Eddie Lampert's Hedge Fund RBS Partners: Portfolio Update (13F Filing) ~ market folly

Tuesday, February 23, 2010

Eddie Lampert's Hedge Fund RBS Partners: Portfolio Update (13F Filing)

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

Next up is RBS Partners, the parent company of Eddie Lampert's hedge fund ESL Investments. Prior to forming ESL, Lampert worked with Robert Rubin at Goldman Sachs risk arbitrage department. Prior to that, Lampert graduated from Yale where he was a member of the skull and bones secret society, as well as Phi Beta Kappa. Lampert runs highly concentrated portfolios and his focus has long been on the retail sector. He has graced Forbes' billionaire list but was one of the top hedge fund losers in 2008.

Recently, we posted up some interesting activity out of Lampert's investment vehicles. And in the past, we've also covered Eddie's 2009 annual letter. Interestingly enough, Richard Rainwater has dubbed Lampert "the greatest investor of his generation."

The positions listed below were RBS Partners' long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Brand New Positions
CIT Group (CIT)
Wells Fargo (WFC)
Bank of America (BAC)

Increased Positions
Sears Holdings (SHLD): Increased by 27.8%
Acxiom (ACXM): Increased by 22.1%
Citigroup (C): Increased by 14%
Autozone (AZO): Increased by 8.1%
Autonation (AN): Increased by 5.9%
Capital One (COF): Increased by 5.3%

Reduced Positions
SLM (SLM): Reduced by 12.1%
Genworth Financial (GNW): Reduced by 5%

Removed Positions (Sold out completely):

Top Holdings by percentage of assets reported on 13F filing

  1. Sears Holdings (SHLD): 49.9%
  2. Autozone (AZO): 28.9%
  3. Autonation (AN): 13.8%
  4. Capital One (COF): 3.3%
  5. CIT Group (CIT): 1.1%
  6. Citigroup (C): 0.9%
  7. Genworth Financial (GNW): 0.9%
  8. Wells Fargo (WFC): 0.4%
  9. Acxiom (ACXM): 0.3%
  10. SLM Corp (SLM): 0.3%
  11. Bank of America (BAC): 0.1%

Eddie Lampert's hedge fund is the definition of a concentrated portfolio. But, that's what happens when you effectively takeover a company (in this case Sears). Many compared Lampert to Warren Buffett a few years ago, but those comparisons have gone by the wayside as Lampert has struggled to generate the returns many thought he was capable of. While he has definitely helped engineer Sears' recovery, the job is by no means done.

They sold a slight amount of SLM and added modestly to their Sears, Acxiom, and Citigroup stakes. Citigroup has made a lot of headlines as of late on our site, mainly due to the fact that lots of hedge funds have been adding C. Additionally, Eddie Lampert shows a new stake in CIT Group. But, just as we've noted with all the other hedge funds that now show this stake, it is most likely due to a debt to equity conversion. Lampert also shows new (small) stakes in Wells Fargo (WFC) and Bank of America (BAC).

That about wraps up his portfolio because as Sears goes, Lampert goes. All data used for this article comes from Alphaclone. It's by far the best hedge fund replicator we've ever used and they of course pull data directly from the SEC filings so that you can backtest tons of strategies. RBS Partners' assets reported on the 13F filing were $11 billion this quarter compared to $9.3 billion last quarter. As you can see, that's almost a $1.7 billion increase in assets invested long in US equities. Remember that these filings are not representative of the hedge fund's entire base of AUM.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, and Dan Loeb's Third Point. Check back daily for our new updates.

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