Thursday, April 30, 2009

2009 Hedge Fund Rankings: Top 10 Asset Losers

After covering Alpha's 2009 hedge fund rankings, we thought it would also be prudent to cover the firms who suffered the most in 2009. The top of Alpha's list is full of cream-of-the-crop hedge funds with a boatload of assets under management. Hidden in their annual rankings are also a few hedge funds that while still ranked, they truly had a bad year in terms of amassing AUM. In fact, they didn't amass assets, but rather lost them seemingly with ease. Listed below are the hedge funds that suffered the biggest year over year decrease in capital.

1. Harbinger Capital Partners: Assets -60.8% year over year

2. Atticus Capital: Assets -60% year over year

3. Marshall Wace: Assets -56% year over year

4. GLG Partners: Assets -51.9% year over year

5. Gartmore Investment Management: Assets -51.4% year over year

6. Glenview Capital Management: Assets -50.5% year over year

7. Cantillon Capital Management: Assets -46.8% year over year

8. Citadel Investment Group: Assets -46.4% year over year

9. AllianceBernstein: Assets -46% year over year

10. BlackRock: Assets -45.5% year over year

Now, keep in mind that these decreases in assets could be any combination of poor performance, redemptions, and other circumstances. Barely escaping this list were Thomas Steyer's Farallon Capital Management and Jim Simons' Renaissance Technologies. Farallon saw a 44.4% decrease in assets year over year while Renaissance saw a 39.9% decrease YoY. Interestingly enough, even with such large year over year decreases, they are still both tied for 10th place in the hedge fund rankings, clinging desperately to their coveted place in the top 10.

Philip Falcone's Harbinger Capital Partners and Timothy Barakett's Atticus Capital definitely experienced some of the most severe drops in terms of their ranking from 2008 to 2009. Atticus dropped from being 13th last year to 51st this year. Harbinger, on the other hand, dropped from 16th last year down to 57th this year. While all the funds listed about definitely slipped in the rankings, these two funds saw arguably the most meaningful moves.

Philip Falcone's Harbinger Capital Partners

Curiously enough, Harbinger Capital Partners has been absurdly busy with SEC filings and portfolio re-shuffling. And, this very slippage in assets under management is undoubtedly one of the major sources of the problem. As we've detailed very recently, Harbinger has been decreasing their Cliffs Natural Resources (CLF) position, selling off some of their Calpine (CPN), and is seeing bidders for their NYT stake, among many other portfolio moves. When you run a portfolio concentrated with some big stakes, you're bound to experience volatility. And, couple that with 2008 being the most volatile year in a while and you see just where Harbinger is hurting. When they began selling some of their CLF stake, they issued a statement that they were merely bringing portfolio metrics back in line. With all of the volatility they've experienced, their portfolio has undoubtedly been thrown out of whack. Harbinger's Offshore fund finished -22.7% for 2008. They were up 0.95% for January 2009, 4.64% for February, and +0.74% for March, leaving them at +4.06% year to date as of then. And, we also got word that Falcone would be returning to his roots in terms of investing style and would be opening a new fund. You can view Harbinger's portfolio here.

Timothy Barakett's Atticus Capital

Atticus has had their fair share of scares as well. Way back when the market turmoil started to heat up around September 2008, Atticus' Global fund and European funds were down anywhere from 30-to-40% at certain times. And, as such, they were subject to flying liquidation rumors. However, they did not liquidate and are still very much alive today. We detailed their panic as we saw their portfolio holdings drop massively in terms of assets reported to the SEC. Their portfolio deleveraged from multiple-billions of dollars down to around $500 million. Then, from Q3 of 2008 to Q4 of 2008, Atticus' reported assets (long positions) rose up from $500 million back up to $1.9 billion in Q4. So, they essentially took off a lot of positions and moved to cash to stop the bleeding and to meet any redemptions.

After dealing with their crisis and stabilizing their boat, they began to put money back to work last quarter. Interestingly enough, they mainly moved into Call options on some of the very positions they held common stock in previous to their debacle. (We detailed the portfolio changes in their entirety here). So, after being down as much as 30-40% in 2008, Atticus was hoping for a better start to 2009. In terms of recent performance, we've seen that their European fund was -0.8% for February and sat -10% for 2009 at the end of that month, as noted in our series of January & February hedge fund performance numbers (March numbers here). So, while they have seemingly crawled back from the grave, they are not yet out of the hedge fund graveyard. As always, we'll continue to monitor their situation and recently detailed their sales of some Legend International (LGDI).

Ken Griffin's Citadel Investment Group

Lastly, touching on Ken Griffin's firm, we see that while he slipped in the rankings, he is still within striking distance. His firm fell from 13th in 2008 down to 33rd this year as their assets dropped over 46% year over year. Much of this can be attributed to his flagship funds' poor performance (Kensington and Wellington). In 2008, those funds were down around 55% for the year. Things got so bad that they had to halt redemptions and then subsequently sent out this investor letter regarding their situation. Yet, Griffin seems to have turned Citadel's fortunes around as they were up 5% for January, and up another 2.6% for February (as per our performance numbers list). And, most recently, Kensington & Wellington were +3% in March, bringing them to +11% year to date as of then. And, since those flagship funds won't be seeing performance fees for a while due to poor performance, Citadel has started new hedge funds in an effort to boost their revenues and get a fresh start.

Even through all the trauma, both Ken Griffin and Philip Falcone still find themselves on Forbes' billionaire list. And, for all of the funds listed above, 2008 was a year to forget. While some have started off 2009 on a much better foot, there is still a long way to go.

You can view the performance numbers of various hedge funds in our 2008 performance numbers list, as well as their recent performance in our March performance list. Make sure to also check out the 2009 hedge fund rankings.

Seth Klarman's Baupost Group Starts Activism in Facet Biotech (FACT) Position - Amended 13D

Seth Klarman's hedge fund Baupost Group has amended the 13D they filed on Facet Biotech (FACT) which we originally covered here. This amendment comes due to activity on April 27th, 2009 and Baupost still shows a 17.8% ownership stake in FACT. The aggregate amount of shares beneficially owned by them is 4,374,407 shares. Please note that Baupost has not altered the amount of shares they own. They have filed the amendment to state their intentions.

Since a 13D is a filing for activist investments, Baupost filed this statement in the amendment: "The Reporting Persons intend to discuss with the management and board of directors of the Issuer potential changes to the composition of the board of Issuer, as well as aspects of its business, operations, governance, strategy, capitalization, ownership and future plans of the Issuer." So, in plain-jane terms, Baupost is simply going to talk to FACT management and do their activist feather-ruffling to try to institute some changes to generate shareholder value.

