Friday, March 27, 2009

Popular Articles on MarketFolly

Just taking a second to highlight the most popular articles on MarketFolly right now:

  1. Wall Street Journal Discount: 75% Off
  2. Alphaclone: The Ultimate Hedge Fund Portfolio Replication Tool
  3. Downgrading the American Consumer's Credit Rating
  4. Hedge Fund March Performance Numbers
  5. Chartered Hedge Fund Associate (CHA designation) Part 1 & Part 2
  6. Ranting, Raving, & Contrarian Signals
  7. Reminder: Free TurboTax Online
  8. Summary of Jim Rogers' Recent Positions
  9. Recommended Reading Lists
  10. Hedge Fund Q4 Portfolio Tracking thus far

Also, if you haven't voted in our poll yet, please take a second to help us make Market Folly even better: Vote in our Poll.

Thoughts from Ray Dalio of Bridgewater Associates

*UPDATE *: Unfortunately, the document has been deleted. Originally, it was Ray Dalio's piece, 'A Template for Understanding Whats Going On.' We apologize for those of you wanting to read it, but institutions are understandably protective of these confidential documents.

Here was the original post:

Hat tip to Mebane Faber for flagging and uploading this. 'A Template for Understanding Whats Going On' by Ray Dalio of Bridgewater Associates. This was originally written back in October, but he's gone back and updated it for March. Definitely a great read (RSS & Email readers come to the blog to view it). We've also posted some of Ray's thoughts on the market before as well.

Since the document is no longer there, we'll substitute it with his 'D-process' interview from February so you can at least get some of his thoughts. Thanks.

Follow the Leader Or Get Trampled: Herd Mentality in Stocks

Great chart illustrating how so much capital is controlled by so few. This is the herd mentality at its finest. If you aren't with the herd, you're most likely getting trampled by it. It does NOT pay to bet against the herd. And, this somewhat plays into the rationale behind why we started Market Folly in the first place: to track hedge funds. While using their portfolio for investment ideas has its pros and cons, it certainly pays to at the very least be aware of what the bigger money is doing. Because, after all, they control a lot of the capital these days. If you're a smaller fish, you've got to know where the bigger fish are so you don't get eaten alive. You don't have to mimic their every move, but you've got to at least know where they are and attempt to pinpoint where they are headed. Hat tip to Cliff Küle for flagging this, as he explains the chart:

"Marty Chenard of provides a chart on institutional buying and selling...takes all the Institutional buying on a given day, and subtracts the Institutional selling to give the net difference which equals accumulation or distribution... if the green bars are above zero.. Institutions are accumulating..if the green bars are below zero..Institutional Investors are in Distribution."

(click to enlarge)

What We're Reading 3/27/09

Pendulum swinging back to investable hedge fund indices for passive HF exposure [AllAboutAlpha]

DE Shaw on the Basis Monster that ate Wall Street [Zero Hedge]

The current state of commercial real estate [ibankcoin - The Fly]

Madoff Employee breaks silence [The Daily Beast]

No matter how bad things get, people still need to eat [The Economist]

Did Goldman Goose Oil? [Forbes]

Thursday, March 26, 2009

Art Samberg's Pequot Capital Management 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 is Pequot Capital Management run by Art Samberg. Pequot was founded by Art in 1986 with $3 million in assets and peaked with $15 billion in assets around the tech bubble. Today, he manages over $4 billion. They have 150 employees and employ multiple strategies, including private equity and venture capital, as Art believes equity returns will decline over time. Art holds a S.B. from Massachusetts Institute of Technology, an M.S. from Stanford University, and he received his MBA from Columbia University. Pequot Capital Management was recently ranked 93rd in Alpha's hedge fund rankings. In terms of their 2008 performance, their main fund was -17.5% for 2008, while their health care fund finished -27.9% as noted in our post on hedge fund year-end performance. Recently, we had noted that they amended some 13G filings and made some portfolio changes to a few larger positions. You can also read Pequot's March Commentary here by Byron Wien.

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):
Medarex (MEDX)
Service Corp (SCI)
Brinker (EAT)
Marsh & McClennan (MMC)
Partnerre (PRE)
Hewitt (HEW)
Regal Entertainment (RGC)
Google (GOOG)
Verifone (PAY)
Sterling Financial (STSA)
Shaw Group (SGR)
Renaissance Re (RNR)
Continental Airlines (CAL)
MGM Mirage (MGM)
Onyx Pharma (ONXX) Calls
Amazon (AMZN)
American Italian Pasta (AITP)
Southwestern Energy (SWN) Calls
National Oilwell Varco (NOV)
Arch Capital (ACGL)
Microsoft (MSFT) Calls
Brink Home Security (CFL)
Cisco (CSCO) Calls
Exxon Mobil (XOM) Calls
Apple (AAPL) Calls
SPDR Gold (GLD) Calls
Monsanto (MON) Calls
Everest Re (RE)

Some Increased Positions (A few positions they already owned but added shares to)
XTO Energy (XTO): Increased by 655%
Apple (AAPL): Increased by 59.8%
Lifetime Fitness (LTM): Increased by 47.5%
Qualcomm (QCOM): Increased by 24.4%
Lender Processing (LPS): Increased by 18.4%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Bank of America (BAC): Reduced by 58%
Huron Consulting (HURN): Reduced by 51.8%
SPDR Gold (GLD): Reduced by 50%
Apollo Group (APOL): Reduced by 45%
Qualcomm (QCOM) Calls: Reduced by 43.4%
Jack in the Box (JBX): Reduced by 32%
Onyx Pharma (ONXX): Reduced by 26.7%
Akorn (AKRX): Reduced by 25%
Panera Bread (PNRA): Reduced by 21%

