Friday, September 19, 2014

Oaktree Capital Discloses Molycorp Stake

Howard Marks' investment firm Oaktree Capital has filed a 13G with the SEC regarding shares of Molycorp (MCP).  Oaktree now owns 9.1% of the company with over 24.47 million shares.

This is a newly disclosed stake and the filing was required due to activity on September 11th.  The filing notes that the shares beneficially owned are a result of direct ownership of 18,358,019 penny warrants and 6,119,340 Oaktree Warrants which are defined in the filing here.

If you haven't already, be sure to check out Howard Marks' book: The Most Important Thing.

Per Google Finance, Molycorp is "provides Rare Earths and Molybdenum products to companies. The Company's rare earth products comprise of bastnasite, cerium, europium, lanthanum, neodymium, praseodymium, yttrium, and other lanthanides."

Bruce Berkowitz's Fairholme Buys Sears Shares

Bruce Berkowitz's firm Fairholme Capital just filed a 13D with the SEC regarding shares of Sears Holdings (SHLD).  Per the filing, Fairholme now owns 24% of SHLD with over 25 million shares.

This means Berkowitz has added to his position size by over 850k shares since the end of the second quarter.  He's been a long-term Sears shareholder and shares have nosedived from $45 earlier in the year down to current levels of under $27.

The vast majority of this decline has been in recent days as news came out that the company was borrowing $400 million from its CEO Eddie Lampert's hedge fund (ESL Investments).  This has prodded fears that the company could eventually be in trouble.

Berkowitz was buying in early September around $32.28 but then ramped up purchases on September 5th and 8th around $33.21. It will be interesting to see if he ramps up his purchases even further now that shares are even lower.

Fairholme's filing also notes that one of their other investments is potentially involved here: St. Joe (JOE).  The filing indicates that, "The St. Joe Company, an affiliate of the Fund and Fairholme, is in discussions with the Issuer regarding the $400 million secured short-term loan disclosed on the 8-K filed by the Issuer on September 15, 2014.  The St. Joe Company may invest up to $100 million in participations relating to theShort Term Loan."

Berkowitz's 13D filing didn't note any other plans or proposals at this time.

Per Google Finance, Sears Holdings is "is a retailer with 2,172 full-line and 1,338 specialty retail stores in the United States operating through Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears) and 500 full-line and specialty retail stores in Canada operating through Sears Canada Inc. (Sears Canada), a 95%-owned subsidiary. The Company operates in three segments: Kmart, Sears Domestic and Sears Canada."

What We're Reading ~ Hedge Fund Links 9/19/14

Brevan Howard's Charlotte Valeur talks strategy [FINalternatives]

Seth Klarman cautions against complacency bubble [ValueWalk]

Picking hedge funds is hard [Abnormal Returns]

Highland Capital on whether the bull market in US airlines will continue [Harvest]

Don't forget the 'hedge' in hedge fund [First Adopter]

The beginning of the end of the hedge fund gravy train [Abnormal Returns]

Profile of ValueAct / Jeff Ubben [Fortune]

The (obscene) cost of hedge funds [FT Alphaville]

Trian makes case to split up DuPont [WSJ]

Tiger Ratan's Chopra stumbles in rise to top [Bloomberg]

Hedge fund's equity titans come unstuck in Europe [eFinancial News]

Activist investors build up their war chests [WSJ]

Alibaba gets interest from Tepper, Loeb, Cooperman [CNBC]

Oaktree fund betting big on economic downturn [CNBC]

Puerto Rico finds it has new friends in hedge funds [Dealbook]

Most hedge fund managers are overpaid [Bloomberg]

CFTC eases hedge fund advertising ban [WSJ]

Wednesday, September 17, 2014

What We're Reading ~ Analytical Links 9/17/14

Edge, time arbitrage and the shame of short-term thinking [Lux Capital]

A fireside chat with Charlie Munger [WSJ]

Buffett on market valuation [Brooklyn Investor]

Bears at their lowest level since 1987, now what? [Yahoo]

8 lessons from the first year of a registered investment advisory firm [Reformed Broker]

Competition is for losers [Peter Thiel]

An independent Scotland could become an energy powerhouse [Fortune]

Britain needs greater unity not a messy break-up [George Soros]

The tollbooth businesses of Visa & Mastercard [Scuttlebutt Investor]

A discussion on Apple Pay [Twitter]

Why banks are buying into Apple Pay [American Banker]

Thoughts on what the Apple Watch means [Daring Fireball]

Hermes takes the long view in China [FT]

Inflection point for Western Union? [YGC]

Alibaba's coming out party & valuation [Aswath Damodaran]

Alibaba IPO is a bonanza for select firms [WSJ]

On the rise of NY regulator Benjamin Lawsky [Bloomberg]

There is no bond bubble [Barrons]

Tuesday, September 16, 2014

Glenview Capital Boosts Fossil Group Stake

Larry Robbins' hedge fund firm Glenview Capital has filed a 13G with the SEC regarding shares of Fossil Group (FOSL).  Per the filing, Glenview now owns 6.15% of the company with 3.25 million shares.

