Notes From Capitalize For Kids Conference 2017: Einhorn, Dreyfus & More

The 2017 Capitalize For Kids Conference recently took place and featured hedge fund managers sharing investment ideas to benefit charity to help solve challenges in children's brain and mental health.  Below are notes from some of the speakers' presentations:


Capitalize For Kids Conference Notes 2017


David Einhorn, Greenlight Capital: Presentation

-  Approaches the market from a bottoms-up perspective and is still finding cheap stocks to buy, both on a relative and absolute basis. Greenlight is always net long and is currently operating within its average exposure.

-  Despite 8+ years of underperformance by “value” investors, believes over time value investing outperforms momentum and growth investing. Believes these trends are cyclical/seasonal but does not know when this will end.

-  Has kept the same “playbook” his whole career, does not believe he has the capability to change this. Will go through market periods where people view him a smarter than he is and then also have periods where is looked at dumber than he is.

-  Look for a margin of safety within individual investments, if the thesis is wrong, would like to “break-even or the stock is dead money”, but if a little bit right or mostly right, should be rewarded.

-  If he thinks he is wrong on a position, he will exit right away, however if he is still holding on (to a mark to market loss), he will keep on fighting. If large losses are realized, he fundamentally misunderstood what was going on in the business.

-  Two big losses: SunEdison (most recently) and New Century (in 2009-10) – almost lost 100% on each

-  One of the big advantages available in the market is time arbitrage (since institutional investors only care about 6-12 months) and there is a good amount of opportunities available where the main advantage is greater patience

-  On the short side, generally doesn’t short on valuation, usually needs deteriorating business model with large headwinds. He created the bubble basket in 2013 (to short ~40 stocks on valuation basis).

-  He approached this very simply. Looked at I/S and B/S and valued the business (without looking at the business model/etc. to remove the “story”). If the value estimate was 10% or less of current market value, he would short it). Has made money on most of the shorts (15-20 still remain active).

-  He is still short Tesla (TSLA), Amazon (AMZN), Netflix (NFLX), Athenahealth (ATHN). Still likes these shorts

-  Does not view himself as an activist. He might recommend things to management over time if they want advice or if they had a really good idea.

-  For General Motors (GM), he thought the dual class shares pitch was a really good idea, however, they were outplayed by General Motors management with their force of consultants, proxy advisors,lawyers, public relations etc. – wants to remain quiet now but still believes the idea makes sense.  General Motors is largest long position.

-  Active vs. Passive: In a momentum market, passive will work better as most indices are market cap weighted and index buys more of what’s doing well. Overtime, there is value to be had with active investors. From the GM proxy battle, he had to work with many index proxy managers and was very difficult (poor alignment of interests, index doesn’t care if stock goes up/down)

-  Doesn’t like cryptocurrency, too volatile to be store of value.  Doesn’t do much macro but likes natural gas and gold and is also short Germany/France sovereign debt (negative yields!).

If you missed it, you can also view David Einhorn's Greenlight Capital Q3 letter here, as well as Einhorn's presentation at GIBI Dallas Conference as well.



Dan Dreyfus, 3G Capital: Long Wheaton Precious Metals (WPM)

-  Long Wheaton Precious Metals:  Shares are down 61% since peak in 2011; Believes without movement in commodity price

-  Three steps to get back to mid-$40 or so versus $20 current stock price:  Resolve near-term creating overhang $25, Realize value of hidden assets $35, Upside from normalizing of gold/silver ratio,  $45

-  Business model is very simple: help finance mines for E&Ps. Typically, E&Ps can finance a mine two ways: Equity (very expensive) or Debt (add covenants; and difficulties/risk of losing asset).  Streaming allows them to sell stake upfront and Wheaton can buy committee straight from the company at a reduced price. Upside for the streaming is that the upside is free (from production and commodity price)

-  Streaming companies have massively outperformed gold miners since 2010. Streaming companies do not face any of the risks miners face (geopolitical, regulatory, delays, cost inflation, etc.)

