Friday, July 10, 2009

Crude Oil Chart: Technical Analysis Video


So, what's up with crude oil lately? In the span of a year, this commodity has been all over the map and we've been a bit astonished at what we've witnessed. We saw it ramp way up to $140+ last summer. This summer, where's it headed? Very recently, it's dropped from $70 to $60. The guys at Market Club just put out a great crude oil technical analysis video, so check it out if you want to know if crude will keep dropping.


What We're Reading (7/10/09)

More empirical evidence: buy and hold not dead [Value Plays]

Hedge fund clones grow in appeal [FT] - Too bad they don't have the annualized (out)performance history like our MarketFolly hedge fund clone that is seeing 27.9% annualized returns.

Top 25 largest banks - defaulted loan percentage [The Hard Money Pros]


Thursday, July 9, 2009

Recent Hedge Fund News Summary

We're going to try out our hedge fund news summary style post again as readers seemed to like it last time. Except this time around, we'll focus not only on hedge funds but on prominent market strategists and gurus as well. In our previous shotgun hedge fund update, we touched on the latest from George Soros, Och Ziff, Taleb, and a few others. And now here's your daily double shot of hedge fund & market tequila:


Hedge Funds in general saw returns of 9.73% for the year as of around the end of June. This is on track to their best annual start since way back in 1999.

George Soros (Soros Fund Management): Legendary investor and former Quantum Fund manager George Soros was recently out saying that he thinks the US will see a "stop-go" economy for some time. Eventually, he feels fears of inflation will hike interest rates up and as a result, economic growth will suffer. He went on to say that, "The idea of self-correcting markets is a misconception. You cannot prevent bubbles from forming but prevent them from self-reinforcement." Apparently (unbeknownst to us at least), Soros went back into retirement earlier this year after the whirlwind of 2008. If he really is 'retired' again, then we wonder why he is gracing us with his typical dose of (realistic) cynicism. We'll have to find out more in this regard, as this is the first we've heard of it. We have previously covered Soros' holdings in our hedge fund portfolio tracking series.


Bill Gross (PIMCO): 'Mr. Bonds' over at PIMCO is out with his July 2009 outlook and in it he touches on a fact that many seem to have brushed off the market action as their eyes glaze over with 'hope' (whatever that word means). Gross says,

"I was impressed this weekend by an article in the Op-Ed section of The New York Times by staff writer Bob Herbert. “No Recovery in Sight” was the heading and his opening sentence asked, 'How do you put together a consumer economy that works when the consumers are out of work?' That is really all one needs to ask when divining our economy’s future fortune. Unless an optimist can prescribe how to put Humpty Dumpty back together again and shuffle him/her back to work then there can be no return to an 'old normal.' As unemployment approaches 10%, what is less well publicized is that the number of 'underutilized' workers in the U.S. has increased dramatically from 15 to 30 million. Those without jobs, as well as those individuals who only work part-time and have become discouraged and stopped looking, total 30 MILLION people. The number is staggering. Commonsensically, one has to know that many or most of these are untrained for the demands of a green-oriented, goods-producing future economy. Imagine a welding rod in the hands of an investment banker or mortgage broker and you’ll understand the implications quicker than any economist using an econometric model."

He also touched on a phrase we found a bit amusing. Instead of investors typically feasting on asset appreciations and going "Bon Appétit," they are now starving and are going “Non Appétit.” You gotta love silly old Bill with his crazy phrases. We read his outlooks because it makes for good reading, but we kind of gave up on ole Bill a long while ago. Simply put, he thinks that while greed is gone for now, it will certainly be back. You can read his full July outlook here.


Dwight Anderson (Ospraie Funds): This name should ring a bell for Market Folly readers for two reasons. Firstly, because his Ospraie fund blew up and we covered that back in September of 2008. Secondly, you will recall that Anderson was coming back in May and starting two new hedge funds. Well, we're back merely to report that Anderson's new funds went live last month with around $100 million. His new equity fund is focused on companies that are related to commodities and resources while his new commodity fund will invest in the various derivatives related to that asset class. Watch out, the 'bird of prey' is back in the game and they are in-it-to-win-it.


John Meriwether (LTCM, now JWM): Sticking with the hedge fund opening/closure meme, we're happy (?) to report that John Meriwether is shutting down yet another hedge fund. This is really starting to get ridiculous. For those of you unaware, John Meriwether was the founder of Long-Term Capital Management which imploded back in the 1990's and caused a huge ordeal. It was somewhat shocking to see him able to start another fund after such a blowup, but it happened. Yet, we have come full circle again and see that Meriwether's main fund at JWM Partners will be shutting down after it lost 44% between September 2007 and February 2009. Ouch. Oh, and double ouch for the fact that he's shutting down yet another firm. Will this guy ever learn? And, more importantly... will investors ever learn?!