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%, is ranked 13th in the 2009 hedge fund rankings, jumping way up from being ranked 49th in Alpha's 2008 hedge fund rankings. Baupost Group's tremendous performance over the years is one of the main reasons that we selected them as one of the hedge funds in our custom Market Folly hedge fund portfolio. Our custom portfolio has seen a total return of 194% since mid-2002 and is returning 17% annualized. It's very evident that Baupost's sterling reputation and performance is a big contributor to our custom portfolio's solid numbers.

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 interview with Harvard Business School and his thoughts from Value Investor Insight.

In addition to their activity with FACT, Baupost has been pretty active with the rest of their portfolio as well, having just increased their position in RHI Entertainment (RHIE) and having filed numerous other SEC filings as well. You can view the rest of Baupost's portfolio here.

Taken from Google Finance,

Facet Biotech is "a biotechnology company. The Company is focused on developing therapeutics for cancer and immunologic diseases. Its products include Daclizumab, Volociximab, Elotuzumab, PDL192, and PDL241. Daclizumab is a humanized monoclonal antibody, with a potential in a range of inflammatory diseases, including multiple sclerosis. It can be used as a maintenance therapy for organ transplant. Volociximab is a chimeric monoclonal antibody, with a potential in treating a range of solid tumors and its role in angiogenesis also aid in the treatment of age related macular degeneration (AMD). Elotuzumab is a humanized monoclonal antibody used to treat multiple myeloma. PDL192 is a humanized monoclonal antibody used to treat tumor indications including pancreatic, colon, lung, renal, breast, head, and neck cancers. PDL241 is a humanized monoclonal antibody, with a potential in immunologic diseases."

Federal Reserve April 2009 Statement FOMC

Yesterday's statement from the Federal Reserve:

Release Date: April 29, 2009

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Wednesday, April 29, 2009

Soros Fund Management (George Soros) Files 13G on Mercury Computer (MRCY)

In a 13G filed with the SEC recently, we see that George Soros' hedge fund Soros Fund Management is now showing a 5.11% ownership stake in Mercury Computer (MRCY). The filing was made due to activity on April 17th, 2009 and they currently hold 1,160,077 shares. These figures are a combination of their 1,111,219 common shares as well as their 48,858 shares issuable from their 2% Senior Convertible Notes due 2024. This is not a new holding for Soros, as they held Mercury when we last looked at Soros' portfolio. However, it looks like they have added to their tally of common shares recently.

Soros is good to track because of his excellent macro sense and formidable track record as an investor. His thoughts on the current financial landscape are detailed in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. Soros sees a vast consolidation in the hedge fund space in the near future, as we noted when we recently checked in on Quantum Fund ex-partners Jim Rogers & George Soros. If you want to get a better sense as to how Soros formulates his investment theses, we highly recommend reading his first book, The Alchemy of Finance. This book is a staple in our recommended reading list and after you read it, you'll understand why. We like to track Soros since he has a solid track record and a great macro sense.

Soros is famous for his stellar returns with partner Jim Rogers when they ran their Quantum fund. (We recently covered Jim Rogers' portfolio here). Now, Soros has carried his investment style over to his own firm, Soros Fund Management. Whether it be equities, bonds, currencies, debt, or commodities, Soros is more of a global macro player, seeking investments in whatever market they can gain an edge. The experience Soros has experienced is vastly evident with his appearance on Forbes' billionaire list, as well as on the top 25 highest paid hedge fund managers.

2008 was an interesting time to be investing, to say the least. Recently, Soros detailed his thoughts about his portfolio from 2008 and it makes for a good read. His fund finished '08 up 8% as noted in our hedge fund year end performances post. His success in 2008 came from making correct bets on the US dollar and betting that short term interest rates in the UK would decline. Interestingly enough, Soros was down for much of the year, until he fought his way back with overtrading. And, as such, Soros Fund Management is now ranked #8 in the 2009 hedge fund rankings. We've covered the rest of Soros' portfolio here.

Taken from Google Finance,

Mercury Computer Systems, Inc "designs, manufactures and markets high-performance computer, signal and image processing systems and software for embedded and other specialized computing markets. The Company’s primary market segments are aerospace and defense, which includes systems for radar, electronic warfare, sonar, command, control, communications, computers and intelligence and electro-optical; life sciences, which includes systems for medical diagnostic imaging and advanced visualization; semiconductor, which includes systems for semiconductor wafer inspection, reticle inspection and mask writing; geosciences, which includes software for oil and gas exploration, and telecommunications systems."

Wall Street 2 the Movie

Greed is good.

I know there will be a few people excited about this news: The sequel to the movie Wall Street is now green to go. Fox recently was out saying that Oliver Stone is on board to direct, Michael Douglas will be back as Gordon Gekko, and they are negotiating with Shia LeBeouf for a new 'Bud Fox' style of character, this time as a Wall Street trader. The focus of the film will stay on Gekko's character, but any details beyond that are scarce.

This sequel has been on again and off again, but now it looks to be given the green light for sure and Fox hopes to starting shooting sometime in the summer. Originally, the film was being tossed around with the title "Money Never Sleeps," but now will apparently just be titled "Wall Street 2."

For those of you who have never seen the original, it's a classic and you need to definitely watch it in all it's 80's glory. You can pick up Wall Street on DVD here (20th Anniversary edition) and on Bluray here. This is an essential flick for anyone involved in markets and graced our list of gifts for those in finance.

Source: LA Times

Recommended Financial Sites/Blogs:

Continuing our series of highlighting some great financial blogs & sites out there for our readers, we want to turn our focus this time to This site is an essential read for myself and many, many others out there. They don't waste time with forecasts and predictions. In fact, their original tagline was, 'A wide-ranging, forecast-free investment blog.'

So, if they don't forecast, what do they do? Simply put, they highlight the best financial articles on the web on any given day. Think of it this way: If you sat down and read practically all financial publications out there (both mainstream and blogs) each day, you would most likely find a handful of truly relevant and incisive articles worth "starring" in your RSS reader or Email. Abnormal Returns does all this for you. They find all the articles worth "starring," so you don't have to.

They highlight the most relevant and insightful pieces in the financial world on a daily basis and we are very appreciative of their efforts. In fact, many of our Market Folly articles have been highlighted on Abnormal Returns' daily links in the past and we are truly honored to be a part of their compilations.

So, check out It saves you a ton of time and we guarantee you'll be hooked.