-  Step 1 - Two outstanding issues; $5 per share of value:  CRA Audit – thinks it’ll settle for a low amount sometime in the next 6-9 months. The company is being looked into as it setup a foreign subsidiary to accept foreign profits.  San Dimas Stream: Owner of the mine is about to go bankrupt, asset will survive (stream is at asset level, doesn’t matter who the owner is); despite current owner having difficulties

-  Step 2: Exceptional Growth (hidden assets) - $10 per share of value.  Wheaton has a lot of production currently and has hidden productions assets on their balance sheet (on the verge of being developed). No capex required to increase production (one of the pros of streaming companies).  Demand of precious metals is still important; copper for city development, electric vehicles; Rosemont/Salobo II mines development to Wheaton has the silver stream for Pascua-Lama, very important project for Barrick Gold.

-  Step 3: re-rate of Silver - $10 per share of value.  Gold:silver ratio at all-time high for gold, however thinks due to cyclical reasons silver demand should rebound driven by solar, industrial demand, etc.  All of these steps can happen very soon.



Jimmy Levin, Oz Management: Long Altaba (AABA)

-  The market is at all-time highs on a relative and absolute basis.  Oz Management looks for investments where they can make money on.

-  Long pitch: Altaba (AABA):  This is a holding company whose main asset is Alibaba (BABA) stock, along with some other assets (like Yahoo Japan).  It trades at a 33% discount to NAV.  Management is incentivized to close the discount between market value and NAV. How quick the discount is closed, as well as how much it closes by is important for compensation targets.  Management is also buying stock (cash source from selling assets) in order to help close the discount

-  Believes the best outcome is the vehicle trades at 1x NAV, which makes sense for an asset of this nature. On the other hand, hard to lose money especially if you are short Alibaba to hedge out systematic risk.

-  Risks include: Mark to Market losses, Both Altaba and its largest holdings are publicly traded, and hence the discount may fluctuate

-  Upside could be: Tax policy; lower corporate tax will help (excess money comes to shareholders), market rumors are that Alibaba will buy back units from Altaba (could help realize value very quickly.)



Brandon Osten, Venator Capital: Long EnerCom

-  Venator is about $200 million in assets; with two strategies (L/S and income)

-  Long Entercom (leader of old school radio, radio is #1 in terms of ROI for advertisers)

-  Earlier in 2017, Entercom agreed to reserve take-over CBS Radio (second largest radio operator in the U.S.), but it was underutilized/under-managed operation. Also, there is FTC deregulation which they could benefit from.o Once transaction closes, float should also increase notably.

-  Radio is #1 in terms of ROI for advertisers (cheap production and local content); listenership is stable and listening hours are also stable.

-  Strong management team with ability to increase margins and a track record of FCF generation and balance sheet deleveraging.

-  CBS assets are solid – strong stations in top markets, sports based; size and scale

-  This vehicle will be family controlled (Field Family) and they have purchased shares via open market since May 2017

-  Estimates 2% revenue growth through 2019, 1% thereafter, 34% EBITDA margin; 25% Tax rate with some buybacks. Believes the stock is worth $16.00 (compared to $11 stock price today).



Jeffrey Olin, Vision Capital: Long General Growth Properties (GGP)

-  Vision Capital, focused on real estate that are publicly traded (both long and short). Have achieved a return of 14% CAGR over the past 10 years (notably beating all relevant indices).  They try to buy real estate that is cheaper/(short more expensive) in the market vs. in private market.

-  GGP owns 100 of the top 500 regional malls in the U.S., Dividend yield of 4.13%

-  Largest shareholder is Brookfield Asset Management (BAM), which owns 34% of shares and has recently bought more.