Removed Positions (Positions they sold out of completely)
JPMorgan Chase (JPM)
ThermoFisher Scientific (TMO)
Cognizant Tech (CTSH)
Coach (COH)
Microstrategy (MSTR)
Burlington Northern (BNI)
Mohawk (MHK)
Sunpower (SPWRA)
McGraw Hill (MHP)
Scientific Games (SGMS)
State Street (STT)
Helmerich and Payne (HP)
Freeport McMoran (FCX)
Moodys (MCO)
Union Pacific (UNP)
Bank of NY Mellon (BK)
Nasdaq (NDAQ)
Halliburton (HAL)
Cigna (CI) Puts
Middleby (MIDD)
Weatherford (WFT)
Microsoft (MSFT)
Healthcare Services (HCSG)
Wells Fargo (WFC)
JC Penney (JCP)
Ultra Petroleum (UPL)
Chesapeake (CHK) Calls
XTO Energy (XTO) Calls
iShares Emerging Markets (EEM) Puts

Top 20 Holdings (by % of portfolio)

  1. SPDR Gold (GLD): 12.05% of portfolio
  2. Chipotle (CMG-B): 4.74% of portfolio
  3. XTO Energy (XTO): 4.6% of portfolio
  4. McDonalds (MCD): 4.35% of portfolio
  5. Southwestern Energy (SWN): 3.93% of portfolio
  6. Everest Re (RE): 3.77% of portfolio
  7. Qualcomm (QCOM): 3.7% of portfolio
  8. Akorn (AKRX): 3.14% of portfolio
  9. Onyx Pharma (ONXX): 3.07% of portfolio
  10. Walmart (WMT): 3% of portfolio
  11. Qualcomm (QCOM) Calls: 2.77% of portfolio
  12. Monsanto (MON) Calls: 1.99% of portfolio
  13. Goldcorp (GG): 1.98% of portfolio
  14. SPDR Gold (GLD) Calls: 1.95% of portfolio
  15. Apple (AAPL) Calls: 1.76% of portfolio
  16. Apollo Group (APOL): 1.61% of portfolio
  17. Exxon Mobil (XOM) Calls: 1.58% of portfolio
  18. Occidental Petroleum (OXY): 1.56% of portfolio
  19. Lender Processing (LPS): 1.54% of portfolio
  20. Jack in the Box (JBX): 1.47% of portfolio

So, we have yet another big fund with Gold in the top 3 positions of their portfolio. Samberg's Pequot joins the ranks of David Einhorn's Greenlight Capital, Paulson & Co (John Paulson), and Eric Mindich's Eton Park as prominent funds holding gold as a top position. Pequot also shows a large position in Goldcorp as well, as their 13th largest holding. Assets from the collective long US equity, options, and note holdings were $3 billion last quarter and were $1.26 billion 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:

Check back daily as we'll cover a new fund each day.

Top 25 Highest Paid Hedge Fund Managers of 2008

Alpha is out with their list of the 25 highest-earning managers of the past year. The average compensation was $464 million (no big deal), with many of the top managers earning north of $1 billion. These figures were calculated by taking the manager's management and performance fees, as well as gains made on their own money that is invested within their firm. This method of calculation has drawn some criticism, as they include the increase in value of personal investments, which technically could be considered not direct compensation. And, since there is no data on their bonuses etc etc, everyone could really just nitpick the whole ordeal. But, let's not go any further and just take a glance at what they've come up with:

(click to enlarge)

(click to enlarge)

As you can see, some very well-known and prominent names on this list. In fact, we track many of the above mentioned funds on the blog and have already covered some of their Q4 holdings. Here are the latest equity portfolios:

- John Paulson's Paulson & Co
- George Soros' Soros Fund Management
- Bruce Kovner's Caxton Associates
- Jim Chanos' Kynikos Associates
- Paul Touradji's Touradji Capital Management (Q3)
- David Shaw's D.E. Shaw & Co (Q3)
- Jim Simons' Renaissance Technologies (Q3)

Make sure you also check out the hedge fund rankings as well. Alpha will also be posting the top losers of 2008 and we'll post that up once its released as well.

Jeremy Grantham's Latest Thoughts

Here's Jeremy Granthan's latest from March:

Moody's Bottom Rung List: Companies on Possible Death Watch

This is slightly older (beginning of March), so apologies for just now posting it. But, we figured many readers would still be interested in Moody's 'Bottom Rung' List, a.k.a. companies that are/possibly are screwed. They have assembled this list on the basis of: probability of default of Caa1 or lower, as well as some other companies with negative outlooks and those under review for downgrade. Its quite a large compilation. Do take it all with a grain of salt obviously, as many of these agencies have been behind the curve on downgrading a lot of things in this crisis/recession. So, while they could be hinting at early warning signs of a few companies, they are obviously late to the game on others.

Federal Reserve Open Market Committee Statement 3/18/2009

The Federal Reserve has taken things up a notch with the latest round of actions by Ben Bernanke and company. We've been too busy to really comment on things, but wanted to make sure everyone has read their latest statement carefully. They are really focused on restoring the economy by helping out mortgage holders in the housing market. Up until this point, quantitative easing was merely talked about. But, now, it is reality. We know this is all old news now, but we wanted to have it posted on the blog for reference going forward, as we start to work on some macro themes.