Tuesday, April 28, 2009

Philip Falcone's Harbinger Capital Partners Selling Some Calpine (CPN); Others Interested in Their NYT Stake

Undoubtedly, some of you are tired of hearing about Harbinger by now. But, when a large firm is this active, it gives us more to write about and as such we are happy to cover the developments. Literally last Thursday (4/23), we wrote about how Harbinger added to their Terrestar (TSTR) position. In that same article we also detail how they have been selling shares of Solutia (SOA). Yet, just a few days later, we have even more activity to cover. (Readers can view the rest of Harbinger's portfolio here).

Firstly, we'll deal with Solutia (SOA), which Philip Falcone's hedge fund has filed yet another Form 4 on. Previously, we mentioned they had been selling and this new Form 4 is of the same nature. Harbinger has sold an additional 3,705,550 shares on April 22nd and 23rd at prices of $3, $2.97, and the bulk of their sale at $2.76. Due to the continued selling of their position, they have also filed another amended 13D. In their previous 13D filing, they showed a 31% ownership stake. In the latest filing, they now disclose a 28% ownership stake in Solutia (SOA), reflecting the latest sales.

Portfolio re-tooling and re-shuffling has been the name of the game for Harbinger as of late. They've been selling some of their large Cliffs Natural Resources (CLF) stake in order to bring portfolio allocations back in line. Their large shuffling of their SOA further reiterates their desire to re-align their portfolio after sustaining losses in 2008. As many are aware, Harbinger has many large, concentrated positions in companies such as CLF, the New York Times (NYT), Calpine (CPN), and more. And, we've received even more news regarding their positions in the latter two.

In regards to Calpine, we have learned that Harbinger has agreed to sell 20,000,000 shares of their CPN position at a price of $7.9032 per share in a registered public secondary offering (with the option for a further 3,000,000 shares if over-allocated). Calpine will receive no proceeds from the offering and the closing is scheduled for April 29th. Due to this activity, they have also filed an amended 13D with the SEC and currently disclose a 25.2% ownership stake in CPN with 108,245,497 aggregate shares beneficially owned as of April 23rd, 2009.

Last, but certainly not least, Harbinger is also said to be listening to offers from potential suitors regarding their 20% stake in The New York Times (NYT). After sinking almost $500 million into NYT over the past two years, Harbinger has seen their 20% stake deteriorate so much that it is now barely worth over $155 million. A potential sale of part or all of their position is certainly feasible, as it fits the bill of Harbinger's recent tendency to trim their large portfolio holdings. Some have speculated that those interested in bidding might be Bloomberg, among others. Although Harbinger has not yet stated that they are willing to sell, they have definitely indicated others are interested in their stake. And, like we said, given their situation and recent tendency to trim positions, it certainly would not be a surprise for them to offload some of their stake.

The newspaper industry, and NYT in particular, is an interesting target. We've postulated before that newspapers as an industry need change. Harbinger entered their NYT stake with an activist bent to begin with. They've made some progress by engaging in a proxy fight and slating two Harbinger directors on the board. Their goal here is clearly to push for change in the form of the sale of their Boston Red Sox stake and their sale/shuttering of The Boston Globe. Either way, it's apparent that breaking up the company and selling off some assets is desired by many. And, Harbinger is not alone in their large stake in NYT. Mexican Billionaire Carlos Slim also has a large presence in NYT. With a majority controlling family at the helm, and some activists in the mix, there are bound to be further headbutts and fireworks. And, we'll be right there along for the ride, following the developments.

We've told a few inquisitive readers before that we basically think Harbinger is "reseting" their portfolio to a certain extent. The volatility of 2008 certainly highlighted the downside to running a concentrated portfolio and stretching yourself too thin across such large positions. Not to mention, fund losses certainly threw portfolio allocations out of whack. As such, we'd speculate that they're just freeing up capital and bringing portfolio metrics back in line, as they originally stated they were doing with their CLF position. All of this, my friends, is exactly why we like to track the movements of the big funds. Their major moves affect markets and in turn affect other investors. So, even if you aren't involved in a particular stock, it's still prudent to know where they've been, and where they're most likely to go. As such, our hedge fund portfolio tracking series was born.

Harbinger has seen recent portfolio performance of +0.74% for March 2009, and +4.06% year to date as of that timeframe, as referenced in our detail of hedge fund performances. They've (obviously) been quite active with filings and we'll continue to monitor them going forward.

Harbinger Capital Partners is a $13 Billion firm ran by Philip Falcone. Harbinger was started in 2000 with seed capital from Harbert Management ($25 million). And, just recently, we've learned that Falcone is buying out Harbert to be the owner of the firm. Falcone made a name for himself in 2007 when he started shorting subprime mortgages and returned 117%. He focuses on intensive credit research, on bankruptcies and proxy fights, and was previously involved with high yield debt trading. Lately, he's been focused on equities it seems, but Harbinger's new fund will redirect his focus back to his roots.

At one point during 2008, they were up as much as 42%. But, their fortunes turned as their Offshore fund finished -22.7% for the year as noted in our 2008 hedge fund performances list. One position that treated them nicely was their short of Wachovia (WB), which we detailed here. Back in September, in a letter to investors, Falcone had assured investors that Harbinger was adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side).

In Harbinger's latest letter to investors, they mentioned that they had covered their shorts on metal producers and financials and also got out of some credit default swaps. Falcone also mentioned that they had added trade claims on an energy company and credit default swaps on various consumer plays (retailers, products, & services). Lastly, we saw that Philip Falcone was recently unveiled as a part of Forbes' billionaire list.

Taken from Google Finance,

Solutia is "a global manufacturer and marketer of a variety of chemical and engineered materials that are used in a range of consumer and industrial applications. The Company maintains a global infrastructure consisting of 25 manufacturing facilities, six technical centers and over 29 sales offices globally, including 14 facilities in the United States. The Company’s segments are Saflex, CPFilms and Technical Specialties."

Calpine is an "independent wholesale power generation company engaged in the ownership and operation of natural gas-fired and geothermal power plants in North America. The Company sells wholesale power, steam, capacity, renewable energy credits and ancillary services to its customers, including industrial companies, retail power providers, utilities, municipalities, independent electric system operators, marketers and others."

New York Times is "a diversified media company, including newspapers, Internet businesses, a radio station, investments in paper mills and other investments. The Company is organized in two segments: News Media Group and the About Group."

Donald Coxe: Basic Points April 2009 Market Commentary

Hot off our post with market strategist Don Coxe's 'Basic Points' newsletter for March, we're here with his April edition. If you're unfamiliar with Coxe, he's a noted market commentator and has a very large following due to the many good points he often brings up. Coxe is an agricultural bull and has additionally focused a lot on commodities. In fact, Coxe shares a lot of views with noted investor Jim Rogers (whose portfolio we've also covered on the blog here). We've also covered Coxe's recent question & answer session here if you want some more insight as to his thought process and investment theses.