-  Three reasons to buy the stock: Great Real Estate, Discount to NAV (30%), Various catalysts to close the gap

-  GGP owns a large amount of high quality real estate

-  From a valuation perspective, there is good precedent transactions which support the claim of 30%discount to NAV

-  Regarding catalysts, things such as: good financial performance, improvement of real estate, potential M&A or asset sales to support valuation comps.

-  Brookfield Asset Management could also buy them out given already high ownership.



Check back soon as we'll also be posting the actual slide decks .pdf's of other speakers from the Capitalize For Kids Conference as well.


For even more recent investment conference coverage, we've also posted up the following:

- Notes from Sohn San Francisco Conference (Okada, McGuire & more)

- Notes from GIBI Dallas Conference (Ackman, Einhorn, Russo)

Pershing Square Sells General Growth Properties Stake to Company

Bill Ackman's hedge fund Pershing Square Capital Management has finally sold the rest of its longstanding position in General Growth Properties (GGP). 

The company has announced that it acquired the shares from Pershing for around $556 million (around 27.6 million shares at a price of $20.12).

As detailed in our Hedge Fund Wisdom newsletter last year, Pershing Square had already sold almost half of its GGP stake in the third quarter.  And now the fund is completely out of the position as they've also sold their warrants in the company to Brookfield Asset Management, the company's largest shareholder.

This has been one of Ackman's most successful investments ever, as he purchased shares below $1 a share.

Per Google Finance, General Growth Properties is "a real estate investment trust (REIT). The Company owns or with joint venture partners 144 regional malls (126 domestic and 18 in Brazil) consists of approximately 135 million square feet. The Company is engaged in ownership, operation, management and selective re-development of its Consolidated Properties and Unconsolidated Properties, which are primarily regional malls."

For more on Pershing, we've also highlighted that they recently trimmed their Beam position and have disclosed a Platform Specialty Products stake.

Bill Ackman on GGP, Procter & Gamble, and His Mystery Short: Interview

Pershing Square Capital Management founder Bill Ackman recently appeared on CNBC Squawk Box to talk about his positions in General Growth Properties (GGP), Procter & Gamble (PG) and dropped a hint about his newest short position.

General Growth Properties (GGP)

Ackman again talked about how Brookfield Asset Management (BAM) is trying to slowly takeover GGP without paying a premium.  Ackman is pushing for Simon Property Group (SPG) to buy GGP.  A background on the situation is provided in Ackman's letter to GGP.  And then an in-depth look at his proposal was posted in Bill Ackman's presentation from the Value Investing Congress if you missed it.

Procter & Gamble (PG)

Of his newest investment, Ackman says there's not a culture of efficiency.  He argues the company's fat and bloated.  The company has a solid board of directors and he's already met with them and will look to see what they can do about helping improve things.

Ackman's Newest Short

We highlighted at the Value Investing Congress how Ackman teased the crowd that he had a new short position but did not reveal it.  He gave a hint in this interview, saying: "it's a good for America short ... as soon as the company goes out of business, the country will be better off."


Embedded below is Bill Ackman's interview video:



For more from this investor, check out Bill Ackman's recommended reading list.

Bill Ackman on General Growth Properties, J.C. Penney, Procter & Gamble at Value Investing Congress

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes from the presentation of Bill Ackman of Pershing Square Capital Management.  His talk was about General Growth Properties (GGP) and the need to stop Brookfield Asset Management (BAM) from acquiring it.


General Growth Properties (GGP)

$19.48 stock, 5% cap rate.  Long-term contracts.  85% recurring revenue, 3% rent escalators per year.  Even during Great Recession, and GGP's bankruptcy, NOI only dropped 10%. Up from $15 to $20 out of bankruptcy, spun off HHC. Stock fell later in 2011, collapsed to $12.50 last summer.

Very interesting saga about how Simon Property Group (SPG) and Brookfield Asset Management (BAM) and Pershing all tried to do a deal with the company (we posted Ackman's letter to GGP).

