Friday, October 3, 2014

Pennant Capital Raises Ocwen Financial Stake

Alan Fournier's hedge fund firm Pennant Capital has filed a 13G with the SEC on their position in Ocwen Financial (OCN).  Per the filing, Pennant now owns 7.2% of the company with over 9.44 million shares.

This means they've boosted their position size by 4 million shares since the end of the second quarter.  Shares of OCN have been under extreme pressure as regulators scrutinize the non-bank servicers.  They're seeking to beef up compliance and have previously halted OCN's purchase of mortgage servicing rights (MSRs).

The filing was made due to activity on September 22nd. 

Per Google Finance, Ocwen Financial is "a financial services holding company. The Company is engaged in the servicing and origination of mortgage loans. The Company's Shared Appreciation Modification (SAM) incorporates principal reductions and lower payments for borrowers while providing a net present value positive loss mitigation outcome for investors, including the ability to recoup losses if property values increase over time."

Fairholme Capital Purchases Participation Interest in Sears Short-Term Loan

Bruce Berkowitz's Fairholme Capital has filed an amended 13D with the SEC regarding their position in Sears Holdings (SHLD).  Per the filing, Fairholme now owns 23.1% of the company with 24.64 million shares.

Berkowitz has now bought an additional 49,200 shares since his last amended 13D disclosure recently.

More importantly though, the filing notes that Berkowitz has participated in Sears' short-term loan.  The 13D indicates that:

"On September 30, 2014, The Fairholme Partnership, LP (the "Partnership"), a private fund affiliated with the Reporting Persons, purchased a 6.25% participation interest in the Short-Term Loan from entities affiliated with ESL Investments, Inc. pursuant to that certain Amended and Restated Participation Agreement, dated September 30, 2014, by and among PYOF 2014 Loans, LLC, the Partnership and affiliates of the ESL Investments, Inc. (the "A&R Participation Agreement")."

What We're Reading ~ Hedge Fund Links 10/3/14

Profile of Canyon Capital [Institutional Investor]

Perry Capital appeals Fannie, Freddie dismissal [FINalternatives]

Relational Investors plans to wind down [WSJ]

Goldman takes stake in Caxton [Reuters]

Hedge fund managers to increasingly defer performance fee pay-outs [COO Connect]

Short seller Chanos targets China's casino industry [Newsweek]

Complex and expensive but hedge funds can benefit us all [Telegraph]

Carol Loomis' 1970 piece: hard times come to hedge funds [AWJones]

Looking at the next generation of institutional investing [All About Alpha]

Wednesday, October 1, 2014

David Tepper's Latest Thoughts: Bloomberg Interview

Appaloosa Management's David Tepper sat down with Bloomberg TV today to discuss the upcoming Robin Hood Investors Conference that fights poverty in New York and to share some of his latest market thoughts.  Here are the highlights:

David Tepper's Bloomberg Interview

On his bet against bonds:  "They (ECB) haven't done any QE yet. So let them start some QE. But the beginning of the end was basically saying that when you create inflation and some inflation in the eurozone, then the bond market is going to start going down. If you don't create inflation in the eurozone of some sort or you don't stop the deflation, then that might not happen. But I do think that if they go in action, if they get in action, if they really get in action you will start creating inflation at some point in time. Until you do that, things will go where they go. And you can look at the curves over there."

On how the saying used to be "don't fight the Fed" and now it's "don't fight Draghi": "Yeah, I think that's probably right to a certain extent. I don't think you want to fight it, but you've got to understand what it's going to mean. So the extent that if he's really in action then you don't want to fight him, but he has to really get in action. You have to start QE. This negative interest rates doesn't necessarily have the effect of creating money. It doesn't necessarily have the effect of creating inflation. So if you want to do that, do that. But right now he's done nothing. So let him start."

On the US equity market multiple:  "Well I don't think it's high because if you – if you believe interest rates are 4 or 4.5 percent, 16.5 seems like about the right multiple. But I don't think we're at the 4.5 percent 10-years. We're at 2.5 percent 10-years or unfortunately 2.43 or something like that right now. And next year at 14 –"

On Fannie/Freddie:  "I wish I didn't have any investment.  And we're just – we're going to do a little bit more research and see where we stand in different courts. There's – it's – there's appeal processes for different lawsuits, so you’re not done with this particular court. You also have other courts that you’re involved in. I forget the name. The court of settlement claims or something like that.   So you have different places, different venues to – to – that you haven't brought a case yet, and also you can appeal this last decision. So I think that will go on. And then you want to see what happened exactly in this – in this judge's opinion right here. So you have to do some analysis right now to see where the securities are (inaudible) down a lot. Are they value now? Are they buy, sell, hold? That's what you have to do, reevaluate (inaudible)."

