Friday, April 4, 2014

What We're Reading ~ Hedge Fund Links 4/4/14

Summary of Glenview Capital's recent letter [ValueWalk]

March tech losses burn major hedge funds [CNBC]

The long and the short of the George Soros strategy [Business Spectator]

A look at Tudor's closure of its Tensor Fund [HedgeWorld]

Coatue and Third Point invest in Lyft [Dealbook]

On Ackman's Fannie/Freddie stakes [NYPost]

Howard Marks: in the end, the devil always wins [Zero Hedge]

Wednesday, April 2, 2014

What We're Reading ~ Analytical Links 4/2/14

Michael Lewis' new book Flash Boys: A Wall Street Revolt [Amazon]

NYSE Margin Debt hits another new high [Advisor Perspectives]

Jeremy Grantham: the Fed is killing the recovery [Fortune]

Why value investing is so hard (Russian edition) [Meb Faber]

Danger ahead for tax loopholes [Barrons]

Some notes on the future of television [Ben Evans]

Rural America struggling as young people chase city jobs [WSJ]

A recap of the macro situation [Macro Man]

How to find big stocks for the next decade [Barrons]

The best real estate plays in 25 years [CNBC]

Why banks hedge funds and Silicon Valley all want their own stock exchanges [Quartz]

No the stock market isn't rigged; a primer on speed trading [Yahoo]

Discounted Tickets Available to the London Value Investor Conference

Market Folly has secured a discounted rate for the London Value Conference on Thursday 22nd May at the Queen Elizabeth II Conference Centre in Westminster.  There are only 10 weeks to go until this conference and for a short time our readers can get £100 off the opportunity to listen to investment ideas and perspectives from the following speakers:

Mason Hawkins, Southeastern Asset Management
Donald Yacktman, Yacktman Asset Management
Mason Morfit, ValueAct Capital
Jon Moulton, Better Capital
Tim Hartch, Brown Brothers Harriman
David Samra, Artisan Partners
Aled Smith, M&G
Richard Rooney, Burgundy Asset Management
Charles Heenan, Kennox Asset Management
Jonathan Mills, Metropolis Capital
Philip Best, Argos Investment Managers
Marc Saint John Webb, Argos Investment Managers
Andrew Hollingworth, Holland Advisors

The conference will be moderated by Richard Oldfield of Oldfield Partners and David Shapiro from Towers Watson.  At this conference there is also 10-15 minutes dedicated to audience Q&A.

 *** Please use the discount code MARKETFOLLY123 when booking here (the discount code expires on April 18th) ***

This will be a unique networking opportunity as this conference is the largest gathering of value investors in Europe.  We expect there will be 400 value investors present this year.  There is also a fantastic video of Michael Price's presentation from last year at this conference, available on the website, which is 42 minutes long and details Michael's prior investments in Hess and Hospira - as well as his investment in Songbird Estates Plc last year.

Passport Capital Reduces (WUBA) Position

John Burbank's hedge fund firm Passport Capital has filed an amended 13G with the SEC regarding their stake in 58com (WUBA).  Per the filing, Passport now owns 5.1% of the company with 2 million shares (held via 1 million ADR shares).

This means they've reduced their position from 1.6 million ADR shares at the end of December.  The filing was made due to activity on March 28th.

Chinese internet companies have been a big portfolio theme for Passport as of late.  We originally disclosed Passport's WUBA stake in November.

WUBA has sold off from a high of $58.89 down to as low as $36.86 over the past month.  Shares have since rebounded back to $45.26.

Per Google Finance, is "a holding company. The Company is an online marketplace serving local merchants and consumers in China through its Website and mobile applications. Its online marketplace enables local merchants and consumers to connect, share information and conduct business. The Company’s online marketplace contains a range of information in approximately 380 cities, across diverse content categories, including housing, jobs, used goods, automotive, pets, tickets, yellow pages and other local services. Its online marketing services include listing services, such as real-time bidding and priority listing, and marketing services through collaboration with third-party Internet companies in China. The listings on its online marketplace cover a range of content categories, such as housing, jobs, used goods, automotive, tickets, homecare and relocation, renovation, wedding, business services, travel, education, food, beauty, entertainment, franchise, and other local services."