This summer, Pershing filed a13D requesting a financial advisor to look a selling the company.  Board rejects the idea.   Ackman contends that director Patterson isn't independent, so 5 of 9 board members are conflicted.  He says if status quo continues, BAM will get control of the company without paying a premium. Says GGP will always have a "Brookfield Discount."

Says SPG may still be interested in buying GGP even though he says he won't do a deal.  Ackman says shareholders benefit from a merger with SPG, it's less risk, and has synergies.  He details the synergies of a deal with SPG:

Incremental NOI, etc.  Saves overhead costs of almost $110M per year.  Says $350-590M in incremental cash flow, with a multiple, several billion of value.  Says 86% stock/14% cash deal makes sense, pay 29% premium.  Accretion of 5.4% from day one.  Deal is $29 equivalent price by end of the year, up from about $20 today.  Dividend also goes up, 51% increase to shareholders.  Lower leverage, more liquid.  He assumes SPG stock will also go up.

Ackman claims BAM was filing prospectus in the meantime, to buy the company themselves.     His solution:  the board of GGP should form a independent committee, hire independent financial advisors, to salvage the control premium.

Q&A:  How do you expect the board to do this, since they've already dismissed it outright? He says they didn't understand what they were being presented.  "Properly informed" he says they will respond correctly.


J.C. Penney (JCP)

Updates on JCP?  Says very few people followed them in GGP, because is was unconventional.  Same with JCP, it there is enormous skepticism. Says JCP is building "a mall within a mall" and 85% of their stores are in malls with $300/sq ft and above, B+ malls.  SSS down 20% in 1H12 and will be in 2H12 as well.  The shops are working, but it takes time. Also, easier comps next year.  You have to think more than 3 months ahead, it's interesting.  Also, killed the dividend, which was unpopular.

What if the JCP strategy doesn't work?  Issue is how do you get them in the store?  A free haircut is better than a coupon of 50% off an inflated price. 


Procter & Gamble (PG)

He's long PG - why does he like it?  Says company has bloated cost structure, organization gotten more complex.  Company instead of cutting costs, raised prices to protect profits, and started to lose market shares.  He has attributed these issues to senior management failings.  If CEO doesn't turn things around soon, they will have to look outside to find a new CEO.  


Shorts?

Best short idea?  waiting to put on more, will share it publicly after they fill their position.  (As you'll see in our past profile of Pershing Square, shorting is less common for them to begin with).

For more on Ackman, we've posted an excerpt from his Q2 letter on why he sold Citigroup.


Embedded below is Ackman's slideshow presentation from the Value Investing Congress:





Be sure to check out the rest of the presentations from the Value Investing Congress.

Whitney Tilson's 3 Favorite Stocks: Value Investing Congress

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes from the presentation of Whitney Tilson of T2 Partners.  His talk was entitled 'My Favorite Ideas.'


Tilson's 3 Favorite Stocks

1. Netflix (NFLX) - He was originally short, but now he's long.  He says the company reminds him of Amazon.com (AMZN) back around 2001.  He also feels it could be a takeover target.

"The most controversial, risky thing in my portfolio." Rallied 80% in first 6 weeks of this year.

Quick overview: only $3B market cap, 400M net cash, $3.5B TTM revenues, EV/rev trading at less than 1x sales, FCF TTM collapsed only $61M because company is reinvesting all of its profits back into the company.  28.3M subs, each EV/sub about $99.  28.7% short interest.

Bull case:  market leader, in a global business that is growing 30-40% per year.  Lots of talk about competitors, but no actual market share losses.  Investing in better content, and international expansion which is losing money.

Using hulu as a comp, a $2B valuation on 2M subs, values it at $1000 per sub. Says downside protection due to "bite sized" acquisition for a half dozen companies that would find it attractive. "Mother of all bidding wars would erupt." 