Release Date: March 18, 2009

Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

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. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of evolving 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, March 25, 2009

Downgrading the American Consumer's Credit Rating

Downgrading the American Consumer's Credit Rating:
A Potential FICO Score Nightmare
by market folly

We're here to point out a potential unforeseen consequence of credit cards as the next credit crunch. The developments of credit card companies raising interest rates, cutting credit lines, and closing inactive accounts altogether has many consequences: Firstly, consumer confidence and consumer spending could drop off. Secondly, as such, the economy as a whole would continue to suffer. Lastly, and most unforeseen, FICO (credit) scores most likely will be reduced and many American consumers will essentially be 'downgraded' by way of their new, lower credit scores, further inhibiting their access to future credit. Many people are focused on how these actions will affect consumer spending (and this could be a legitimate concern). But, we also want to turn the focus to the decrease in consumer liquidity and how overly reliant consumers are on credit cards for cash-flow management.

Credit Cards Are the Next Credit Crunch

We'll break this down in the piece below, but first, some background. If you don't know who Meredith Whitney is, then shame on you. She has been one of the best analysts on all things financial, nailing the trouble at Citigroup (C) when no one wanted to believe it. She is the dominatrix of doom and she has recently put out a report on credit card companies, stating that financial institutions could cut up to $2.7 trillion in lines of credit that have been typically available to consumers. The bulk of her message was that this could happen by 2010 and that it would severely dampen consumer spending. Not only would it affect consumers, but it would affect small businesses as well, who often rely on credit cards to actively finance their day to day activities.

We've been harping on this issue for a while under the notion that credit cards are the next credit crunch. Companies like Bank of America (BAC), American Express (AXP), and Capital One (COF) have reported increase after increase in charge-offs and delinquencies in their credit card units. Obviously, rising unemployment and a hell of a recession are only going to add to that. Head of JPMorgan (JPM) Jamie Dimon has even flat out admitted that credit cards are going to be a house of pain for his company in 2009 and possibly beyond. We've posted on this issue back in August of 2008 and will continue to harp on it until we see material improvement. But, while more people seem to be coming around to the fact that credit cards will indeed be a big problem going forward, the possible magnitude of the issues still needs to be highlighted.

Many American consumers were living on a debt binge by purchasing everything on credit cards and slowly paying them off over time (or not paying them off at all). America = consumerism. You also have a second tier of consumers who would typically pay with cash or debit card, who have now been struck by hard times. When push comes to shove and you've got to make the essential purchase of food, you fall on the credit card for emergencies. And, with this economy, there are a lot of consumers pushing the big red 'emergency' button. The problem here is that the credit card companies are trying to fight off rampant delinquencies and non-payers by all means necessary. The best example of this would be American Express offering you $300 to pay off your bills and close your account (to a limited number of accounts). This is the deleveraging world. Markets are deleveraging, hedge funds are deleveraging, and consumers are deleveraging. The credit card companies are no different. They simply took on too many customers (especially of poor credit quality) and offered everyone credit lines that were much larger than necessary. They are now correcting their errors.

But, as such, the consumer suffers and their purchasing power now decreases exponentially. If you didn't have enough money for that flat screen TV, you put it on your credit card with your $10,000 line of credit. But now, that $10,000 line of credit might be chopped down to only $4,000 and you've already racked up a lot of charges on there. Where do you turn now? How do you purchase your sacred flat screen TV? You can't. (In the end, that might not necessarily be such a bad thing as it brings consumers back to a realistic level of spending, as well as a realistic level of saving. But that's a topic for a whole 'nother post).

Available lines of credit were cut by almost $500 billion in Q4 of 2008. Whitney acknowledged that and says her estimate might be too conservative given how fast credit lines are shrinking. In the US there is about $5 trillion in credit card lines and $800 billion or so of that is being drawn upon right now. This affects overall consumer liquidity as consumers become even more squeezed in an already penny pinching environment. And, its not the reduction in credit lines that affects things. Creditors are also shutting down credit card accounts completely, due to inactivity (which, by the way, is their legal right). Additionally, they are raising interest rates on numerous accounts in an attempt to recoup whatever losses they can. Unfortunately, this move will put many borrowers even further underwater, decreasing the chances they pay off their cards. But, there is also something else that could be an unforeseen consequence: a nightmarish decrease in consumer credit ratings (FICO scores).

What is a FICO Score?

We should preface this section with a disclaimer: We're by no means FICO experts and FICO calculation is almost like a mad-science. We've simply done a ton of research and are presenting theoretical examples that could potentially lower credit scores of many consumers. Feel free to chime in if you're an über-expert on the matter. If you are unfamiliar with FICO scores, it is essentially your credit rating as a consumer; a number slapped across your forehead that tells creditors how likely you are to pay them back. The pure definition of a FICO score:

"A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable. (And more info per mtg-net if you want it)"

Why FICO Scores Matter

Quite literally, your FICO score is one of the biggest factors determining your access to credit. The FICO score ranges from 300 to 850; the higher the score, the better (with 850 being the ideal score). You can essentially break down the FICO score range into four tiers:

  1. Excellent credit: 700-850. People with this score will receive the best interest rates, aren't likely to default, and should have no problems accessing future credit.
  2. Good/Decent credit: 600-699. People with scores in this range will pretty much get a normal loan and usually won't be denied.
  3. Poor credit: 500-599. This is not the worst part to be on the ladder, but banks start to get you in their back pocket here and credit availability could be an issue.
  4. Dismal credit: 499 and below. Terms for people with these scores will be absolutely brutal, if they are even given credit at all.

We've kind of generalized the list of tiers, but you get the picture. So, why do FICO scores matter here? Well, if you look closely, you'll see some big differences in terms of interest rates offered on loans and overall availability of credit as you move from one FICO score category to another. After all, don't forget that a sub-600 credit score was deemed as sub-prime by many. Let's take a look at a theoretical $200,000 30-year fixed mortgage (national average as of March 24th) across the range of credit scores to see the various APR's offered thanks to a graphic from

(click to enlarge)

Keep in mind that this graphic only encompasses an 'upper tier' of FICO scores. You'll notice that they only go down to a score of 62o on their list. And, even so, a consumer who has a score of 620 is paying 1.589% more in APR than someone with a 760 score. You can only imagine what the APRs are going to be like on FICO scores lower than 620 as you fall into the 'fair' and 'poor' credit ratings. So, not only does a lower FICO score mean you'll be paying a higher APR, but you'll also have less overall access to future credit as lenders will be more inclined to turn you down in this environment of tightening credit standards.

