Bruce Kovner's Hedge Fund Starts New Veeco Instruments (VECO) Stake

Bruce Kovner's global macro hedge fund Caxton Associates recently filed a 13G with the SEC regarding shares of Veeco Instruments (VECO). Due to portfolio activity on September 28th, 2010, Caxton Associates has disclosed a 5.3% ownership stake in VECO with 2,168,800 shares. This is a brand new position for the hedge fund as they did not own it as of June 3oth. Kovner of course has graced the pages of Forbes' billionaire list due to his success as a hedge fund manager.

Taken from Google Finance, Veeco Instruments is "designs, manufactures, markets and services enabling solutions for customers in the high brightness light emitting diode (HB LED), solar, data storage, scientific research, semiconductor and industrial markets."

To see what hedge funds have been buying & selling, scroll through our latest coverage of SEC filings.

Hedge Fund News: Soros, Citadel, Atticus, Caxton & More

We're back with our latest compilation of the most recent news out of hedge fund land. Our goal here is to give you all of the major hedge fund news in quick little hits. If you've missed some of our previous updates, we highly recommend checking them out our September update, as well as our July hedge fund news. Let's dive right into the latest updates from some prominent players:

George Soros, Soros Fund Management

Legendary investor and hedge fund manager George Soros 'bought the dip' in financial markets as he saw it as a buying opportunity to make some money. This just goes to show that no matter your economic thoughts, you have to play the market for what it is, as irrationality often abounds. He still thinks we are facing structural long-term problems, but that has not stopped him becoming more bullish for the short-term. His main concern is the deleveraging of the US consumer over a longer period of time which will hurt consumer spending and thus growth going forward.

While he 'bought the dip,' Soros is now cautious as he notes the market to be very overextended and at the risk of another drawdown. While he thinks a downturn is coming, he says that the market will be fine for the rest of the year. The problems, he says, will come in 2010 once the reality of weak global growth hits. In terms of recent portfolio activity, we highlighted when Soros adjusted three of his positions. To check out Soros' thoughts on financial markets in their latest iteration, we recommend checking out his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.


Ken Griffin's Citadel Investment Group

Investors can finally redeem their money out of Citadel's largest funds, Kensington and Wellington. After being locked up for almost an entire year, we wonder how many investors will pull their funds purely out of rage from being locked up so long. They probably will take at least a little consolation in the fact that after a horrendous performance in 2008, Citadel's funds have at least bounced back as they are up 57% this year. Citadel has $14 billion in assets under management and apparently Citadel's funds are positioned to "withstand a catastrophic market event" so they have learned from their mistakes. In terms of their recent activity, Citadel has been busy with their ETrade stake and we also noted their UK positions here. Bloomberg also has a recent in-depth profile of Griffin up here as well.


Timothy Barakett, Atticus Capital

While Barakett may have left the hedge fund manager game, he has not ceased being an investor. Apparently, Barakett is set to invest in the various new fund launches by former Atticus employees. Atwater is a hedge fund being launched by Lee Pollock and Kris Green who formerly plied their trade at Atticus. Atwater is supposedly planning to raise $500 million by the end of next year and will focus on merger arbitrage and special situations.

Another fund Barakett is set to invest in is being launched by former Atticus Capital analyst Ed Bosek and Noam Ohana, who previously invested Atticus' partner money in other hedge funds. They have founded Beacon Light Capital, a hedge fund that will trade global equities. Bosek will be portfolio manager while Ohana will be the chief operating officer of the fund. Whenever the time comes, we'll check out whatever SEC filings may come out of both these new ventures.


Hugh Hendry, Eclectica Fund

Our resident deflationist is hedge fund manager Hugh Hendry of the Eclectica Fund. His latest media appearances have him noting that markets are crowded right now and are "all one trade." He thinks that stocks and gold now have a risk that everyone could all want to exit at the same time, saying that now investors are either in the market or not at all. One interesting point he does bring up is the fact that the rally has been ramping higher on questionable volume. He notes the absence of typical volume associated with healthy rallies in this video interview embedded below (email readers come to the blog to view it):



Hendry's commentary is always good reading and you can read some of his recent letters here as well as here.