This marks an increase of 582,100 shares since the end of the second quarter.  The filing was made due to activity on September 4th.  We've also detailed how another hedge fund has been active in FOSL shares.  Ricky Sandler's Eminence Capital also increased its Fossil stake this summer.

Per Google Finance, Fossil Group is "a global designer, marketer and distributer company that specializes in consumer fashion accessories. The Company’s offerings include a line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts, sunglasses, soft accessories and clothing. Its products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company do not maintain a physical presence."

We've detailed other recent portfolio activity from Glenview here.

Lee Cooperman Discloses Aspen Group Position

Lee Cooperman has disclosed a new position in Aspen Group (ASPU) via a 13G filed with the SEC.  He now owns 9.99% of the company with 11.24 million shares.  The filing was made due to activity on September 4th.

The fine print notes that this "does not include additional shares of common stock issuable upon the exercise of warrants which contain a blocker provision under which the reporting person can only exercise his warrants to a point where he would beneficially own a maximum of 9.99% of the issuer's outstanding shares.

Per Google Finance, Aspen Group is "offers relevant online education. The Company derives revenue primarily from tuition and fees derived from courses taught by the Company online, as well as from related educational resources that the Company provides to its students, such as access to its online materials and learning management system. The Company’s subsidiary, Aspen University Inc. (Aspen University), delivers education experiences and has served thousands of students. Aspen University offers students 65 degree programs, specializations, completion programs and certificates in a range of areas, including business and organization management, education, nursing, information technology, general studies and more."

Starboard Value's Presentation on Transforming Darden Restaurants

Jeff Smith's activist firm Starboard Value is out with a presentation on their position in Darden Restaurants (DRI).  They're pushing for change here and has put together a massive 293 slide deck illustrating the company's margin improvement opportunity, the need for a turnaround in its Olive Garden brand, among other things.

Embedded below is Starboard Value's presentation "Transforming Darden Restaurants":

You can download a .pdf copy here.

For more on Starboard, check out Jeff Smith's presentation at the recent Value Investing Congress as well.

Corvex Management Increases Fidelity National Financial Stake

Keith Meister's activist hedge fund Corvex Management has filed an amended 13D with the SEC regarding their position in Fidelity National Financial (FNF).  Per the filing, Corvex now owns 7.3% of the company with 20.24 million shares.

This is an increase of over 1.95 million shares since the end of the second quarter.  The filing was made due to activity on September 8th.  They bought 535,000 shares at $26.64 in late July and 1.4 million shares in early September at $27.60.

Per Yahoo Finance, Fidelity National Financial is "together with its subsidiaries, provides title insurance, technology, and transaction services to the real estate and mortgage industries in the United States."

Corvex's FNFV Group Stake

Corvex at the same time filed another 13D on FNFV Group common stock (FNFV).  Per that filing, they own 2.9% of the company with 2,694,572 shares. 

FNFV was spun-off from FNF.

It's also worth pointing out that Corvex had been selling these shares throughout July and then recently sold 2.5 million shares at $15.28 in early September.

Per Yahoo Finance, Fidelity National Financial Ventures "operates as an investment arm of Fidelity National Financial, Inc. and is based in United States."

Monday, September 15, 2014

Tiger Global Discloses New Bitauto Stake, Boosts Autohome Position

Chase Coleman and Feroz Dewan's hedge fund Tiger Global recently filed two separate 13G's with the SEC. 

New Bitauto Stake (BITA)

First, they disclose a new position in Bitauto (BITA).  Per the 13G filing, they now own 14.9% of the company with over 6.56 million ADR shares. 

The filing was required due to activity on September 3rd.  They had previously been involved in shares but SEC filings indicate they sold out of the position in the first quarter of this year.  But now they've jumped back in.

Per Google Finance, Bitauto is "a provider of Internet content and marketing services. The Company’s and websites provide consumers with up-to-date new and used automobile pricing information, specifications, reviews and consumer feedback."

Increases Autohome Stake (ATHM)

Second, Tiger Global has revealed they've increased their position in Autohome (ATHM).  Per the filing, they now own 18.5% of the company with 6.735 million shares.  The filing was made due to activity on September 2nd.  At the end of the second quarter, they only owned 290,873 shares.

