Thursday, June 16, 2011

Lansdowne Partners Buy Mwana Africa (LON:MWA)

UK hedge fund Lansdowne Partners have purchased 11.51% of Mwana Africa's (LON: MWA) outstanding shares. At first glance, it appears as though Lansdowne bought the majority of this stake via the recent placement. This position was revealed by UK regulatory filing.

This company mines various metals, including gold. Equity stakes in gold miners seems to be a popular investment amongst hedge fund managers as we just detailed Baupost Group's miner stake this morning.

In other activity from Lansdowne, we previously detailed the increase in their Gartmore stake. Paul Ruddock and Stephen Heinz head Lansdowne, one of the largest hedge funds in the world.

Per Google Finance - "Mwana Africa PLC (Mwana Africa) is engaged in the exploration, development and production of nickel, gold, copper and diamonds. It has four segments: gold, nickel, diamond and exploration. Mwana Africa has interests in gold, nickel and other base metals, and diamonds in Zimbabwe, the Democratic Republic of Congo and South Africa. Bindura Nickel Corporation (BNC), Zimbabwe, is situated near the town of Bindura, 90 kilometers northeast of Harare."

Baupost Group Shows Position in Gabriel Resources (TSE:GBU)

Seth Klarman's hedge fund Baupost Group has disclosed an 11.37% ownership stake in Gabriel Resources (TSE:GBU) with 39,625,822 shares. This makes them the fourth largest shareholder.

This is an older disclosure as it was revealed on April 8th in a Canadian regulatory filing. Given how investors love to track Klarman, we figured we'd share since we hadn't seen it discussed before.

This position is interesting mainly because it's has exposure to gold mining. This is the second equity investment in a gold miner we've seen from Klarman's fund. As noted in the latest issue of our Hedge Fund Wisdom newsletter, Baupost started a new position in Allied Nevada Gold (ANV) back in the first quarter.

Gold Miners A Play on Inflation?

We'll have to see if building equity stakes in miners becomes a trend for Baupost. The firm could potentially be using these miners as a hedge. After all, we covered how Klarman is worried about inflation.

It's been well documented that John Paulson's gold fund invests in gold miners as a bet against the US dollar (inflation) as well. Paulson & Co also owns 17.62% of Gabriel Resources with 61,420,000 shares. They disclosed this position size in May 2008 and it was later amended to reflect their purchase of securities in a private placement in June 2009. So, two legendary investors own sizable chunks of GBU.

Gold Vs. Gold Miners

In the past, hedge fund managers have pondered whether gold or gold miners is a better way to play the precious metal, inflation, and uncertainty. So while many invest in gold miners for protection, we assume that Baupost is pursuing the same thesis (but again that's merely speculation on our part).

In other recent activity from the prominent hedge fund, Baupost trimmed its position in Audiovox (VOXX).

Per Google Finance, Gabriel Resources is " is engaged in the exploration and development of mineral properties in Romania. It is developing its 80.46% owned Rosia Montana gold project (the Project). Minvest S.A. (Minvest), a Romanian state-owned mining company, and one other private Romanian company, hold a 19.54% interest in Rosia Montana Gold Corporation (RMGC)."

For more from Klarman, see an excerpt from Baupost's 2010 letter.

What We're Reading ~ 6/16/11

Honored to be included in a list of must-follows on Twitter [Barron's]

And as always, you can follow @MarketFolly on Twitter here

Post re-org equities entering Russell indexes [Distressed Debt Investing]

Daytrading hipster takes on David Tepper [Dealbreaker]

Funny: the real Wall Street dress code [Reformed Broker]

Option traders most bearish since 2009 bottom [Trader's Narrative]

Warren Buffett on how inflation swindles equity investors [Fortune]

Paulson's funds struggle [WSJ]

FPA's Bob Rodriguez sees another crash coming [Fortune]

Debating a tech bubble [Economist]

Profiles on some big mutual fund managers [Bloomberg]

Hedge funds target Yankee stadium parking bonds [Bloomberg]

Online ventures lure Tiger Global back to India [WSJ]

We've covered some of Tiger's past investments here [Market Folly]

Former Third Point PM launches healthcare fund [AR+Alpha]

Hedge funds lured to new source of capital [MarketWatch]

Tuesday, June 14, 2011

Hedge Fund Compensation Report 2011

Those of you looking to enter the hedge fund industry, switch funds, or get a pay raise will find this hedge fund compensation report very helpful. This report gives you a benchmark to help negotiate your pay package based on industry averages.

It breaks down compensation based on size of the fund, employee title, base package versus bonus, and year over year comparisons.

The report is 47 pages, has over 40 charts and is based on data collected directly from big funds (like Citadel, Lansdowne, etc) and small funds as well. You can get the report by clicking here.

Whether you're an analyst, trader, investor relations professional, or CFO, this is a great way to measure your compensation against the industry and a great tool for negotiating so definitely check it out.

