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

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

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