Jeremy Grantham, GMO

The resident perma-bear and 'grumpy old man' (we mean that with respect) Jeremy Grantham is out with his latest commentary and it is a good read as usual. Here's a notable excerpt from his latest piece where he chimes in on the current market:

“Corporate ex-financials profit margins remain above average and, if I am right about the coming seven lean years, we will soon enough look back nostalgically at such high profits. Price/earnings ratios, adjusted for even normal margins, are also significantly above fair value after the rally. Fair value on the S&P is now about 860 (fair value has declined steadily as the accounting smoke clears from the wreckage and there are still, perhaps, some smoldering embers). This places today’s market (October 19) at almost 25% overpriced, and on a seven-year horizon would move our normal forecast of 5.7% real down by more than 3% a year. Doesn’t it seem odd that we would be measurably overpriced once again, given that we face a seven-year future that almost everyone agrees will be tougher than normal?"

It's always good to hear both sides of an argument and if you want your fair dose of pessimism, head Grantham's way (some his past commentary here). You can check out his full recent commentary via .pdf here.


Bruce Kovner's Hedge Fund Caxton Associates

Interestingly enough, we see that Caxton Associates has helped executives at the firm raise $500 million to launch new Lucidus Capital Partners. The new hedge fund will focus on high yield and will be managed by Darryl Green and Geoffrey Sherry. Caxton has taken a 25% stake in this new firm. What's interesting here is that Sherry will continue to run Caxton's $1 billion bond fund as well. We'll have to see if this new trend of hedge funds funding new funds spawned from inside their own walls continues. This can be quite successful, as evidenced by Julian Robertson's network of seeded 'Tiger Cub' funds. Back in our June performance update post, we noted that Caxton was barely up for the year at that time, at 2.21%.


Abu Dhabi Investment Fund (Aabar Investments)

This Abu Dhabi investment fund has taken a $328 million stake in a Spanish financial firm's new Brasilian arm, Banco Santander Brasil. Aabar has been one of the most active funds out of Abu Dhabi as they also have a 9.1% stake in Daimler, a 30% stake in Virgin Galactic, and a 4% stake in Tesla Motors. Aabar is controlled by the Abu Dhabi government through a majority stake in the International Petroleum Investment Company.


Paolo Pellegrini, hedge fund PSQR Management

We recently covered the ex-Paulson & Co hedge fund manager's trade ideas and we see that he is back in the media yet again. Pellegrini recently laid out the 'only attractive bet' for investors is to short long-term US debt. He says, "“I always like to think about assets that are likely to experience a breakdown; the only thing I’m pretty comfortable with right now is U.S. Treasury securities and U.S. agency mortgage-backed securities. I think that those are overpriced so they are attractive shorts ... The dollar has depreciated more than it should for the short term ... And if you ask me where am I putting my money now, I am on the sidelines.” Make sure to check out Pellegrini's recent thoughts on shorting treasuries and longing oil.


Bruce Berkowitz (Fairholme Funds)

Noted equity mutual fund manager Bruce Berkowitz of the Fairholme Fund (FAIRX) is launching a new bond fund that will invest over the entirety of the bond universe. While Berkowitz is unquestionably a good equity fund manager, it raises the question if he is also a good bond fund manager? His equity fund has an annual return of over 9% over the past 5 years. While many investors will undoubtedly jump on this fund due to the name recognition, be aware that it has a $25,000 minimum initial investment, over 10x his other fund. It will be interesting to see if Berkowitz can also prove his worth in the bond arena, as few managers out there can dabble successfully in both.


Stanley Fink, International Standard Asset Management

Former Man Group CEO Stanley Fink is releasing a new fund at his new firm. International Standard Asset Management will release a gold fund in December, even against Fink's liking, as he isn't fond of single commodity funds. However, you can never turn down an opportunity that investors clearly desire. Fink's fund will thus join a large cast of prominent hedge fund players in the gold trade including David Einhorn of Greenlight Capital and John Paulson of hedge fund Paulson & Co, amongst many others.


Thanks for checking out our latest edition of hedge fund quick-hits and make sure to check out our September hedge fund news as well.

Bruce Kovner's Caxton Associates 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

This week, turning the focus to global macro funds, we'll be checking in on Bruce Kovner's Caxton Associates. Do note that global macro funds are typically not equity focused funds. While they do indeed have equity exposure, the majority of their holdings are in other markets. So, we mainly check in on their sector exposure to see what types of global macro themes they may be investing in. This $9 billion firm is one of many global macro oriented funds which we cover. This is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. But, they are only required to disclose equity holdings.

