Third Point Ups Short in Peugeot

Dan Loeb's hedge fund firm Third Point has recently filed disclosures with the French regulatory body regarding a short position.  Per the filing, Third Point is now short 1.01% of Peugeot's shares in France as of September 24th.

This is up from the 0.98% of shares they were short on September 23rd.  As we've previously highlighted, Viking Global is also short Peugeot (though they've been trading around the position as of late).  Viking's last disclosure shows them short 0.99% of shares as of the end of September, down from as high as 1.52% of shares in the middle of the month.

Given the volatility in markets as of late, we're providing updates on various hedge fund short positions.  You can scroll through them all by clicking here: hedge fund short positions.

 You can view additional portfolio activity from Third Point here.

Prominent Hedge Funds Short Deutsche Lufthansa and Air France KLM

Various short sale disclosures in European Union markets reveal that numerous prominent hedge funds are short shares of two European airlines: Deutsche Lufthansa AG (LHA.F) and Air France-KLM (AF).

Regulatory rules require funds to publicly disclose when they have a net short position of 0.5% of shares or greater.


Hedge Funds Short Deutsche Lufthansa AG

Senator Investment Group: Net short 0.72% of shares as of July 16th.  This is up from a 0.64% position on July 15th and a 0.54% position on June 8th.

Marshall Wace: Net short 0.7% of shares as of July 22nd, 2015.  This is up from a 0.64% position on July 10th and a 0.55% position on June 19th.

Blue Ridge Capital: Net short 1.02% of shares as of June 18th, 2015.

AKO Capital: Net short 0.69% of shares as of June 29th, 2015.

Discovery Capital: Net short 0.61% as of July 1st.

Lone Pine Capital: Last reported a 0.94% net short position on April 30th, 2015.


Hedge Funds Short Air France-KLM

Blue Ridge Capital: Net short 0.92% of shares as of June 23rd, 2015, an increase from the 0.73% they were short just a day earlier.

Discovery Capital: Net short 0.77% of shares as of July 2nd, 2015.  Up from a 0.63% position on July 1st.

Tyrian Investments: Net short 0.42% of shares on July 1th, down from a net short position of 0.54% on March 5th, 2015.

Odey Asset Management: Net short 0.26% of shares as of July 17th.  This is a decrease from the 0.58% position they had on April 21st and the 1.32% stake they had on February 19th so they've definitely taken down exposure to the name.

AKO Capital: Their last disclosure was a net short of 0.7% of shares back on February 2nd, 2015.

Marshall Wace:  Their net short position size has fluctuated a lot over the past four months.  Their latest disclosure shows a net short of 3.11% as of July 7th.  Their short disclosures in the name go back to April 29th when they were short 2.65%.



You'll notice some overlap in funds on both airline shorts.  You'll also notice another commonality: a lot of 'Tiger Cub' hedge funds, or managers with ties to Tiger Management.

While these positions could either be hedges or alpha shorts, it's still interesting to get a look at the side of the portfolio that's normally quite secretive.

Stay tuned as we reveal more short positions next week.  We've already posted that Lone Pine is short Rolls Royce and Viking Global is short Peugeot. Also, Greenlight Capital is short ARM Holdings.

Baupost Group Reduces Vivendi Stake

Seth Klarman’s Baupost Group has reduced its holding in Paris listed media conglomerate, Vivendi  (PAR: VIV). According to Vivendi’s 2012 Annual Report, Baupost trimmed their position from a year  earlier from 2.04% to 1.38% of voting rights or from 25.5 million shares down to 18.22 million shares. 

