Friday, April 3, 2009

Alphaclone: The Ultimate Hedge Fund Portfolio Replication Tool

If you're going to read one Market Folly article for the rest of the year, then this is the one you'll want to read. Why, might you ask? Well, because we are about to introduce you to a tool that lines up directly with the content you see here at MarketFolly on a daily basis: hedge fund portfolios.

Today, we want to talk about Alphaclone (now 50% off), a web-based software tool developed by Maz Jadallah and Mebane Faber (of the World Beta blog). Quite literally, their tool allows you to create, customize, and replicate hedge fund portfolios. They have 200+ funds listed which can be turned into 15,000+ portfolio clones that are rebalanced quarterly and backtested on a daily basis. And, through a series of posts, we're going to show you what exactly you can do with this powerful tool.

We have been using Alphaclone for the past few weeks and are extremely impressed with vast array of information you can generate in a matter of minutes. You can create clones of individual managers (for instance: Greenlight Capital's portfolio) and can customize the existing portfolio or create your own based on criteria you define. Additionally, you can also create clone groups that create and track a portfolio of multiple managers. For instance, we just went through and for fun cloned a combination portfolio of 'activist' managers in Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point. The combinations are endless.

You can also select various strategies and backtest their performance. You can take the top 10 holdings of an individual manager, the 'most popular' holdings from a group of managers, the 'best ideas' of managers, and many, many more options. You can also select a level of hedging (long only or hedged: 25%, 50%, 75%, 100%) to see how the portfolio performs when hedged. You can backtest tons of strategies and I've found myself sitting on Alphaclone for hours at a time creating unique hedge fund portfolios that outperform the S&P500 and various other indices.

Here are some of the highlights of Alphaclone, taken directly from their site:

  • View clone performance annually or across several date spans
  • Compare performance over time against several indexes
  • View current and past holdings for each clone
  • View recent trade activity for each clone
  • Download a spreadsheet for any clone to view monthly return streams
  • Hedge a clone portfolio and view back-tested performance
  • Customize clones by changing the number of holdings and/or rebalance method
  • Select which sectors and/or cap groups to include/exclude in the cloning process
  • Clone your own fund groups

As you can see, there is tons of useful information here. Whether you are a retail investor, money manager, or hedgie yourself, this cloning tool will simplify your investment process. If you like the hedge fund portfolio posts we bring to you on a daily basis, then you are absolutely going to love Alphaclone.

To give you a quick look, we'll show you what Alphaclone pulls up for Warren Buffett's Berkshire Hathaway as an example. This first screenshot below shows the fund overview and highlights current portfolio holdings and sector breakdown.

(click to enlarge)


Directly below the Berkshire fund overview, we get to some of the good stuff: the clone generator. As you can see below, you have full control of what you wish to clone. You can select the number of top portfolio holdings to include (1,3,5,10, or 20) or you can shift to the "best ideas" tab, which opens up another set of criteria from which you can select the number of holdings. You can also select your rebalance method from holding all the positions equal-weighted, or you can "match the manager" where it will allocate the same percentage of the portfolio to each position as the hedge fund manager has deemed in their own portfolio. Next, you can also set hedging parameters. You can run long only, with a 25% hedge, a 50% hedge, a 75% hedge, or fully 100% hedged.

(click to enlarge)


Directly below the clone generator you can see the performance breakdown of your clone. You can select which indices to compare the clone to, and you can view the performance over a myriad of timeframes. Below the graph you have all kinds of useful information such as turnover, alpha, beta, and the correlation to the index. Additionally, Alphaclone shows you the volatility, sharpe ratio, and max drawdown comparatively as well. If you switch from the "1 year" to the "Annual data" tab, you can see performance data for the clone you've created against the index you've selected, broken down by each year. The historical information and backtesting is very comprehensive. And, you can export all of the info to Microsoft Excel, too.

(click to enlarge)


Lastly, at the very bottom of Berkshire's page, you'll see the current holdings as deemed by the portfolio clone you've selected. You can then see whether Berkshire has added to or reduced a specific position, and you can view their past portfolios as well.

(click to enlarge)


As you can see, there is an absolute wealth of information available, and that's only covering a single fund. Stay tuned, as next week we'll walk you through one of Alphaclone's pre-arranged fund groups: the Tiger Cub clone (a group of hedge funds that Market Folly readers should be very familiar with). This clone of all the ex-Tiger Management hedge funds has beaten the S&P500 by 15.5% annualized since 2000. And, we'll also be debuting a special Market Folly clone where we have hand selected a group of hedge funds for our own unique clone.

Head over and check out Alphaclone. It is easily one of the most useful financial market (and hedge fund specific) tools we've ever come across. And, they're running a special right now where you can get full membership for 50% off. They also have a basic membership setting and a free guest pass that has limited access. Once you get a taste of the possibilities, I guarantee you'll want to upgrade to full access. Full disclosure: I do receive a small commission if you sign-up, but I want to be explicitly clear that this is not some blind sales post; I approached them. I use Alphaclone on a daily basis and I think that fact speaks for itself. It has completely streamlined my hedge fund portfolio tracking/cloning process. If you try it out you'll see that it falls directly in line with what we do here at MF every single day. If you like MarketFolly, then you will love Alphaclone, it's as simple as that.

Update: Our 2nd article on Alphaclone is now up as well. This next article details how you can combine multiple hedge fund managers into one cohesive portfolio. In particular, it focuses on the Tiger Cub hedge fund managers. Enjoy the second post!


What We're Reading 4/3/2009

The Pleasure of Plastic (Visa) [Barron's] ~ highlighting this since so many funds we cover on the blog are long V

Meredith Whitney: Regional Banks are the Future. Also, see the NY Mag Profile on Whitney. [WSJ & NY Mag]

How Hedge Funds Will Survive [Slate]

Economic impact of increased US savings [McKinsey Quarterly]


Thursday, April 2, 2009

$1000 Prize: Guess the Nasdaq Close Challenge

*Update* Entry is now closed! Best of luck to everyone who entered!