Kovner comes from the group of "offspring" of the legendary Commodities Corp. Kovner emerged as a successful offspring along with fellow great macro traders Paul Tudor Jones (Tudor Investment Corp), and Louis Bacon (Moore Capital Management). If you want to hear some insightful thoughts from Bruce Kovner himself, head over to our post on Hedge Fund manager interviews. Taken from Wikipedia, Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." Kovner is also featured in Jack Schwager's book, Market Wizards. Caxton's Global Investments fund saw Caxton's net returns of 13% (after performance fees), as noted in our year-end performance numbers post. Kovner last year told Alpha magazine that, "One of the most important skills you need is to consistently reinvent where you put resources. You must seek out undiscovered information." His hedge fund is named after the first printer of books in English from the fifteenth century.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
WR Berkley (WRB)
Ecolab (ECL)
Western Union (WU)
McDonalds (MCD)
Kraft (KFT)
Northern Trust (NTRS)
Urban Outfitters (URBN)
Oil Service ETF (OIH)
Liberty Media (LMDIA)
Bed Bath & Beyond (BBBY)
SPDR Gold Trust (GLD)
Devon Energy (DVN)
Anadarko Petroleum (APC)
Potash (POT)
American Express (AXP)
Ambev (ABV)
KBW Bank ETF (KBE)
Teva Pharma (TEVA)
United States Steel (X)
Morgan Stanley (MS)
Petroleo Brasileiro (PBR)
Noble (NE)
Ishares Brazil ETF (EWZ)
CF Industries (CF)
Unibanco (UBB)
Ishares Mexico ETF (EWW)
Weyerhaeuser (WY)
Fluor (FLR)
Canadian Natural Resources (CNQ)


Some Increased Positions (A few positions they already owned but added shares to)
Amgen (AMGN): Increased position by 285%
Occidental Petroleum (OXY): Increased position by 71%
General Mills (GIS): Increased position by 17.8%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
JPMorgan Chase (JPM): Reduced position by 92%
Crown Holdings (CCK): Reduced position by 69%
Gilead (GILD): Reduced position by 67%
Berkshire Hathaway (BRK-A): Reduced position by 67%
DirecTV (DTV): Reduced position by 65%
Lorillard (LO): Reduced position by 63%
Total (TOT): Reduced position by 56%
Wells Fargo (WFC): Reduced position by 53.7%
Ferro (FOE): Reduced position by 51%
Raytheon (RTN): Reduced position by 50.5%
Medco Health (MHS): Reduced position by 49%
Apollo Group (APOL): Reduced position by 47%
Google (GOOG): Reduced position by 47%
Netease (NTES): Reduced position by 47%
Waste Management (WMI): Reduced position by 46.4%
XTO Energy (XTO): Reduced position by 42%
Colgate Palmolive (CL): Reduced position by 38.9%
Walmart (WMT): Reduced position by 37%
Hewlett Packard (HPQ): Reduced position by 36%
Priceline (PCLN): Reduced position by 34.5%
Lazard (LAX): Reduced position by 30%
WR Grace (GRA): Reduced position by 27.6%
Qualcomm (QCOM): Reduced position by 26%
Visa (V): Reduced position by 22.8%
Philip Morris Intl (PM): Reduced position by 12%


Removed Positions (Positions they sold out of completely)
Great Atlantic (GAP)
Petroleo Brasileiro (PBR-A)
RTI (RTI)
Barr Pharma (BRL)
Home Depot (HD)
Trinity Industries (TRN)
Reinsurance Group (RGA-B)
Precision Castparts (PCP)
Greenfield Online (inactive)
Kohls (KSS)
Mohawk Industries (MHK)
Rockwood (ROC)
Goldman Sachs (GS)
Lennar (LEN)
Fastenal (FAST)
Bucyrus (BUCY)
NDS (NNDS)
Titanium Metals (TIE)
Schlumberger (SLB)
Tercica (TRCA)
Ariba (ARBA)
Symantec (SYMC)
Estee Lauder (EL)
Scripps Networks (SNI)
Altria (MO)
Campbell Soup (CPB)
Ikon Office (IKN)
Grey Wolf (GW)


Top 20 Holdings (by % of portfolio)