The entire Basic Points presentation is presented below in slide-deck form, but for those of you who want a quick summary and the highlights, here's what you need to know:

Coxe still believes that commodities will be the true winners and will outperform on a relative basis. While he is bullish on the commods, he has been disappointed by the performance in gold due to the sales by the IMF, the strong dollar, and the banking crisis as there is a flight to safety. Coxe still feels that inflationary fears will return at some point, at which Gold will return to its solid position. He also mentions copper specifically, noting the massive run-up it has seen recently. And, he cautions investors from adding to base metals here, as the economy still has real problems ahead and these metals are due for a pullback. We here at Market Folly have highlighted this very issue of base metals as a leading indicator. We've said all along that copper is due for a pullback and it is what happens after that pullback that will truly tell us if the economy is beginning to show some signs of stabilization.

Coxe also cautions investors that they'll have plenty of opportunities to buy American equities and to not rush the process. His best advice is to slowly accumulate positions in the names you want to own when a bull market returns. The sudden "return of optimism" in the markets is premature by his accounts and we still have some problems to work off before we can truly recover. Along this line of thought, he warns investors from being enticed by long-term bonds and their steep yield curves. While these instruments may be havens of safety for now, those who avoid the yields now will benefit from performance later on down the road. This is along the lines of what Jim Rogers has said as well, as he wants to be short the long-term treasuries again at some point, which we noted when we summarized Rogers' recent portfolio. (Rogers also shares some of Coxe's other viewpoints, including his bullish prospects on agriculture). While Coxe is cautious on the economy in the near-term, he notes that when that recovery does take place, he is seeing signs that technology and commodities will be the new leaders.

In terms of specific sectors, Coxe also focuses in on refiners (and also the Oil Sands plays) as he feels the refiners can do well in the current environment where Americans are driving a little less. His argument for the oil sands is that you are essentially buying production of oil from the year 2020 at very cheap levels and they will make great long-term investments.

Overall, Coxe is sticking with many of his main investment theses and just elaborating on what he is seeing in the current market environment. And now to the actual slide deck of Coxe's April 2009 edition of Basic Points:

(RSS & Email readers may need to come to the blog to view the slide-deck)

Pershing Square's Bill Ackman Video Interview With Charlie Rose (From 4/24/09)

Bill Ackman recently sat down with Charlie Rose and here is the video of the entire interview. Rose's other guests in this chat include Andrew Ross Sorkin, Joseph Stiglitz, and more. (Email readers will have to come to the blog to view the video).


Monday, April 27, 2009

Technical Analysis & Charts: Long Term Bonds (TLT) & Shanghai Index (China)

If you're unfamiliar with technical analysis or just want to learn a little bit about it, here's a recommended reading list to get you started (technical analysis edition). In that post, we've identified some of the best books out there on charts and how to analyze price patterns. Also, for beginners, we recently posted up a free technical analysis tool that will do all the hard work for you and will tell you what the technicals are saying about any stock or commodity in this crazy current market. So, that way, you don't even need to know or understand technical analysis to see what the market action is telling us. Lastly, we've also posted up investor psychology illustrated, which shows how investors react during various periods in the market on a chart basis.

And, before a technicals versus fundamentals debate breaks out, we'd just like to state that we actively use and support both methodologies. We've found that a hybrid approach of fundamentals and technicals encompasses all schools of thought and truly shows the entire picture surrounding a stock/index. The fundamentals will tell you the "why" and the technicals will tell you the "how" and "when." Use the fundamentals to find the good stories and then use the technicals to identify when to get in and out of the name. While you don't necessarily have to believe in or use both, we'd say that it's highly beneficial to at least know what each methodology is saying.

Long Term Bonds/Treasuries (TLT)

So, with the necessary introductions out of the way, let's check out a few charts. Kevin has discovering some great patterns lately, and let's first look at the long term bond (treasuries) chart (TLT).

(click to enlarge)

As you'll see, there have been two distinct trading ranges in TLT over the past few months. Kevin argues that these consolidations often break out to the upside, as evidenced from the first trading range from September to December. TLT consolidated before breaking out to the upside. And, a similar multi-month consolidation has been occurring in the name. With the 200 day moving average acting as support, you could very well see a similar scenario play out. Last September, TLT hovered around that moving average and consolidated around support. This time around, however, things are much more dangerously close to breaking down. If TLT breaks through that 200 day moving average, things could get ugly.

We also want to touch on the correlation between the long term bond (treasuries) chart of TLT and the stock market in general (SPY). TLT and SPY have a loosely inverse relationship due to the 'flight to safety' status TLT has as an investment vehicle. When investors seek refuge from risk, they flock to vehicles like TLT. So, that massive breakout you see on the TLT chart in November/December coincides with the massive drop we saw in equity markets. When SPY tanks, TLT cranks up.

So, if you were to apply this relationship to the current TLT chart, this could be quite worrisome. If TLT does indeed breakout to the upside after a long period of correlation, that could very well mean that a new leg down is coming in equity markets. However, should this consolidation breakdown below the moving average and support levels, then equities could see a further rally. Either way, the consolidation in long term bonds (treasuries) tells us that a big move is coming. The question is, in which direction? While we don't yet know the answer, the charts will tell all and it will eventually reveal itself. One thing's for certain though: whatever TLT does, the equity markets will do the opposite. So, wait for a breakout in either direction of the trading range box. You can then play TLT long or short depending on the action, while playing SPY in the inverse direction of the action in TLT.

Shanghai Index / China

Secondly, we also wanted to highlight a very interesting pattern that Kevin noticed recently regarding the Shanghai Index. He has pointed out that every two months or so, Shanhai has essentially been topping out and selling off. He's denoted the chart below with this unique pattern.

(click to enlarge)

We also wanted to point out a few other things we're noticing. In coordination with the time-lapse selloff every two months or so, the Shanghai Index is simply selling off when it reaches an overbought condition on the stochastics (the 2nd graph on the bottom). Whenever the stochastics hit a reading of 80 or higher, it's time to put it on your watchlists. Once that 80 barrier is breached back to the downside, the selloff starts.

Kevin has noted that he thinks the index will touch its 50 day moving average in the near term and we'd agree with that for 2 reasons. Firstly, as he's shown, the overbought condition every 2 months or so leads to short-term selloffs and they are confirmed by the stochastics as well. We see the 50 day moving average as a logical target due to the fact that moving averages typically act as support. Lastly, you'll notice that Shanghai has been in a nice uptrend every since November, climbing the stairs slow and steady up to the recent highs in April. This uptrend currently is around the 2300 level, which coincidentally is right in line with the 50 day moving average. As the stochastics turn from overbought territory, look for the Shanghai index to head down to the 50 day moving average where it should find some support there to continue its uptrend.