David Rosenberg (Gluskin Sheff & Associates): The notorious market strategist was out with his usual market talk at his new outfit, Gluskin Sheff & Associates. However, he specifically focused on corporate bonds versus equities which intrigued us. He writes, "The comparable yield in the equity market, depending on whether one uses reported or operating P/E multiples on forward or trailing earnings, is little better than 6½%. So corporate debt still trumps stocks. And what this 200 basis point ‘yield gap’ is telling you is that either corporate bond prices will need to rally more down the road or we need to start seeing corporate earnings growth recover sharply enough to pull those multiples down to more attractive levels."

Overall, he thinks that stocks already have a ton of good news priced-in and sees a pullback to 800 on the S&P500. However, he would see that as a buying opportunity and thinks the March lows will hold. The trick here is dealing with an already massive rally in equities from the lows.


Morris Sachs, E.G. Fisher, and Rob Wahl: While these three names might not ring any bells right now, we're here to report that the three gentlemen above will be opening a new hedge fund focused on government bonds named 5:15 Capital Management. The traders have a background at Brevan Howard and RBS Greenwich so they definitely have the credentials. They are starting with around $60 million, with plans to grow it to around $100 million. This hedge fund is intriguing in that its name is derived from a song from the band The Who. The track "5:15" was featured on the album "Quadrophenia" and the founders say they chose the name because they all love the song and band in general.

And, in mocking the hedge fund names typically selected by managers, Sachs said "What are we going to do, try to find another name for the Greek god of money?" Personally, we think someone else out there should create a fund with a name that flat out mocks another hedge fund, to get a little rivalry going. Suggestion: maybe Tontine, due to the irony there. (Confused? See this post).

Fair play to the trio at 5:15 for this random, yet refreshing development. We can't wait to see other new names that pop up now... perhaps 'Enter Sandman Partners'? Or, maybe, in tribute to the king of pop, 'Beat It Capital.' Hmm... we won't hold our breath.


Assan Din: Sticking with the "new-hedge-funds-by-people-you've-probably-never-heard-of" theme, we see that Assan Din is also set to start his own hedge fund after trading for Lehman Brothers. His SaKa Capital will be seeded with $25-50 million and will start trading corporate bonds and derivatives in Singapore in September.


Byron Wien: Just a few days ago, we posted up Pequot Capital strategist Byron Wien's latest commentary. However, this time around he did not deliver his usual dialect regarding the markets. Instead, he took the time to reflect on the closing of the hedge fund firm he was a part of: Pequot Capital. If you haven't read it, we posted up Byron's thoughts here.


Boone Pickens: Although we usually just cover Pickens' hedge fund movements here on Market Folly, this news is still market related in a sense. Remember the "Pickens Plan" and his quest for alternative energy change in the United States? Yea, most people probably don't remember after all this time. To give you a quick refresher, Pickens was seeking the use of various alternatives to replace our dependency on oil and was in the process of building a massive Wind Turbine Farm across Texas.

Well, times are tough because he is suspending plans to build such a farm. While he will still spend $2-3 billion on smaller farms, the grand-daddy plan will have to wait. The delays (per Pickens) were cited to be the drop in natural gas prices and a lack of transmission lines... not to mention the vast slowdown alternative energy companies have seen and the financial turmoil that has affected Pickens as well. After all, when his hedge funds started tanking, he lost a lot of money. So, it looks like we'll have to wait even longer before we see the massive plot of propellers sprawled throughout Texas. This just goes to show how a nice drop in the price of oil (From $140 down to $60) can start to cripple the alternative energy sector. For those interested in Pickens' hedge fund, we recently covered his portfolio here.


Cliff Asness (AQR Capital Management): Yet again, we repeat ourselves: this is starting to get ridiculous. AQR is going to introduce even more "hedge-fund-style mutual funds" starting next month. This is all in a move to continue their expansion into mutual funds in addition to the hedge funds they run. Their AQR Diversified Arbitrage fund launched back in January and this time around they apparently have an arsenal of funds to unleash at the retail investing crowd.

But, then again, this is nothing new as we have seen literally a slew of similar investment vehicles already released. Thus far, we've seen: mutual funds imitating hedge funds, ETFs imitating hedge funds, and even more mutual funds pursuing hedge-like strategies, and then even more ETFs pursuing 'hedgefundesque' strategies. We've covered them all in detail before and we sincerely wonder if this fad will ever cease.

Instead of trying to match hedge fund performances by buying and shorting various index ETFs like those new vehicles do, why not just clone the hedge fund equity portfolios directly like we here at Market Folly have done? After all, with the help of Alphaclone, we've cloned our custom hedge fund portfolio that is seeing 27.9% annualized returns. And no, we're not even joking; check it out.



That wraps up this edition of our hedge fund shotgun round-up, so stay tuned for future updates. In the mean time, check out our previous update, our portfolio tracking series, as well as our most recent profile of Bill Ackman of Pershing Square Capital Management. Also, we would gladly welcome more feedback regarding these 'shotgun' style posts of recent hedge fund news. Hit the comments below or send us an email.