1. Service Corp (SCI): 4.37% of portfolio
2. General Mills (GIS): 4.14% of portfolio
3. Philip Morris (PM): 3.66% of portfolio
4. Walmart (WMT): 3% of portfolio
5. Occidental Petroleum (OXY): 2.6% of portfolio
6. Raytheon (RTN): 2.25% of portfolio
7. XTO Energy (XTO): 2.1% of portfolio
8. WR Berkley (WRB): 1.9% of portfolio
9. Priceline (PCLN): 1.85% of portfolio
10. Hewlett Packard (HPQ): 1.84% of portfolio
11. Wells Fargo (WFC): 1.84% of portfolio
12. Vivus (VVUS): 1.78% of portfolio
13. Colgate Palmolive (CL): 1.73% of portfolio
14. Medco Health (MHS): 1.64% of portfolio
15. Ecolab (ECL): 1.63% of portfolio
16. Waste Management (WMI): 1.57% of portfolio
17. Apollo Group (APOL): 1.53% of portfolio
18. Western Union (WU): 1.49% of portfolio
19. McDonalds (MCD): 1.49% of portfolio
20. Amgen (AMGN): 1.46% of portfolio

Caxton was moving out of equities in a big way this past quarter. Assets from the collective long US equity, options, and note holdings were $2.2 billion last quarter and were $770 million this quarter. That's really the only major move worth noting... the fact that they were selling out of so many things. Overall, they have a pretty blue-chip littered portfolio. They're playing it 'safe' considering their holdings and the fact that they have so little equity exposure now. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Peter Thiel's Clarium Capital, Bret Barakett's Tremblant Capital, David Stemerman's Conatus Capital, James Pallotta's Raptor Capital Management, Lee Ainslie's Maverick Capital, and John Griffin's Blue Ridge Capital. Look for our updates as we will be covering a new fund each day.

Bruce Kovner's Caxton Associates: Hedge Fund Tracking Q3 2008 - 13F Filing

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
  

Next up is Bruce Kovner's Caxton Associates. The $10 billion firm is one of many global macro oriented funds which we cover. This is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.

Kovner comes from the group of "offspring" of the legendary Commodities Corp. Kovner emerged as a successful offspring along with fellow great macro traders Paul Tudor Jones (Tudor Investment Corp), and Louis Bacon (Moore Capital Management). If you want to hear some insightful thoughts from Bruce Kovner himself, head over to our post on Hedge Fund manager interviews. Taken from Wikipedia, Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." As of the end of October, Caxton's Global Investment Fund was up 7.25%.

Before beginning, you might be interested in checking out Caxton's portfolio holdings from Q2 2008. Also, we noted that Caxton had recently boosted their stake in Ferro (FOE) to 5.2%. The following were Caxton's long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC.


New Positions (Brand new positions that they initiated in the last quarter):
Grey Wolf (GW)
Ikon Office (IKN)
Campbell Soup (CPB)
Scripps Networks (SNI)
JP Morgan Chase (JPM-PA)
PPG Industries (PPG)
Hewlett Packard (HPQ)
Lorillard (LO)
Waste Management (WMI)
Vivus (VVUS)
Lazard (LAZ)
NDS Group (NNDS)
Greenfield Online (SRVY)
Reinsurance Group of America Class B (RGA-B)
IAC Interactive (IACI)
HSBC Holdings (HBC)
Secure Computing (SCUR)
Genentech (DNA)
Winnebago (WGO)
Amgen (AMGN)
Penn National Gaming (PENN)
HILB Rogal & Hobbs (HRH) - no longer active on NYSE
Georgia Gulf (GGC)
Ishares Natural Resources (IGE)
Delta Airlines (DAL)
Financials ETF (XLF)
Scholastic (SCHL)
Northwest Airlines (NWA)
Anadarko Petroleum (APC)
Devon Energy (DVN)


Added to (Positions they already owned but added shares to)
JP Morgan Chase (JPM): Increased stake by 2991%
Freeport McMoran (FCX): Increased stake by 870%
Ferro (FOE): Increased stake by 824%
Charles Schwab (SCHW): Increased stake by 257%
Walmart (WMT): Increased stake by 242%
Metlife (MET): Increased stake by 145%
Symantec (SYMC): Increased stake by 145%
Medco Health (MHS): Increased stake by 92%
Altria (MO): Increased stake by 60%
Republic Services (RSG): Increased stake by 44%
Ariba (ARBA): Increased stake by 28%
Raytheon (RTN): Increased stake by 15%
XTO Energy (XTO): Increased stake by 5%