2. Berkshire Hathaway (BRK.A) - "Total opposite."  Brief update: trading above the 110% of book level. Core operating businesses "are going gangbusters."  Insurance up 65% this year, because last year had some super cat events.

How to value it? $106,700 investments per share, $8600 eps ex investments x 8 (12 p/e) multiple, get $175,500 intrinsic value, which is 32% up from today's price.  Intrinsic value calculations have typically led the stock price a bit, but quite correlated.


3. Howard Hughes Corp (HHC) - His third largest position, after BRKA, and AIG.  HHC owns 34 commercial, residential and mixed-use real estate properties in 18 states.  It was a spin-off of the harder-to-value assets from General Growth Properties (GGP).

Real estate company with no income or dividend, so no natural investors for it.  $2.7B market cap, $3.1B EV. Bill Ackman is chairman, insiders own 50% of stock, CEO bought $15M of warrants with his own money, not an option grant.

Owns: Summerlin residential in Las Vegas.  40,000 homes in the area, 5880 acres remaining to be sold.   Woodlands in Houston. 3669 lots left.  Not as bad as overall, they had their bubble much earlier.  Ward Center in Honolulu.  60 acres, 1M sq ft of leasable space.  "Unbelievably hot market in Honolulu."  Could do 5-8 residential towers with ocean views.  At peak, $18M/acre, they have 60 acres. South St. Seaport.  #5 visited site in NYC, 11 acres, major development, worth about $200-300M now. They will tear down Pier 17 and replace it with a glass enclosed building, with panels that can open in the summer. Great views from the roof, they will build it.

Very hard to value, have to use a variety of methods based on the specific property.  Low end, gets $67 (where it is now) and high end gets you $125 per share, almost a double.  Also inflation hedge, hard assets. Risk is real estate market declines again.  Need good execution. 

For more from this manager, we've also posted up Tilson's presentation on AIG from the last conference. 


Question & Answer

NFLX- will Apple stream?  He says they seem perfectly content to just sell content, not at the unlimited fixed price.  AMZN is a bigger threat, with their Prime offering.  He says use the hulu example, which has gotten very little traction despite massive investment.

How are his funds ytd?  "about flat"  Strong 1st Q, especially with NFLX, but in hindsight, should have taken more money off the table.  "Kicked the market's butt for 12 years, but gotten it kicked for last 2 years."


Macro Thoughts

Great Recession was worse than thought- for Q408, estimates were -3.8%GP, it has been revised to -8.9%!  Consumer confidence still well below pre-crisis levels.

Job growth anemic, barely over the 150k needed to keep up with population growth. Unemployment fell from 10% to 8.1%, but still way above 2000 4% level. Job losses have been more severe than any downturn since the Great Depression, and the recovery has been weak.  Lost 8 million jobs, 6% of all jobs, still 3.5% below late 2007 number of jobs.

Each recession has taken longer to recover, 1981, 1990, 2001 and now 2007 which hasn't recovered yet. Govt running biggest deficits since WW2. Over last ten years, median household income has declined slightly to $50.876.   Reason the recovery is so slow?  no residential investment, like we usually get.  Private sector jobs strong, but government jobs are in decline.  The story is tremendous weakness in housing spending and loss of government jobs.

Big picture summary:  US has tepid recovery, little market upside unless the economy gets much better.  Factors that could derail the recovery: Europe gets worse, US housing market turns down, China hard landing, sovereign debt crisis in Japan.  Much more concerned about these 4 than the US.

In his talk, he pointed out that it's absurd to own 10 year Treasuries at 1.65% when you can own high quality companies like Exxon Mobil (XOM), Microsoft (MSFT), ADP (ADP), and Johnson & Johnson (JNJ).  Fidelity, the behemoth fund manager, now has more money in bonds than stocks. Massive mistake by investors by doing rear-view mirror investing.


Embedded below is Tilson's slideshow presentation from the Value Investing Congress:




Be sure to check out the rest of the hedge fund presentations from the Value Investing Congress.