Why FICO Scores Will Decrease

Now that you've got an overview of how a lower FICO score is "bad-news-bears," let's examine why cutting consumer credit lines will essentially downgrade consumers' credit ratings. Your FICO score is determined by a myriad of factors. But, this chart breaks down just how the score is calculated:

(click to enlarge)

Now, as you can see, the two biggest pieces of the pie are 'on-time payments' (35% of the FICO score) and 'capacity used' (30% of the score). On-time payments are obviously in the hands of the consumer themselves. And, many pundits have already accounted for the fact that consumers will be delinquent on their bills or flat-out won't pay them due to economic hardship, etc. This is the well known part of the credit card crunch. What hasn't really been talked about is the second biggest piece of the pie: capacity used.

Capacity used is simply a calculation of how much of your available credit lines you are using. This utilization ratio can be affected by two inputs: how much you're charging to your cards and how high your credit limits are. So, a lower ratio of capacity used is obviously better. The lower your utilization ratio, the better your FICO score can be. You can achieve such a ratio by having either lower balances or increasing your available credit; or both. Now, we've already seen from above that creditors will be cutting available credit lines all over the place and even closing down some accounts completely. This immediately increases a consumer's utilization ratio even if their rate of spending remains constant.

An example: You spend $1,000 on your credit card each month and your available credit line is $10,000. Currently, your utilization ratio (capacity used) is only 0.1, or 10% each month. Fast forward to next month and you're still spending $1,000 on your credit card. Then, the credit card company comes through and axes your available credit down to only $4,000. Even though your spending rate has stayed the same, your utilization rate is now .25, or 25%. Once again, even though your spending was constant, the credit card company's actions have now just sent your utilization rate up 2.5x. And, as such, that 30% of your FICO score determined by capacity used (the second largest component in computing your score) has just sent your score down (possibly even to a lower-tier of ratings).

Next, look at the same example wherein the consumer ramps up the amount they charge to their credit card due to emergency and economic hardship. Before, they were spending $1,000 on a $10,000 credit line. Now, their line has been chopped down to $4,000 and their spending has doubled to $2,000 due to hardship brought on by the recession. Purchases they would normally pay for in cash now have to be put on the 'emergency card.' In this scenario, their utilization rate has now risen to .5, or 50%. Their utilization ratio has now increased five-fold! Such a large increase in capacity used will undoubtedly affect their FICO score in a negative way.

So, while others may be focused on the "amount charged" input in the capacity used equation, we are focused on the "available credit" portion of the equation. The amount charged on a card is a variable input as it can fluctuate on any given month. Available credit though, is more often than not static as consumers have their credit lines in place (with a few exceptions like opening new cards). The problem is, though, that credit card companies are no longer leaving credit availability relatively static. Creditors have already started cutting available credit and they will only continue to do so, as they struggle with rising charge-offs and delinquencies. This 'fad' has already run rampant, as I can't even begin to tell you how many people I've read about that have had available lines clipped and have even had cards closed down altogether due to inactivity.

Think about that for a second. If they close down a card completely, not only have you lost that available credit line which affects the 30% of the FICO equation, but you've also lost a portion of the 15% 'length of credit history' part of the equation in the pie chart above (or all of that history if its your only card). So, when they completely close an account, you now have negative readings on up to 45% of the inputs used to calculate your FICO score, rather than just the 30% in the theoretical scenarios we've outlined above. And, this is all on top of the negative scores many consumers will receive on the 35% allocation of the score for "on-time payments" since many have missed payments and delinquencies are continually rising. If you take all of these factors into consideration, the categories with the highest weighting in FICO scoring most likely have and will be negatively affected, leaving consumers with lower scores. Just how much lower could credit scores go? Ultimately, all we can do is guess. The degree of severity lies buried within the madness known as FICO. Our inclination is that it could very well have an impact though, depending on scale.

The Crux of the Credit Card Crunch

Utilization ratios (capacity used) could potentially skyrocket and thus negatively affect the 2nd largest input (30%) in calculating consumers' FICO scores. Additionally, closed accounts could negatively affect up to 45% of the FICO calculation, possibly bringing down one's score that much more. As such, FICO scores could possibly decrease, landing Americans in a credit tier below their current status, thus further restraining their access to credit. Why does this all matter? Well, we are just recently working off the effects of a defaulting sub-prime borrower. If FICO scores decrease en masse, we could shift a whole new batch of American consumers from the 'fair' tier to the 'sub-prime' tier. Not to mention, the liquidity crunch consumers are facing becomes that much tighter as companies put the squeeze on consumers, increasing the probability that said consumers will default.

The ultimate question becomes, 'Will FICO scores decrease en masse?' That's tough to answer, given the complexities of the FICO score itself and the vast variety of household balance sheets found around the nation. And, even if credit scores decreased en masse, FICO could possibly alter the way they compute scores to take this into consideration. So, the affects of a massive theoretical downard shift in FICO scores could be overstated. But, if you take this outcome on a slightly smaller scale, its still a very real scenario. We're simply trying to provide a counter-argument to our thoughts.

So, to recap: Credit card lines drying up is bad for the consumer because it takes away their liquidity and ability to spend since many potentially use cards for cash-flow management. This decrease in consumer spending would, in turn, obviously bad for the economy. Lastly, such a reduction in available credit could negatively impact consumers' credit ratings (FICO scores), 'downgrading' consumers to lower credit tiers, raising the interest rates they are charged, and decreasing their overall access to future credit. And, all of the above can increase the probability they will default. The creditors quite literally own consumers with bad credit; it's as simple as that. We're mainly worried about the consumers who are currently teetering on the edge in terms of their credit score and tier. While they might not have 'poor' credit yet, a slight decrease in their score could shift them into that category. Add up the cumulative effect of all those who are teetering on the edge, and there could be serious implications.

While things might not turn out to be as extreme as we've laid out above, there will nonetheless be consequences. In an environment where companies are being downgraded left and right, we're downgrading the credit ratings of the American consumer. Credit just got that much harder to procure.

Eric Mindich's Eton Park Capital 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 is Eric Mindich's Eton Park Capital, who was ranked 53rd in Alpha's hedge fund rankings. Mindich received an Economics degree from Harvard and then worked at Goldman Sachs' risk-arbitrage desk. After becoming the youngest partner in the history of Goldman Sachs at the age of 27, it was clear he had a bright future. In 2004, he started his hedge fund Eton Park Capital with a record $3 billion in assets and a $5 million minimum investment required of investors. Today, Mindich manages over $6 billion. Typically, Eton Park invests in long/short equity and convertible arbitrage strategies. Additionally, as much as 30% of the fund can be invested in private investments. In our recent January & February 2009 hedge fund performance numbers post, we saw that Eton Park was up 3% for the month of January. We had also previously noted that Mindich was starting to see opportunity in the markets in an excerpt from an investor letter.

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):
iShares Emerging Markets (EEM) Calls
Citigroup (C)
Viacom (VIA-B)
Google (GOOG)
Zimmer Holdings (ZMH)
Potash (POT) Calls
Constellation Energy (CEG)
Akamai Technologies (AKAM)
General Motors Corp (GRM)
iShares Brazil (EWZ)

Some Increased Positions (A few positions they already owned but added shares to)
Walter Industries (WLT): Increased position by 121.5%
VimpelCom (VIP): Increased position by 95%
Goodyear Tire (GT): Increased position by 55%
Ebay (EBAY): Increased position by 37.5%
Hansen Natural (HANS): Increased position by 26.6%
Verisign (VRSN): Increased position by 25%
Mobile Telesystems (MBT): Increased position by 25%
Gold Fields (GFI): Increased position by 17.2%
Beckman Coulter (BEC): Increased position by 15%
Wells Fargo (WFC): Increased position by 11.6%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Potash (POT) Puts: Reduced position by 72%
SPDR Gold Trust (GLD) Calls: Reduced position by 70%
Qualcomm (QCOM) Calls: Reduced position by 50%
Calpine (CPN): Reduced position by 32%
iShares Silver (SLV): Reduced position by 32%

Removed Positions (Positions they sold out of completely)
Endeavour International (END)
Verisign (VRSN) Calls
Clear Channel (CCO)
Baringpoint (BE)
Yahoo (YHOO) Puts
Ralcorp (RAH)
TFS Financial (TFSL)
Kinross Gold (KGC)
Motorola (MOT) Calls
Net1 UEPS Tech (UEPS)
Best Buy (BBY) Bonds
Teco Energy (TE)
Goodyear Tire (GT) Calls
Comcast (CMCSA) Calls
Deere (DE) Puts
Vale (RIO) Calls
Kraft (KFT)
Ikon Office (inactive)
UST (UST) Calls
Lorillard (LO) Puts
Alpharma (ALO)
Alpha Natural Resources (ANR)
Barr Pharma (BRL)
Cemex (CX) Puts
Comcast (CMCSK) Calls
Genentech (DNA)
Merrill Lynch (MER)
iShares Emerging Markets (EEM) Puts

Top 20 Holdings (by % of portfolio)

  1. iShares Emerging Markets (EEM) Calls: 9.37% of portfolio
  2. Wells Fargo (WFC) Puts: 8.38% of portfolio
  3. SPDR Gold (GLD) Calls: 7.64% of portfolio
  4. SPDR Gold (GLD): 7.11% of portfolio
  5. Hansen Natural (HANS): 7.1% of portfolio
  6. Verisign (VRSN): 6.6% of portfolio
  7. Qualcomm (QCOM): 5.3% of portfolio
  8. Citigroup (C): 5.1% of portfolio
  9. Viacom (VIA-B): 3.5% of portfolio
  10. Hospira (HSP): 3.4% of portfolio
  11. Goodyear Tire (GT): 3.3% of portfolio
  12. Google (GOOG): 2.6% of portfolio
  13. Zimmer Holdings (ZMH): 2.6% of portfolio
  14. Ebay (EBAY): 2.3% of portfolio
  15. Potash (POT) Calls: 2.2% of portfolio
  16. Comcast (CMCSA): 1.75% of portfolio
  17. Gold Fields (GFI): 1.6% of portfolio
  18. Lorillard (LO): 1.1% of portfolio
  19. Beckman Coulter (BEC): 1.13% of portfolio
  20. Spirit Aerosystems (SPR): 1.1% of portfolio

Well, just like David Einhorn's Greenlight Capital and John Paulson's Paulson & Co, Eric Mindich and his Eton Park team like gold. They have a large position in both GLD and GLD Calls, at the top of their long portfolio. They also own shares of Gold Fields (GFI), a gold producer. When you see a confluence of this many smart minds in the gold trade, you have to take notice. Another portfolio notable is Lorillard (LO), which we've seen pop up in numerous 'Tiger Cub' portfolios. Lastly, we couldn't help but notice the massive put position in WFC. But, given the recent action in financials and the fact that these holdings were as of December 31st, 2008, you have to wonder if they've held onto this position or not. Assets from the collective long US equity, options, and note holdings were $6 billion last quarter and were $3.39 billion this quarter so you can see some evidence of a combination of deleveraging, possible losses, and winding down long equity exposure. 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, Bruce Kovner's Caxton Associates, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and Anand Parekh's Alyeska Investment Group. Look for our updates as we will be covering a new fund each day.