Some Reduced Positions (Positions they sold some shares of - note not all sales listed)
DirecTV (DTV): Reduced position by 51%
Coca Cola (KO): Reduced position by 42%
Estee Lauder (EL): Reduced position by 36%
Gilead Sciences (GILD): Reduced position by 32%
Schlumberger (SLB): Reduced position by 32%
General Mills (GIS): Reduced position by 26%
Union Pacific (UNP): Reduced position by 24%
Total (TOT): Reduced position by 20%
Omnicom (OMC): Reduced position by 16%
W.R. Grace (GRA): Reduced position by 7.5%
Berkshire Hathaway (BRK.A): Reduced position by 6%


Removed Positions (Positions they sold out of completely)
Oil Services ETF (OIH)
Kraft (KFT)
Alcoa (AA)
Gardner Denver (GDI)
Apple (AAPL)
Baldor Electric (BEZ)
Tesoro (TSO)
Taiwan Semiconductor (TSM)
Innophos Holdings (IPHS)
Deere (DE)
Brookfield Asset Management (BAM)
Liberty Media (LMDIA)
Clear Channel (CCU)
Electronic Data Systems (EDS-PI)
Navteq
Activision (old shares before merger with Blizzard)
Lowes (L)
WH Energy (WHQA) - inactive
Choicepoint (CPS)
Monsanto (MON)
Rural Cellular (RCCCO)
Research in Motion (RIMM)
Nucor (NUE)
Ansoft
NRG Energy (NRG)
US Steel (X)
Pioneer Natural Resources (PXD)
Mastercard (MA)
Exelon (EXC)
MGM Mirage (MGM)


Top 20 Holdings (by % of portfolio)

1. JPMorgan Chase (JPM): 8.05% of portfolio
2. Grey Wolf (GW): 4.5% of portfolio
3. Metlife (MET): 3.9% of portfolio
4. Ikon Office (IKN): 3.1% of portfolio
5. Service Corp (SCI): 2.7% of portfolio
6. Campbell Soup (CPB): 2.4% of portfolio
7. Ferro (FOE): 2.0% of portfolio
8. Autozone (AZO): 1.9% of portfolio
9. Berkshire Hathaway (BRK.A): 1.8% of portfolio
10. Altria Group (MO): 1.8% of portfolio
11. Walmart (WMT): 1.8% of portfolio
12. W.R. Grace (GRA): 1.7% of portfolio
13. Wells Fargo (WFC): 1.7% of portfolio
14. Scripps Networks (SNI): 1.7% of portfolio
15. XTO Energy (XTO): 1.7% of portfolio
16. Raytheon (RTN): 1.6% of portfolio
17. Coca Cola (KO): 1.6% of portfolio
18. Philip Morris International (PM): 1.6% of portfolio
19. Union Pacific (UNP): 1.5% of portfolio
20. Omnicom (OMC): 1.5% of portfolio

Assets from the collective holdings were $6.5 billion last quarter and were only $2.2 billion this quarter. Much like fellow Commodities Corp 'offspring' Paul Tudor Jones and Louis Bacon, Kovner was also decreasing exposure to equities all across the board. Please note that we have not detailed every single change to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point, Paul Tudor Jones' Tudor Investment Corp, and Louis Bacon's Moore Capital Management. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Kovner & Caxton:
- Caxton's portfolio holdings from Q2 2008
- Caxton boosts stake in Ferro (FOE)
- November hedge fund performance numbers
- October hedge fund performance numbers
- Hedge Fund Rankings

Caxton Associates Boosts Stake in Ferro (FOE)

In a recent 13G filing made with the SEC, Bruce Kovner's Caxton Associates revealed their 5.2% ownership stake in Ferro (FOE). As of the date of the filing, they owned 2,276,526 shares. Previously, in their most recent 13F filing, they only owned 245,944 shares. So, as you can see, Caxton has significantly upped their stake in the company. You can view Caxton's most recent portfolio holdings here.

Caxton Associates is ran by Bruce Kovner. Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." (Wikipedia)

Year-to-date, Caxton Associates was up 5% as of mid September, as I wrote in my hedge fund year-to-date performance update. And, I've recently updated with a comprehensive post detailing how many affluent hedge funds' performance suffered in September.

Taken from Google Finance, Ferro (FOE) is "a producer of specialty materials and chemicals that are sold to a range of manufacturers who, in turn, make products for end-use markets. In approximately 50 manufacturing sites around the world, the Company produces products, such as Inorganic specialty products, which include glazes, frits, enamels, pigments, dinnerware decorations and other performance materials."

