Bret Barakett's Tremblant Capital Group Bets On Technology: 13F Filing Q1 2009 ~ market folly

Wednesday, June 10, 2009

Bret Barakett's Tremblant Capital Group Bets On Technology: 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 Tremblant Capital Group. Tremblant is a $3 billion hedge fund based in New York and is run by Bret Barakett, who is a former portfolio manager at Moore Capital Management (the hedge fund run by the great Louis Bacon, whom we also track). If the last name of 'Barakett' sounds familiar, its because his brother, Timothy Barakett, manages fellow hedge fund Atticus Capital, whose portfolio we recently covered. Taken from their site, Tremblant Capital Group's objective is "to achieve superior risk adjust returns for our investors through our focused and disciplined investment process." Barakett has worked with some of the best in the macro game and obviously is quite knowledgeable himself. But, as we noted back in September, Tremblant had a rough 2008.

In recent action, Tremblant filed a 13G on Eclipsys (ECLP) in mid April. Over the course of last year, they disclosed a 5.2% stake in Advanced Medical Optics (EYE). Additionally, they previously filed a 13G filing on Chipotle (CMG), where they had been adding to their large position. We'll check out how their portfolio looks nowadays below.

The following were Tremblant'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):
Procter & Gamble (PG), Apple (AAPL) Calls, Visa (V) Puts, Apple (AAPL) Puts, Mastercard (MA) Puts, Qualcomm (QCOM) Puts, J Crew (JCG), Icon (ICLR), Canadian Natural Resources (CNQ). Amerisource Bergen (ABC), Charles Schwab (SCHW), Research in Motion (RIMM) Puts, Omnicare (OCR) Calls, Intuitive Surgical (ISRG) Calls, Las Vegas Sands (LVS) Calls, Visa (V) Calls, Green Mountain Coffee (GMCR) Puts, Sohu (SOHU) Calls, Sina (SINA) Calls, Fred (FRED) Calls, Red Hat (RHT) Puts, Baidu (BIDU) Puts, Covance (CVD), Bankrate (RATE), Bankrate (RATE) Puts, Factset (FDS) Calls, Cheesecake Factory (CAKE) Calls, Equinix (EQIX), MGM Mirage (MGM) Calls, Liberty Media (LMDIA)

Some Increased Positions (A few positions they already owned but added shares to)
Pharmaceutical Product Development (PPDI): Increased by 2,358% - position was tiny before and still is small relative to their overall portfolio
Google (GOOG): Increased by 338%
Union Pacific (UNP): Increased by 231%
Hologic (HOLX): Increased by 145%
DirecTV (DTV): Increased by 127%
Hologic (HOLX) Calls: Increased by 100%
Costco (COST): Increased by 95.7%
ThermoFisher Scientific (TMO): Increased by 83%
Mckesson (MCK) Calls: Increased by 78%
Research in Motion (RIMM) Calls: Increased by 65.9%
Molson Coors (TAP): Increased by 63%
Cheesecake Factory (CAKE): Increased by 63%
Eclipsys (ECLP): Increased by 41%
Chipotle (CMG-B): Increased by 33.8%
Walmart (WMT): Increased by 28.7%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Green Mountain Coffee Roasters (GMCR): Reduced by 60%
Apple (AAPL): Reduced by 35%
Mastercard (MA): Reduced by 28%
CVS Caremark (CVS) Calls: Reduced by 24%
Red Hat (RHT): Reduced by 23%
Visa (V): Reduced by 22%
Research in Motion (RIMM): Reduced by 18%

Removed Positions (Positions they sold out of completely)
Qualcomm (QCOM) Calls, Mckesson (MCK), Corning (GLW) Calls, NYSE Euronext (NYX) Calls, Life Tech (LIFE), Energizer (ENR) Calls, TW Telecom (TWTC), Calls, Advanced Medical Optics (EYE) Calls, Dell (DELL), United Health (UNH) Calls, CVS Caremark (CVS), Pharmanet (PDGI)

Top 15 Holdings (by % of portfolio)

  1. Visa (V): 5.11% of portfolio
  2. Apple (AAPL): 4.59% of portfolio
  3. Research in Motion (RIMM): 4.57% of portfolio
  4. Procter & Gamble (PG): 4.51% of portfolio
  5. Qualcomm (QCOM): 4.13% of portfolio
  6. Red Hat (RHT): 3.95% of portfolio
  7. Baidu (BIDU): 3.64% of portfolio
  8. Research in Motion (RIM) Calls: 3.64% of portfolio
  9. Chipotle (CMG-B): 3.42% of portfolio
  10. Apple (AAPL) Calls: 3.32% of portfolio
  11. Walmart (WMT): 3.23% of portfolio
  12. Mastercard (MA): 2.73% of portfolio
  13. Melco Crown (MPEL): 2.69% of portfolio
  14. Google (GOOG): 2.66% of portfolio
  15. Hologic (HOLX): 2.63% of portfolio

If we had to give this portfolio a label, we'd call it the quintessential hedge fund portfolio. Why, you ask? Well, because it has numerous commonly held hedge fund positions all in their top 15 holdings. Tremblant has the radically popular Visa as their largest stake and has large stakes in the three tech titans: Apple, Research in Motion, and Google. Not to mention, they also hold other tech plays Baidu, Redhat, and long-time hedge fund darling Qualcomm. It seems like people never sell out of QCOM and it is always in the portfolios of numerous hedge funds we track. So, Tremblant's portfolio is the quintessential hedge fund portfolio because they have all of the hedge-fund-favorite names.

As we've covered previously, tons of the 'Tiger Cub' hedge funds are in the Mastercard (MA) and Visa (V) trade, and Tremblant is no different. But, while Tremblant has a large play on the payment processing duopoly, their bigger bet lies in the positions mentioned in the paragraph above. Collectively, it looks like Tremblant is betting on tech to be the sector that outperforms on the long side.

One other holding that we wanted to point out in particular is that of Green Mountain Coffee Roasters (GMCR). This is their 16th largest position at 2.66% of their portfolio and undoubtedly has generated huge gains for Tremblant, even after they sold 60% of their position. After all, shares of GMCR are up 165% over the last 6 months. Over on Twitter, we called this big move as we posted updates on this short squeeze play. 30-40% of the float was short going into an earnings release and GMCR knocked the cover off the ball. All of our channel checks had indicated strong numbers. And, when you combined that with the technical setup on the chart and the short float numbers, it was an easy play. So, if you're not already, definitely follow us on Twitter for unique insight in addition to what we post on the blog.

Assets from the collective holdings reported to the SEC via 13F filing were $1.8 billion this quarter compared to $1.6 billion last quarter, so a slight uptick in their long positions. 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, Eric Mindich's Eton Park Capital, John Griffin's Blue Ridge Capital, and David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Timothy Barakett's Atticus Capital, Lee Ainslie's Maverick Capital, Raj Rajaratnam's Galleon Group, and Shumway Capital Partners (Chris Shumway).

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