But, as always with this crazy market, be nimble. The trend is your friend... until it's not. While we'd suspect there to be solid support at that level, crazier things have happened in this market. If it breaks this moving average and uptrend, then shorting would be prudent.

Clarium Capital Investor Letter: Macro Framework For Equity Valuation

This next investor letter from Peter Thiel's global macro hedge fund Clarium Capital is an addendum to the letter we posted last week. In their previous letter, Clarium outlined market commentary. In this letter, they address 'A Macro Framework for Equity Valuation.' In this unique piece, they examine a valuation derived from two analyses. They have first examined the fundamental process derived from Benjamin Graham's book Security Analysis (a staple in our recommended reading list). Secondly, they determine whether a given year is experiencing "positive liquidity" or "negative liquidity" (a concept explained in the letter).

It's a very fascinating read and we highly recommend you digest their commentary, both in the form of their investor letter and the addendum listed below. We definitely consider Clarium to be at the forefront of global macro thinking, especially in a 'new generational' sense. RSS & Email readers may need to come to the blog to view the embedded document.

In the past, we've covered Clarium's (scarce) equity portfolio, as well as their February 2009 performance numbers in depth. Without further ado, the letter:

Chart Watchlist (Technical Analysis)

Wanted to post up a nice video for those of you interested in technical analysis. The following video is a weekly watchlist of various stocks that look interesting on the charts, courtesy of for the week of 4/27/09.

The video highlights trading ideas for various stocks from a technical perspective. It looks at breakouts, breakdowns, support/resistance, as well as various patterns such as ascending triangles, etc. It definitely highlights some stocks to keep an eye on for the week for those who like to trade on technicals.

RSS & Email readers may need to come to the blog to view the video. Enjoy:

Friday, April 24, 2009

Custom Hedge Fund Portfolio Created With Alphaclone: Part 2

Ok, so we're back with the second installment of our custom Market Folly hedge fund portfolio created with Alphaclone. Last week, we unveiled our special portfolio that is a unique blend of 3 separate hedge funds: Eric Mindich's Eton Park Capital, Seth Klarman's Baupost Group, & Shumway Capital Partners (Chris Shumway). After a month straight of creating various portfolios, we finally found the right combination. The portfolio we created last week looks at the top 5 holdings from each of those hedge funds (equal-weighted) and meshes them into one portfolio of 15 holdings. We ran the portfolio with a 50% S&P500 hedge (which can be achieved by shorting SPY). When all was said and done, we saw that since August 2002, our Market Folly 'Top Holdings' portfolio has seen Alpha of 15.5 and a total return of 194.5% versus the S&P500 return of only 6.6%. It also has seen annualized returns of 17% versus the S&P annualized of 0.8%. As you can see, that's some solid performance. We created it all with Alphaclone, which you can get currently with a 50% discount. We use it every single day and highly recommend it if you're interested in creating portfolios based on hedge fund holdings.

This week, we're going to examine a portfolio based on the top 5 'best ideas' of each of those hedge funds. So, before we begin, make sure you check out the introduction to Alphaclone, our post on the Tiger Cub portfolio, as well as our previous post on our custom Market Folly clone.

The Market Folly 'Best Ideas' Portfolio

This week we've gone with a slightly different strategy. One of the other options Alphaclone has is it lets you run a portfolio based off a hedge fund manager's "best ideas." The rules associated with this clone strategy are:
1. Buy manager(s) top “new buys” as determined by the market value of the holdings.
2. Sell when manager(s) reports holding as sell out
3. Sell if the number of shares held by a manager decreases by 50% or more from the original amount.
4. Limit clone portfolio to no more than 50 holdings selected first on the basis of whether they are a new buy and next based on the % Portfolio of the holding.

So, we've taken the best ideas of the 3 hedge funds in our portfolio group to create a custom portfolio. You have the option to select either the top 1, 2, 3, or 5 best ideas from each fund. In our case, we've selected the top 5 best ideas from each hedge fund. And, as we mentioned earlier, we also set it up with a 50% S&P hedge, as we always like to run our portfolios hedged. Here's what the inputs look like on the Alphaclone screen:

(click to enlarge)

As we've touched on in previous posts on Alphaclone, you can configure your funds in numerous different ways, so it's totally customizable.

The Performance

Now, let's take a look at how the fund has performed over time. Overall, the results are quite impressive. Since August 2002, the Market Folly 'Best Ideas' Portfolio has seen a total return of 128.1% versus the S&P500 return of only 8.2%. The graph below shows our portfolio in green and the S&P in blue.

(click to enlarge)

Our portfolio has also seen an annualized return of 13.5% versus only 1.2% annualized for the S&P. Yet again, we've achieved some nice outperformance. And, we've done so with 11.8 Alpha, 0.8 Beta, and 0.6 correlation to the index. Our portfolio has achieved these results with a Sharpe Ratio of 0.5 (versus S&P -0.2) and has also seen less drawdown than the S&P. However, we did see slightly more volatility than the S&P. Overall, the portfolio is definitely a success and has outperformed the S&P. Let's also take a look at our year by year performance, as Alphaclone breaks it all down for us:

(click to enlarge)

As you can see, our portfolio is massively outperforming the S&P500 thus far in 2009. We have seen a 26.7% year to date return versus the S&P return of -5.8%. Additionally, you'll note that in both bear markets of 2002 and 2008, our portfolio outperformed the index by a wide margin. Out of 8 years, our clone has only underperformed in 2 of those years. And, the massive outperformance in the other 6 years more than makes up for that slight hiccup. Alphaclone gives you a great performance breakdown and gives you the ability to export all the data to Excel as well. After all is said and done, our portfolio has a total return of over 128% versus S&P's return of only 8.2%. That is outperformance over the long term at its finest.

The Holdings

Lastly, let's take a quick look at what our 'best ideas' holds in its portfolio that is currently achieving such massive outperformance. Remember, Alphaclone automatically rebalances the portfolio for you each quarter and tells you which securities to buy and sell (if you wished to mimic this with real money). As you'll see from the tabs on the screenshot below, you can see the recent transactions, as well as check out what the portfolio held in previous quarters. Alphaclone perfectly backtests everything based on the SEC filings that we like to cover on Market Folly. Without further ado, the holdings:

(click to enlarge)

Make sure to ignore the "% of Portfolio" column on the screenshot above. That column references how big a specific position is for its owner's hedge fund portfolio. So, when you see that Hansen Natural (HANS) makes up 10.3% of the portfolio... it means it is 10% of Eton Park's portfolio. All of our positions in the portfolio we've customized are equal-weighted. So, each of our holdings would get a 6.66% allocation. As you can see, our portfolio holds a wide variety of names and has severely outperformed the S&P thus far in 2009. It will be interesting to examine our portfolio again once Alphaclone automatically rebalances the holdings in May. We'll be posting an update once that happens.

