Wednesday, July 13, 2011

Request For Hedge Fund Letters

Now that Q2 hedge fund letters are starting to be released, we want to remind readers to please feel free to send in any hedgie letters you might have access to. Email us or add us to your distribution list:

All submissions are treated as confidential and anonymous; your privacy is our top priority. We'll do whatever makes you most comfortable and can remove watermarks, summarize the letter, etc. The more people that share, the more manager updates we'll be able to cover.

Thanks for contributing!

Seth Klarman's Baupost Group Doubles Syneron Medical (ELOS) Stake

Seth Klarman's Baupost Group recently filed an amended 13G with the SEC regarding shares of Syneron Medical (ELOS). Per portfolio activity on June 30th, Baupost Group has disclosed a 11.06% ownership stake in ELOS with 3,836,071 shares.

This marks a 155% increase in their position size as they only owned 1,500,000 shares back on March 31st. So while Baupost added to this position significantly, keep in mind that it's still a relatively small equity position for them. Not to mention, Baupost has under 10% of its assets under management allocated long US equities.

In other disclosures from the hedge fund, we saw that Baupost trimmed its Audiovox stake (VOXX) and we also detailed their position in Gabriel Resources (TSE:GBU) as well.

Per Google Finance, Syneron Medical "designs, develops and markets aesthetic medical products based on its various technologies including its Electro-Optical Synergy (ELOS), technology, which uses the synergy between electrical energy, including radiofrequency (RF) energy, and optical energy to provide aesthetic medical treatments. The Company’s products, which it sells primarily to physicians and other practitioners, target a range of non-invasive aesthetic medical procedures, including hair removal, wrinkle reduction, rejuvenation of the skin’s appearance through the treatment of superficial benign vascular and pigmented lesions, acne treatment treatment of leg veins and treatment for the temporary reduction in the appearance of cellulite."

David Einhorn Buys Seagate Technology (STX), Sells Various Stocks

ZeroHedge posted up David Einhorn & Greenlight Capital's Q2 investor letter which reveals that the hedge fund was down 2.5% for the quarter and is now down 5% for the year.

Greenlight noted that the US economy has continued to soften as energy and food prices eroded consumer purchasing power. At the same time, Greenlight points to strong corporate earnings as a positive.

Bought Seagate Technology (STX)

During the quarter, Einhorn's hedge fund saw notable portfolio turnover. Greenlight built a "medium sized long position" in Seagate Technology (STX) with an average purchase price of $16.06 a share (STX currently trades around $16.90). The current issue of our Hedge Fund Wisdom newsletter features an analysis of STX for those interested.

Sold Positions

Greenlight also sold completely out of its position in Cardinal Health (CAH). At the same time, they continue to hold a large position in CAH's spin-off, CareFusion (CFN). You can also see the investment thesis on CFN in a free sample of our newsletter.

Einhorn's fund also sold out of CIT Group (CIT), Yahoo! (YHOO), Vicat SA (France: VCT), MI Developments (MIM), MDC Holdings (MDC), and Xerox (XRX). They also covered their short position in LED-maker Cree (CREE).

While Einhorn sold out of CIT Group, we noted last week that Dan Loeb's Third Point continues to hold CIT as one of their largest positions.

Given that Greenlight sold so many positions, it will be interested to see if they've put that capital to work elsewhere or have merely raised cash levels as a form of protection. We've highlighted one buy as Greenlight purchased Playtech (LON:PTEC) shares. Embedded below is Greenlight's Q2 letter:

If the embedded doc doesn't work, you can view/download it here.

For more from Einhorn, be sure to check out his presentation from the Ira Sohn Conference.

The Biggest Fears of 15 European Portfolio Managers

Market strategist Jeff Saut just concluded his visit with numerous European portfolio managers and his latest commentary summarizes their viewpoints. While he spoke with roughly 200 portfolio managers, it's interesting that most were bearish or very bearish on US equities due to fear of the debt situation, the dollar, and the debt ceiling.

While many PM's shared this view, Saut asked what their biggest fear was and here were their responses:

1. Fund managers that only use mutual funds & exchange traded funds (ETFs)

2. Investing is practiced in too complicated a fashion when it should be easy

3. A military coup in Greece

4. Inflation goes down instead of up

5. China sells half of its Treasury Bonds

6. Europe and the U.K. don't tackle their pension problems

7. There is blood in the street, but the markets trade higher

8. Most of the unemployed are un-hirable

9. The EU doesn't stay together

10. Water

11. Used to worry about Ireland, but don't anymore

12. Over-regulation

13. If the EU breaks up, what happens to the boom in German exports

14. The fact that only 11 residents in Greece declared annual incomes of one million Euros or more

15. Everyone is so negative that when the blue skies arrive they will be ignored

You can then compare and contrast the above viewpoints with that of UK hedge fund manager Crispin Odey who says that stockpicking is still working in his latest commentary.

Turning back to the US, Saut's recent missive also notes his skepticism around recent soft economic numbers as he thinks they are largely attributed to high commodity prices and the tragedy in Japan. Embedded below is Jeff Saut's full commentary:

You can download a .pdf copy here.

Be sure to also check out Saut's thoughts from mid-June that a trading bottom was near as well as some of his current favorite stocks.

Monday, July 11, 2011

What We're Reading ~ 7/11/2011

Richard Russell: #1 reason to be underweight equities [PragCap]

Can investors make money following hedge funds? [Institutional Investor]

Review of a great book on short selling [Davian Letter]

Highly recommended: The Art of Short Selling [Kathryn Staley]

How well does your hedge fund hedge? [All About Alpha]

How likely is a hard landing in China? [WSJ]

China's boom is more investment than consumption [AR+Alpha]

Stop fooling yourself, you're not Warren Buffett [Old School Value]

ZAGG: A thin film between love and hate [Financial Investigator]

Hedge fund giants are coming up small this year [Reuters]

Paulson & Co enjoys $550 million Lehman boost [CNBC]

Hedge fund bosses sound alarm on super-sized funds [Reuters]