Tepper's thoughts on equities: "Well I kind of told you. Listen, it's – it's interesting on a multiple basis and – but you have to have certain things happening. You’ve got to have Europe stop – stop the nonsense, so to speak, Draghi stop the nonsense. So that's kind of it."

Embedded below is the video of Tepper's Bloomberg Television interview:

For more from Tepper, head to his call for the beginning of the end of the bond market bubble.

What We're Reading ~ Analytical Links 10/1/14

Do valuation shorts work? [CFA] 

Importance of ROIC: the math of compounding [Base Hit Investing]

The great American deleveraging continues [Yahoo]

The end of monetary policy [Forbes]

'Stock Market Wizards' take losses [Dasan]

Profile of Mohnish Pabrai [Forbes]

On China's economy: a test of will [Economist]

eBay does about-face in spinoff of PayPal [Dealbook]

On Apple Pay's eCommerce disruption [Starpoint]

Bullish piece on Bank of America [Barrons]

US poised to become world's leading liquid petroleum producer [FT]

Mystery man who moves Japanese markets [Bloomberg]

An investor's guide to better writing [imausa]

Citadel Adds To Acxiom Stake

Ken Griffin's Citadel has filed a 13G with the SEC regarding their position in Acxiom (ACXM).  Per the filing, Citadel now owns 5.1% of the company with over 4 million shares.

They've boosted their position size by over 2.7 million shares since the end of the second quarter.  The filing was required due to activity on September 25th.  ACXM shares have plummeted from $39 earlier this year down to current levels around $16.

Per Google Finance, Acxiom is "an enterprise data, analytics and software-as-a-service company. The Company operates in three segments: Marketing and Data Services, IT Infrastructure Management, and Other Services. The Marketing and Data Services segment includes its global lines of business for customer data integration, consumer insight solutions, marketing management services, and consulting and agency services. The IT Infrastructure Management segment develops and delivers information technology (IT) outsourcing and transformational solutions. The Other Services segment includes the e-mail fulfillment business, the United States risk business, and the United Kingdom fulfillment business. In July 2014, the Company acquired LiveRamp, Inc., a service for onboarding customer data into digital marketing applications."

Tuesday, September 30, 2014

Lone Pine Capital Boosts Tiffany Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding their position in Tiffany & Co (TIF).  Per the filing, Lone Pine now owns 5.3% of the company with over 6.85 million shares.

This means they've boosted their stake by over 2.61 million shares since the end of the second quarter.  The filing was made due to activity on September 18th.

You can view additional recent portfolio activity from Lone Pine here.

Per Google Finance, Tiffany's is "a holding company that operates through its subsidiary companies. The Company operates in five segments: Americas, Asia-Pacific, Japan, Europe and other. The Company's principal product category is jewelry, which represented 92% of worldwide net sales during the fiscal year ended January 31, 2014."

Eton Park Capital Increases Riverbed Technology Position

Eric Mindich's hedge fund firm Eton Park Capital has filed a 13G with the SEC regarding their position in Riverbed Technology (RVBD).  Per the filing, Eton Park now owns 5.63% of the company with 9 million shares.

This means they've increased their position size by over 6 million shares since the end of the second quarter.  The filing was made due to activity on September 18th.

Per Google Finance, Riverbed Technology "has developed solutions to the fundamental problems associated with information technology (IT) performance across wide area networks (WANs). Riverbed’s family of performance products include solutions for branch offices, mobile workers, private data centers, private clouds and cloud computing. The Company’s products include Steelhead products and Cascade product line."

Bruce Berkowitz's Wealthtrack Interview: AIG, BAC, FNMA

Consuelo Mack's Wealthtrack recently sat down with Fairholme Capital's Bruce Berkowitz to talk about his investments.  These days, he manages around $8 billion and his largest holding continues to be AIG (AIG).

He says he's still focused on financials because that's what he knows and what's in his circle of competence.  The main thing he's drawn to is the huge stature of some of the companies he's invested in.  He likes systemically important institutions (such as AIG and Bank of America).


Berkowitz notes that AIG's tangible book value is around $75 and he's waiting for the company to trade around book value.  He says he has to keep trimming the position slightly because as the price increases, it becomes an even larger part of his portfolio (and it's already almost 50% of his portfolio).

On Bank of America

He bought Bank of America (BAC) because he felt it would eventually become more like a bank like Wells Fargo after restructuring and settling litigation.  As it still sells below book or runoff value, he says he's getting the "future for free and a discount on the books."


He compares this situation to AIG in that it's a very important organization where the government is involved.

Curiously absent from the discussion was another of Berkowitz's holdings: Sears.  Shares have declined recently and Berkowitz has been interested in participating in the company's short-term loan.

Embedded below is the video of Berkowitz's interview with Wealthtrack: