John Griffin's Blue Ridge Capital Likes Microsoft (MSFT): 13F Filing Q1 2009 ~ market folly

Wednesday, May 27, 2009

John Griffin's Blue Ridge Capital Likes Microsoft (MSFT): 13F Filing Q1 2009

This is the 1st Quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings series preface.

Next up, we have John Griffin's Blue Ridge Capital. Now, Griffin is similar to Andreas Halvorsen of Viking Global and Stephen Mandel at Lone Pine Capital in that they are all 'Tiger Cubs' (pupils of Julian Robertson during their time at Tiger Management). Griffin though, is more well known because he was Julian Robertson's right hand man. So, needless to say, he knows his stuff.

Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems. Do note that the 13F filing only requires funds to disclose long positions (unless they are short via puts, we can see those). In the past, we have, however, gotten one sneak peek at what Blue Ridge has been shorting. Both Griffin at Blue Ridge and Lee Ainslie over at Maverick Capital like to effectively hedge with a solid balance of both long and short positions (like a true hedge fund... not like some of the crazy funds these days that aren't truly hedged).

Recently, we featured a multi-post series of readings recommended by Blue Ridge Capital. Their reading list is expansive and comprehensive, as it is broken down into four categories. We covered their lists of:

- Behavioral Finance recommendations
- Analytical recommendations
- Economics recommendations
- Historical/Biographical recommendations

We highly suggest checking out their suggestions as these lists are a great resource from a prominent and successful hedge fund.

John Griffin ahas numerous holdings in common with his mentor and ex-Tiger Management founder Julian Robertson. (Robertson has owned MA, V, AAPL, and MSFT as well). Griffin attended the University of Virginia for undergrad and received his MBA from Stanford. For more on Griffin you can check out our post of Tiger Cub biographies.

The following were Blue Ridge's long equity, note, and options holdings as of March 31st, 2009 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):
Range Resources (RRC)
Vale (RIO)
S&P500 Index ETF (SPY) Calls
Vornado Realty Trust (VNO)
Petrohawk (HK)
NovaGold Resources (NG)
Apple (AAPL)
RenaissanceRe (RNR)
Harley Davidson (HOG)
Whole Foods Market (WFMI)
Axis Capital (AXS)

Some Increased Positions (A few positions they already owned but added shares to)
General Growth Properties (GGP - now GGWPQ): Increased by 310%
Visa (V): Increased by 227%
Monsanto (MON): Increased by 194%
Google (GOOG): Increased by 191%
Target (TGT): Increased by 178%
Thermo Fisher Scientific (TMO): Increased by 160%
Microsoft (MSFT): Increased by 88%
Dell (DELL): Increased by 78%
Crown Castle (CCI): Increased by 77%
Exterran Holdings (EXH): Increased by 76%
Blackrock (BLK): Increased by 67%
Mastercard (MA): Increased by 34%
Millipore (MIL): Increased by 23%
National Oilwell Varco (NOV): Increased by 9%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Agnico Eagle Mines (AEM): Reduced by 53%
Netflix (NFLX): Reduced by 47%
Yamana Gold (AUY): Reduced by 38%
Berkshire Hathaway (BRK-A): Reduced by 36%
Goldcorp (GG): Reduced by 29%
Newmont Mining (NEM): Reduced by 28%
Petroleo Brasileiro (PBR): Reduced by 26%
Broadridge Financial (BR): Reduced by 23%

Removed Positions (Positions they sold out of completely)
American Express (AXP)
XTO Energy (XTO)
SPDR Gold Trust (GLD)
Gold Miners ETF (GDX)
Grupo Televisa (TV)
Genentech (DNA)
Valero (VLO)
Marathon Oil (MRO)
Aeroportuario del Pacifico (PAC)
iShares Mexico ETF (EWW)
Compton Petroleum (CMZ)
EOG Resources (EOG)

Top 15 Holdings (by % of portfolio)

  1. Microsoft (MSFT): 8.68% of portfolio
  2. Mastercard (MA): 6% of portfolio
  3. S&P500 Index etf (SPY) Calls: 5.82% of portfolio
  4. National Oilwell Varco (NOV): 4.94% of portfolio
  5. Amazon (AMZN): 4.9% of portfolio
  6. Millipore (MIL): 4.88% of portfolio
  7. Monsanto (MON): 4.5% of portfolio
  8. Visa (V): 4.45% of portfolio
  9. Vale (RIO): 3.8% of portfolio
  10. Amgen (AMGN): 3.45% of portfolio
  11. Thermo Fisher Scientific (TMO): 3.3% of portfolio
  12. Apple (AAPL): 2.76% of portfolio
  13. Covanta (CVA): 2.59% of portfolio
  14. Target (TGT): 2.5% of portfolio
  15. Berkshire Hathaway (BRK-A): 2.47% of portfolio

There are a few major themes running through Blue Ridge's portfolio. Firstly, you'll notice the large presence of technology. John Griffin substantially boosted his holdings in Microsoft and Google, and started a new stake in Apple again (having owned the name in the past). Microsoft is by far his favorite play though, as it sits as their top holding. Also, while they are not technically technology plays, Mastercard and Visa's payment processing technology obviously has caught Griffin's eye as he now holds them as his 2nd and 8th largest holdings, respectively. These two names are featured quite prominently in numerous hedge fund portfolios, including many other Tiger Cub managers.

Secondly, we also noticed that Griffin was selling gold miner shares and sold completely out of his gold (GLD). This is interesting to note given the fact that we have seen numerous other hedge fund managers load up on gold and gold miners over the past 2 quarters. (Most notably David Einhorn, Eric Mindich, and Stephen Mandel, among others). As they say, 'there is always the other side of the trade'. And, it appears as if Blue Ridge was merely hiding out in gold until the storm passed, a tactic also used by Dan Loeb's Third Point LLC.

We also continue to notice the presence of Covanta (CVA), Monsanto (MON), and Millipore (MIL) in Blue Ridge's portfolio. These positions have been some of their core holdings for numerous quarters and it's safe to say they are longer term plays. They just boosted their stake in Monsanto this time around as well. Blue Ridge filed a 13G on Millipore (MIL) back in October of 2008 and continued to add to the position this quarter. However, they did get substantially reduce one of their other previously core positions. Last time around, Berkshire Hathaway was Blue Ridge's 3rd largest holding. In the first quarter of 2009 though, BRK-A is barely in their top-15.

Lastly, we saw one more thing that intrigued us. While they are not a huge chunk of their portfolio, Blue Ridge did indeed pick up some commercial real estate plays in Vornado (VNO) and General Growth (GGWPQ). Their VNO position is by far the larger of the two. Readers will be familiar with General Growth because another hedge fund titan, Bill Ackman, has a large position in GGP (new symbol: GGWPQ). So, they must see some value in these names.

Assets from the collective holdings reported to the SEC via 13F filing were $4.3 billion this quarter compared to $3.3 billion last quarter. So, overall, they were putting a lot more capital to work on the long side this time around. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. Check back each day as we cover new fund portfolios. We've already covered Andreas Halvorsen's Viking Global, John Paulson's hedge fund Paulson & Co, Stephen Mandel's Lone Pine Capital, and Eric Mindich's Eton Park Capital.

blog comments powered by Disqus