Dan Loeb's Third Point LLC Fancies 'Blank Check' Companies: 13F Filing Q1 2009


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

Next up is Dan Loeb's Third Point LLC, a $2 billion hedge fund firm. Specifically, they deem themselves to be "event driven, value oriented investors." Loeb founded the firm back in 1995 with $3.3 million in seed capital and is still running the show these days. While Third Point is technically an activist fund, Loeb often has numerous passive investments as well. Loeb himself is quite well known for his searing and critical letters to management of various companies. Third Point has seen annual returns averaging over 15% since inception (including the crazy year that was 2008), a Sharpe Ratio of 0.9, and a correlation to the S&P500 of 0.4. As per their April investor update, we saw that they were net long healthcare and utilities, while being heavily net short consumer at that time.

Their Offshore fund was up 7.4% for the month of May 2009. We covered Third Point's performance and more in our May hedge fund performance numbers post. Additionally, you can see some of Third Point's market commentary in their Q1 2009 investor letter. For the month of June 2009, Third Point was up 1.8%, bringing their year to date total to up 7.2%.

In terms of more recent activity, we revealed that Third Point filed an amended 13D on Maguire Properties (MPG). The following were their long equity, note, and options holdings as of March 31st, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Wyeth (WYE), Pfizer (PFE), Schering Plough (SGP-PB) B shares, Amedisys (AMED), Schering Plough (SGP), Life Partners Holdings (LPHI), Legg Mason (LMI).


Some Increased Positions (A few positions they already owned but added shares to)
Nothing of significance


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
SPDR Gold Trust (GLD): Reduced by 94%
Life-Time Fitness (LTM): Reduced by 79%
Core-Mark Holding (CORE): Reduced by 20%


Removed Positions (Positions they sold out of completely)
Wachovia (WB), Exco Resources (XCO), Potash (POT), Teradata (TDC), SPDR S&P500 (SPY), Telephone Data Systems, UST (UST), Rohm & Haas (ROH), Energy XXI (EXXI), Epicor (EPIC), Dineequity (DIN)


Top 15 Holdings (by % of portfolio)

  1. Wyeth (WYE): 22.28% of portfolio
  2. PHH Corp (PHH): 13.29% of portfolio
  3. Liberty Acquisition Holdings (LIA): 11.75% of portfolio
  4. Victory Acquisition Corp (VRY): 5% of portfolio
  5. Trian Acquisition (TUX): 4.95% of portfolio
  6. Nabi Biopharma (NABI): 4.93% of portfolio
  7. Triplecrown Acquisition (TCW): 4.35% of portfolio
  8. Pfizer (PFE): 4.31% of portfolio
  9. Schering Plough (SGP-PB) B shares : 4.1% of portfolio
  10. Sapphire Industrials (FYR): 3.7% of portfolio
  11. Depomed (DEPO): 3.22% of portfolio
  12. Global Brands Acquisition (GQN): 2.4% of portfolio
  13. Greenlight Capital Re (GLRE): 2.22% of portfolio
  14. Core-Mark Holding Company (CORE): 1.9% of portfolio
  15. Global Consumer Acquisition (GHC): 1.8% of portfolio

Third Point was doing more selling than anything. They completely sold out of Wachovia and Exco, which had previously been 8.7% and 8.2% positions for their hedge fund. Additionally, they sold out of numerous prior 5% positions including Potash, Teradata, and the S&P500 index. Not to mention, they sold practically all of their gold position (GLD). We already knew and reported this back in late April, and it is now reflected in their 13F filing. They were merely using GLD as a trade to shelter their portfolio from uncertainty in the markets. (And head here for a recent technical analysis video on gold).

However, Third Point did still manage to make a few purchases, including shares of Wyeth as they brought it all the way up to their top position at 22.28% of the portfolio as a brand new stake. Undoubtedly, they were playing the merger arbitrage/event driven game here, like so many other hedge funds out there. Additionally, they added new modestly sized positions of Pfizer and Schering Plough.

What still catches our eye though is Third Point's propensity to own merger and acquisition 'blank check' shell companies. Eight of their top fifteen positions are all companies whose sole purpose is to create some sort of event through purchase, merger, capital stock exchange, or asset acquisition. It definitely is quite interesting to see them own so many similar companies in this regard.

Assets from the collective holdings reported to the SEC via 13F filing were $516 million this quarter compared to $799 million last quarter, so quite a noticeable drop off in assets invested on the long side of the portfolio. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. We've already covered:

- Gurus such as: Soros Fund Management (George Soros), and Jim Rogers.

- 'Tiger Cub' portfolios like: Andreas Halvorsen's Viking Global, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Shumway Capital Partners (Chris Shumway), Chase Coleman's Tiger Global,

- Outperforming funds like: John Paulson's hedge fund Paulson & Co, Eric Mindich's Eton Park Capital, Raj Rajaratnam's Galleon Group,

- Value and activist funds such as: David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Whitney Tison's T2 Partners, Philip Falcone's Harbinger Capital Partners, Ricky Sandler's Eminence Capital, Bill Ackman's Pershing Square Capital Management,

- Concentrated funds that play secular/macro themes such as: Timothy Barakett's Atticus Capital, Bret Barakett's Tremblant Capital Group, Boone Pickens' BP Capital Management, John Burbank's Passport Capital

- Global macro firms such as: Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital,

- And, newer funds on the scene: David Stemerman's Conatus Capital, Anand Parekh's Alyeska Investment Group. Check back each day as we cover new fund portfolios.