The Comparison: 'Top Holdings' Versus 'Best Ideas'

In our custom Market Folly portfolios, we've created two different clones with Alphaclone that have both outperformed the S&P by a huge margin. However, one of our clones was even more successful than the other. Drumroll please: And the winner is......... The Top Holdings Portfolio.

If you compare the portfolios side by side, here's what you get:

1. The 'Top Holdings' Portfolio: Total return of 194.5% since August 2002; Annualized return of 17%
2. The 'Best Ideas' Portfolio: Total return of 128.1% since August 2002; Annualized return of 13.5%
3. S&P500: Total return of 5.6% since August 2002; Annualized return of 0.8%

While both of our portfolios easily outperform the S&P500 over the long term, the 'top holdings' portfolio goes above and beyond. As such, it is currently our selection for our custom Market Folly portfolio that we will be tracking on the blog from here on out. With the customization of Alphaclone, we were able to create thousands of custom portfolios and we've finally found the one that dominates.


Hopefully you've enjoyed walking through our journey of creating a custom portfolio with Alphaclone. (We're starting to wonder if we're addicted to this tool since we use it everyday). Alphaclone is currently 50% off, so definitely check it out while the offer lasts. It is truly customizable and you'll be hooked for hours once you start to create portfolios. And, as illustrated above, you can come up with some massively outperforming strategies that you can put real money behind.

If you've missed our previous posts on hedge fund portfolio creation, check out our introduction to Alphaclone, our fund of funds (the Tiger Cub clone), and our custom Market Folly portfolio we created last week. If you have any questions or comments, feel free to mention them below or drop us an email.

Stay tuned, as we're going to start a contest in the near future to see who can customize the most dominant portfolio with Alphaclone. We want to find out which readers can take down our total return of 194.5% since mid-2002 and an annualized return of 17% with a custom group of funds. Be on the lookout and get ready to bring it on!

*Please note that all our Market Folly portfolios have a filter set at the very beginning of the Alphaclone custom portfolio process where we exclude positions with a market cap greater than $50 billion. We still allow all sectors and all other market caps. If you wish to replicate our portfolio with Alphaclone, just make sure when you create your custom fund group that you 'uncheck' the "greater than $50 billion market cap" box at the beginning, so that those positions are excluded from the portfolio. We did this because we found that slightly better performance could be achieved when enabling this filter.

Bill Ackman Quote (Pershing Square Capital)

After getting his ass handed to him thus far in his Target (TGT) position, Ackman had these instrospective words of wisdom which we wanted to share as they can be applied to any investor in the world. Ackman said,

“The investment business is about being confident enough to know that you’re right and everyone else is wrong. Yet you have to be humble enough that you recognize when you’ve made a mistake. Earlier in my career, I think I had the confidence part pretty solid. But the humbleness part I had to learn.’’

What We're Reading (4/24/09)

2009 Alternative Asset Report (Hedge Funds) [nick gogerty]

Profile on Pershing Square's Bill Ackman [Portfolio]

Distressed Debt Investing Concept - General Growth Properties (GGP) and Substantive Consolidation [Distressed Debt Investing]

Rebalancing leveraged ETFs each day [Daily Options Report]

StockTwits launches premium blogs of great traders UpsideTrader & Alphatrends [StockTwits]

Why Hedge Funds are Not 'Too Big to Fail' [hedgefundblogman]

Thursday, April 23, 2009

Free Technical Analysis & Stock Charts

We've been receiving a lot of questions about technical analysis lately and so I wanted to point out a great resource for people who wanted some quick technical analysis for free. Some people just look at a chart and have no idea what all the lines mean or what they're supposed to be looking for. And, I must say, I was the same way when I first started to include charts as a tool in my investment arsenal. And, I'm writing this because there's a good solution for those of you who are just learning about it but want to know what the technicals are saying about a particular stock right now. A great place to start is to learn about trends and how they play out over time.

INO has a free technical analysis tool where you can just enter the ticker symbol and your email address and receive an analysis of the stockin your inbox. And, you can do this for things other than stocks by entering "crude oil" or "gold", etc. So, definitely check that out if you want a quick glance at how some equities are shaping up technically in the current market.

Below is just one of the samples of what they will send you for your quick free chart analysis. They'll show you the short-term trend, the longer term trend, as well as provide commentary on the current technical setup. They've also devised a numerical score based on a weighted formula from their Smart Scan chart analysis. Here's an older free technical analysis email covering Wells Fargo (WFC) at the beginning of February 2009:

(click to enlarge)

You'll notice that their technicals implied that the rally in WFC shares in January was only a short-term trend in the context of a larger downward trend. And, as such, shares of WFC dropped from $18 to $12 in February. This free technical analysis tool definitely helps you see the near and long term trends in a stock. So, just wanted to share this free resource for those who are curious about a stock's technicals in this current market.

Also, if you want to learn more about technical analysis and chartology, check out some of the books in our recommended reading list.

Portfolio Update on Philip Falcone's Harbinger Capital Partners (13D & Form 4)

Philip Falcone's hedge fund Harbinger Capital Partners made numerous SEC filings yesterday after the close and so we wanted to cover those really quick. Firstly, Harbinger has filed an amended 13D on TerreStar (TSTR) due to activity on April 20th, 2009. They are now showing a 48.6% ownership stake in TSTR with 88,855,174 shares owned in aggregate. Back in their 13F filing detailing positions from December 31st, 2008, Harbinger had previously owned 26,954,794 shares. So, over the past few months they've definitely ramped up their position. You can view Harbinger's entire portfolio here.

Secondly, Harbinger has also filed an amended 13D and a Form 4 on Solutia (SOA). They are showing a 31.9% ownership stake in SOA. The Form 4 details that they sold 2,031,700 shares on April 20th & 21st at prices of $2.96, $3, & $3.07 per share.

Lastly, we also recently noted that they have been selling some of their Cliffs Resources (CLF) position. Harbinger has seen recent portfolio performance of +0.74% for March 2009, and +4.06% year to date as of that timeframe, as referenced in our detail of hedge fund performances. They've been quite active with filings and we'll continue to monitor them going forwards.