Want to win $1000?

Yea, we thought so! Blain over at StockTradingToGo has started a great contest that we wanted to alert our readers to. It's basically a financial blog community battle royale and we think Market Folly readers can take home the big prize.

How do I enter?

The challenge: Write a comment below this post here on MarketFolly with your guess as to what you think the NASDAQ Composite Index will close at on Thursday, April 30th, 2009 (two decimals included: i.e. 1538.64).

It's as simple as that! Please note that you can ONLY post your guess once... you can't run around and enter on other blogs. So, represent Market Folly and post your guess below because its free to enter!


Entries must be posted in the comments section of this post on MarketFolly by Sunday, April 5th at 9pm EST... no exceptions!

Remember, do NOT post your guess anywhere else or you'll be disqualified. ONLY post your guess here at Market Folly. Winner with the correct guess of the Nasdaq close will get $1000 courtesy of Blain and his site.

Good luck everyone!


Chase Coleman's Tiger Global 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 Chase Coleman's Tiger Global. Chase Coleman is yet another 'Tiger Cub,' or manager who learned their trade under the watch of Julian Robertson while at Tiger Management. We've already covered many of the 'Tiger Cub' funds' portfolios including Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, Chris Shumway's Shumway Capital Partners, and John Griffin's Blue Ridge Capital. And, late last year, many of these managers gathered at a 'Tiger Cub' hedge fund manager panel, where they laid out investment theses for the future.

Chase Coleman attended Williams College and started Tiger Global with the blessing of Julian Robertson after learning the ways of success at Tiger Management. His focus has always been on smaller cap names and on technology. Although, he has since expanded his horizons with time. In 2007, Tiger Global returned 70%, and from 2001-2007, Coleman bolstered an average return of 47%. In terms of activity, we just recently posted about Tiger's amended 13D filing on Longtop Financial Technologies (LFT).

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):
Microsoft (MSFT)
SPDR S&P 500 (SPY)
Walmart (WMT)
Johnson & Johnson (JNJ)
Discovery Communications (DISCK) C-shares
Google (GOOG)
Philip Morris (PM)
JA Solar (JASO)
Altria (MO)
Broadridge Financial (BR)
Diamonds (DIA)
Burlington Northern (BNI)
Discovery Communications (DISCA) A-shares
ishares Russell 2000 (IWM)
Yingli Green Energy (YGE)
ishares Russell 2000 Value (IWN)
ETrade (ETFC)
Hill Rom (HRC)
Ultrashort Real estate (SRS)


Some Increased Positions (A few positions they already owned but added shares to)
LDK Solar (LDK): Increased by 260%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
CSX (CSX): Reduced by 90%
Apple (AAPL): Reduced by 71%
Transdigm (TDG): Reduced by 39%
Lorillard (LO): Reduced by 25.9%
Mastercard (MA): Reduced by 20.2%
Visa (V): Reduced by 17.7%


Removed Positions (Positions they sold out of completely)
Washington Mutual (WAMUQ)
Vocus (VOCS)
Hovnanian (HOV)
China Security (CSR)
Fifth Street (FSC)
Thor (THO)
A-Power (APWR)
Ambac (ABK)
iStar Financial (SFI)
Emcore (EMKR)
Under Armour (UA)
Colonial Bancgroup (CNB)
Comerica (CMA)
Discovery Holding (DSY)
Regions Financial (RF)
Cavium Networks (CAVM)
Meredith (MDP)
True Religion (TRLG)
Service Corp (SCI)
Data Domain (DDUP)
First Horizon (FHN)
Marshal & Ilsley (MI)
Huntington Bancshares (HBAN)
General Motors (GM)
Zions Bancorp (ZION)
Sina Corp (SINA)
Coach (COH)
SBA Communications (SBAC)
America Movil (AMX)
American Tower (AMT)


Top 15 Holdings (by % of portfolio)

  1. Microsoft (MSFT): 12.89% of portfolio
  2. SPDR S&P500 (SPY): 12.74% of portfolio
  3. Mastercard (MA): 10% of portfolio
  4. Lorillard (LO): 7.8% of portfolio
  5. Visa (V): 7.44% of portfolio
  6. Longtop Financial Technologies (LFT): 6.9% of portfolio
  7. Qualcomm (QCOM): 6.56% of portfolio
  8. Walmart (WMT): 5.76% of portfolio
  9. Transdigm (TDG): 3.71% of portfolio
  10. Mercadolibre (MELI): 3.2% of portfolio
  11. Johnson & Johnson (JNJ): 2.67% of portfolio
  12. Discovery Communications (DISCK): 2.38% of portfolio
  13. Google (GOOG): 1.64% of portfolio
  14. LDK Solar (LDK): 1.5% of portfolio
  15. Philip Morris International (PM): 1.48% of portfolio


Some of their biggest moves included sales of American Tower (AMT) and CSX (CSX). AMT was previously almost a 12% position for them, and no they no longer own it. While they still hold CSX, it was previously nearly a 12% position for them and now its only a 1% holding. The sale of AMT is even more-so interesting considering the fact that many other 'Tiger Cub' hedge funds owned/own AMT in size. We'll have to see what everyone else does with their position. In terms of additions, they added Microsoft (MSFT) as a new holding this past quarter and brought it all the way up to the top holding in the portfolio. Additionally, their large addition of SPY (S&P500 ETF) will have served them well, assumming they were still holding when the market started rallying significantly. Assets from the collective long US equity, options, and note holdings were $3.37 billion last quarter and were down to $2.2 billion this quarter. We cover a new hedge fund each day and you can see the complete list of hedge fund portfolios here.