Per Google Finance – “Vivendi SA is a France-based company engaged in telecommunications  services and media entertainment. The Company operates six core subsidiaries: Activision Blizzard,  a publisher of online and console games; Universal Music Group, a recorded music company;  SFR, a French telecommunications operator; Maroc Telecom Group, a mobile and fixed-line and  Internet operator in Morocco, active also in Burkina Faso, Gabon, Mauritania and Mali; GVT, a  telecommunications operator in Brazil; and Groupe Canal+, a subsidiary which offers premium  and theme channel distribution and programming in France. In addition, it holds stakes in See  Tickets (the United Kingdom), Vivendi Mobile Entertainment (France), Wengo (France) and  Elektrim Telekomunikacja (Poland). In February 7, 2013, it announced a definitive agreement to sell  Parlophone Label Group, a unit of EMI Recorded Music, to Warner Music Group.”

For more on this hedge fund, we've detailed some of Baupost Group's recent portfolio activity here.

Hedge Fund Short Positions in France: Eton Park, Lone Pine, Maverick & More

With new EU regulations on short selling providing more transparent disclosures, we're continuing our coverage today with hedge fund short positions in France.  If you missed them, we've also posted up hedge fund short positions in the UK as well as hedge fund short positions in Germany.


French Regulatory System

The French disclosure system has been one of the most transparent in Europe in relation to short positions for some time. In many respects the French approach seems to have served as an influence for policy-makers when they were drawing up the new EU Regulation on short selling as it uses the same thresholds and requires the disclosure of shorts across all sectors.  Even so, due to the new EU Regulation we are suddenly seeing new short positions in France that we had not reported before.


Hedge Fund Short Positions in France Revealed

The following percentages represent the amount of a company's shares the hedge fund is short:

AQR Absolute Return Master: Short -1.35% Vallourec, -1.33% Alcatel Lucent, -0.71% Veolia Environnement, -1.08%  

Eton Park: Short -0.56% lliad  

Lone Pine Capital: Short -0.51% Neopost, -0.98% Gemalto, -0.64% Air France-KLM  

Maverick Capital: Short -1.37% Gemalto  

Odey Asset Management: Short –2.23% Alcatel Lucent, -2.76% Peugeot  

Pennant Capital: Short -0.72% Neopost


As you'll note above, a few hedge funds are short Neopost and we've written extensively on the thesis there which you can read at the above link.


For more new hedge fund disclosures, head to our coverage of:

- Hedge fund short positions in the UK

- Hedge fund short positions in Germany

- Hedge fund short positions in the Netherlands

Third Point Reduces Technicolor Stake

Dan Loeb's hedge fund Third Point late last month filed on the Paris Bourse regarding their stake in Technicolor (EPA:TCH).  Due to a disclosure on April 20th, Third Point have decreased their ownership stake in the company.

Third Point went from owning 7.66% of Technicolor's shares to 4.87% of shares.  This filing was made as they've now gone below the 5% ownership threshold that requires them to file.  We originally detailed when Third Point crossed the 5% threshold early this year to begin with.

About two weeks after Third Point's latest disclosure, Technicolor announced its plans to launch a rights offering to raise up to €158 million in order to fortify its balance sheet and implement its "Amplify 2015" strategic roadmap.

Third Point's founder Dan Loeb is profiled and interviewed in the new insightful book, The Alpha Masters.

Per Google Finance, Technicolor is "a France based company engaged in the development of broadcasting technologies. It supplies production, postproduction and distribution services for content creators, broadcasters and network operators. Technicolor’s activity covers services for Content Creators; digital home products and software service platforms, and research and licensing."

For more from this hedge fund, you can read Third Point's Q1 letter here.

On Seth Klarman & Baupost Group's Chargeurs Investment

Seth Klarman is one of the most successful investors of our time, so it's no surprise that investors have an insatiable appetite for any information regarding Baupost Group's investments.  Today after rummaging through the French regulatory database, we found a French company Klarman's firm has been invested in for quite some time: Chargeurs (CRI:PAR).

It appears as though they originally invested in the company over 16 years ago (or at least that's the earliest trace of their ownership we could find).  But the main reason we're highlighting it is because the company says the hedge fund still holds a stake in the company.