Hedge Fund Tracking: Caxton Associates 13F Filing (Bruce Kovner)

(Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here).

Time to continue the Hedge Fund tracking series! If you've missed them, I've already covered Jeffrey Gendell's Tontine Partners here, Bret Barakett's Tremblant Capital here, Peter Thiel's Clarium Capital here, Stephen Mandel's Lone Pine Capital here, Lee Ainslie's Maverick Capital here, John Griffin's Blue Ridge Capital here, Boone Pickens' BP Capital here, Louis Bacon's Moore Capital Management here, and Paul Tudor Jones' Tudor Investment Corp here. This week, I'm taking a slightly different approach to the hedge fund tracking series. I'm doing so because the 13F SEC filings are filed on a quarterly basis, so these materials are time sensitive and the next ones are due out in November. I stated in my series preface that you need to treat these as a lagging indicator, because that's what they are. The holdings discussed below reflect portfolio holdings as of June 30th, 2008. So, since these forms are so tedious to sort through, I've condensed the rest of the hedge funds I track to summarize their major moves and top holdings.

Additionally, the majority of the rest of the funds I follow are macro funds. And, since 13F filings only detail equity holdings, we're left with a bit of a problem. Macro funds typically employ strategies that encompass many financial markets. Be it commodities, currency, futures, foreign markets.... you name it. So, these funds are much harder to track. Since they are not required to disclose positions held in those markets, we only get to see their equity holdings. But, at the same time, I still find the information useful because many of these funds have numerous large equity positions which give you a broad sense as to what their strategies may be.

So, next in the macro hedge fund tracking series we have Caxton Associates, ran by Bruce Kovner. Taken from Wikipedia, Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." Year-to-date, Caxton Associates was up 5% as of a few weeks ago, as I wrote in my hedge fund year-to-date performance update.

If you want to hear some insightful thoughts from Bruce Kovner himself, head over to my post on Hedge Fund manager interviews. So, now that we've got a background on Kovner and Caxton Associates, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Caxton's top holdings. Due to the time sensitive nature of the 13F material, I wanted to get this information posted before the next set of filings come out in November.

Top 20 Holdings by % of portfolio
1. Compania Cervecerias Unidas (CCU) - Increased position by 72934%, from 25,000 shares to 18,233,668 shares
2. Electronic Data Systems (EDS) - New Position
3. Activision (ATVI) - New Position
4. Monsanto (MON) - Increased position by 41 %
5. Rockwood Holdings (ROC) - Increased position by 68.8%
6. W-H Energy Services (WHQ) - Increased stake by 195%
7. Occidental (OXY) - Increased stake by 65%
8. ChoicePoint (CPS) - Decreased position by <>
9. DirecTV (DTV) - Decreased stake by 25%
10. W.R. Grace (GRA) - Boosted stake by 8%
11. Qualcomm (QCOM) - Boosted stake by 44.6%
12. Coca Cola (KO) - Decreased position by 12.5%
13. Rural Cellular (RCCC) - Increased stake by 12.4%
14. Research in Motion (RIMM) - Boosted stake by 8.7%
15. Service Corporation (SCI) - Increased position by 32%
16. Nucor (NUE) - Boosted position by 37%
17. (ANST) - New position
18. XTO (XTO) - Boosted stake by 150%
19. Stewart Enterprises (STEI) - Increased position by 12%
20. Gilead (GILD) - Decreased position by 26.7%

Kovner's Caxton Associates definitely disassociate themselves from the rest of the macro pack when it comes to the equity side of their portfolio. While their portfolio does hold typical energy and technology names often seen in other hedge fund portfolios, they also hold seemingly obscure names that I have yet to see pop up in any other funds I track. So, Kovner and his team may have discovered some diamonds in the rough here. In particular, I want to focus on his top holding: Compania Cervecerias Unidas (CCU). In the quarter prior to the filing, he held just 25,000 shares of this name. Then, over this past quarter, he ratcheted up his holdings in the name big time. He increased his position by 72,934%, bringing it all the way up to his firm's top holding, with a market value of over $642 million at the time of the filing. Needless to say, they bought this name with conviction. And, although I've seen numerous other funds buying up shares of Latin & South American beverage companies, this is the first fund I've seen pick up this name. So, definitely keep an eye on it.