Eddie Lampert's Letter to Investors (February 2009)

Courtesy of Zero Hedge, here's Eddie Lampert's latest thoughts from his February 2009 letter to investors:

Tuesday, March 24, 2009

David Einhorn's Greenlight Capital Files 13G on TicketMaster (TKTM)

In a 13G filed with the SEC after the close yesterday, David Einhorn's hedge fund Greenlight Capital has disclosed a 5.2% ownership stake in TicketMaster (TKTM). The aggregate amount of shares beneficially owned is 2,953,100, up from the 2,547,346 shares they owned in their most recent 13F filing, which detailed their positions as of December 31st, 2008. So, they have boosted their stake and the filing was made due to activity on March 11th, 2009. You can view the rest of Greenlight's portfolio holdings here. Greenlight has been pretty active so far this year, as we've also covered their new positions in Jones Apparel (JNY) & Harman (HAR). Additionally, Einhorn has picked up positions in gold (GLD) & gold miners (GDX) among other things, as noted in our recent Greenlight portfolio update.

Greenlight Capital is a $6 billion fund ran by David Einhorn that specializes in spin-offs and value investing and has seen annual returns of over 20%. Einhorn's name has been popping up in the media a lot over the past year, as he talked about his well documented short position in Lehman Brothers (LEH). And, while that position paid off handsomely for him, it barely offset losses he experienced from other positions. He was caught in the massive Volkswagen short squeeze as he detailed in one of his latest investor letters. Einhorn has also recently detailed the saga between his fund and Allied Capital, a company he shorted, in his book Fooling Some of the People All of the Time: A Long Short Story. It gives you an inside perspective as to how Greenlight constructs and researches their investment theses and we highly recommend it. Greenlight approaches things by identifying mispricings in the markets and going from there.

Taken from Google Finance,

Ticketmaster is "a live ticketing and marketing company. As of August 1, 2008, it operated in 20 countries worldwide, providing ticket sales, ticket resale services, marketing and distribution through, one of the e-commerce sites on the Internet, and related Internet and mobile channels, approximately 6,700 independent sales outlets and 19 call centers worldwide."

Hedge Fund Closures in 2008

These markets have been unforgiving and have taken down many hedge funds, including some pretty prominent names. The recession, credit crisis, and overall market tankage lead to record redemptions in 2008. Here are some of the prominent names that the crisis sucked into the abyss: Ospraie Mangement, Drake Management, Peloton Partners, Okumus Capital, Ascot Partners, and Gordian Knot's Sigma Finance Fund. Overall, more than 1400 hedge funds were forced to closed, with nearly half of those coming solely in the fourth quarter of 2008. Courtesy of Dealbook, we see Absolute Return magazine's top 10 closures this past year: Fairfield Greenwich, Drake, Citigroup's Old Lane, D.B. Zwirn, Tontine's 2 funds, Ospraie, Highland Capital Management, Peloton, Tremont Group, and Kingate Management.

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And, while there may have been a lot of closures in 2008, new hedge funds are still opening up. There were, however, fewer new hedge fund starts last year than in years past. In fact, it was the lowest amount opened in 8 years. We've covered some of the notable start-ups including David Stemerman's Conatus Capital (ex-Lone Pine) and Anand Parekh's Alyeska Investment Group (ex-Citadel). Additionally, we've seen an emerging pattern of prominent funds starting new funds in an effort to still attain management and performance fees. This is, of course, due to the fact that some of their flagship funds have suffered such large losses that it would take quite a while before they start earning performance fees again (notably, Citadel). So, there are definitely new funds hitting the scene. But, at the same time, a Darwinian process is underway as the strongest survive and the weak die off. In the end, its only natural and its a healthy cleansing of the system. Get rid of that fluff.

Its also interesting to note that many are expecting another wave of hedge fund withdrawals as the market has continued to slide throughout 2009. Bloomberg had an article out recently stating that hedge fund giant DE Shaw has had more requests for withdrawals recently than it did for Q4 last year. (See some of DE Shaw's recent portfolio activity here). Jana Partners, a hedge fund ran by Barry Rosenstein that we've tracked on the blog before, has been faced with an increased level of redemptions (notably 20-30% of assets). Jana has been forced to set aside hard to sell assets in an effort to meet these massive redemption requests. We've covered some of their recent portfolio activity here and here. This just goes to show that no one is safe in this environment because everyone is in dire need of capital. This all after the fact that hedge funds lost around $11 billion in February. Also, fun fact: from June to December, hedge fund losses due to market losses and redemptions totalled $400 billion, according to Eurekahedge.

Back in the beginning of October, we wrote a piece entitled 'Let the Bloodbath Begin: Hedge Fund Redemptions.' While we would like to think that the worst of the redemptions is over (due to the massive panic in November), there undoubtedly will still be some further ripples in the industry. Whether or not those ripples become as large as the initial tidal wave remains to be seen.

AIG Counterparties

With all the hulabaloo surrounding AIG lately, we thought it would be fitting to post up the NYT's great graphic of the biggest AIG counterparties:

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Pequot Capital March Commentary (Byron Wien)

Here's Pequot Capital Management's March commentary from Byron Wien. We've covered Pequot's Q3 holdings earlier, and are soon going to be covering their latest Q4 holdings so keep an eye out. In terms of recent movements, we've detailed those here. (RSS & Email readers may need to come to the blog to read).