Bill Ackman's Pershing Seeks Sale of General Growth Properties (GGP)

Just now, Bill Ackman's Pershing Square Capital Management filed an amended 13D with the SEC regarding General Growth Properties (GGP).  The main purpose of doing so was to attach a letter to the board of directors that Ackman sent.  In it, he pushes for a sale of the company to either Simon Property Group (SPG), Brookfield, or another party. 

Ackman writes:

"We hereby request that:

- The Board form a special committee of directors wholly unaffiliated with Brookfield to consider the sale of the company to maximize shareholder value.

- The special committee hire independent legal and financial advisors to permit it to manage a process that will maximize shareholder value.

- The special committee permit all interested parties to express their interest in acquiring the company, provide them with access to confidential information to conduct their due diligence, without any standstill restrictions.

- GGP refrain from any future stock repurchases and prohibit Brookfield from participating in or otherwise suspend the dividend reinvestment program to prevent Brookfield from continuing to effectuate a creeping takeover of control without paying a control premium.

- The special committee also consider such other steps that it deems appropriate to level the playing field for potential bidders for the company and to ensure that control is not transferred to Brookfield."


Summary of Ackman's Letter

The letter is quite lengthy and we recommend you read it in full here.  But for summary purposes, here are the Cliff Notes:

- In October of 2011 Simon Property Group (SPG) tried to buy GGP for a 65% premium at the time.

- In November of 2011, Brookfield expressed their interest in acquiring GGP in which they'd sell 68 assets to Simon in order to complete the transaction.  GGP required SPG to enter into a "highly restrictive confidentiality and standstill agreement that, among other limitations, prevents Simon from making offers to acquire GGP or its assets for an extended period of time."

- April/May 2012: Simon rejects the 68 asset purchase & Brookfield seeks to acquire GGP on its own.

- In July 2012, Brookfield said they needed time to raise capital.  After GGP's emergence from bankruptcy, Brookfield has gone from owning 29% to now owning over 38% (or an even higher 42.2% if they exercise their warrants).  Brookfield has raised their stake by purchasing Fairholme Capital's position and receiving shares via GGP's dividend reinvestment program.

- Due to terms of the warrants, Brookfield's stake also effectively increases each time GGP pays a dividend.  Each time that happens, the number of shares underlying the warrants increases and the strike price is reduced.  So Brookfield is slowly acquiring more of the company each time GGP pays a dividend.

- Ackman says it's unfair that Brookfield has had an "unlimited period of time" to consider acquiring GGP while Simon does not have access to inside information and has been cut off from considering a transaction that wouldn't need financing.

- Ackman's not opposed to Brookfield acquiring the company, but he obviously wants a fair process to allow others to bid.

- Ackman points out that if Simon's bid from last year was translated to today's terms, it would "deliver a minimum of $28.01 dollars per share of value, a 51.2% premium to GGP's closing price of $18.52."


In the end, the Pershing founder is just looking for a level playing field to allow Simon and Brookfield (and potentially others) to bid for the company.  So it will be interesting to see how this one plays out.



Don't forget that Ackman will be presenting his latest investment ideas at the Value Investing Congress in New York City in October.  Market Folly readers can receive a discount to the event here with code: N12MF7.

Bill Ackman & Pershing Square's Q1 Letter: On Canadian Pacific, J.C. Penney & Citigroup

Bill Ackman's hedge fund firm Pershing Square is out with its first quarter letter to investors.  The hedge fund is up 9.3% year-to-date and updates investors on its holdings in Canadian Pacific (CP), J.C. Penney (JCP), as well as Citigroup (C) and General Growth Properties (GGP).

Pershing highlights that they've started buying a new stake and have added a rare equity short, but they've declined to disclose any names.