We've already covered:


David Einhorn's Greenlight Capital Files Amended 13D on MI Developments (MIM)

In an amended 13D filed with the SEC on March 31st, David Einhorn's hedge fund Greenlight Capital has disclosed a 12.3% ownership stake in MI Developments (MIM). The filing was made because on March 30th, 2009, "counsel to Greenlight Inc. submitted a complaint to the Ontario Securities Commission in an effort to ensure MID’s compliance with applicable minority protection regulations prior to entering into certain transactions with its subsidiary, Magna Entertainment Corporation (“MEC”)." As per the filing, the aggregate amount of shares beneficially owned is 5,655,235.

Since this is an amended 13D filing, indicating an activist stake, there's obviously lots going on behind the scenes in regards to Magna's auction plan and this filing references that. For the rest of Greenlight's portfolio, check out their most recent 13F filing, which details their positions as of December 31st, 2008. Since December, Greenlight has been pretty active, as we've also covered their latest new positions in Jones Apparel (JNY) & Harman (HAR), as well as their most recent 13G filing on Ticketmaster (TKTM). Additionally, we've noted in that Einhorn had picked up positions in gold (GLD) & gold miners (GDX) among other things, as noted in our Greenlight investor letter 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 was -1.5% for February 2009 and sits at -0.03% for the year as of the end of February, as mentioned in our latest hedge fund performance numbers list. 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,

MI Developments is "a real estate operating company engaged in the ownership, management, leasing, development and acquisition of industrial and commercial real estate properties. The Company also own land for industrial development and own and acquire land that would be developed for mixed-use and residential projects."


Bill Luby's Rules of Trading

Over the past weekend, we read a great list of trading rules. The piece was by Bill Luby, the author of the VIX and More blog you'll find on our blogroll. We've been longtime readers of his blog and wanted to highlight it to MarketFolly readers who may not be aware.

Here's his list:

"As requested, here are ten overriding principles that have survived the past five years, through bull and bear markets:

  1. Always live to fight another day
  2. Entries must have a statistical edge
  3. Patience and discipline
  4. Be a jellyfish (swim with the current)
  5. Trade only liquid securities
  6. Focus on trying to capture the middle 80% of a move
  7. Know your exit points when you open a position (and stick to them!)
  8. When in doubt, reduce position size by 50%
  9. Limit losses to 2% of total equity for any single trade
  10. Start each day with a clean financial and emotional slate

The above list is relatively generic, but it helped provide me with a framework for organizing how I would approach trading as a business, what strategies I should adopt, how those strategies should be executed, and ultimately defining what success should look like.

Trading rules are vitally important - as is knowing when they should be broken. Even more important, I believe, is the process that one goes through in order to arrive at these rules and to make sure that as new market situations unfold and new blind spots are revealed, the rules and guidelines are enhanced to maximize the opportunity for the trader to continue to grow and develop."



Great stuff from Bill which I'm sure many of you all can implement into your own regimen. Make sure to check out his blog. And also, if you want another great set of trading rules, make sure to check out noted trader Dennis Gartman's Rules of Trading as well.


Maverick Capital Makes Silly Calculation Error

In a recently further amended 13G filing with the SEC, hedge fund Maverick Capital has updated their position in CSII. In a very silly mistake, Maverick has noted in the amended filing that they "inadvertently reported a miscalculation of the percentage" (of shares beneficially owned by the reporting persons). In the initial amended 13G filing, Maverick had a 16.2% stake in the company, which is a miscalculation. Now, as you below, they are listed as owning 15.3%.

So, their shares owned amount remains the same, but the percentage ownership stake (as calculated by them) has been adjusted to correct their error. Maverick now shows a 15.3% stake in Cardiovascular Systems (CSII) with 2,228,441 aggregate amount beneficially owned. This just goes to show that while many hedge funds have some very talented minds, everyone makes mistakes and is human.

This was a new position for them as of March 10th, as they did not own it when we covered their portfolio prior to that. Again, please note, Maverick has not altered the amount of shares they own. They are simply amending the filing to correct their calculation error.

If you're unfamiliar with Maverick, here's their background: Lee Ainslie started Maverick Capital back in 1993 with $38 million. Nowadays, the fund is worth $4 billion. Ainslie, like many of the other fund managers we've profiled, has a background rooted in learning from legendary great Julian Robertson at Tiger Management. These proteges (nicknamed 'Tiger Cubs') learned from the best and have had great success running their own funds. Some of the other Tiger Cubs include Stephen Mandel's Lone Pine Capital and Andreas Halvorsen's Viking Global. Maverick's strategy is straight up stock picking, both long and short. While they focus on both the long and short sides of the book, they do not employ pairs trades.

They try to hedge their positions like the true definition of a hedge fund. Maverick uses a value approach (obviously learned from Julian) and one of their most popular metrics is finding companies and comparing their enterprise value to sustainable free cash flow. Their Maverick Fund finished -26.2% for 2008, as noted in our year-end hedge fund performance numbers post.

Taken from Google Finance,

Cardiovascular Systems is "a biopharmaceutical company focused on discovering, developing, in-licensing and commercializing anti-infective products. The Company had been developing its product candidate REP3123, an investigational narrow-spectrum antibacterial agent for the treatment of Clostridium difficile (C. difficile) bacteria and C. difficile infection and its other anti-infective programs based on its bacterial deoxyribonucleic acid (DNA) replication inhibition technology."


Wednesday, April 1, 2009

Thomas Steyer's Farallon 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, we have Thomas Steyer's Farallon Capital Management. Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate.

For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and had suspended withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. Some of Farallon's portfolio performance is available here and you can also read one of their investor letters from last year. In terms of more recent activity, we had noted in early February that Farallon had sold out of numerous positions (via 13D and 13G filings). And, just yesterday, Farallon updated their positions in Freightcar America (RAIL) and Capitalsource (CSE).