Monday, March 23, 2009

Anand Parekh's Alyeska Investment Group 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 is Alyeska Investment Group ran by Anand Parekh. This is the first time we're tracking them in our portfolio series due to the fact that they're a newer fund on the scene. Before starting Alyeska, Anand Parekh was Citadel's head of equities, and was essentially who we were tracking at Citadel when we would examine their equity holdings. Originally, Parekh's new firm was set to be named Highliner Investment Group which had raised $1.5 billion, as we noted when we started tracking spin-off and newer funds. But, somewhere along the line, the name was switched. David Stemerman's Conatus Capital was another newer fund that we mentioned back then, and we have already covered their portfolio. This is Alyeska's first 13F filing and is our first look into their portfolio. There are no prior positions to compare with, so we're just going to present Alyeska's 13F filing in its entirety as we familiarize ourselves with their new portfolio.

Do note the second column from the left on the 13F tables below, as you want to make sure you identify the type of asset they are holding. The majority are equity holdings, but there are a few notes, options, etc mixed in there. (Options are noted in the column 4th from the right).

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Their top four holdings are: Puget Energy (PGW), Entergy (ETF), Merrill Lynch (MER), and Wachovia (WB). Other top holdings include Honeywell (HON), Grainger (GWW), Nationwide Financial (inactive), National City (NCC), Pfizer (PFE), and Regal Beloit (RBC). Keep in mind that these filings were as of December 31st, 2008. On their inaugural 13F filing they are showing assets invested on the long side to be $831 million. We'll be following Alyeska from here on out and will be able to track their portfolio movement once we get another 13F to compare things with. 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, Bruce Kovner's Caxton Associates, Paul Tudor Jones' Tudor Investment Corp, and Louis Bacon's Moore Capital Management. Look for our updates as we will be covering a new fund each day.

Hedge Fund Performance Numbers: 2009 January & February

After a brief hiatus, we're back with a cumulative review of recent hedge fund performance. Our last update was our post on 2008 year end performance numbers and now we're back with a cumulative update. After gathering a bunch of data, here's what we've come up with, in no particular order.

Hedge Fund January, February, & YTD Numbers:

  1. John Paulson's Paulson & Co saw their Advantage Plus fund up 8.84% through the end of January. They then were -0.77% for February, bringing them to 8% for the year through February. Their Credit Opportunities fund was -0.93% for February and sits at 0.22% for the year. Their Enhanced fund was -1.55% for February and 2.08% for the year as of end of February. Lastly, their International fund was -0.86% for February which brought them to 1.07% on the year at that time. Although Paulson operates in numerous markets, we covered the equities portion of their portfolio here.
  2. Peter Thiel's Clarium Capital was -2.3% for February and sits up 4.3% year to date as of the end of February. You can see the entire chart breakdown of their performance here as well as their recent equity holdings here (which represents only a small amount of their assets under management).
  3. Jim Simons' Renaissance Technologies saw their Institutional Equities Fund -4.61% for February and -8.84% for 2009. We had previously covered Rentec's portfolio just for fun, since they are a quant fund by nature and its near impossible for us to gauge the rhyme or reason behind their picks.
  4. Steven Cohen's SAC Capital International fund was up 3.3% for February and sits at 7.12% for 2009. We had previously covered SAC's portfolio just for fun as well, considering their propensity to move in and out of positions quickly.
  5. David Einhorn's Greenlight Capital was -1.5% for February and sits at -0.03% for the year at the end of February. We've recently updated their portfolio and have also covered their 13F filing too.
  6. Philip Falcone's Harbinger Capital Partners was up 0.95% for January 2009 and 4.64% for February, leaving them at 5.26% for the year as of the end of February. We haven't covered their Q4 holdings quite yet, but we've noted numerous recent changes to their portfolio.
  7. Lee Ainslie's Maverick Capital saw their Maverick Fund up 1.55% for January 2009 and -2.1% for February, leaving them at -0.62% for the year at that time. We had covered their holdings recently here.
  8. Andreas Halvorsen's Viking Global has been on fire lately, notching a 7.88% gain in their Global Equities III fund through the latter part of February. Their Viking Global Fund was up 3.43% for February and was 8.21% for the year at the end of that month. We recently covered their long equity positions here, so maybe you can see where their gains are coming from.
  9. Chris Shumway's Shumway Capital Partners Ocean Fund was up 2.54% for February and 5.75% for the year as of then.
  10. Ken Griffin's Citadel was up 5% in January, and up another 2.6% for February. These are much better numbers from Citadel, who last year saw their flagship funds get annihilated. And, as such, we've noted that Citadel will be starting new hedge funds.
  11. Timothy Barakett's Atticus Capital survived a nightmarish year last year, only to have their pain somewhat continue. Their European fund was -0.8% for February and sits -10% for 2009. We just recently covered their portfolio holdings as well.
  12. Louis Bacon's Moore Capital Management sees their Emerging Market fund up 10.83% as of the latter part of February. Their Global Fixed Income fund was up 1.92% for the month of January and their Global Investments fund was up 1.55% in the month of January. We just last week examined their equity holdings as well, noting that they are a true global macro fund and have a smaller allocation to equities than other funds we track.
  13. Bruce Kovner's Caxton Associates saw their Alpha Equity fund -9.32% as of February 24th, 2009 and their Global fund was up 3.03% for January. We just recently covered Caxton's equity holdings here.
  14. Paul Tudor Jones' Tudor Investment Corp continues their solid relative performance as they saw their flagship BVI Global fund up 2.85% for the month of January and 1.71% for February, leaving them at 4.61% for the year at that time. Their Tensor Fund was 0.52% for February and is now -0.12% as of the end of February.
  15. Barton Biggs' Traxis Partners saw their Traxis Fund -4.63% for February and -10.42% year to date for 2009. We've covered Barton before on the blog as his book, Hedgehogging, is on one of our recommended reading lists.
  16. Highbridge's long/short equity fund was -7.88% for the year, through the beginning days of March. Conversely, their multistrat fund is up 4.5% year to date through the same timeframe.
  17. Whitney Tilson's T2 Partners was -10.3% for February and sits -13.5% ytd.
  18. Ricky Sandler's Eminence Capital was up 4.96% for January and is now up 8% as of the latter portion of February. We've covered their Q3 holdings but haven't gotten to their Q4 positions quite yet.
  19. Childrens Investment Fund saw a January '09 return of -4.58%.
  20. BlueGold's Global Fund was up 20.2% for February and sits at a 35.6% return for 2009.
  21. Avenue International was -0.56% for the month of January.
  22. Raj Rajaratnam's Galleon Group sees their Buccaneer fund sitting up 13.39% as of late February. Additionally, their diversified fund was up 9.87% through the same time period. We had previously looked at some of their holdings here.
  23. Eric Mindich's Eton Park Capital was up 3% for January 2009. We had previously examined their Q3 holdings and will soon be looking into their Q4 positions.
  24. Bluecrest Capital finds themselves up 9.18% as of February 20th.