Additionally, I want to point out his holdings in Rocwood Holdings (ROC), W-H Energy Services (WHQ), and Service Corporation (SCI). These are three other names I am seeing for the first time amongst the hedge funds I track. And, he was adding across the board to all three names. Caxton added to WHQ the most, increasing their position by 195%.

Now, turning to the 'hedge fund favorite' names that tend to pop up in numerous hedge fund portfolios that I track, we see Caxton holds positions in Qualcomm (QCOM), Research in Motion (RIMM), XTO Energy (XTO), Occidental (OXY), and Gilead (GILD). Caxton was out adding pretty moderately to all these names. OXY and XTO are easily two of the favorite equity energy plays amongst various hedge funds. And, you have to wonder how they affected their portfolio, given the volatile ride energy stocks have seen as of late. Turning to tech, we see that Caxton, like so many other funds, enjoy large positions in both QCOM and RIMM. As I've noted before, QCOM is easily a top five most common equity holding among the hedge funds I track. And, just like energy, technology stocks have been whipsawed around a lot recently. So, although Caxton was out adding this past quarter, we'll have to see if they were still adding to these names come the next 13F filing.

We already knew hedge funds (and macro funds in particular) had a rough July, as I noted here. And, it's easy to see why, with the heavy commodity exposure many of them had. What we don't yet know is how they've rebounded (if at all). Lastly, I just want to re-emphasize that since Caxton is a macro fund, they obviously have the majority of their positions in the commodity, currency, futures, or other markets. But, at the same time, they still have a sizable chunk of money in the equity markets.

Caxton Associates' full 13F filing listing every position can be found at the SEC.

Hedge Fund Year to Date Returns (Paulson, D.E. Shaw, SAC, & More)

Well, we recently got an update as to just how poorly hedge funds are performing year to date. Don't get me wrong, there are of course some standout performers. But, for the most part, they are taking it on the chin. So, if you are an individual investor getting your ass handed to you in this market.... you're not alone. Even some of the best and brightest in the game are right there with you. Hell, you're probably even outperforming some of these funds. Courtesy of the Wall Street Journal, we get a look at many notable hedge fund's performance year to date.

The Standout Performers

• $35 billion Paulson & Co: +18% ytd
• $26.3 billion Brevan Howard: +16% ytd
• $37.1 billion D.E. Shaw: +8% ytd
• $30.9 billion Bridgewater Associates: +6% ytd
• $33.3 billion Och-Ziff Capital: +0.5% ytd
• $16 billion Winston Capital: +10% ytd
• $10 billion Caxton Associates: +5% ytd
• $17 billion Tudor Investment Corp: +3% ytd
• $16 billion SAC Capital: +1.5% ytd
  

The Not-so Standout Performers

• $49.3 billion Highbridge/JP Morgan (Multistrat fund): -2% ytd
• $33 billion Farallon Capital: -6% ytd
• $23.7 billion GLG Partners: -14% ytd
• $13 billion Eton Park Capital: -1% ytd
• $19 billion Citadel Investment Group: -6% ytd
• $18 billion Lone Pine Capital: -8.5% ytd
• $12.5 billion TPG-Axon: -11% ytd
• $8 billion Cantillon Capital: -12% ytd
• $15 billion Atticus Capital: -25% ytd

The Slightly Mixed Bag

• $29.5 billion Renaissance Technologies: One of their funds is -1% ytd, while their signature Medallion fund is +40% ytd
• $26.9 billion Goldman Sachs: One of their funds is -2% ytd, while their Global Alpha fund is +17% ytd

And, according to Hedge Fund Research, Inc., hedge funds are having their worst year since 1990 (when they started tracking). They show that the average hedge fund is -3.43% ytd compared to -12.65% in the S&P500 and +1.05% in the Lehman Bros Bond Index.

So, results all across the board. Interesting to note though, that Atticus Capital is down 25% year to date. Just yesterday, there were rumors circulating that they were liquidating as I wrote about here. Tim Barakett, the founder of Atticus, came out and denied those rumors. The reason for such a large decline is pretty easy to pinpoint. As I've written about before, their portfolio had very heavy exposure to the likes of Freeport McMoran (FCX), Mastercard (MA), and NYSE Euronext (NYX); all of which have really been beaten down badly as of late. So, the rumors of liquidation weren't completely illogical, seeing as how the fund is down big this year. But, I want to reiterate again that they have denied the rumors that they were liquidating.