Strategist Saut Thinks Trading Bottom Is Near

Jeff Saut is out with his latest investment strategy comments, emphatically titled, "Ouch." This of course refers to the precipitous decline in markets as of late. He writes, that, "My risk management discipline forced me to raise more cash again on Friday, even though I believe the stock market is in the process of making a significant 'low.' "

We've covered Saut's risk management principles before and while those principles caused him to raise cash levels last week, he's confident that markets are now oversold.

He cites the great folks at Bespoke who said that "61.4% of the SPX's stocks are oversold. The current oversold level is only the 27th time since 1990 that more than 60% of stocks in the index have been [this] oversold."

At this point, Saut believes you should 'keep your head screwed-on straight' and start compiling your buy list. In addition to some of Saut's favorite stocks, he recently added Abbott Labs (ABT), Copa Holdings (CPA), Digital Realty Trust (DLR) and Norfolk Southern (NSC) as solid candidates.

Embedded below is Jeff Saut's latest market commentary where he talks about an impending trading bottom in stocks drawing near:

You can download a .pdf copy here.

GLG Partners Start Ovoca Gold Position

Due to a regulatory filing made on June 7th, UK based hedge fund GLG Partners has disclosed a brand new position in Ovoca Gold (LON: OVG). They own a 5.44% interest in the AIM listed gold mining company.

Ovoca Gold is also listed on the ESM market of the Irish Stock Exchange (OVX). The company's principal activity is gold exploration in the Magadan Region of the Russian Federation. Previously, Ovoca acquired, developed and sold the Goltsovoye silver project to JSC Polymetal. You can view other hedge fund positions in UK markets here (scroll through).

Last year, we posted up GLG's research on the effect of analyst recommendations which was intriguing and worth checking out if you missed it as well.

Bill Ackman's Presentation on Family Dollar (FDO)

At the recent Ira Sohn Conference, Pershing Square Capital's Bill Ackman presented Family Dollar (FDO) as his investment idea under the notion that it is a prime target for a leveraged buyout (LBO).

While we've presented notes from the hedge fund conference, today we present Ackman's actual presentation (powerpoint slides) from the event.

His presentation highlighted that the dollar store chain is like Walmart (WMT), but with more room to grow. Ackman points to the company's return on capital as attractive.

The hedge fund manager believes that FDO can benefit operationally by being taken private, citing KKR's past acquisition of Dollar General (DG) as a successful LBO in the space.

Since the presentation on May 25th, Ackman has doubled his position in FDO and now owns 8.9% of the company. Embedded below is the full presentation Ackman gave on why Family Dollar (FDO) is a compelling investment:

To see what else Ackman has invested in, sign-up for our Hedge Fund Wisdom newsletter.

Monday, June 13, 2011

Valinor Management Boosts Swift Transportation (SWFT) Stake

David Gallo's hedge fund Valinor Management just filed an amended 13G with the SEC regarding Swift Transportation (SWFT). Due to trading on June 2nd, Valinor now owns 8.8% of SWFT with 7,023,271 shares.

This marks a 47% increase in their position size as they owned only 4,767,170 shares at the end of the first quarter (March 31st). We covered when Valinor originally started their stake in SWFT back in December as the company went public.

Over the past few months we've also detailed activity from Gallo's hedge fund in Clearwater Paper (CLW) as well as Cott (COT).

We're always curious as to how hedge funds got their name, so it's interesting that Gallo's firm is named after lands inhabited by immortal souls from the books of J.R.R. Tolkien. Before founding Valinor, Gallo earned his MBA from Harvard Business School and worked at Roberto Mignone's Bridger Management.

Per Google Finance, Swift Transportation "formerly Swift Holdings Corp., is a transportation services company and a truckload carrier in North America. As of September 30, 2010, the Company operated a tractor fleet of approximately 16,200 units comprised of 12,300 tractors driven by company drivers and 3,900 owner-operator tractors, a fleet of 48,600 trailers, and 4,500 intermodal containers from 35 terminals positioned near major freight centers and traffic lanes in the United States and Mexico."

Philippe Laffont's Coatue Management Buys More Sina (SINA)

In a 13G filed with the SEC due to trading on June 1st, Philippe Laffont's hedge fund Coatue Management has increased its position in Sina (SINA). They now own 5.16% of the company with 3,187,477 shares.

Laffont's hedge fund focuses on technology, media, & telecom and you can view the rest of Coatue Management's portfolio in the new issue of our Hedge Fund Wisdom newsletter.

This is almost a 10% increase in their position size since March 31st when they owned 2,907,894 shares. Coatue isn't the only major hedge fund to have purchased shares of SINA recently either. John Thaler's JAT Capital acquired a massive SINA position as well.

Sina is a social media company based in China and needless to say is one of the hot investing trends right now. However, shares have seen heightened volatility as they've declined from a high of $147 in April to $86 per share currently.

Given the volatility in the past two weeks, it's tough to be entirely sure as to who which funds still hold a position. This stock is the definition of a 'momentum' name and it will be interesting to see who emerges as a true investor once the sell-off abates.