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):
n/a


Some Increased Positions (A few positions they already owned but added shares to)
Mastercard (MA): Increased by 64%
Fidelity National (FIS): Increased by 46.3%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Sherwin Williams (SHW): Reduced by 85.5%
America Movil (AMX): Reduced by 67%
Oracle (ORCL): Reduced by 50.5%
Sandridge Energy (SD): Reduced by 48.8%
Burlington Northern (BNI): Reduced by 48%
Freightcar America (RAIL): Reduced by 24.7%
Cablevision (CVC): Reduced by 23.8%
Wendys Arbys (WEN): Reduced by 19.2%
Geoeye (GEOY): Reduced by 14.8%


Removed Positions (Positions they sold out of completely)
Sciele Pharma (inactive)
Sealy (ZZ)
Abbott Labs (ABT)
National City (NCC)
SBA Communications (SBAC)
Symantec (SYMC)
Barr Pharma (BRL)
Visa (V)
Liberty Media (LMDIA)
Alcon (ACL)
Sealed Air (SEE)
ishares Biotechnology (IBB) Puts
Verisign (VRSN)
Qualcomm (QCOM)
Netapp (NTAP)
Seagate (STX)
Amylin (AMLN)
Applied Biosystems (ABI)
Exco Resources (XCO)
Zimmer Holdings (ZMH)
Gilead Sciences (GILD)
Hospira (HSP)
Marriott International (MAR)
Apple (AAPL)
JB Hunt (JBHT)
Research in Motion (RIMM)
ishares Emerging Markets (EEM) Puts
Schlumberger (SLB)
Williams (WMB)
ishares Russell 2000 (IWM) Puts


Top 15 Holdings (by % of portfolio)

  1. Capitalsource (CSE): 22.42 % of portfolio
  2. Mastercard (MA): 21.33% of portfolio
  3. WendysArbys (WEN): 7.85% of portfolio
  4. Cablevision (CVC): 7.34% of portfolio
  5. Fidelity National (FIS): 5.73% of portfolio
  6. Burlington Northern (BNI): 4.2% of portfolio
  7. Sherwin Williams (SHW): 4.2% of portfolio
  8. Transdigm (TDG): 3.5% of portfolio
  9. Oracle (ORCL): 3.4% of portfolio
  10. America Movil (AMX): 3.2% of portfolio
  11. MI Developments (MIM): 3.17% of portfolio
  12. Knology (KNOL): 2.9% of portfolio
  13. Pinnacle Entertainment (PNK): 2.4% of portfolio
  14. Sandridge Energy (SD): 2.12% of portfolio
  15. Geoeye (GEOY): 1.96% of portfolio


Prevalent selling was the name of the game for Farallon, as assets listed in the 13F filing were way down this quarter. Previously, they held $3.69 billion and now show only $871 million worth of positions this quarter. This is a prevalent theme we've noted amongst hedge funds (and really everyone for that matter). Deleveraging was continuing last quarter and it will be interesting to see in the next round of 13F's if these founds were flocking back to equities, given the recent rally. The were only a few notable changes to their portfolio in terms of specific names. Their addition of more Mastercard (MA) shares, bringing it up to their 2nd largest holding was noticeable. Additionally, their large sales of Sherwin Williams (SHW) and America Movil (AMX) knocked it down on the list of their top holdings. 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.


Forbes' Billionaire List

Well, fresh off our posts on the Top25 highest paid hedge fund managers of 2008, as well as our biggest losers of 2008, we've stumbled upon Forbes' annual Billionaire List. The list encompasses all industries; but, as you can imagine, there are a lot of big hedge fund names on this list. Without further ado, the list of alternative managers on Forbes' list:

Rank Billionaire Firm Net Worth (billions)
29 George Soros Soros Fund Management $11
43 Carl Icahn Icahn Associates $9
55 James Simons Renaissance Technologies $8
76 John Paulson Paulson & Co. $6
87 Steven Cohen SAC Capital Advisors $5.5
164 Stanley Druckenmiller Duquesne Capital Management $3.5
164 Bruce Kovner Caxton Associates $3.5
164 Daniel Ziff Och-Ziff Capital Management $3.5
164 Dirk Ziff Och-Ziff Capital Management $3.5
164 Robert Ziff Och-Ziff Capital Management $3.5
205 Henry Kravis Kohlberg Kravis Roberts $3
205 Sam Zell Equity Group Investments $3
224 Paul Tudor Jones Tudor Investment Corp. $2.8
234 John Arnold Centaurus Energy Advisors $2.7
246 George Roberts Kohlberg Kravis Roberts $2.6
261 Ray Dalio Bridgewater Associates $2.5
261 Stephen Schwartzman The Blackstone Group $2.5
296 Philip Falcone Harbinger Capital Management $2.3
334 Tom Gores Platinum Equity $2
334 Edward Lampert ESL Investments $2
334 Daniel Och Och-Ziff Capital Management $2
334 T. Boone Pickens BP Capital $2
450 David Shaw D.E. Shaw Group $1.6
468 Louis Bacon Moore Capital Management $1.5
468 Israel Englander Millennium Partners $1.5
468 Kenneth Griffin Citadel Investment Group $1.5
522 William Conway The Carlyle Group $1.4
522 Daniel D'Aniello The Carlyle Group $1.4
522 Thomas Lee Lee Equity Partners $1.4
522 David Rubenstein The Carlyle Group $1.4
559 Alec Gores Gores Group $1.3
559 Raj Rajaratnam Galleon Group $1.3
559 Julian Robertson Tiger Management $1.3
559 Wilbur Ross WL Ross & Co. $1.3
601 Stephen Mandel Lone Pine Capital $1.2
601 David Tepper Appaloosa Management $1.2
647 Leon Black Apollo Management $1.1
647 John Henry John W. Henry & Co. $1.1
647 Marc Lasry Avenue Capital Management $1.1
701 David Bonderman TPG $1
701 Leon Cooperman Omega Advisors $1
701 James Dinan York Capital $1
701 Glenn Dubin Highbridge Capital Management $1
701 Theodore Forstmann Forstmann Little $1
701 Henry Swicea Highbridge Capital Management $1


As we said, some very familiar names fill up that list. To get a better idea as to how well their specific hedge funds are doing, check out Alpha's hedge fund rankings. And, for a list of those with converse fortunes, check out the recent list of 2008 hedge fund closures. In all, there are 793 richest men in the world, led by the #1 ranked Bill Gates (founder of Microsoft). In terms of the investment industry, 45 billionaires made the list.

Source: Forbes


Tuesday, March 31, 2009

Criticisms of QAI, the New Hedge Fund Exchange Traded Fund (ETF)

After all the crazy exchange traded funds (ETFs) that have been released over the past few years, we thought we had seen it all. But, leave it to IndexIQ to take it to the next level . They've released the IQ Hedge Multi-Strat ETF, ticker QAI. This new ETF is not a hedge fund itself and does not invest in hedge funds. However, it seeks to replicate their hedge fund multi-strategy index, where they use long/short equity, global macro, market neutral, event-driven, emerging markets, and fixed income arbitrage. We thought this was an interesting offering seeing how we track hedge fund portfolios here at MarketFolly. But, upon further examination, we found a few flaws with this vehicle.

Basically, IndexIQ has laid out exposure to all the major hedge fund strategies and will try to seek solid returns based on a collection of these strategies. What is interesting about this ETF is that it is investing in other ETFs as part of its strategy. Some of their top holdings include: iShares Aggregate Bond (AGG): 23.91%, iShares Barclays 1-3 Year Treasury (SHY): 18.31%, and iShares Emerging Markets (EEM): 11.04%. The immediate criticism here would be investors asking, "Why do I need to use this ETF when I can just look at your top holdings and allocate my money appropriately to the ETFs QAI is using?" And, that makes perfect sense. (After all, IndexIQ will post daily holdings to their website and will rebalance on a monthly basis). Investors could simply buy the same ETFs QAI is invested in.

The flaw in this criticism would be the fact that ETFs invest in a myriad of holdings and so you would have to truly stay on top of all the holdings, not just the top few, in order to truly replicate the same performance as QAI. And, since QAI rebalances monthly, you'd also have to rebalance your holdings monthly (not to mention all the trading commissions you would incur with all the buying & selling). This brings us to our first point: Instead of an exchange traded fund (ETF), QAI is more like an exchange traded fund of funds replicating a hedge fund of funds strategy.

The current weightings in QAI are split 33.33% across the following strategies: equity market neutral, event-driven, and fixed income arbitrage. It also has a -16.67% position in long-short and everything else is comprised of global macro and emerging markets. The ultimate problem here is that QAI doesn't have any short positions. But, IndexIQ says they have dealt with this by investing in inverse ETFs to allocate short exposure. This is a giant red flag, considering how leveraged inverse ETFs are horrible at tracking their indexes over a longer period of time. As daytrading vehicles, they're fine. But, the minute you hold them overnight (past the inverse ETF's daily reset), you're potentially screwed. Here's the list of QAI's holdings and portfolio breakdown, courtesy of IndexUniverse. This closer look reveals a problem:

  • 72.79% fixed income, including 32.73% in broad-based bond indexes; 27.71% in short-term Treasuries; 10.54% in junk bonds; and 1.81% in TIPS
  • 13.33% in emerging market stocks, the only long equity position in the portfolio
  • 9.47% in commodities and currencies
  • 4.41% in various inverse funds
(click to enlarge)


As you will note in their complete holdings list above, QAI holds a couple of Ultrashort ETFs. We wanted to show why investing in these ultra-short ETFs is a bad idea and have chosen one of their holdings, SRS, for the example. QAI is invested in SRS, the Ultrashort Real-Estate ETF. SRS seeks 2x the inverse daily performance of IYR, the underlying real estate index ETF. Now, this seems all 'fine and dandy,' but here is the problem we've highlighted: 2x inverse ETFs do not track their indexes accurately over time. Let's look at the year to date performance of SRS and IYR, the index SRS seeks to replicate:

(click to enlarge)


As you can see, IYR is -35.6% ytd and SRS is +20.3% ytd (as of March 30th, 2009). And here is the glaring problem. SRS is theoretically supposed to be 2x in the inverse performance of IYR. So, if IYR was -35.6%, then SRS should have returned +71.2%. Yet, we see that in reality, SRS is up only 20.3%. So, we obviously have a problem. And, the problem is the fact that QAI has chosen ultrashort ETFs as the proxy for their short exposure. The problem with these ultrashort ETFs is they seek daily replication of their indexes and as such, reset on a daily basis. The compounding is then skewed over time (hence the vast error in tracking between IYR and SRS over extended periods of time). Ultrashort ETFs are appropriate as quick trading vehicles. They are not appropriate as investments.

Now, the 'positive' of this situation (if you even want to call it that), is that QAI has only allocated 0.46% of its assets to SRS (and 4.41% overall to inverse funds). So, the overall exposure to these tracking-error landmines is small. But, you're still exposed. Given the fact that QAI rebalances monthly, you'll have to be on the lookout as they could potentially increase Ultrashort exposure on any given month.

Secondly, we want to address the issue of expense ratios. Not only are you paying QAI an expense ratio (fee) to essentially allocate your money to other ETFs (with underlying expense ratios of their own). But, you're also paying QAI an expense ratio to allocate your money into proxies that don't even give you proper index tracking (i.e. SRS & other Ultrashorts). You are being passively 'double dipped' on fees. SRS charges an expense ratio, and then QAI charges you an expense ratio to invest you in SRS (and other ETFs). Maybe its just us, but it seems as if the 'cons' are outweighing the 'pros' thus far. Let's move on to the next potential flaw: the fact that it's more of a fund of funds ETF than an outright hedge fund ETF.