Wednesday, July 8, 2009

Bill Ackman's Pershing Square: Profile & Biography

Continuing our series of hedge fund profiles and biographies, we turn our attention now to Bill Ackman of Pershing Square Capital Management. This is the third biography in our profile series where we've already covered hedge fund legend Julian Robertson of Tiger Management and also Lee Ainslie of Maverick Capital. (We also covered Robertson's big inflation bet as well).

Today is essentially 'Bill Ackman day' here on the blog as we also just covered Pershing's portfolio this morning. So, let's get right into it.

Background

Nowadays, Ackman runs Pershing Square, a well known value/activist based hedge fund that started in 2003. But before Pershing, there was Gotham Partners. He co-founded Gotham with David Berkowitz right out of business school and was forced to shut down around a decade later. They started with only $3 million in seed capital and would eventually garner investments from the who's who of the investment world. Gotham's investors included Michael Steinhardt, Seth Klarman, Leon Levy, Jack Nash, and the Ziffs. They saw 40% annual returns and life was good. At its peak, Gotham had around $500 million in assets.

However, Gotham would then invest in some illiquid assets and found themselves dealing with problems concerning investor redemptions. Ackman and Berkowitz then wound the fund down. Additionally, they would eventually become subject to investigation for possible illegal practices but they were found to have committed no wrongdoing. Ackman went on to form Pershing upon Gotham's dissolution. He started it in 2003 with $54 million in seed capital from only three investors. Nowadays, Pershing manages over $2 billion. Since 2004, Pershing Square has seen a 24% annual return according to Hedge Fund Research (as of 10/14/10).

Ackman received both his degree and his MBA from Harvard. He graduated magna cum laude in 1988 and graduated from Harvard Business School in 1992. Interestingly enough, Ackman is buddies with Whitney Tilson from Harvard. We've tracked Tilson in the past, as he is a fellow hedge fund manager (T2 partners). Portfolio revealed an intriguing story of how Tilson told Ackman to check out the company Farmer Mac on the long side, back when he was still managing Gotham. Ackman liked Farmer Mac as a play, but as a short instead. Thereafter he published a report entitled 'Buying the Farm' where he publicly disclosed his research and the fact that he was short. He was right, and he profited handsomely from its decline.

Investment Strategy/Methodology

Through presentations, investor letters, and just flat out tracking Ackman for a long time, we've gotten a great sense as to how Pershing runs their portfolios. The first (and most obvious) point is that they run a very concentrated portfolio. They like to focus on their best ideas and typically focus on 8 to 12 companies while always on the lookout for other opportunities. They like to say that they only need "a handful of new ideas per year." Their main goal is to generate long-term returns while avoiding permanent loss of capital. But then again, those are pretty typical goals for an asset manager. For their core funds, they try to avoid leverage but are not opposed to using options. And, that is very much the case in their Pershing Square IV fund which invests in Target common stock and options. They like to use options in activist scenarios where their influence can reduce the risk associated to the timing of options and typically use longdated, in the money contracts.

Longs

In terms of what they look for in investments, Pershing focuses on businesses that can generate free cash flow which are also trading at discounts to their intrinsic value. Additionally, they like to see companies with low financial leverage. Their entrance into General Growth Properties (GGWPQ) obviously contradicts this. However, they are playing this more-so for the distressed and event driven side of things as they walk with the company through bankruptcy.

Pershing often also takes activist stakes in the companies they are investing in. Prime example: Target (TGT). Ackman likes to get in there and create value for shareholders so they have more control over the outcome. Unfortunately, things with their Target position have been an uphill battle, to say the least. A great quote from Ackman has arisen from all the Target hoopla. He states, “The investment business is about being confident enough to know that you’re right and everyone else is wrong. Yet you have to be humble enough that you recognize when you’ve made a mistake. Earlier in my career, I think I had the confidence part pretty solid. But the humbleness part I had to learn.’’

Shorts

On the short side of their portfolio, they like to focus on absolute return by examining companies with bad businesses. They look for companies reliant on the markets for liquidity, companies with poor earnings, accounting issues, and other flaws as a red flag and an opportunity to short. One interesting thing to note about their shorts is that they often like to use derivatives to put on their positions as a means to maximize the reward of the play. As Pershing puts it, they look for their shorts to be "situations with asymmetric risk-reward profile, what we call a 'ceiling on valuation' ".

Lastly, we want to also point out that Pershing typically has over 20% of the assets under management (AUM) invested in 'cash' or Treasuries. At the heart of the matter, Pershing is an activist investor that seeks to institute change at various companies to generate value.

Portfolio Movements

The past few years, he has had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). But, he has since closed those shorts. He also detailed his plans for Target to spin-off its real-estate to unlock value. His Pershing Square IV fund, which invests solely in Target (TGT), has seen poor performance (as Ackman apologized for in one of their investor letters). So far, it has been an uphill battle with Target in regards to instituting change at the company. He recently failed to get his board of directors elected as he staged a large proxy fight against the company. However, Ackman is not giving up on this name and will continue to fight for change at Target. Target is still their largest position due to their Pershing Square IV fund. We examined Pershing's portfolio earlier today as a part of our hedge fund portfolio tracking series.

