Paul Tudor Jones' Tudor Investment Corp 13F Filing, Q4 2008 ~ market folly

Tuesday, March 17, 2009

Paul Tudor Jones' Tudor Investment Corp 13F Filing, Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

This week, turning the focus to global macro funds, we'll be checking in on Paul Tudor Jones' Tudor Investment Corp. Do note that global macro funds are typically not equity focused funds. While they do indeed have equity exposure, the majority of their holdings are in other markets. So, we mainly track them to check in on their sector exposure to see what types of global macro themes they may be investing in. This is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. But, they are only required to disclose equity holdings.

Paul Tudor Jones comes from the group of "offspring" of the legendary Commodities Corporation. Tudor Jones emerged as a successful offspring along with fellow great macro traders Bruce Kovner (Caxton Associates) and Louis Bacon (Moore Capital Management). Taken from Wikipedia, the bio of PTJ is as follows: "In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems." So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of THE macro trader.

If you want to hear some insightful thoughts from Tudor Jones himself, head over to our post on Hedge Fund manager interviews or our post on quotes from PTJ. We should note that in the past, Tudor's equity portion of their portfolio has been run by James Pallotta in Tudor's Raptor fund. But, Pallotta recently left Tudor to start his own hedge fund. So, we've started to cover Pallotta's new Raptor Capital Management, and we will also continue to track Tudor. Pallotta was essentially responsible for the great track record at Tudor, so that's why we continue to track his 'spun-off/new' venture. We'll track Tudor simply because they have some of the greatest minds in the macro game. And, that's why we track macro funds in the first place: to monitor their sector exposure to pick up any possible macro themes they might be playing.

In terms of recent activity, Tudor has been pretty busy. They earlier filed numerous 13G's with the SEC, amending a bunch of their holdings. Additionally, we just learned that they will be starting a new Momentum Fund. They still of course have their main flagship BVI Global fund that finished 2008 -4.5% as noted in our 2008 hedge fund performance numbers. Keep in mind that as of right now, Tudor has only a miniscule amount of their overall portfolio allocated to equities. They are a multi-billion dollar firm and only have equity exposure of a few hundred million, as detailed below.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
Kraft (KFT)
Genentech (DNA)
Prudential (PRU)
Harris (HRS)
Amylin (AMLN)
Monsanto (MON)
Metlife (MET)
Semiconductor Holdrs (SMH)
State Street (STT)
Berkshire Hathaway (BRK-A)
CIT Group (CIT)
Mastercard (MA)
Blackrock (BLK)
Teva (TEVA)
Vertex Pharma (VRTX)
Wendys (WEN)
Cigna (CI)
Citigroup (C)
Devon Energy (DVN)
Corning (GLW)
Select Sector Industrial (XLI)
Market Vectors Agribusiness (MOO)
Sandisk (SNDK)
Legg Mason (LM)
Agilent (A)
US Steel (X)
Potash (POT)
Och Ziff (OZM)
Onyx Pharma (ONXX)

Some Increased Positions (A few positions they already owned but added shares to)
Select Sector Energy (XLE): Increased by 165%
Select Sector Healthcare (XLV): Increased by 137%
Dell (DELL): Increased by 61%
Select Sector Financial (XLF): Increased position by 57%
Hartford Financial (HIG): Increased by 31%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Activision Blizzard (ATVI): Reduced by 95%
Invesco (IVZ): Reduced by 92%
Coach (COH): Reduced by 61%
Wyeth (WYE): Reduced by 31%
3Com (COMS): Reduced by 26%
Ishares Emerging Markets (EEM): Reduced by 18.5%
Select Sector Technology (XLK): Reduced by 13.6%

Removed Positions (Positions they sold out of completely)
SPDR Gold Trust (GLD)
Willis Group (WSH)
Select Sector Materials (XLB)
Jamba (JMBA)
Tenet (THC)
Petroleo Brasileiro (PBR)
Ico Global (ICOG)
Viacom (VIA-B)
JPMorgan Chase (JPM)
Theravance (THRX)
American Eagle Outfitters (AEO)
RCN (RCNI) Calls
Accenture (ACN)
Pfizer (PFE)
Select Sector Consumer Staples (XLP)
Ishares China (FXI)
Cisco (CSCO)
Macrovision (MVSN)
Terrestar (TSTR)
Fomento Economico (FMX)
Ishares S. Korea (EWY)
Home Inns & Hotels (HMIN)
Fibertower (FTWR)
Fidelity Info (FIS)
Heinz (HNZ)
Anadarko Petroleum (APC)
Ishares Japan (EWJ)
Plains Exploration (PXP)

Top 20 Holdings (by % of portfolio)

  1. Kraft Foods (KFT): 9.83% of portfolio
  2. Progenics Pharma (PGNX): 6.97% of portfolio
  3. Genentech (DNA): 5.88% of portfolio
  4. Prudential Financial (PRU): 4.98% of portfolio
  5. Harris Corp (HRS): 4.86% of portfolio
  6. Amylin Pharma (AMLN): 4.81% of portfolio
  7. Wyeth (WYE): 4.53% of portfolio
  8. Monsanto (MON): 3.73% of portfolio
  9. Metlife (MET): 3.59% of portfolio
  10. Semiconductor Holdrs (SMH): 3.54% of portfolio
  11. State Street (STT): 3.29% of portfolio
  12. Mako Surgical (MAKO): 3.16% of portfolio
  13. Berkshire Hathaway (BRK-A): 2.88% of portfolio
  14. Select Sector Technology (XLK): 2.56% of portfolio
  15. CIT Group (CIT): 2.47% of portfolio
  16. Select Sector Financial (XLF): 1.87% of portfolio
  17. Mastercard (MA): 1.72% of portfolio
  18. Blackrock (BLK): 1.7% of portfolio
  19. Select Sector Energy (XLE): 1.69% of portfolio
  20. Taleo Corporation (TLEO): 1.68% of portfolio

Last quarter, Tudor didn't have a large percentage of their assets in equity markets. And, this quarter, that trend continued. Assets from the collective long US equity, options, and note holdings were $452 million last quarter and were $334 million this quarter. As we mentioned in the beginning, due to their global macro nature, they are invested in all kinds of markets. And, more often than not, equity exposure takes a backseat to currencies, commodities, futures, and the like. But, at the same time, they had been ratcheting down their equity exposure as things started to deteriorate in the stock market, a wise move. This is one major advantage of the global macro strategy. They are nimble and move wherever they see opportunity. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Peter Thiel's Clarium Capital, Bret Barakett's Tremblant Capital, David Stemerman's Conatus Capital, James Pallotta's Raptor Capital Management, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Bruce Kovner's Caxton Associates. Look for our updates as we will be covering a new fund each day.

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