There could be some confusion when investors see that QAI is deemd a 'Hedge Fund ETF.' We think a more appropriate title is a 'Fund of funds ETF.' IndexIQ somewhat addresses this issue by labeling QAI a 'Multistrategy Hedge Fund ETF.' This is politically correct, since QAI technically invests in multiple hedge fund strategies. However, we think the fund of funds terminology is more appropriate and here's why: Not only does QAI invest in numerous hedge fund strategies (like a fund of funds), but it also charges double the fees. QAI will charge a 0.75% expense ratio, which is right around the norm for typical ETFs. But, since QAI is investing in other ETFs, you will also be charged those underlying ETF expense ratios passively. (For instance, QAI is charging you 0.75% to invest in vehicles such as SRS, which has its own underlying expense ratio of 0.95% that you will also be passively charged).

A hedge fund of funds essentially does the same thing, as they charge you a fee (slightly over 1% or so) to diversify your money into numerous hedge funds who also charge underlying fees (2% management and 20% performance fee). The upside of QAI (if you want to call it that) is that you won't be charged the astronomical fees most hedge funds charge. Instead, you're 'only' paying expense ratios of around 1%. But, the point is that QAI is still charging you a second set of fees passively, through the investments they purchase (other ETFs). Something just doesn't sit right when you think about how you're paying IndexIQ an expense ratio to invest you into other vehicles which have an underlying expense ratio themselves.

Its interesting to note that this isn't the first vehicle that IndexIQ has created, as their IQ Alpha Hedge Strategy Mutual Fund was -4.1% for the year. So, performance wise, they seem to be doing alright with that vehicle. We'll have to see if QAI has success on a relative basis and how accurately it replicates the index it seeks to track.

The vehicle itself (QAI) is an interesting idea as it could potentially give hedge fund strategy exposure to investors who typically do not have access to such alternatives due to regulations and restrictions. So, we definitely applaud the innovation. But, in its current incarnation and nomenclature, QAI has some problems. It is not an ETF, but rather an ETF of other ETFs (or, as we like to call it, an exchange traded fund of funds). And, instead of being charged only one expense ratio, you will passively be 'double-dipped' with fees of the underlying ETFs they invest in, in addition to the expense ratio QAI charges. While QAI's current designation as a "Hedge Fund Multi-strategy ETF" may be politically correct, we think it should be designated a "Fund of funds ETF."

Lastly, and probably most importantly, QAI will not be short-selling. A hedge fund in the true sense of the definition has to have short exposure. And, the folks at IndexIQ know this. The problem is, they've chosen to address this issue by investing in shortselling vehicles that were created for trading. Ultrashort ETFs are great for quick trades. They are horrible for investments. They do not track their indexes well over time and therein lies QAI's main problem. Sure, QAI will collectively only have slight exposure to Ultrashort ETFs (although it will change monthly). But, the fact that they have any exposure at all is a problem.

In the end, this is yet another addition to the world of interesting ETFs. And, since we generally like to stray away from leveraged ETFs as investment vehicles, we'll watch QAI from the sidelines for now and will stick to tracking hedge fund portfolios for the time being.


Shumway Capital Partners (Chris Shumway) 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 Shumway Capital Partners run by Chris Shumway. Shumway started his own fund after leaving well-known Julian Robertson's Tiger Management. And thus, as a progeny of Robertson, he is a part of what people call the 'Tiger Cubs' (people who have started their own firms after succeeding at Tiger). We've already covered many of the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, and John Griffin's Blue Ridge Capital.

Taken from our post on 'Tiger Cub' biographies, "Chris Shumway is the Founding Partner of Shumway Capital Partners (“SCP”), an investment management firm founded in 2001. SCP, which manages a multibillion dollar group of private investment funds, uses a private equity-like research model for public market investment on a global basis. Prior to forming SCP, Mr. Shumway was a Senior Managing Director at Tiger Management (1992-1999), an Analyst at Brentwood Associates (1990-1991), and an Analyst at Morgan Stanley & Co. (1988-1990). He received an M.B.A. from Harvard Business School (1993) and a B.S. from the McIntire School of Commerce at the University of Virginia (1988)." As noted in our latest hedge fund performances, Shumway's Ocean Fund was up 2.54% for February and 5.75% for the year as of then. At a 'Tiger Cub' hedge fund manager panel, Shumway suggested that buying stocks that were down largely due to hedge fund liquidations would be a winning strategy longer-term. Lastly, in terms of recent activity, Shumway has filed a 13G on Equinix (EQIX).

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):
EMC (EMC)
Savvis (SVVS) Bonds
SBA Communication (SBAC) Bonds
NII Holdings (NIHD) Bonds
Celanese (CE)
Equinix (EQIX) Bonds
Stryker (SYK)
Thermo Fisher Scientific (TMO)
Union Pacific (UNP)
Equinix (EQIX)
American Tower (AMT)
Biogen Idec (BIIB)
Visa (V)
St Jude (STJ)


Some Increased Positions (A few positions they already owned but added shares to)
News Corp (NWS-A): Increased by 153%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
NII Holdings (NIHD): Reduced position by 97.9%
Cisco Systems (CSCO): Reduced position by 96.7%
SBA Communications (SBAC): Reduced position by 96.5%
Potash (POT): Reduced position by 96.4%
Qualcomm (QCOM): Reduced position by 80%
CVS Caremark (CVS): Reduced position by 78%
Teva Pharma (TEVA): Reduced position by 57%
Mastercard (MA): Reduced position by 27%
Waters (WAT): Reduced position by 11%