In terms of other portfolio positions, we saw that they have a large position in EMC (EMC) and in the first quarter of 2009 added new stakes in Yum Brands (YUM) and Apartment Investment & Management (AIV). In terms of positions they sold completey out of, they have recently sold their Dr Pepper Snapple (DPS) shares and their Wendys Arbys (WEN) shares.

In past interviews, Ackman has stated that he is, "long-term bullish on America but not on things turning around in the next few months, or even 12 months. We've had the equivalent of a heart attack, but now we are in recovery, hopefully. It takes time to heal."

Performance

Pershing Square's main fund was up 0.2% for the month of May 2009 and was up 1.2% for the month of June. They are now up 10.5% net year to date for 2009. In terms of positions that are each larger than 0.5% of the portfolio, they have 9 longs and 3 shorts. Additionally, they have around $900 million of notional exposure to credit default swaps. On a relative basis, Pershing escaped 2008 without too much of a dent. Their funds beat the indexes, but still lost money, as they were down around 11-13%, depending on the fund.

Resources

Lastly, we'll finish up with a list of resources we've collected regarding Bill Ackman's Pershing Square:

- Pershing's General Growth (GGWPQ) Presentation @ Ira Sohn Conference

- Bill Ackman's interview with Charlie Rose (4/24/09)

- Bill Ackman talks GGWPQ & TGT


In an interview with Portfolio, Bill Ackman said he was an "extremely resilient person." And, hopefully our biography has given you a bit more background and sense as to why we track his movements here on Market Folly. If you enjoyed this post, then consider getting our free updates via email or you can also get our free updates via RSS reader.


Bill Ackman's Pershing Square Has Large EMC Stake: 13F Filing Q1 2009

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

Next up we have Pershing Square Capital Management. Bill Ackman runs Pershing Square, a well known value/activist based hedge fund that started in 2003 after Gotham Partners broke up. The past few years, he has had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). But, he has since closed those shorts.

He also detailed his plans for Target to spin-off its real-estate to unlock value. His Pershing Square IV fund, which invests solely in Target (TGT), has seen abysmal performance, as Ackman apologized for in one of their investor letters. So far, it has been an uphill battle with Target in regards to instituting change at the company. A great quote from Ackman has arisen from all the Target hoopla. He states, “The investment business is about being confident enough to know that you’re right and everyone else is wrong. Yet you have to be humble enough that you recognize when you’ve made a mistake. Earlier in my career, I think I had the confidence part pretty solid. But the humbleness part I had to learn.’’

More recently, Ackman presented at the Ira Sohn Conference where numerous hedge fund managers shared investment ideas. Ackman's gave a presentation on General Growth Properties (GGWPQ) in which he proposed that equity would not be completely wiped out in their bankruptcy. For more reading on the subject, Ackman also separately talked a lot about his Target & General Growth positions.

We track Ackman on the blog extensively and have a lot of resources on him and his fund. Just today, we ran a profile & biography piece on Bill Ackman for a more in depth look. This is part of our biography series in which we've already covered Julian Robertson (of Tiger Management) and Lee Ainslie (of Maverick Capital).

The following were their long equity, note, and options holdings as of March 31st, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Apartment Investment & Management (AIV)
Yum Brands (YUM)


Some Increased Positions (A few positions they already owned but added shares to)
General Growth Properties (GGP): Increased by 16%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Visa (V): Reduced by 69%
Wendys Arbys (WEN): Reduced by 31%
Target (TGT): Reduced by 7%


Removed Positions (Positions they sold out of completely)
Dr Pepper Snapple (DPS)
Sears Holdings (SHLD)


Their Entire Long Portfolio (by % of portfolio)

  1. Target (TGT): 42.9% of portfolio
  2. EMC (EMC): 33.5% of portfolio
  3. Wendys Arbys (WEN): 8.15% of portfolio
  4. Visa (V): 6.15% of portfolio
  5. Target (TGT) Calls: 3.47% of portfolio
  6. Apartment Investment & Management (AIV): 2.23% of portfolio
  7. Yum Brands (YUM): 2.14% of portfolio
  8. General Growth Properties (GGP): 0.83% of portfolio
  9. Borders (BGP): 0.33% of portfolio
  10. Greenlight Capital Re (GLRE): 0.2% of portfolio
  11. Alexander (ALX): 0.07% of portfolio

Firstly, please note that since this filing there has been activity regarding Pershing's portfolio. In mid May, they sold entirely out of their WEN position. So, the information above does not reflect this (as it is taken directly from their filing that was made prior to the WEN action). Moving on to the rest of their portfolio, we see that Ackman still has his large Target position. This is due to his Pershing Square IV fund that invests solely in TGT via common stock and options. It is undoubtedly their largest position but it is also somewhat of a unique circumstance in our tracking series because its not very often that you come across a firm that has a fund invested solely in one company. However, Pershing still has their main fund which is invested in numerous positions. The rest of Pershing's portfolio is more 'normal' in the sense that it is diversified amongst a few concentrated holdings. One cannot overlook the large EMC stake they have amassed at 33.5% of their portfolio.

