Hedge Fund Balyasny Asset Management Discloses New Position

Dmitry Balyasny's hedge fund firm Balyasny Asset Management has filed a 13G with the SEC in regards to shares of Baltic Trading (BALT). In the filing, they disclose a 5.52% ownership stake in the company with 925,000 shares. This is a brand new position for them and it appears as though they received shares in the initial public offering (IPO) on March 11th, 2010.

Balyasny Asset Management, nicknamed BAM, was founded by Dmitry Balyasny in 2001. It has over 100 employees with the main office in Chicago and other offices in Greenwich, Hong Kong, London, Mumbai, and New York. Their investment process involves fundamental research by sector as well as dynamic capital allocation. They place a heavy weighting on experience and organize their teams so that they can concentrate on any given idea.

Balyasny likes to "focus on misunderstood situations and companies/sectors undergoing turbulent change from different perspectives." Through their research process they seek to identify unique ideas with attractive risk return. For 2009, Balyasny's Atlas Global Fund was up 8.64% as noted in our hedge fund performances post. In terms of other recent activity out of Balyasny, we wrote about their 13G filing on shares of Maguire Properties (MPG).

Taken from their recent press release, Baltic Trading is "a Marshall Islands company recently formed by Genco Shipping & Trading Limited, plans to conduct a shipping business focused on the drybulk industry spot market. Baltic Trading plans to use the proceeds of the offering, together with a $75 million capital contribution received from Genco, to acquire its initial fleet of two Capesize newbuildings and four 2009-built Supramaxes and for working capital and general corporate purposes, which may include future vessel purchases."

For more of the latest hedge fund portfolio movements, head to our coverage of the latest SEC filings.

Keep an Eye on Transports ($TRAN)

Stewie's post recently reminded me to keep an eye on the Transports. I like to watch this average for two reasons. Firstly, transports are an important gauge of economic activity. Secondly, transports typically are a leading indicator (for instance leading out of the recession). In addition to the transports, we've also looked at unemployment rates during recessions as a leading indicator, noting that the rate always skyrockets right before the worst is over.

Currently, the Transports average $TRAN is stuck in a very solid trading range, and has been for quite some time (as illustrated below). It has very strong support around the $2900 level and one should look to buy there. There seems to be a short opportunity setting up in transports as the average reaches resistance around the $3200 level. And, keep an eye out to see if the index breaks out of this past overhead resistance (as well as the 200 day moving average, which also acts as resistance). You can obviously play this by buying/selling various transport names like trucking companies, railroad plays and such.

A breakout over this heavy layer of near-term resistance would be obviously very bullish for transports. And, if this happens, it could be a signal that the recession is drawing nearer to a close, seeing as transports act as a leading indicator to economic activity. But, we unfortunately would expect the transports to fail at this resistance, setting up a nice short of the group. Because, after all, with the consumer in the house of pain, what has really changed with the economy? We would love to be proven wrong, though.

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Also, keep your eye on the Baltic Dry Index ($BDI), which measures bulk shipping. This volatile index is also a gauge for economic activity around the globe. And, if shipping activity is weak, then the odds are that we probably aren't out of the woods yet. As you can see from the chart, the index just absolutely fell off a cliff back in August of 2008. We've seen signs of a rebound, and we will continue to monitor it. Noted trader and author of the Gartman Letter, Dennis Gartman has also advocated monitoring the BDI in his recent interview with Bloomberg where he discussed the economy and Gold (GLD), among other things.

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These leading indicators of economic activity will be a great gauge for determining when we might be in the clear.