Removed Positions (Positions they sold out of completely)
Mercadolibre (MELI)
Chipotle (CMG-B)
Sirius Satellite Notes
Google (GOOG)
Wyeth (WYE)
Focus Media (FMCN)
Medoc Health (MHS)
Annaly Capital Management (NLY)
Zimmer Holdings (ZMH)
Apple (AAPL)


Top 20 Holdings (by % of portfolio)

  1. Qualcomm (QCOM) Calls: 15.6% of portfolio
  2. St Jude Medical (STJ): 11.5% of portfolio
  3. Mastercard (MA): 11.3% of portfolio
  4. Visa (V): 9.6% of portfolio
  5. Biogen Idec (BIIB): 9.6% of portfolio
  6. American Tower (AMT): 7% of portfolio
  7. Waters (WAT): 6.7% of portfolio
  8. Equinix (EQIX): 5% of portfolio
  9. Teva Pharma (TEVA): 3.8% of portfolio
  10. News Corp (NWS-A): 3.37% of portfolio
  11. Union Pacific (UNP): 3.1% of portfolio
  12. CVS Caremark (CVS): 2.5% of portfolio
  13. Qualcomm (QCOM): 2.4% of portfolio
  14. Thermo Fisher Scientific (TMO): 2.3% of portfolio
  15. Stryker (SYK): 1.7% of portfolio
  16. Hansen Natural (HANS): 0.7% of portfolio
  17. NII Holdings (NIHD) Bonds: 0.5% of portfolio
  18. Equinix (EQIX) Bonds: 0.4% of portfolio
  19. Celanese (CE): 0.36% of portfolio
  20. NII Holdings (NIHD) 2nd set of Bonds: 0.34% of portfolio



Shumway joins numerous other prominent hedge funds (and in particular Tiger Cubs) with Visa (V) as a top holding. They also sizably increased their position in News Corp (NWS-A) and brought their new stake in Union Pacific up to a top holding. Assets from the collective long US equity, options, and note holdings were $2.1 billion last quarter and were $1 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.


Thomas Steyer's Farallon Capital Updates Positions in FreightCar America (RAIL) & Capitalsource (CSE)

In a new 13G filing made due to activity on March 19th, 2009, Thomas Steyer's Farallon Capital Management has disclosed a 6.2% ownership stake in FreightCar America (RAIL) with an aggregate amount of shares beneficially owned of 734,883. This is up from the 542,115 shares they owned as of December 31st, 2008 (disclosed in their 13F filing). So, Farallon has definitely been steadily increasing their position in this name. Stay tuned because on Wednesday (4/1) we'll be examining Farallon's entire portfolio as detailed in their most recent 13F filing. In the mean time, you can check out some of the other prominent hedge fund portfolios we've covered in our portfolio tracking series.

In other activity, Farallon also has filed an amended 13D on Capitalsource (CSE), disclosing a 10.7% ownership stake with 32,445,905 shares as an aggregate amount beneficially owned. This filing was made due to activity on March 23, 2009. This is a decrease in their position, as they previously owned 42,270,274 shares back on December 31st, 2008.

Background info on Farallon: Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate.

For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and had suspended withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. Some of Farallon's portfolio performance is available here and you can also read one of their investor letters from last year. In terms of more recent activity, we had noted in early February that Farallon had sold out of numerous positions (via 13D and 13G filings).

Taken from Google Finance,

FreightCar America is "a manufacturer of aluminum-bodied railcars in North America, based on the number of railcars delivered. The Company specializes in the production of aluminum-bodied coal-carrying railcars, with a range of railcar types, including aluminum-bodied and steel-bodied railcars."

Capitalsource is "a commercial lender that provides financial products to middle market businesses. Through its wholly owned subsidiary, CapitalSource Bank, the Company provides depository products and services in southern and central California."


Monday, March 30, 2009

Jeffrey Gendell's Tontine Associates 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 Jeffrey Gendell's Tontine Associates. If you're unfamiliar with Tontine, they specialize in macro investing and take very large, concentrated positions in companies Gendell feels will benefit from those macro themes. Additionally, he will take on an activist role when necessary, to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005. Conversely, 2008 was the year from hell for Tontine.

Jeffrey Gendell's hedge fund firm has been quite busy over the past year, and in particular over the past few months. As two of his hedge funds have closed down, his portfolio has been shuffled around all over the place. (Some of their recent changes can be seen here). As we've detailed before, Tontine has recently sold out of 15 positions, as well as filed amended 13D's to many of their holdings, and then they most recently sold out of 9 more positions. They closed two of their hedge funds: Tontine Capital LP and Tontine Capital Partners LP. Two of Tontine's funds will remain open: Tontine-25 and Tontine Financial. Then, most recently, they filed a 13D on Neenah Enterprises (NENA).

As listed in our hedge fund year-end performance numbers post, their Tontine Partners LP fund was -12.1% for December and finished the year -91.5%. Yes, you read that correctly. Their Tontine 25 LP fund was -2.2% for December and ended 2008 -63.6%. As such, Gendell made Alpha's list of 'Biggest hedge fund losers for 2008' (See also top 25 gainers). Gendell also opened the new Tontine Total Return Fund. This fund will not use leverage and will invest in assets deemed undervalued. The portfolio shuffling has been nonstop and we'll continue to monitor things going forward.

It has definitely been an astonishing year for Gendell, whose Tontine firm is named after an annuity invented by Lorenzo de Tonti. In such an annuity, investors contribute and collect dividends. As investors each die off, their share is left to the remaining partners. Therefore, the last man alive receives all the money. Gendell's desire is clearly to be that 'last investor' remaining. Such a goal becomes slightly ironic when you consider his firm suffered monumental losses and almost 'died' this past year. Gendell explains the turmoil they faced in his October letter to investors (.pdf format).

