Timothy Barakett's Atticus Capital Drastically Scales Back Portfolio: 13F Filing Q1 2009 ~ market folly

Tuesday, June 2, 2009

Timothy Barakett's Atticus Capital Drastically Scales Back Portfolio: 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 Atticus Capital, the hedge fund ran by Timothy Barakett. In 2005, Atticus' funds were up a combined 45%. And, they finished well over 30% for 2006. Barakett founded the firm at age 29 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps.

Barakett received both his BA in Economics and his MBA from Harvard. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. A fun fact about Barakett is that he was a Harvard hockey teammates with Philip Falcone of Harbinger Capital Partners, whom we also cover.

You may have heard about Atticus over the past year simply because their performance has not been up to par, to put it politely. In a September 2008 hedge fund performance update, we noted that Atticus European was -42.5% for 2008 while Atticus Global was -27.2% over the same timeframe. And, consequently, Atticus was a victim of liquidation rumors, which were quickly denied.

More recently, we turned our focus again to Atticus when we checked out the 2009 Hedge fund rankings: Top 10 Asset Losers. Unfortunately for them, Atticus was #2 on that list, as their assets dropped 60% on a year over year basis. Something is definitely afoot over there, but the only SEC filed development we have seen is sales of Legend International (LGDI).

The following were Atticus' 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):
Wyeth (WYE)
Costco (COST) Puts
Nokia (NOK)

Some Increased Positions (A few positions they already owned but added shares to)

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Mastercard (MA): Reduced by 92%
Visa (V): Reduced by 79%

Removed Positions (Positions they sold out of completely)
Google (GOOG) Calls
Mastercard (MA) Calls
Potash (POT)
Microsoft (MSFT)
Microsoft (MSFT) Calls
Boeing (BA) Calls
NYSE Euronext (NYX)
Baidu (BIDU)
Google (GOOG) Puts
Intercontinental Exchange (ICE)
CME Group (CME)
CSX (CSX) Calls
Vale (RIO) Calls
Union Pacific (UNP)
Oracle (ORCL) Calls
Emerging Markets ETF (EEM)
Boeing (BA) Puts
CME Group (CME) Puts
CME Group (CME) Calls
Burlington Northern (BNI)
Oracle (ORCL)
Monsanto (MON)
Boeing (BA)
Norfolk Southern (NSC)
Freeport McMoran (FCX) Calls
Valero (VLO)
Mastercard (MA) Puts
NYSE Euronext (NYX) Calls
NYSE Euronext (NYX) Puts

Their Entire Long Portfolio (by % of portfolio)

  1. Wyeth (WYE): 47.2% of portfolio
  2. Costco (COST) Puts: 40.36% of portfolio
  3. Visa (V): 5.74% of portfolio
  4. Nokia (NOK): 3.46% of portfolio
  5. Mastercard (MA): 3.24% of portfolio

Yes, you are reading that correctly; Atticus has only listed 5 positions. They have yet again drastically reduced their portfolio size. On a quarter to quarter basis, this hedge fund's portfolio is most akin to a rollercoaster. They initially scaled back their portfolio to an extreme when they were faced with poor performance and redemption requests back in Q3 2008. Once they survived that scare, they ratcheted positions back up in Q4 2008, but curiously enough in the form of many options positions, rather than their typical plays of common stock. Then, we arrive at the present. Assets from the collective holdings reported to the SEC via 13F filing were only $118 million this quarter compared to $1.9 billion last quarter. And, obviously, that's quite a change.

A lot of the positions they sold out of over the first quarter 2009 were their options positions that they had purchased the quarter prior. Of the positions they still hold, they cut their Mastercard and Visa stakes substantially, which is notable considering how we've seen so many hedge funds invested in those two payment processors. Of their other holdings, we note a large position in Wyeth (WYE), as they too seem to be playing the arbitrage/event-driven game with that name. Concurrent with their MA and V positions, their Wyeth position is also widely held amongst hedge funds we cover in our series. They started their WYE stake as a new holding this past quarter and it is worth around $55 million. While it is listed at an obscene 47% of their portfolio, you also have to consider that their invested long portfolio decreased substantially.

We're not going to begin to speculate about what is going on over there, but we're starting to get nauseous with all the swings back and forth. This constant level of portfolio re-shuffling is odd to say the least and we'll save our torts for when we have concrete information. We'll continue to monitor the developments and hopefully the portfolio will stabilize sometime soon (though at this rate we're not exactly counting on that). 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, and Seth Klarman's Baupost Group.

blog comments powered by Disqus