helix (HLX)
Select Sector Technology (XLK) Puts
Patriot Coal (PCX)
BJ Service (BJ)
Exco Resources (XCO)
St Mary Land & Exploration (SM)
Helmerich & Payne (HP)
Cabot Oil & Gas (COG)
Nabors (NBR)
GMX Resources (GMXR)
Chicago Bridge & Iron (CBI)
US Steel (X)
Hercules Offshore (HERO)
Walter Industries (WLT)
Potash (POT)
UNIT (UNT)
Petroquest (PQ)
Goodrich Petroleum (GDP)


Top 20 Holdings (by % of portfolio)

  1. Petrohawk (HK): 19% of portfolio
  2. Baker Hughes (BHI): 12% of portfolio
  3. Delta Petroleum (DPTR): 10.6%
  4. Hess (HES): 5.8% of portfolio
  5. McDermott (MDR): 5.4% of portfolio
  6. Chesapeake Energy (CHK): 5.2% of portfolio
  7. Comstock Resources (CRK): 4.1% of portfolio
  8. Transocean (RIG): 3.4% of portfolio
  9. Sandridge Energy (SD): 3.1% of portfolio
  10. Whiting Petroleum (WLL): 2.9% of portfolio
  11. XTO Energy (XTO): 2.2% of portfolio
  12. CVR Energy (CVI): 2.1% of portfolio
  13. Encore Acquisition (EAC): 2.1% of portfolio
  14. Range Resources (RRC): 1.9% of portfolio
  15. Terra Industries (TRA): 1.7% of portfolio
  16. Devon Energy (DVN): 1.7% of portfolio
  17. Apache (APA): 1.6% of portfolio
  18. Talisman Energy (TLM): 1.5% of portfolio
  19. Anadarko Petroleum (APC): 1.5% of portfolio
  20. Hornbeck Offshore (HOS): 1.4% of portfolio


Assets from the collective holdings were $749 million last quarter and were $139 million this quarter. Keep in mind that since Touradji's background is in commodities, the vast majority of his holdings will be in markets other than equities. But, seeing as he has hundreds of millions in equity markets, we think it makes sense to track him to try and pick up on any macro themes. Like many other hedge funds we've seen thus far, Touradji was out decreasing equity exposure across the board last quarter. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:


Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on Touradji:
- 'Tiger Cub' biographies
- Hedge fund manager panel (Tiger Cubs)
- November hedge fund performance numbers
- Julian Robertson's recent buys
- October hedge fund performance numbers
- Hedge Fund Rankings