Thomas Steyer's Farallon Capital 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.

Next up, we have Thomas Steyer's Farallon Capital Management. Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate.

For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and had suspended withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. Some of Farallon's portfolio performance is available here and you can also read one of their investor letters from last year. In terms of more recent activity, we had noted in early February that Farallon had sold out of numerous positions (via 13D and 13G filings). And, just yesterday, Farallon updated their positions in Freightcar America (RAIL) and Capitalsource (CSE).

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):
n/a


Some Increased Positions (A few positions they already owned but added shares to)
Mastercard (MA): Increased by 64%
Fidelity National (FIS): Increased by 46.3%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Sherwin Williams (SHW): Reduced by 85.5%
America Movil (AMX): Reduced by 67%
Oracle (ORCL): Reduced by 50.5%
Sandridge Energy (SD): Reduced by 48.8%
Burlington Northern (BNI): Reduced by 48%
Freightcar America (RAIL): Reduced by 24.7%
Cablevision (CVC): Reduced by 23.8%
Wendys Arbys (WEN): Reduced by 19.2%
Geoeye (GEOY): Reduced by 14.8%


Removed Positions (Positions they sold out of completely)
Sciele Pharma (inactive)
Sealy (ZZ)
Abbott Labs (ABT)
National City (NCC)
SBA Communications (SBAC)
Symantec (SYMC)
Barr Pharma (BRL)
Visa (V)
Liberty Media (LMDIA)
Alcon (ACL)
Sealed Air (SEE)
ishares Biotechnology (IBB) Puts
Verisign (VRSN)
Qualcomm (QCOM)
Netapp (NTAP)
Seagate (STX)
Amylin (AMLN)
Applied Biosystems (ABI)
Exco Resources (XCO)
Zimmer Holdings (ZMH)
Gilead Sciences (GILD)
Hospira (HSP)
Marriott International (MAR)
Apple (AAPL)
JB Hunt (JBHT)
Research in Motion (RIMM)
ishares Emerging Markets (EEM) Puts
Schlumberger (SLB)
Williams (WMB)
ishares Russell 2000 (IWM) Puts


Top 15 Holdings (by % of portfolio)

1. Capitalsource (CSE): 22.42 % of portfolio
2. Mastercard (MA): 21.33% of portfolio
3. WendysArbys (WEN): 7.85% of portfolio
4. Cablevision (CVC): 7.34% of portfolio
5. Fidelity National (FIS): 5.73% of portfolio
6. Burlington Northern (BNI): 4.2% of portfolio
7. Sherwin Williams (SHW): 4.2% of portfolio
8. Transdigm (TDG): 3.5% of portfolio
9. Oracle (ORCL): 3.4% of portfolio
10. America Movil (AMX): 3.2% of portfolio
11. MI Developments (MIM): 3.17% of portfolio
12. Knology (KNOL): 2.9% of portfolio
13. Pinnacle Entertainment (PNK): 2.4% of portfolio
14. Sandridge Energy (SD): 2.12% of portfolio
15. Geoeye (GEOY): 1.96% of portfolio

Prevalent selling was the name of the game for Farallon, as assets listed in the 13F filing were way down this quarter. Previously, they held $3.69 billion and now show only $871 million worth of positions this quarter. This is a prevalent theme we've noted amongst hedge funds (and really everyone for that matter). Deleveraging was continuing last quarter and it will be interesting to see in the next round of 13F's if these founds were flocking back to equities, given the recent rally. The were only a few notable changes to their portfolio in terms of specific names. Their addition of more Mastercard (MA) shares, bringing it up to their 2nd largest holding was noticeable. Additionally, their large sales of Sherwin Williams (SHW) and America Movil (AMX) knocked it down on the list of their top holdings. 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:

• Well known gurus such as: Carl Icahn, Warren Buffett, & George Soros
• 'Tiger Cub' portfolios: Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, Chris Shumway's Shumway Capital Partners, and John Griffin's Blue Ridge Capital
• Global macro giants: Bruce Kovner's Caxton Associates, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital, & Paul Tudor Jones' Tudor Investment Corp
  
• Value & Activist players like: Bill Ackman's Pershing Square, Seth Klarman's Baupost Group, Art Samberg's Pequot Capital, & David Einhorn's Greenlight Capital
• Concentrated portfolios like: Bret Barakett's Tremblant Capital, & Timothy Barakett's Atticus Capital
• Some solid names: Paulson & Co (John Paulson) and Eric Mindich's Eton Park Capital
• Newer funds on the scene: James Pallotta's Raptor Capital Management, Anand Parekh's Alyeska Investment Group, & David Stemerman's Conatus Capital
• Troubled funds: Jeffrey Gendell's Tontine Associates

Check back daily as we'll cover a new fund each day.