Nelson Peltz's Trian Partners Boosts Ingersoll Rand Stake

Nelson Peltz's activist investment firm Trian Partners has filed an amended 13D with the SEC regarding its position in Ingersoll Rand (IR).  Per the filing, Trian now owns 6.2% of the company with over 17.9 million shares.

This marks an increase of over 5.9 million shares since the end of 2013.  The filing notes that Peltz is not seeking re-election to IR's board due to his recent appointment to Mondelez's (MDLZ) board.

Late last year, Ingersoll Rand spun-off Allegion (ALLE), a commercial and residential security business and Trian also owns shares in this business.  After this spin-off, IR is now focused on transport refrigeration and heating, ventilation and air conditioning.

Trian's fourth quarter 2013 letter to investors notes that, "We believe innovation-led market share gains and a recovery in commercial and residential construction markets will help grow the top-line while continued productivity improvements should drive more margin expansion at IR."

Monday, March 31, 2014

Omega Advisors Acquires Pennymac Financial Services Shares

Lee Cooperman's investment firm Omega Advisors has filed a Form 4 with the SEC disclosing transactions in shares of Pennymac Financial Services (PFSI).

Per the filing, Omega acquired 632,000 shares of PFSI class A common stock in total on March 27th at a price of $15.99.  The purchases were made for their investment entities and managed accounts.

After these transactions, Omega's investment entities owned just over 2 million shares while their managed accounts owned over 1.27 million PFSI shares.

We've also detailed some other recent portfolio activity from Omega Advisors here.

Per Google Finance, Pennymac Financial Services is "a specialty financial services firm with a mortgage platform and integrated business focused on the production and servicing of United States residential mortgage loans and the management of investments related to the United States residential mortgage market. The Company operates in two segments: mortgage banking and investment management. Its principal mortgage banking subsidiary, PennyMac Loan Services, LLC (PLS), is a non-bank producer and servicer of mortgage loans in the United States. PLS is a seller/servicer for the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac), each of which is a government-sponsored entity (GSE). The Company’s principal investment management subsidiary, PNMAC Capital Management, LLC (PCM), is an investment adviser. It manages PennyMac Mortgage Investment Trust (PMT), a mortgage real estate investment trust (REIT)."

Bill Ackman Raises Fannie & Freddie Stakes

Bill Ackman's hedge fund firm Pershing Square Capital has filed amended 13D's regarding Federal National Mortgage Association, or Fannie Mae (FNMA) as well as Federal Home Loan Mortgage Corp, or Freddie Mac (FMCC).

Per the filings, Ackman's hedge fund now owns around 9.98% of FNMA with 115,569,796 shares.  But they also have additional aggregate exposure via cash settled total return swaps.  This exposure amounts to around 15.4 million notional shares.  So in total, Pershing's aggregate ownership is around 11.31%.  UBS is the counterparty for the swaps.

Additionally, Pershing's new swap exposure to FMCC equates to over 8.4 million notional shares.

Other prominent investors are involved as well.  Bruce Berkowitz's Fairholme Capital owns preferred securities on both names.

Greenlight Capital Increases BioFuel Stake, Submits Proposal

David Einhorn's hedge fund Greenlight Capital has filed an amended 13D on shares of BioFuel Energy (BIOF).  Per the filing, Greenlight discloses a 35.5% ownership stake with over 2.2 million shares.  This is an increase of 784,205 shares since their last disclosure.  The filing was made due to activity on March 28th.

Einhorn and real estate investor Jim Brickman submitted a non-binding proposal to BioFuel's board to acquire the company for $275 million in cash and stock.  The proposal basically involves one (or more) newly created subsidiaries acquiring equity interests in JBGL, a real estate developer (JBGL is owned by Brickman & Greenlight).

You can read the entire proposal via the SEC here.  Shares of BIOF rocketed higher on the news.

Per Google Finance, BioFuel Energy is "a holding company. The Company produces and sells ethanol and its co-products (primarily distillers grain and corn oil), through its two ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota. The Company’s ethanol plants are owned and operated by the Operating Subsidiaries of the LLC."