Harbinger Capital Partners is a $13 Billion firm ran by Philip Falcone. Harbinger was started in 2000 with seed capital from Harbert Management ($25 million). And, just recently, we've learned that Falcone is buying out Harbert to be the owner of the firm. Falcone made a name for himself in 2007 when he started shorting subprime mortgages and returned 117%. He focuses on intensive credit research, on bankruptcies and proxy fights, and was previously involved with high yield debt trading. Lately, he's been focused on equities it seems, but Harbinger's new fund will redirect his focus back to his roots.

At one point during 2008, they were up as much as 42%. But, their fortunes turned as their Offshore fund finished -22.7% for the year as noted in our 2008 hedge fund performances list. One position that treated them nicely was their short of Wachovia (WB), which we detailed here. Back in September, in a letter to investors, Falcone had assured investors that Harbinger was adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side).

In Harbinger's latest letter to investors, they mentioned that they had covered their shorts on metal producers and financials and also got out of some credit default swaps. While they have been winding down equity positions, they are sticking with their major stakes in Calpine (CPN) and the New York Times (NYT). Falcone also mentioned that they had added trade claims on an energy company and credit default swaps on various consumer plays (retailers, products, & services). Lastly, we saw that Philip Falcone was recently unveiled as a part of Forbes' billionaire list.

Taken from Google Finance,

TerreStar is "in the integrated satellite wireless communications business through its ownership of TerreStar Networks and TerreStar Global. TerreStar Networks is the Company’s principal operating entity. In cooperation with its Canadian partner, 4371585 Canada, it plans to launch wireless communications system to provide mobile coverage throughout the United States and Canada using small, lightweight handsets similar to mobile devices. The Company’s core network strategy is based on three elements: the space segment; the terrestrial network; and universal chipset architecture to be integrated into a range of mobile devices."

Solutia is "a global manufacturer and marketer of a variety of chemical and engineered materials that are used in a range of consumer and industrial applications. The Company maintains a global infrastructure consisting of 25 manufacturing facilities, six technical centers and over 29 sales offices globally, including 14 facilities in the United States. The Company’s segments are Saflex, CPFilms and Technical Specialties."

Alpha's Hedge Fund Rankings 2009

Alpha is out with their annual hedge fund rankings and they've compiled a list of the top 100 hedge funds by assets and the combined hedge funds on the list totaled $1.03 trillion in assets. Ray Dalio's Bridgewater Associates is the top of the pack with $38.6 billion under management. In 2008, they were the #2 fund on the list and they have since passed JP Morgan to garner the top spot. (JP Morgan notably lost ground due to sluggish performance & redemptions at their Highbridge Capital unit). Although we haven't covered Bridgewater's portfolio, we've covered some of Ray's market thoughts previously. Their Pure Alpha fund finished up 8.7% for 2008. Previously, we've also covered Alpha's 2008 rankings in depth if you wish to compare years.

For this year's rankings, they slightly changed the way they indexed their rankings by using firm and fund assets from January 1st, rather than the December 31st data they had previously used. In order to qualify for the top 100 hedge funds in the world, a firm needed at least $4 billion to be considered. In 2008, this threshold was around $6.25 billion. Clearly the decrease in assets under management overall reflects the severity of the market in 2008.

Top 10 for 2009

Here are the top 10 hedge funds, with links leading to that specific fund's portfolio holdings:

  1. Bridgewater Associates (Ray Dalio) with $38,600 (in millions)
  2. JPMorgan with $32,893 (in millions)
  3. Paulson & Co (John Paulson) with $29,000 (in millions)
  4. D.E. Shaw & Co (David E Shaw) with $28,600 (in millions)
  5. Brevan Howard Asset Management with $26,840 (in millions)
  6. Man Investments with $24,400 (in millions)
  7. Och-Ziff Capital Management with $22,100 (in millions)
  8. Soros Fund Management (George Soros) with $21,000 (in millions)
  9. Goldman Sachs with $20,585 (in millions)
  10. Tie: Farallon Capital Management (Thomas Steyer) & Renaissance Technologies (Jim Simons) both with $20,000 (in millions)

Undoubtedly, you can find many of the hedge fund managers listed above on Forbes' billionaire list. Not only do the funds above garner the most assets under management, but they receive some of the highest compensation around for their production. We've covered many of the hedge funds portfolios listed in the top 10 above. Additionally, practically all of the funds we cover in aggregate are in the top 100.

Moving on Up

A noted value player, Seth Klarman's Baupost Group benefited from 2008 the most in terms of rankings. Baupost's assets grew over the past year and find themselves as the hedge fund to make the biggest leap between years. Baupost was 49th in 2008 and now sits in 13th for 2009. This past year was Klarman's first losing year as his funds were down around 7 to 12% but had practically no redemptions. You can view their portfolio holdings here. Paulson & Co was a notable mover on the list as well, as they jumped from 8th place in 2008 to 3rd place in 2009 (their portfolio here). London based Brevan Howard also benefited as they moved from number 11 in 2008 up to number 5 in 2009. Their 2008 performance was quite solid as their main fund finished up 20.4%.

Sliding Down

In terms of funds that fell in the rankings, Thomas Steyer's Farallon Capital Management definitely fits the bill. His fund lost nearly 45% of their assets due to redemptions and poor performance. Their funds were -24% on average for 2008 and you can see where their pain came from by checking out their portfolio holdings. Another notable mover not listed in the top 10 would be global macro giant Bruce Kovner's Caxton Associates. Last year, Caxton was number 16 on the list. However, due to loss of assets they are now number 51 on the 2009 rankings.

Other Notes

Stephen Mandel's Lone Pine Capital was ranked 17th in 2008 and comes in 21st for 2009. Their assets were down 28% but only due to poor performance, not really because of redemptions. You can check out the comprehensive list of hedge fund portfolios we cover here. To see how some of these hedge funds are performing, you can find their latest numbers in our performance numbers list. And, of course, head to Alpha if you wish to purchase the full list of rankings.

Sprott Asset Management (Eric Sprott) Older Special Report

Great commentary and special report from Eric Sprott's Sprott Asset Management that is older yet very relevant: Move over Adam Smith: The Visible Hand of Uncle Sam. Many readers have requested that we start covering them, and we are gladly obliging, as you will see information on them from here on out. Since they are Canadian based and we are American based (and hence focus mainly on American funds), we would gladly welcome any information or updates our Canadian readers receive on Sprott. So, feel free to share with us. We've been assembling a good amount of information and content, but we surely have missed a few things. Without further ado, courtesy of Zero Hedge. (RSS & Email readers may need to come to the blog to read it).

Wednesday, April 22, 2009

Barron's Discount: 40% Off

The deals on these financial publications just keep on rolling in. Here is yet another deal that we wanted to share with readers: 40% off Barron's. In addition to the big discount, you also get 4 weeks free as an added bonus.