While Visa is their fourth largest holding, they still cut it drastically, selling 69% of their position. They also sold completely out of both Dr Pepper Snapple and Sears, with DPS previously being a pretty large position for them as it used to be 7.2% of their portfolio. And, as mentioned before, they also have recently sold out of their Wendys Arbys (WEN) position, even though the data above does not reflect this. In terms of new additions, they added both Apartment Investment & Management (AIV) and Yum Brands (YUM) and both sit right in the middle of their portfolio in regards to position sizing. Overall, not a whole lot of changes on the long side for Pershing Square over the first quarter of 2009.

Assets from the collective holdings reported to the SEC via 13F filing were $1.9 billion this quarter compared to $2.4 billion last quarter, so a drop off of around $500 million or so. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. We've already covered:

- Gurus such as: Soros Fund Management (George Soros), and Jim Rogers.

- 'Tiger Cub' portfolios like: Andreas Halvorsen's Viking Global, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Shumway Capital Partners (Chris Shumway), Chase Coleman's Tiger Global,

- Outperforming funds like: John Paulson's hedge fund Paulson & Co, Eric Mindich's Eton Park Capital, Raj Rajaratnam's Galleon Group,

- Value and activist funds such as: David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Whitney Tison's T2 Partners, Philip Falcone's Harbinger Capital Partners, Ricky Sandler's Eminence Capital,

- Concentrated funds that play secular/macro themes such as: Timothy Barakett's Atticus Capital, Bret Barakett's Tremblant Capital Group, Boone Pickens' BP Capital Management, John Burbank's Passport Capital

- Global macro firms such as: Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital,

- And, newer funds on the scene: David Stemerman's Conatus Capital, Anand Parekh's Alyeska Investment Group. Check back each day as we cover new fund portfolios.


Sprott Asset Management's Hedge Fund Performance: June 2009

Thanks to another reader we're posting up another bit of interesting info from Sprott Asset Management. Just yesterday, we took at look at Sprott's portfolio of their Canadian Equity Fund. This time around, we're taking a look at their June hedge fund performance data.

Instead of embedding the document in the post below, we're going to try something new here and just point you to a link where you can download the actual .pdf document. To do so, click here. Please let us know if it stops working, because as of right now everything is functional in this regard.


Tuesday, July 7, 2009

Harbinger Capital Partners: New Position in Morgans Hotel Group (MHGC)


In a 13G filing just filed with the SEC late yesterday, Philip Falcone's hedge fund Harbinger Capital Partners has disclosed an 8% ownership stake in Morgans Hotel Group (MHGC). The filing was made due to activity on June 24th, 2009 and they now own 2,584,726 shares. This is a brand new position for them, as they previously did not hold it when we last looked at Harbinger's portfolio.

In addition to this recent movement, Harbinger has also been selling a lot of shares of Solutia (SOA). It appears that Harbinger is re-tooling and realigning their portfolio and strategy as they also picked up a new position in Zapata (ZAP). Harbinger ranked #1 in the top 10 asset losers, losing 60.8% on a year over year basis as their Offshore fund finished -22.7% for 2008. Also, we got word that Falcone would be returning to his roots in terms of investing style and would be opening a new fund. We'll continue to monitor the developments regarding their holdings.

Taken from Google Finance, Morgans Hotel Group is "an integrated hospitality company that operates, owns, acquires, develops and redevelops boutique hotels primarily in gateway cities and select resort markets in the United States, Europe and in select international locations. As of December 31, 2008, the Company owned or partially owned, and managed a portfolio of 12 luxury hotel properties in New York, Miami, Los Angeles, Scottsdale, San Francisco, London and Las Vegas, comprising approximately 3,700 rooms. In addition, it has two hotel developments, in Boston and New York, and a hotel expansion in Las Vegas representing an estimated 1,300 additional guest rooms."


Hedge Fund Jana Partners Sells More Coleman Cable (CCIX): 13G Filing


In an amended 13G filing with the SEC, Barry Rosenstein's hedge fund Jana Partners LLC has disclosed a 9.7% ownership stake in Coleman Cable (CCIX) with 1,664,729 shares. They have been selling shares of CCIX recently and have filed 2 separate Form 4's with the SEC detailing those sales. Firstly, on June 19th, they sold 72,374 shares with the bulk of the sale coming at $2.90 per share. Then, on June 25th & 26th, Jana sold 515,000 shares at prices pretty much evenly split at $2.83 and then $2.94. Simply put, they've been reducing their position. In their last 13F filing (which shows positions as of March 31st, 2009), Jana held over 2.3 million shares of CCIX. Now, they hold less than 1.7 million.