On another note, the algorithm master Jim Simons and his Renaissance Technologies Medallion fund are up big this year; very big. That's all I can really say about that, seeing as his entire operation is one giant quant enigma. D.E. Shaw & Co, fellow quant masters, are doing decently, up 8% year to date in this horrid tape.

Lone Pine Capital, managed by Stephen Mandel, (whom I frequently cover here on the blog), isn't having the best of years, but isn't getting slaughtered like Atticus is. Lone Pine is down a little over 8% year to date. You can view their most recent portfolio holdings as I analyzed here.

The "Commodities Corp Offspring," Paul Tudor Jones and Bruce Kovner have been playing the commodities markets smartly with their macro funds it seems. Jones' Tudor Investment Corp is up 3% ytd, while Kovner's Caxton Associates is up 8% ytd. With the wild swings in the commodities markets claiming the life of the Ospraie fund, I'm sure Tudor Jones and Kovner are happy to turn a profit. This year has been one wild ride, to say the least.

And, lastly, John Paulson is still kicking ass and taking names; up 18% year to date. You'll remember that Paulson correctly pegged the subprime crisis last year and profited handsomely from it.

So, there you have it. See how you stack up against some of the most revered names in the game. Some are dominating, while others are getting dominated. Welcome to the bear market.

Source: WSJ

Hedge Fund Activity / 13F

(Just FYI: This post marks the first of a series I will be doing this week that details what the "smart money" has been up to lately.)

Four times a year, hedge funds & asset managers with > $100 million AUM (assets under management) are required to report to the SEC their holdings from the previous quarter. I check these 13F filings quarterly just to get a sense as to where these funds are putting their money sector wise. If you just sit down and do some simple number crunching between last quarter's 13F and this quarter's 13F, you can see exactly where these funds have been moving their money.

Now, these 13F's should be treated as a lagging indicator simply because the 13F's that were just released May 15th 2008 show the funds' holdings as of March 31st 2008. So, in the past month and a half, they could have completely changed their portfolio. But, at the same time, its easy to see which sectors they are flocking to.

I like to specifically follow value based hedge funds in the hope that they won't experience ridiculously high turnover and thus allowing me to track their sector rotations. Specifically, I follow the Tiger Cubs (otherwise known as the proteges of former Tiger Management legend Julian Robertson). Many of these former proteges/right hand men have started their own funds and here are the ones I've been following:

- Blue Ridge Capital (John Griffin)
- Lone Pine Capital (Steve Mandel)
- Maverick Capital (Lee Ainslie)
- Viking Global (Andreas Halvorsen)

Additionally, I also like to follow the Commodities Corporation "offspring" which typically employ a global macro strategy.

- Tudor Investment Corp (Paul Tudor Jones)
- Moore Capital (Louis Bacon)
- Caxton Associates (Bruce Kovner)

So, I follow a core of value funds in depth and then I also follow a core of global macro funds in depth. Over the next week, I will be going into detail as to what those specific funds were up to this past quarter. Additionally, I like to follow other "whales" and funds that are not necessarily value based, but are still top performers on Wall Street. I won't be going into detail on some of these names, but I will provide some very useful links that give a broad overview of what some of these whales have been buying/selling. Because, after all, you've got to at least keep tabs on what these guys are doing:

- Warren Buffett (obviously)
- Carl Icahn (rabblerousing at its best)
- RBS Partners (Eddie Lampert)

Then, of course, there are some just straight up beastly funds which you have to keep an eye on due to their awesome returns over the years:

- Atticus Capital (Timothy Barakett)
- BP Capital (Boone Pickens)
- Greenlight Capital (David Einhorn)
- Paulson & Co (John Paulson)
- D.E. Shaw & Co (David E. Shaw)
- Jana Partners (Barry Rosenstein)

And, lastly, a few deep value & activist funds.

- Third Point (Daniel Loeb)
- Pershing Square (Bill Ackman)
- Okumus Capital (Ahmet Okumus)
- T2 Partners (Whitney Tilson)
- Tontine Partners (Jeffrey Gendell)

So, over the coming week I'll touch on some important position moves some of these funds/whales have made (new positions, removed positions, etc). And, specifically, I'll be looking in depth at some of my favorite funds on a quarter by quarter comparison. Here are the links to my in-depth analyses of said funds.

- Blue Ridge Capital
- Lone Pine Capital
- Maverick Capital
- BP Capital
- Atticus Capital