Thomas Steyer's Farallon Capital Updates Positions in FreightCar America (RAIL) & Capitalsource (CSE)

In a new 13G filing made due to activity on March 19th, 2009, Thomas Steyer's Farallon Capital Management has disclosed a 6.2% ownership stake in FreightCar America (RAIL) with an aggregate amount of shares beneficially owned of 734,883. This is up from the 542,115 shares they owned as of December 31st, 2008 (disclosed in their 13F filing). So, Farallon has definitely been steadily increasing their position in this name. Stay tuned because on Wednesday (4/1) we'll be examining Farallon's entire portfolio as detailed in their most recent 13F filing. In the mean time, you can check out some of the other prominent hedge fund portfolios we've covered in our portfolio tracking series.

In other activity, Farallon also has filed an amended 13D on Capitalsource (CSE), disclosing a 10.7% ownership stake with 32,445,905 shares as an aggregate amount beneficially owned. This filing was made due to activity on March 23, 2009. This is a decrease in their position, as they previously owned 42,270,274 shares back on December 31st, 2008.

Background info on Farallon: Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate.

For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and had suspended withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. Some of Farallon's portfolio performance is available here and you can also read one of their investor letters from last year. In terms of more recent activity, we had noted in early February that Farallon had sold out of numerous positions (via 13D and 13G filings).

Taken from Google Finance,

FreightCar America is "a manufacturer of aluminum-bodied railcars in North America, based on the number of railcars delivered. The Company specializes in the production of aluminum-bodied coal-carrying railcars, with a range of railcar types, including aluminum-bodied and steel-bodied railcars."

Capitalsource is "a commercial lender that provides financial products to middle market businesses. Through its wholly owned subsidiary, CapitalSource Bank, the Company provides depository products and services in southern and central California."

Farallon Capital Management (Thomas Steyer): Hedge Fund Tracking - 13F Filing Q3 2008

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.


Next up, we have Thomas Steyer's Farallon Capital Management. Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate. For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and has recently suspended withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. Farallon's recent portfolio performance is available here. Additionally, you can also read one of their recent investor letters. Lastly, you can check out this profile on Steyer for more information on him and his firm.


The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Wendy's/Arby's Group (WEN)
Exco Resources (XCO)
Applied Biosystems (ABI)
Visa (V)
Barr Pharma (BRL)
Symantec (SYMC)
SBA Comm (SBAC)
Abbott Labs (ABT)
Sciele Pharma
Imclone (IMCL)
Microsoft (MSFT)
Thermo Fisher Scientific (TMO)
Crown Castle (CCI)
Vertex Pharma (VRTX)
Hansen Medical (HNSN)
Baxter (BAX)
China Medical (CMED)
Priceline (PCLN)
Cepheid (CPHD)
Cardiome Pharma (CRME)
Imclone (IMCL) Puts
Old Dominion Freight Line (ODFL)
Intermune (ITMN)
Medivation (MDVN)
Savient Pharma (SVNT)
Mueller Water (MWA-B)
GT Solar (SOLR)
Magna Entertainment (MECA)


Some Increased Positions (A few positions they already owned but added shares to)
Ishares Emerging Markets ETF (EEM) Puts: Increased position by 220%
Mastercard (MA): Increased position by 81%
Burlington Northern (BNI): Increased position by 49%
Research in Motion (RIMM): Increased position by 42%
Netapp (NTAP): Increased position by 15%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Fidelity National Information (FIS): Reduced position by 54%
Qualcomm (QCOM): Reduced position by 49%
JB Hunt Transport (JBHT): Reduced position by 47%
Sherwin Williams (SHW): Reduced position by 46%
Marriott (MAR): Reduced position by 45%
Oracle (ORCL): Reduced position by 38%
America Movil (AMX): Reduced position by 37%
Ishares Russell 2000 (IWM) Puts: Reduced position by 35%
Amylin Pharma (AMLN): Reduced position by 35%
Ishares Biotechnology ETF (IBB) Puts: Reduced position by 31%
Cablevision Systems (CVC): Reduced position by 29%
Sealed Air (SEE): Reduced position by 25%
Hospira (HSP): Reduced position by 24%
Gilead Sciences (GILD): Reduced position by 22%
Apple (AAPL): Reduced position by 20%
Sandridge Energy (SD): Reduced position by 14%