In addition to their sales of CCIX, we've also noted Jana recently selling shares of Convergys (CVG). Additionally, they've also filed a 13D on Immucor (BLUD). This all comes after Barry Rosenstein's hedge fund had a rough 2008 and apparently received redemption requests for a significant amount of their capital (20-30%). They were forced to set aside illiquid positions in an attempt to meet all the requests. It appears as though they've survived but we'll still monitor any further transactions.. We'll also be checking in on the rest of their portfolio in our hedge fund portfolio tracking series after skipping them last go-round due to the uncertainty swirling around the fund.

Jana was founded in 2001 by Barry Rosenstein and typically employs activist, market neutral, and long/short equity strategies in public equity markets. Rosenstein received his BS from Lehigh University and his MBA from the Wharton School of Business at the University of Pennsylvania. Jana has returned 20.9% each year annualized from 2001 til 2007. Rosenstein sees Jana's future in a strategy that uses management adjustments to force change at companies, which in turn can send shares higher. And, hopefully that strategy changes things for the better, as 2008 was a rough year for them.

Taken from Google Finance, Coleman Cable is "a designer, developer, manufacturer and supplier of electrical wire and cable products for consumer, commercial and industrial applications, with operations primarily in the United States, and to a lesser degree, in Canada. It produces products across four primary product lines: industrial wire and cable, including portable cord, machine tool wiring and other power cord products."


Technical Analysis & Charts: Stock Trading Ideas (Weekly Watchlist 7/7/09)

Here is the latest weekly watchlist courtesy of the OptionAddict. As always, a great video look at some technical setups on the charts for those of you looking for trading opportunities.



If you're new to technical analysis or you want to learn more, then check out our technical analysis recommending reading list. And, if you missed them last week, we also posted up a video on how to find trades, as well as a quick look at the charts of both AAPL and RIMM.


Pequot Capital: Byron Wien's July 2009 Commentary

At first, we thought it was a bit odd that we were reading commentary coming from Pequot Capital, seeing as they are liquidating their core fund (And, not to mention, we just revealed some of the positions they were unwinding). Donno, just seems weird to us, even if they are shutting down mainly due to poor image and marketing problems, more-so than poor performance (after all, AUM is king in hedgefundland). Just seems like we're reading something from the grave, even though 2 of their funds will still remain open. In the past, we've covered some of Byron's previous commentary too.

Take note that this particular piece deals more with the state of affairs regarding Pequot and does not really deal with market commentary like Byron's typical work. Unique circumstances, obviously. RSS & Email readers may need to come to the blog to view it. Attached below is the July 2009 commentary from Pequot's strategist Byron Wien:


Sprott Asset Management's Portfolio: Canadian Equity Fund (Longs & Shorts)


Since many of our readers desire more coverage of Canadian based Sprott Asset Management, we thought we would post up this nice tidbit that a reader sent to us. We have been slacking in our coverage of this talented firm and we apologize. There's just too many funds out there to cover these days! If anyone wants to be our "go-to" Sprott info guy (or gal) please get in contact with us as we are very interested in tracking their movements. For those of you unfamiliar with Sprott, they were recently ranked 49th in Barron's top 100 hedge fund rankings for 2009.

At any rate, attached below is Sprott's Canadian Equity Fund quarterly portfolio disclosure. This shows their positions as of March 31st, 2009 (exactly like all of the hedge funds we track in our portfolio tracking series). However, this form is a bit different in that it reveals their short positions as well in the interest of full transparency. Keep in mind that this specific portfolio is from that of a mutual fund, not a hedge fund. Nevertheless, we feel there is still information to be gleaned from them.

As we look at the broad overview, we see that they have 42.9% of their net asset value invested in gold and silver bullion on the long side of the portfolio. This simply cannot be overlooked. Additionally, they have another 22.2% in mining and precious metals plays. On the short side of the portfolio, their largest allocation there is in financials, as they are (13.5%) allocated to financial short positions. Their total long positions are 83.4% of their net asset value and their shorts are (16.8%) of their NAV. Then, on top of all that, they still have 33.5% of their NAV in cash and short-term investments. This is another feature of their portfolio one must pay attention to. Typically, cautious managers will keep up to 20% of assets in cash. Sprott is up to 33.5%. Not to mention, their large weighting in 'uncertainty plays' like gold and precious metals further reiterates their cautious stance.

After their cash, gold bullion, and silver bullion positions, First Uranium Corporation is their largest equity position at 2.7% of NAV. Shifting to the short side of their portfolio, Toronto-Dominion Bank is their largest short at (4.2%) of NAV, followed by Canadian Imperial Bank of Commerce at (3.1%). Obviously, take this information with a grain of salt as it is all delayed and positions were reported as of March 31st, so there is definitely a big time lapse factor here. At the same time, it's hard not to notice their very cautious stance with large amounts of cash and precious metals on hand.

Here is the full embedded document:





For those of you wanting some more reading material from Sprott, we'd suggest checking out an older special report from them that was an excellent read.


