Hoplite Capital Adds to H&R Block Stake: Q3 Letter

John Lykouretzos' hedge fund Hoplite Capital is out with its Q3 letter.  In it, we see that they added to positions in Sea World Entertainment (SEAS), Monster Beverage (MNST), and H&R Block (HRB) during Q3 as shares sold off but their theses remain unchanged. 

HRB is their largest position and Lykouretzos writes,

"While HRB has recently announced that it will no longer be selling its bank to Republic Bancorp, we are confident they will either sell the bank or shut it down and pursue a more shareholder-friendly capital structure."

The hedge fund also exited their stake in Intuitive Surgical (ISRG) during the quarter as their thesis was incorrect.

This year, ISRG shares tumbled from $500 down to $420 after the second quarter and then continued to cascade to current levels of $369.  Numerous other prominent hedge funds like Viking Global were long shares of ISRG at the end of the Q2 so we'll have to wait and see if others sold in Q3 when the next batch of 13F filings come out.

Some of Hoplite's shorts include a semiconductor manufacturer and a wireless telecom operator in an emerging market.  They've recently added to shorts in companies that supply equipment to mining companies or that have exposure to mining in general and these are some of their top shorts.

Their Q3 letter also mentions that they were short a "handset manufacturer" that spiked when part of the company was acquired, and we assume that this position was Nokia (NOK).  As we detailed this week, Dan Loeb's Third Point bought NOK recently.

At the end of Q3, Hoplite had gross exposure of 150.7% and was 54.9% net long.


For more of the latest hedge fund letters, head to:

- Greenlight Capital's Q3 letter

- Third Point's Q3 letter

- Cobalt Capital's Q3 letter

- Corsair Capital's Q3 letter

Interviews with Julian Robertson & Jim Chanos: Columbia Business School Newsletter

We wanted to highlight the latest version of Columbia Business School's newsletter: Graham & Doddsville.  In their latest edition, they publish interviews with Tiger Management's Julian Robertson and Kynikos Associates' Jim Chanos,


Below are some excerpts we found insightful from the Tiger Management founder:

Julian Robertson on his investment philosophy: "I believe that the best way to manage money is to go long and short stocks.  My theory is that if the 50 best stocks you can come up with don't outperform the 50 worst stocks you can come up with, you should be in another business ... For my shorts, I look for a bad management team, and a wildly overvalued company in an industry that is declining or misunderstood."

Robertson on evaluating an initial idea: "The first thing is, is the management decent and honest?  A lot of people don't really care about that.  The way to look into that is to do some diligence."

On qualities he looks for in seeding funds: "Competitiveness.  Is he a competitor?"  He references that he often likes athletes due to their will.

Robertson's favorite plays (aside from Google and Apple): "I love WuXi (WX) which is a Chinese-based employment agency for PHDs, primarily in the drug industry ... the company's earnings are certainly increasing beautifully at about 20% a year and it still sells at 10x earnings."



Good insight from the interview with the Kynikos founder:

Jim Chanos on his early experiences in investing and lessons learned: "I recommended a short position in Baldwin-United at $24 ... the stock promptly doubled on me.  This was a good introduction to the fact that in investing, you can be really right but temporarily quite wrong."  (He started Kynikos with $16 million, $1 million of which was his own money.)

Chanos on long versus short: "I've learned there's a big difference between a long-focused value investor and a good short-seller.  That difference is psychological and I think it falls into the realm of behavioral finance ... if you're a short-seller, that's a cacophony of negative reinforcement.  You're basically told that you're wrong in every way imaginable every day.  It takes a certain type of individual to drown that noise and negative reinforcement out and to remind oneself that their work is accurate and what they're hearing is not."

On skills essential to succeed: "Start first with the SEC filings, then go to press releases, then go to earnings calls and other research. Work your way out.  Most people work their way in."

Chanos' current positions: Short natural gas industry in the US, betting against the coal industry.  He also thinks for-profit education business is flawed.  In his Opportunity Fund, he's currently short Chinese property companies and long Macau casinos.  We've also posted some of his other short positions.



The newsletter also features write-ups from MBA students on Avon Products (AVP), Ingersoll-Rand (IR), Legg Mason (LM), and H&R Block (HRB) as well as interviews with Tom Russo and Alexander Roepers.

Embedded below is the full Graham & Doddsville Spring 2012 issue:




For more on these particular investors, we've posted up:

- Jim Chanos on short selling: the power of negative thinking

- Charlie Rose's 1998 interview with Julian Robertson

Viking Global Increases H&R Block (HRB) Stake

Andreas Halvorsen's hedge fund Viking Global has boosted its stake in H&R Block (HRB). Per a 13G filed with the SEC, Viking has disclosed a 5.5% ownership stake in HRB with 16,664,422 shares. This is a 60% increase in their position size as they owned 10,408,200 shares at the end of 2010.

The firm has been taking more concentrated positions as each portfolio manager essentially owns each other's "best ideas". Before founding Viking, Halvorsen worked at Julian Robertson's Tiger Management. You can see the rest of Viking Global's portfolio here.

Per Google Finance, H&R Block is "has subsidiaries that provide tax, banking, and business and consulting services. The Company’s Tax Services segment provides income tax return preparation, electronic filing and other services and products related to income tax return preparation to the general public primarily in the United States, and also in Canada and Australia."