Tiger Global isn't the only other major hedge fund involved here.  Earlier in the year, we highlighted how Tybourne Capital has a large Autohome stake as well.  Tybourne was founded by Eashwar Krishnan, previously of Lone Pine Capital.

Per Google Finance, Autohome is "an online destination for automobile consumers in China. Through its two Websites, and, it delivers independent and interactive content to automobile buyers and owners. Content it provides to its users include professionally produced content, user generated content, automobile library and automobile listing information. It has an editorial team focusing on serving consumers throughout the automobile ownership lifecycle. It conducts independent and professional evaluations of vehicle models from its users’ perspective."

Notes From Charlie Munger's Daily Journal Meeting 2014

Thanks to Alex Rubalcava (@AlexRubalcava) for tweeting notes from Charlie Munger's Daily Journal (DJCO) 2014 meeting recently.  We've aggregated and posted the notes below with his permission:

Notes From Charlie Munger's Daily Journal (DJCO) Meeting

"We have a few shareholders and a bunch of groupies."

 Charlie talked about how the legal filings notice is in structural decline, made an analogy to Kodak.

Says Thomson Reuters successfully made the transition.  Also Berkshire ("We didn't have just one failing business at Berkshire.  We had three!" ~ textiles, department stores, stamps)

DJCO attempting a technological transition, working to manage expectations

Working with bureaucracy, government, regulators is one of the core competencies of DJCO's software biz

"I don't like derivatives."

"There is more dementia about finance than there is about sex."

On the Berkshire/THI inversion: "Anyone who thinks this is a travesty is stark raving mad."

Charlie argued for low corporate taxes and higher consumption rates

"People like you have bid our stock up to a price I wouldn't pay"

Charlie has spent at least twenty percent of his comments inveighing against gambling

"I've always read Paul Krugman because he's the smartest leftist I've ever read, and he uses the King's English very well."

On Alibaba:  "I know nothing about the company except that it's powerful."

Munger's asset allocation is basically Berkshire, Costco, and "an Asian fund" (Li Lu's Himalayan Capital?)

"All my holdings are making new highs. Am I doing it wrong?"

On avoiding mistakes: "All you have to do is take your head out of a place it shouldn't be."

Charlie praised Ron Chernow's biography of Rockefeller (Titan: The Life of John D. Rockefeller, Sr)

Do individual investors still have an advantage over institutions? Some can do it but it's very hard

On managing a portfolio of 200 stocks: "I would shrink from that responsibility."

Charlie says Buffett will write extensively in this year's annual report about the why and how of Berkshire's success and why it will continue after Warren and Charlie are no longer running it.  "You will find this year's report very, very interpreting."

"I think Elon Musk is a genius and I don't use that word lightly.  And he's one of the boldest men ever."

On Japan: "They've got so much stimulus you can't find a pothole on a side of a mountain anywhere in the country."

Praised a large money manager who indexes his US equities and searches for value in less efficient markets

On his partnership with Warren: "People don't ordinarily get a divorce after they've been together for fifty years.  I think Einstein needed someone to talk to."

"If I were the benevolent dictator of America we would have a single payer health care with an opt out provision."

"The thing about Berkshire is that the results are prodigious but the people producing the results aren't prodigies."

On his secret to success:  Get the no-brainers off his desk immediately

"I think two years from now MidAmerican will be the biggest utility company in the United States."

Charlie says he bought DJCO for $2.7 million, then dividended out the original $2.7 three years later.  Company is basically cost basis zero.

Thanks again to Alex and be sure to follow him on Twitter here: @AlexRubalcava

You can also check out more thoughts from Charlie via Jason Zweig here.

Paulson & Co Reveals Overseas Shipholding Group Position

John Paulson's hedge fund firm Paulson & Co has filed a 13G with the SEC regarding shares of Overseas Shipholding Group (OGISZ).  Per the filing, Paulson now owns 19.35% of the company with over 61.38 million shares. 

This is a newly disclosed position as it has not appeared in their SEC filings previously.  The company recently emerged from Chapter 11 and so it's also possible that Paulson was involved beforehand via a distressed play.  The filing was made due to activity on August 31st.

Per Google Finance, Overseas Shipholding Group is "a tanker company engaged primarily in the ocean transportation of crude oil and petroleum products. The Company’s vessel operations are organized into strategic business units and focused on market segments: crude oil, refined petroleum products and the United States Flag. The International Flag Crude Tanker unit manages International Flag ultra large crude carrier (ULCC), very large crude carrier (VLCC), Suezmax, Aframax, Panamax and Lightering tankers; the International Flag Product Carrier unit principally manages LR1 and MR product carriers and the United States unit manages the Company’s United States Flag vessels. In August 2014, the Company announced that it has emerged from Chapter 11 as a newly reorganized company."