Galleon Group (Raj Rajaratnam): Hedge Fund Portfolio Tracking - 13F Filing Q3 2008 ~ market folly

Thursday, January 15, 2009

Galleon Group (Raj Rajaratnam): Hedge Fund Portfolio Tracking - 13F Filing Q3 2008

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

Next up is Galleon Group. Galleon was founded by Raj Rajaratnam in 1997 and currently manages in excess of $7 billion. Raj previously worked for Needham & Company, and when he left was responsible for a compounded rate of return of 37% over 4 years while overseeing $250 million. Raj received a Bsc in Engineering and then an MBA in Finance from the University of Pennsylvania.

Taken from their website, the Galleon Group “manages a series of funds that specialize in the technology and healthcare industries. Currently The Galleon Group manages five different long/short equity funds: Technology, Healthcare, New Media (Internet), Communications and Life Sciences. Galleon’s philosophy and approach differs from that of other hedge funds in the fundamental belief that it is possible to deliver superior returns to our investors without employing leverage. Combine strong fundamental investment analysis with superior trading capability Galleon places a strong emphasis on both fundamental investment analysis and trading. This enables us to identify companies with superior long-term growth prospects while maintaining the flexibility to profit from short-term market fluctuations.”

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):
A ton of different batches of S&P 500 index (SPY) Puts
A few different sets of Nasdaq index (QQQQ) Puts
Some sets of Russell 2000 index (IWM) Puts
Oil Service Sector (OIH) Puts
Some S&P 500 (SPY) Calls
Nokia (NOK) Calls
Amag Pharma (AMAG)
Marathon Oil (MRO)
Pfizer (PFE)
Baidu (BIDU)

Some Increased Positions (A few positions they already owned but added shares to)
Mastercard (MA): Increased position by 4,366%
Analog Devices (ADI): Increased position by1,961%
Advanced Micro Devices (AMD): Increased position by 1,716%
Halliburton (HAL): Increased position by 983%
EMC (EMC): Increased position by 692%
Select Sector Financials (XLF): Increased position by 496%
SPDR S&P500 (SPY): Increased position by 311%
Applied Materials (AMAT): Increased position by 281%
SPDR Gold Trust (GLD): Increased position by 175%
Apple (AAPL): Increased position by 62%
Synaptics (SYNA): Increased position by 55%
Microsoft (MSFT): Increased position by 18%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Google (GOOG): Reduced position by 89%
Intel (INTC): Reduced position by 40%
Hewlett Packard (HPQ): Reduced position by 36%
First Solar (FSLR): Reduced position by 34%
Nokia (NOK): Reduced position by 34%
Electronic Arts (ERTS): Reduced position by 33%
Qualcomm (QCOM): Reduced position by 28%
Research in Motion (RIMM): Reduced position by 22%

Removed Positions (Positions they sold out of completely)
A ton of different batches of S&P 500 index (SPY) Puts
A few different sets of Nasdaq index (QQQQ) Puts
Some sets of Russell 2000 index (IWM) Puts
Priceline (PCLN)
Inventiv (VTIV)
Nokia (NOK) Calls
Yahoo (YHOO) Calls
Google (GOOG) Calls
Novartis (NVA) Puts
Cisco (CSCO) Puts

Top 20 Holdings (by % of portfolio)

1. SPDR S&P 500 (SPY): 9.1% of portfolio
2. 1st batch of (SPY) Puts: 4.1% of portfolio
3. 2nd batch of (SPY) Puts: 2.1% of portfolio
4. Advanced Micro Devices (AMD): 2% of portfolio
5. 1st batch of (QQQQ) Puts: 1.8% of portfolio
6. 3rd batch of (SPY) Puts: 1.76% of portfolio
7. Apple (AAPL): 1.67% of portfolio
8. 4th batch of (SPY) Puts: 1.65% of portfolio
9. 1st batch of (SPY) Calls: 1.38% of portfolio
10. 2nd batch of (QQQQ) Puts: 1.28% of portfolio
11. 5th batch of (SPY) Puts: 1.09% of portfolio
12. 6th batch of (SPY) Puts: 1.06% of portfolio
13. 1st batch of (IWM) Puts: 0.95% of portfolio
14. 2nd batch of (IWM) Puts: 0.91% of portfolio
15. 3rd batch of (IWM) Puts: 0.87% of portfolio
16. 7th batch of (SPY) Puts: 0.81% of portfolio
17. 8th batch of (SPY) Puts: 0.81% of portfolio
18. EMC (EMC): 0.8% of portfolio
19. Microsoft (MSFT): 0.79% of portfolio
20. Hewlett Packard (HPQ): 0.75% of portfolio

Assets from the collective long US equity, options, and note holdings were $8.3 billion last quarter and were $7.1 billion this quarter. As you can see, Galleon Group holds various sets of puts on the indexes, taking a pretty bearish stance on the markets, having replaced their old batches of options with new ones. We have not detailed the 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, private equity, etc). This is just one of many funds in our hedge fund portfolio 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 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 Galleon Group & hedge funds:
- 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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