In the letter, Ackman touched on the notion of time arbitrage, something he defines as "taking advantage of the opportunity for long-term profit offered when short-term investors sell due to disappointing short-term macro or business progress."

He says that this has been a big source of profits for the hedge fund and long-time readers will know this isn't the first time we've seen this.  John Griffin of Blue Ridge Capital has long classified investments as either time arbitrage or catalyst driven.

Ackman touches on J.C. Penney in-depth in the letter and we've also highlighted Ackman's JCP slideshow from the Ira Sohn Conference.

Ackman is also profiled and interviewed in the brand new book, The Alpha Masters.

Embedded below is Bill Ackman & Pershing Square's Q1 letter to investors:





For more hedge fund letters, head to:

- Greenlight Capital's Q1 letter

- Third Point's Q1 letter

Insider Buying: CEO's Buying Stock En Masse

There has been an increased amount of insider buying over the past few days. But what caught our eye in particular was the vast amount of CEO's that were buying.

To pull all this data, we used Insider Trade Reports who says that "over four decades of academic research has shown that by following in the footsteps of company insiders and buying the stocks that they are buying, you can outperform the market by 6% to 10.2% per year."

As CEO's bought into the recent market sell-off, it's clear they believe the market was undervaluing their companies.

List of Recent CEO Insider Buying

- Six Flags Entertainment (SIX) CEO buys $2,499,189 worth

- Morgan Stanley (MS) CEO buys $2,062,070 worth

- Fifth Street Finance (FSC) CEO buys $2,014,323 worth

- Huntsman (HUN) CEO buys $1,137,270 worth

- WMS Industries (WMS) CEO buys $1,000,224 worth

- General Growth Properties (GGP) CEO buys $856,489 worth

- Kinder Morgan (KMI) CEO buys $679,621 worth

- First Industrial Realty Trust (FR) CEO buys $642,000 worth

- Winthrop Realty Trust (FUR) CEO buys $589,550 worth

- Tupperware Brands (TUP) CEO buys $507,045 worth

- Life Technologies (LIFE) CEO buys $420,000 worth

- Greenbrier Companies (GBX) CEO buys $268,705 worth

- Kansas City Southern (KSU) CEO buys $253,050 worth

- AK Steel (AKS) CEO buys $199,030 worth


We're proud to announce that Market Folly readers receive a special 33% discount on Insider Trade Reports' annual subscriptions and a 25% discount on monthly & quarterly subscriptions.

You can choose how often you receive insider buying/selling alerts (daily, weekly, high conviction reports) which is a great feature. They also have a proprietary scale that measures the significance of each transaction with commentary to provide context.

We've been using Insider Trade Reports for months now and it's a very useful resource for investors so take advantage of the discount.

Bill Ackman Joins J.C. Penney's (JCP) Board

Pershing Square's Bill Ackman recently appeared on CNBC and discussed the latest activity regarding his investment in J.C. Penney (JCP). Ackman will join JCP's board along with Vornado Realty Trust's (VNO) chairman Steven Roth. The retailer will also close some stores and get rid of its catalog business.

You'll recall that Ackman took an activist stake in JCP back in September. At the time, we also noted Vornado's sizable concurrent position as well. It appears as though the activist gears are in motion as the two attempt to shake up the large retailer. In the past, we opined that JCP was potentially a real estate play, but Ackman subsequently quashes that notion in the interview. While he acknowledges that the company has valuable real estate assets, he notes that they will 'live or die as a retailer.'

At the end of the interview, the hedge fund manager also mentions that he still has not sold any of his General Growth Properties (GGP) position either. This has been his most successful investment ever as he turned $60 million into $1.6 billion for his investors (and more).

Embedded below is Ackman's interview in CNBC (email readers will need to come to the site to view it):



We'll be detailing any recent portfolio activity from Pershing Square and analyzing their holdings in our new issue of Hedge Fund Wisdom that will be released in a few weeks.