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):
Chart Industries (GTLS)
Ultrashort Financials (SKF)
Englobal Corp (ENG)
Regional Bank HOLDRS (RKH)
Halliburton (HAL)
Oil Service HOLDRS (OIH)


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


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
KBR (KBR): Reduced by 96.5%
Quanta Services (PWR): Reduced by 96%
Trinity Industries (TRN): Reduced by 95.8%
Thomas & Betts (TNB): Reduced by 94%
Shaw Group (SGR): Reduced by 94%
Enersys (ENS): Reduced by 91%
Smith (AOS): Reduced by 88%
Navistar (NAV): Reduced by 85%
Brush Engineered Materials (BW): Reduced by 84.6%
Mastec (MTZ): Reduced by 83%
Nacco (NC): Reduced by 77.7%
Sterling Financial (STSA): Reduced by 76%
MYR Group (MYRG): Reduced by 50%
Sun Bancorp (SNBC): Reduced by 48.7%
Matrix (MTRX): Reduced by 44%
Citigroup (C) Calls: Reduced by 42%
Bank of America (BAC) Calls: Reduced by 36%


Removed Positions (Positions they sold out of completely)
Hovnanian (HOV)
Susquehanna (SUSQ)
MI Homes (MHQ)
Baker (BKR)
Comfort Systems (FIX)
Continental Airlines (CAL)
Internet Capital Group (ICGE)
Furmanite (FRM)
LB Foster (FSTR)
Webster (WBS)
Champion (CHB)
US Airways (LCC)
Whitney (WTNY)
Greenbrier (GBX)
Bank of America (BAC)
Citigroup (C)
YRC Worldwide (YRCW)
Associated Bancorp (ASBC)
Pike Electric (PEC)
Chemtura (CEM)
General Cable (BGC)
Itron (ITRI)
US Steel (X)
Astec (ASTE)
Perini (PCR)
Ultra Financials (UYG)
DST Systems (DST)
Graftech (GTI)
Emcor (EME)


Top 20 Holdings (by % of portfolio)

  1. Exide Technologies (XIDE): 17.75% of portfolio
  2. Integrated Electrical (IESC): 10.6% of portfolio
  3. Bank of America (BAC) Calls: 8.77% of portfolio
  4. Innospec (IOSP): 4% of portfolio
  5. Performed Line Products (PLPC): 3% of portfolio
  6. Citigroup (C) Calls: 2.6% of portfolio
  7. Matrix Service (MTRX): 2% of portfolio
  8. Mastec (MTZ): 1.89% of portfolio
  9. Wabash (WNC): 1.8% of portfolio
  10. Westmoreland Coal (WLB): 1.5% of portfolio
  11. Navistar (NAV): 1.47% of portfolio
  12. Quanta Services (PWR): 1.2% of portfolio
  13. Thomas & Betts (TNB): 1.17% of portfolio
  14. Ferro (FOE): 1.15% of portfolio
  15. Sun Bancorp (SNBC): 1.14% of portfolio
  16. Brush Engineered Materials (BW): 1% of portfolio
  17. Sterling Financial (STSA): 1% of portfolio
  18. Oil Service HOLDRS (OIH): 0.99% of portfolio
  19. Halliburton (HAL): 0.98% of portfolio
  20. North American Energy (NOA): 0.97% of portfolio


Please keep in mind that this portfolio is undergoing a ton of changes and is even more-so 'out of date' than other funds that we cover given their unique circumstances. This is what they reported as of December 31st, 2008 and as we referenced up above, you've got to monitor the 13Ds and 13Gs, as they've been very active filing them January through March. That is the only way to get a truly 'up to date' look at their portfolio, since they've got so much going on at once. So, we highly recommend you check out the links we've posted up above for the most recent activity. This 13F filing is the definition of portfolio unwinding. Since they had to close down two funds, you saw an enormous amount of selling. Assets dropped from $6.5 billion in reported long US equity, options, and note holdings last quarter all the way down to $706 million this quarter. That is some serious unwind and is the direct result of 2 funds closing down. 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 Hedge Fund Manager Losers of 2008

Late last week, we posted up the Top 25 Hedge Fund managers of 2008 in terms of compensation, and now its time to check out Alpha's 'Biggest Losers' of 2008. And, there are some pretty prominent names on the list. Here it is:

  1. Citadel's Ken Griffin: Personal wealth down $2 billion after their two flagship funds lost over 50% in 2008.
  2. ESL Partners' Eddie Lampert: Lost $1 billion in wealth due to losing positions, including his painful Sears Holdings (SHLD) stake.
  3. SAC Capital's Steven Cohen: Personal wealth down around $750 million due to his funds being down over 18%.
  4. Tontine Associates' Jeffrey Gendell: After chronicling Tontine's misfortunes all throughout the year, we learn that Gendell has lost around $625 million in personal net worth.
  5. Lone Pine Capital's Stephen Mandel: He suffered losses with his overseas funds which were -26% and -32%, causing his worth to decline $550 million.
  6. BP Capital's T. Boone Pickens: We've also documented Boone's struggles, as his bad wagers on oil really hurt him. He lost $450 million as his energy fund was down around 60%.
  7. Appaloosa's David Tepper: He lost $425 million as his funds were down over 25%.
  8. Icahn Enterprises' Carl Icahn: Large positions in Motorola (MOT) and Yahoo (YHOO) really hurt him, as his fund was down 35% for 2008, causing Icahn to lose $400 million.

As you can see, some very prominent names, many of whom we've covered on the blog. 2008 was definitely a year to forget for many funds. Alpha's list tallied personal wealth losses of $6.2 billion. We'll have to see if these managers will fare better in 2009. While these gentlemen lost money last year, things could have been a lot worse. They are relieved they aren't on this list: 2008 hedge fund closures. Check out just how well (or poorly) other major hedge funds fared in our 2008 year-end performance figures, and also our recent look at 2009 January & February performance.


For the other side of the trade, make sure to check out the Top 25 Hedge Fund managers of 2008 in terms of compensation as well.