Removed Positions (Positions they sold out of completely)
Magna Entertainment (MECA)
Seattle Genetics (SGEN)
YRC Worldwide (YRCW)
Hologic (HOLX)
Pfizer (PFE)
Isis Pharma (ISIS)
Chart Industries (GTLS)
Hub Group (HUBG)
EMC (EMC)
Informatica (INFA)
Dentsply (XRAY)
Gatx (GMT)
Carnival (CCL)
Qualcomm (QCOM) Calls
MetroPCS (PCS)
Arch Capital (ACGL)
Tibco Software (TIBX)
Fedex (FDX)
Schlumberger (SLB) Puts
Starwood Hotels (HOT)
Wyndham (WYN)
Capella Education (CPLA)
Citrix Systems (CTXS)
Celgene (CELG)
Select Sector Technology ETF (XLK) Puts
Hilltop Holdings (HTH)
Staples (SPLS)
Walgreen (WAG)
Wendys (old shares)


Top 20 Holdings (by % of portfolio)

1. Capitalsource (CSE): 14.1% of portfolio
2. Sherwin Williams (SHW): 6.5% of portfolio
3. Ishares Russell 2000 (IWM) Puts: 5.8% of portfolio
4. Mastercard (MA): 3.8% of portfolio
5. Williams Companies (WMB): 3.7% of portfolio
6. America Movil (AMX): 3.5% of portfolio
7. Cablevision (CVC): 3.4% of portfolio
8. Schlumberger (SLB): 3.4% of portfolio
9. Sandridge Energy (SD): 3.1% of portfolio
10. Ishares Emerging Markets ETF (EEM) Puts: 3% of portfolio
11. Research in Motion (RIMM): 2.6% of portfolio
12. JB Hunt Transport (JBHT): 2.5% of portfolio
13. Wendy/Arby Group (WEN): 2.4% of portfolio
14. Burlington Northern (BNI): 2.3% of portfolio
15. MI Developments (MIM): 2% of portfolio
16. Oracle (ORCL): 1.9% of portfolio
17. Apple (AAPL): 1.7% of portfolio
18. Marriott (MAR): 1.7% of portfolio
19. Hospira (HSP): 1.5% of portfolio
20. Gilead (GILD): 1.3% of portfolio

Assets from the collective long US equity, options, and note holdings were $5.8 billion last quarter and were $3.69 billion this quarter. As you can see, Farallon decreased long equity and options exposure pretty significantly. Please note that we have not detailed changes 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. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• 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
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management
• Chase Coleman's Tiger Global
• Stephen Mandel's Lone Pine Capital
• Lee Ainslie's Maverick Capital
• John Griffin's Blue Ridge Capital
• Andreas Halvorsen's Viking Global
• Chris Shumway's Shumway Capital Partners
• Touradji Capital (Paul Touradji)
• Eric Mindich's Eton Park Capital
• Barry Rosenstein's Jana Partners
• Seth Klarman's Baupost Group
• Art Samberg's Pequot Capital Management
• Ricky Sandler's Eminence Capital
  

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number 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 Sandler, Eminence, & hedge funds:
- Prominent Hedge Fund manager interviews
- Hedge Fund investor letters
- Hedge Fund Rankings
- Profile on Thomas Steyer (Farallon)
- November hedge fund performance numbers
- October hedge fund performance numbers

Prominent Hedge Funds Restrict Withdrawals

Recently (and unsurprisingly) numerous hedge funds have begun to restrict withdrawals as they fight off the barrage of investors who want their money back. In an environment where seemingly everyone needs cash, this can be a problem. But, those investors entered into those funds knowing full well that their money could be locked up at some point. And, that time has come.

Rounding up the info, we've seen that some fairly prominent and large hedge funds are battening down the hatches. Here's a quick summary.

• We already wrote that Tudor Invesment Corp has frozen withdrawals from its $10 billion Global BVI Fund. This fund has some illiquid assets that they are trying to spin off into a separate fund and they need some time to get it approved and sorted. They had reported seeing redemption requests for 14% of the fund's capital.
• D.E. Shaw & Co, the firm ran by David Shaw, has locked up redemptions from its Oculus fund and its Composite fund. Their Oculus fund saw redemption requests for 8% of their capital, while the Composite fund saw requests equal to 6%. The firm manages around $36 billion and you can view a video about the firm's work culture here. In Alpha's latest hedge fund rankings, D.E. Shaw is ranked 6th in the world.
• $30 billion Farallon Capital Management is also suspending withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. In Alpha's latest hedge fund rankings, Farallon was ranked #3. Farallon's portfolio performance is available here and you can read their latest letter here.
  
• Fortress Investment Group froze withdrawals from an $8 billion fund of theirs, after they received requests for withdrawals for a staggering 40% of the fund's capital.

Also, we're currently in the middle of our hedge fund portfolio tracking series. We're covering the 3rd quarter 2008 13F filings of various prominent hedge funds (including those above) in order to breakdown the changes they've made to their portfolios. You can view the portfolios of the funds we've analyzed thus far here.



Source: Bloomberg