Not to mention, it appears as though the equity is trading at lower levels now than it was back in 1996 (the first trace of Baupost's activity).


Chronicling Baupost's Chargeurs Ownership

Looking back through the collection of Baupost Group letters we've previously posted up, we found Chargeurs listed as a holding back in one of their 1996 letters.

Searching through past filings in the Autorite Des Marches Financiers (France's equivalent of the SEC), it shows that Baupost held a 5% stake in 1998.  Then after shares of the company dropped, the following year they disclosed a 10% ownership stake in Chargeurs.  In 2011, their ownership dipped below the 10% threshold.

And now, according to the company's website, Baupost currently hold the equivalent of 8.68% of Chargeurs voting rights, or 1.16 million shares.


Stock & Convertible Bonds

We use the term equivalent because it appears as though Baupost owns a mixture of shares and convertible bonds.

A search of the French regulatory system revealed that Baupost had 1.24 million shares on April 13th, 2010, the date the filing was made public.

Because preferential rights were given to existing shareholders to purchase the convertible bonds, it seems likely that Baupost would have purchased some prior to the March 12, 2011 cut off.  Bear in mind that there was also a secondary market in the preferential rights which complicates the situation a bit further. 

Convertible bondholders who hold until maturity in January 2016 will receive 6.06 shares at par, so shareholders will continue to be diluted by bondholders.  

It's situations like this that provide a good reminder that it's never wise to blindly follow a hedge fund without trying to grasp the situation and doing your own research first.

It's also an amazing example of how Klarman truly focuses on the long-term.  He's held a stake in this company for 16 years, an eternity by today's investment timeframe standards.


About Chargeurs

Per Google Finance, Chargeurs SA is "a France-based company which, manufactures and distributes wool and textiles. The Company manufactures fabrics and garment interlinings for the apparel industry. It operates in three business segments: temporary surface protection, through Chargeurs Protective Films, primarily in the building materials industry, but also in electronics and household appliances; Technical textiles, through Chargeurs Interlining and Raw material processing, through Chargeurs Wool which specializes in topmaking, which consists of designing wool blends. Chargeurs SA operates in five production unites and it's present in 34 countries on five continents."


This isn't the only French company Klarman owns, as it recently came to light that Baupost had been buying Vivendi (VIV:PAR), the stock of a French conglomerate.

Stay tuned as we'll be revealing more of Seth Klarman's investments that have been flying under the radar.  In the mean time, check out notes from Seth Klarman's Margin of Safety.

Hedge Funds Short Neopost SA (NEO.PA)

Market Folly's coverage has expanded into tracking hedge fund positions in UK markets as well as in French markets. Upon digging in the latter's regulatory system, it's clear that four prominent hedge funds have been short Neopost SA traded on Euronext Paris (NEO.PA).

Hedge Funds Short Neopost


Steve Mandel's Lone Pine Capital has been short shares in its Lone Balsam, Lone Sequoia, Lone Spruce, and Lone Cypress investment vehicles. They crossed the threshold that required regulatory disclosure on January 11th, 2012 and revealed a net short position of -0.508% of Neopost's shares.

Cliff Asness' AQR Capital has disclosed a -0.995% short position in Neopost due to crossing the regulatory threshold on March 2nd, 2012. They've shorted it in various funds including their absolute return master account, multi-strategy fund, relative value fund and more. They've been short for a few months and this is a slight decrease in their position as they disclosed a -1.088% short on January 31st, 2012.

Ricky Sandler's Eminence Capital has disclosed a -0.895% short in Neopost due to crossing the threshold on January 3rd, 2012. They've also been short shares as far back as August 2011 when they were short 1.32% of the company's shares. Eminence's position has slowly decreased over the past eight months, though they still maintain a position.

Alan Fournier's Pennant Capital revealed their short position due to activity on October 19th, 2011 where they were short -0.72% of shares. A month prior in September, they were only short -0.5%.