As we've mentioned in some of our articles before, the newspaper industry is definitely rolling out some deals in the recession. Don't forget that you can also get the Wall Street Journal for 75% off too.


Daniel Loeb's Hedge Fund Third Point LLC: 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.

Next up, we have Daniel Loeb's Third Point LLC. Third Point is a $2 billion activist and value based hedge fund. Specifically, they deem themselves to be "event driven, value oriented investors." Loeb founded the firm back in 1995 with $3.3 million in seed capital and is still running the show these days. While Third Point is technically an activist fund, Loeb often has numerous passive investments as well. Loeb himself is quite well known for his searing and critical letters to management of various companies. Third Point has seen annual returns averaging over 15% since inception (including the crazy year that was 2008), a Sharpe Ratio of 0.9, and a correlation to the S&P500 of 0.4. In terms of recent portfolio performance, Third Point was -3% for March, and -1.44% year to date as of then, according to our list of March hedge fund numbers. As per their recent April investor update, we saw that they were net long healthcare and utilities, while being heavily net short consumer.

If you want a more historical perspective on Third Point's portfolio, you can check out their holdings from Q3 2008, the quarter prior to the positions detailed below. We track these funds on a quarter by quarter basis to establish their longer-term moves. Slight disclaimer: Third Point has been pretty active with 13D & 13G filings in the time period that has elapsed from this filing to the present. As such, certain positions in their portfolio have been updated and we will be covering all of those more recent moves in another post tomorrow, to distinguish the moves from the list of their entire portfolio 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):
Gold (GLD)
Wachovia (WB)
Liberty Acquisition (LIA)
Potash (POT)
Trian Acquisition (TUX)
Triplecrown (TCW)
Sapphire Industrials (FYR)
Global Brands (GQN)
Guaranty Financial (GFG)
Global Consumer (GHC)
Hicks Acquisition (TOH)
LifeTime Fitness (LTM)

Some Increased Positions (A few positions they already owned but added shares to)
PHH (PHH): Increased by 160%
UST (UST)): Increased by 60%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Vanguard Natural Resources (VNR): Reduced by 65%
Rohm & Haas (ROH): Reduced by 64%
CoreMark Holding (CORE): Reduced by 37%
Telephone & Data (TDS): Reduced by 32%
Energy XXI (EXXI): Reduced by 32%
Teradata (TDC): Reduced by 30%
Txco Resources (TXCO): Reduced by 27%
Victory Acquisitions (VRY-WS): Reduced by 24%
Maguire Properties (MPG): Reduced by 23%
Phoenix Companies (PNX): Reduced by 22%
Dineequity (DIN): Reduced by 20%
Epicor Software (EPIC): Reduced by 18%

Removed Positions (Positions they sold out of completely)
Dr Pepper Snapple (DPS)
Plains Exploration (PXP)
Lorillard (LO)
Leap Wireless (LEAP)
Time Warner (TWX)
Tibco (TIBX)
Anheuser Busch (BUD)
American Eagle Outfitters (AEO)
Liberty Acquisition (LIA-U)
Thompson Creek (TC)
Orient Express Hotels (OEH)
Meadwestvaco (MWV)
CVS Caremark (CVS)
Hewlett Packard (HPQ)
Covidien (COV)
Target (TGT)
Flow (FLOW)
Enpro (NPO)
Verigy (VRGY)
GLG Partners (GLG)
Global brands (GQN-U)
Global Consumer (GHC-U)
Trian Acquisition (TUX-U)
Augusta (AZC)
Vantage Energy (VTG)
Heckmann (HEK-WS)
OSI Systems (OSIS)
Heckmann (HEK)
Emcore (EMKR)

Top 15 Holdings (by % of portfolio)

  1. SPDR Gold Trust (GLD): 9.73% of portfolio
  2. Wachovia (WB): 8.66% of portfolio
  3. PHH Corp (PHH): 8.29% of portfolio
  4. Exco Resources (XCO): 8.15% of portfolio
  5. Liberty Acquisition Holdings (LIA): 7.2% of portfolio
  6. Potash (POT): 5.5% of portfolio
  7. Teradata (TDC): 5.2% of portfolio
  8. SPDR S&P 500 (SPY): 5.17% of portfolio
  9. Telephone & Data Systems (TDS): 3.8% of portfolio
  10. UST (UST): 3.5% of portfolio
  11. Victory Acquisition (VRY): 3.17% of portfolio
  12. Trian Acquisition (TUX): 3% of portfolio
  13. Nabi Biopharma (NABI): 2.9% of portfolio
  14. Phoenix Companies (PNX): 2.9% of portfolio
  15. Triplecrown (RCW): 2.7% of portfolio

Like so many other hedge funds, Third Point's top holding is Gold (via GLD), and they brought it on as a new holding last quarter. As you can tell, Third Point's portfolio is slightly more concentrated than many other hedge funds, with a large percentage of their portfolio in their top 6 or 7 holdings. Some of their notable sales include Dr Pepper, Plains Exporation, and Lorillard, all which were at one point greater than a 4.5% position for Third Point; they no longer own those names. We would like to make special note of the current list of Third Point's holdings seen above. Since filing this 13F, they have been busy filing various 13D's and 13G's with the SEC, detailing changes to some of their positions. As such, we will cover these more recent moves in a separate post to which we can compare the holdings. Assets from the collective long US equity, options, and note holdings were $1.7 billion last quarter and were $799 million this quarter. 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:

We cover a new hedge fund each day and you can see the complete list of hedge fund portfolios here.

Hedge Funds: March Redemptions & Mid-April Performance Numbers

We wanted to touch on two quick data points really quickly. Firstly, is out saying that Hedge Fund assets only fell by 1% in March 2009. This is a mix of net redemptions of around 3% and a performance of 2% for the same month. As we've pointed out before, this is still a pretty significant number, but overall, the redemption wave is decelerating a little bit, rather than accelerating. We have postulated numerous times that October and November was the major splash in the pool and that various ripples will be felt for the next year or two until the industry stabilizes.

Secondly, Here's a quick look at how some major hedge funds are performing midway through April 2009, courtesy of our friends over at Zero Hedge.

(click to enlarge)

Keep in mind that we've covered the portfolios of numerous hedge funds listed above. So, if you're curious as to what many of those funds are holding, check out our cumulative list of hedge fund portfolio coverage.

And then we also wanted to toss in a few other interesting pieces. As of 4/17/09, here is the Hedge Fund Performance Review (in downloadable .pdf format) courtesy of Dealbreaker. Lastly, we covered the March 2009 performance figures in a previous post as well if you've missed that. Hedge Fund land marches on.