Monday, July 6, 2009

Anand Parekh's Alyeska Investment Group Favors Puget Energy, Rohm & Haas, Entergy: 13F Filing Q1 2009

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

Next up 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. So, from here on out, we'll continue to track Citadel's movements and we'll also track Alyeska's movements as well, since we were essentially following Parekh's movements there anyways. 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 second 13F filing and we now have enough of a timeline to start tracking their movements effectively. You can view their original portfolio and 13F filing here.

The following were Alyeska's long equity, note, and options holdings as of March 31st, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

We had some data issues since Alyeska filed an amended 13F that was completely different than the initial 13F they filed (can you say 'whoops'). As such, our coverage is quite limited this time around and we apologize. However, below we present their top 10 largest long positions.

Top 10 Positions:

  1. Puget Energy (PSD)
  2. Rohm & Haas (ROH)
  3. Entergy (ETR) Notes
  4. Merrill Lynch (MER)
  5. Wachovia Bank (WB)
  6. Honeywell (HON)
  7. Genentech (DNA)
  8. Nationwide (NFS)
  9. Metlife (MET) Units
  10. Regal Beloit (RBC)

As you can see, they are highly favoring energy producing plays, a few financials, and then the merger arbitrage subject ROH. You can view the entire amended Alyeska filing here to see what other smaller positions they hold. Assets from the collective holdings reported to the SEC via 13F filing were $888 million this quarter compared to $816 million last quarter, so they increased their exposure to the long side of US equities, notes, and bonds. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. We've already covered:

- Gurus such as: Soros Fund Management (George Soros), and Jim Rogers.

- 'Tiger Cub' portfolios like: Andreas Halvorsen's Viking Global, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Shumway Capital Partners (Chris Shumway), Chase Coleman's Tiger Global,

- Outperforming funds like: John Paulson's hedge fund Paulson & Co, Eric Mindich's Eton Park Capital, Raj Rajaratnam's Galleon Group,

- Value and activist funds such as: David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Whitney Tison's T2 Partners, Philip Falcone's Harbinger Capital Partners, Ricky Sandler's Eminence Capital,

- Concentrated funds that play secular/macro themes such as: Timothy Barakett's Atticus Capital, Bret Barakett's Tremblant Capital Group, Boone Pickens' BP Capital Management, John Burbank's Passport Capital

- Global macro firms such as: Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital,

- And, newer funds on the scene: David Stemerman's Conatus Capital. Check back each day as we cover new fund portfolios!


Michael Lewis' AIG Article in Vanity Fair: The Man Who Crashed the World

Here's an excellent read in Vanity Fair from noted author Michael Lewis regarding the madness that is AIG. His piece is entitled 'The Man Who Crashed the World.' There has been a slew of intriguing journalistic pieces hitting the tabloids lately and its refreshing to see. Just last week, we brought you Matt Taibbi's piece on Goldman Sachs as well.

Below is the embedded AIG article. RSS & Email readers will need to come to the blog to view it. Again, our apologies for using Scribd as we know many of you dislike it. However, the other alternatives we have tried out have not been any better. As such, we are stuck using the lesser of many evils. If you need the actual .pdf of this article please let us know and we'll do our best to meet all the requests (we were inundated with requests for the GS article last week and are still sifting through all those!) Don't try to print the article directly from Scribd as it will mess up the margins and come out illegible. We recommend clicking on the Scribd logo, going to their page and selecting the 'download' option which will let you save the .pdf to your desktop. Do note that you'll need a free account there to do this.


World's 50 Safest Banks: Global Finance World's Rankings

While this list was released back in March 0f 2009, we wanted to publish it up as we forgot to at the time. Global Finance World publishes a list of the World's 50 Safest Banks and they edited it mid-year which reflects the turmoil within the financial markets worldwide. Interesting tidbits regarding the list: Only 4 American banks make the list, none of which are in the top 10. The closest is Wells Fargo (WFC) at 21st. This will certainly draw much criticism as there are many skeptics out there regarding Wells Fargo's stability.

Another interesting fact is that all of the major Canadian banks are included in the top 50, which confirms what many strategists and prominent investors have been speaking of throughout the turmoil. They have said that if you want to own banks at all, then your best bet is a Canadian entity. Specifically, Dennis Gartman has often noted his preference of Canadian banks. In addition to a large amount of Canadian banks on the list, there is quite a cluster of Australian banks within the top 25. Lastly, we'd also like to highlight the large amount of German banks on the list, especially ranked within the top 10.

Embedded below is the publication. (RSS & Email readers will need to come to the blog to view the embedded document). Here is Global Finance World's 50 Safest Banks list:




Now, while rankings lists like these might be fine and dandy, we're inserting an asterisk next to this one. Why? Well, because upon examination of the criteria for ranking, we were a bit surprised. Global Finance World ranked the banks according to long-term credit ratings and total assets. They used ratings from Moody's, Standard and Poor's, and Fitch. And there is your red flag right there. They are compiling a list based on ratings from the ratings agencies... the same ratings agencies that have appalled many of us with their reactionary movements and downgrades. What good are the ratings agencies if they can't even provide accurate ratings to give us a barometer as to the health of various institutions? But, we digress. We've attached the list for your perusal (or comic relief) anyways.

As always, take things like this with a nice grain of salt.