The main takeaway here is that it's highly likely that most still maintain short positions in Neopost given that they have not filed disclosures indicating they've gone below the -0.5% short position threshold (they're required to file then).


Rationale For Shorting Neopost

The thesis behind shorting Neopost is largely a secular decline story. Many hedge funds have invested under the broad theme of transformation from print to digital. They go long the companies pioneering technology and short the companies whose products are in decline (and in some cases heading toward obsolescence).

The decline in traditional postal mail somewhat falls under this theme as fewer pages/documents are printed and mailed, instead being stored and transferred digitally.

U.S. First Class mail has seen a decline in volume of over 5% annually over the past four years. Not to mention, it's been in the news that the US Postal Service was potentially facing bankruptcy.

Per Google Finance, Neopost is "a France-based company engaged in the provision of solutions for the mailing and logistics sectors. The Company rents, leases and markets mailing equipment, document and logistics systems, and supplies customized mail processing solutions for letters and parcels to a range of customers in the corporate sector."

Neopost is the second largest provider of postage meters in the US, behind only Pitney Bowes (PBI). Given that physical mail is in secular decline, it should come as no surprise that some hedge funds in the past have disclosed put positions on PBI in their 13F filings with the SEC as well.

Neopost is going after PBI's business by releasing a lower-end postage meter for the US market. Competition in the industry as a whole is heating up as Stamps.com (STMP) offers e-postage as well.

Hedgies are willing to pay Neopost's 3.7% dividend (shorts must pay the dividend normally received by longs) because they believe gains from the decline in share price will more than outweigh these carrying costs. Shares of Neopost have largely traded in a range between €48-58 over the past six months (NEO.PA currently trades at €51.xx).

In summary, it seems hedge funds are betting against Neopost largely as a way to play the secular decline in physical mail.

Third Point's Technicolor Stake

Since the site so often focuses on US traded securities, every once in a while we like to highlight notable activity in foreign markets as well. We've highlighted UK positions hedge funds have been active in, and now we'll also cover relevant positions in French markets.

A perfect example of this is activity from Dan Loeb's hedge fund Third Point and Philippe Laffont's Coatue Management.

Third Point crossed the 5% ownership threshold on shares of Technicolor (EPA:TCH) traded on Euronext Paris on January 24th, 2012. As of that date, the hedge fund owns 17,149,658 shares representing 171,496,580 voting rights, or 7.66% of share capital and voting rights of the company.

What's interesting is that their regulatory filing in France also highlights that they crossed the threshold due to taking delivery of shares previously subject to "contract for difference" (CFD), a tool we've talked about before that many hedgies use (click on the link to learn more about it).

Technicolor had previously been listed in Third Point's top holdings, but other stakes have replaced it in recent months. This regulatory filing provides the most recent data point as to how large Third Point's equity position in the company is. We've seen Technicolor appear in their portfolio as far back as March 2011 (when they've owned multiple securities of the issuer).


Coatue Management Short Technicolor in the Past

Technicolor is also the perfect example of how there are always two sides to a trade. Philippe Laffont's hedge fund Coatue Management was previously short Technicolor (and they could possibly still maintain a small short). Coatue disclosed their short with French regulators back in October 2011 with a -3.04% short position.

Over the next three months, they reduced their position to -0.97%. And most recently, they filed a disclosure on February 6th notifying French regulators that they had gone below the -0.5% threshold required for reporting.

So while it's still possible Coatue holds a very small short in the company, they won't have to report anything until they cross the -0.5% ownership stake threshold again.


About Technicolor

Per Google Finance, Technicolor "is engaged in the development of broadcasting technologies. It supplies production, postproduction and distribution services for content creators, broadcasters and network operators. Technicolor’s activity covers services for Content Creators; digital home products and software service platforms, and research and licensing. The Company is organized around three operating divisions: Entertainment Services, Connect and Technology."