So, there you have it; some standout performers already this early in 2009. We saw a similar pattern emerge last year, as some big players gained early, only to give back those gains later in the year. We'll have to see if that trend repeats this year. Do note that some of those performance numbers listed above were intra-month numbers, as we're playing catch-up with all the performance figures here. We'll be posting the latest up to date figures as we receive them for March. Keep in mind we're in the midst of our hedge fund portfolio tracking series, where we are checking the portfolios of many of the funds listed above. We've already tracked a bunch and we cover a new fund each day, so make sure to check back for daily updates!

Philip Falcone's Harbinger Capital to Start New Hedge Fund

Phil Falcone is going back to his roots at Harbinger Capital Partners. Falcone first started his fund to focus on distressed debt and he is returning to those origins (having been focused on equities a lot of last year). He is starting the Credit Distressed Blue Line Fund aimed to buy 'troubled loans and bonds.' The $7 billion hedge fund has had an interesting year in which they've faced uphill battles in some of their equity holdings where they control large stakes. Additionally, their less liquid private equity investments led them to limit redemptions in their funds to 65% of assets. As we noted in our year end hedge fund performance numbers, Harbinger's Offshore fund finished -22.7% for 2008.

In Harbinger's latest letter to investors, they noted 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). They have also been selling off some Cliffs Resources (CLF), essentially to ensure that their portfolio balance is where they want it to be.

Courtesy of Bloomberg:

"Falcone is starting the distressed fund to “seek to capitalize on the current dislocation in the credit markets,” he wrote in his letter. The new fund will buy credit-default swaps, which act like insurance against loan going bad.

It will purchase devalued high-yield bonds, bank loans and trade claims, which are debts that a bankrupt company owes to its suppliers. The fund won’t borrow money to make purchases, nor will it buy stocks. Harbinger expects the fund to be capped at $500 million to $1 billion, and to wind down after the credit crisis subsides.

Falcone also started a private-equity fund with a Korean company as an anchor investor, according to the letter. The Global Opportunities Breakaway Fund LP has a five-year term, and will draw down capital as it makes investments. Harbinger plans to open a Singapore office as part of the management of the new fund, the letter said."

Remember that we're in the midst of our hedge fund Q4 portfolio tracking series where we look at the portfolios of prominent hedge funds, covering a new fund each day. We'll be covering Harbinger's Q4 holdings here very soon, so stay tuned. In the mean time, read the Bloomberg article in its entirety.

Paulson & Co Takes Stake in AngloGold Ashanti (AU)

John Paulson's hedge fund Paulson & Co has taken a $1.28 billion stake in AngloGold Ashanti (AU). They took an 11.3% stake at $32 per share and are now the company's 2nd largest shareholder. This isn't the first gold miner Paulson has taken a large stake in, as he also is the fourth largest shareholder of Kinross Gold (KGC) with a 4.1% stake. Paulson said that AngloGold Ashanti is "one of the best managed and undervalued of the major global gold-mining companies. We look forward to the implementation of their global expansion strategy." We recently covered the rest of Paulson's portfolio holdings here.

We've noted in the past that hedge fund Paulson & Co has made a fortune by betting against all things sub-prime. Additionally, they've profited from shorting UK financials and in particular, they've focused on Lloyds. (For more insight as to Paulson's way of thinking, check out his year-end letter & report). He's been quite successful, having made correct bets against Barclays, RBS, and Lloyds (which all conveniently fall at the lower end of the list above). We would be remiss though if we didn't point out the fact that John Paulson has become slightly constructive on some other destroyed assets he had been previously short, and is looking to slowly start buying them. It remains to be seen though if he would reverse such a bet against the institutions themselves.

And, in what could be considered a 'doomsday' trade, inflation play, or a bet made based on various macro factors, Paulson now has quite a large position in gold by way of gold companies. And, he is not the first notable hedge fund player to enter such a space. Earlier, we had noted that David Einhorn's hedge fund Greenlight Capital had taken positions in gold via GLD and gold miners via GDX. So, there seems to be a confluence of smart hedge fund minds entering the gold play in various capacities. (You can view the rest of Greenlight's portfolio here).

One thing is for sure: Paulson isn't the first major player to enter the gold play in these historical times, and he most likely won't be the last, either.