Bruce Berkowitz Sells General Growth Properties (GGP) Stake to Brookfield (BAM)

Shares of General Growth Properties (GGP) have been a big winner for Bruce Berkowitz's Fairholme Capital (and mutual fund FAIRX). After scooping up debt and shares while the company was in bankruptcy, Berkowitz has profited from the company's emergence from Chapter 11 as shares rebounded from the low single digits to now over $14.

It appears as though Berkowitz has said that now is the time to take some profits off the table. Announced via a press release today, Brookfield Asset Management (also a large GGP investor) has acquired 113.3 million shares of GGP from the Fairholme Fund. This transaction is valued at $1.7 billion and Brookfield's ownership stake in General Growth Properties will rise to 38%. Per GGP's restructuring, Brookfield is limited to owning 45% of GGP at most.

Other large General Growth Properties investors include hedge fund Pershing Square. Bill Ackman's firm helped spearhead the campaign to restructure GGP and ensure its exit from bankruptcy. We've detailed previously that Whitney Tilson's T2 Partners also owns GGP but trimmed its stake as well.

To finance the transaction, Brookfield will use $804 million in cash and will issue 27.5 million shares of Class A stock (BAM). Upon completion, Berkowitz's Fairholme will own a 4.5% equity stake in Brookfield.

Maybe the most interesting note here is that Fairholme is selling its *entire* equity stake in GGP, but it will continue to own warrants. Todd Sullivan over at ValuePlays has an interesting look at why Berkowitz might be doing this. A hint: it relates to St. Joe (JOE), a battleground stock as Berkowitz is long and David Einhorn's Greenlight Capital is short. It's purely speculation, but it's certainly an interesting idea.

T2 Partners Year-End Letter: Discussing Longs & Shorts

Whitney Tilson and Glenn Tongue's hedge fund firm T2 Partners released their year-end letter to investors. The letter is one of the most thorough we've seen as it is 27 pages long and includes assessment of both their long and short positions. If you want transparency in the hedge fund industry, here's your barometer.

For 2010, T2 finished up 10.3% net compared to an S&P 500 return of 15.1%. So while they trailed the indices last year, T2 has outperformed since inception, returning 9.1% annualized net versus 2.0% for the S&P. This past year, their pain came from various short positions and essentially 'missing' the quantitative easing round 2 rally.

T2 Partners' top 12 long positions at the end of 2010 were:

1. Grupo Prisa (PRIS & PRIS.B)
2. Microsoft (MSFT) ~ see their thoughts on MSFT here
3. Berkshire Hathaway (BRK.A/B)
4. BP (BP) ~ their thoughts on BP here
5. General Growth Properties (GGP)
6. CIT Group (CIT)
7. Kraft (KFT) and warrants
8. Seagate Technology (STX)
9. Iridium (IRDM) and warrants
10. Automatic Data Processing (ADP) ~ see their presentation on ADP
11. Resource America (REXI)
12. Anheuser Busch InBev (BUD)

While we've presented analysis on T2's longs before, we want to single out Seagate Technology (STX) and CIT Group (CIT) as we haven't seen Tilson talk about these before. He likes STX mainly because it is trading at an absurdly cheap valuation and he thinks fears over the hard drive (HDD) market (versus the solid state drive market) are overblown.

Tilson and Tongue fancy CIT due to the company's potential to capture financing-cost savings. Additionally Tilson writes, "Even more intriguing is the possibility that a healthy bank might acquire CIT, attracted by the enormous earnings leverage available in applying the acquiring bank's much lower borrowing costs to CIT's business model."


T2's top 10 short positions (in alphabetical order):

1. AIG (AIG)
2. Homebuilders (various individual companies plus XHB the ETF)
3. InterOil (IOC) ~ analysis of their short position here
4. ITT Educational (ESI), as well as other for-profit education plays
5. Lender Processing Services (LPS)
6. Lululemon Athletica (LULU)
7. MBIA (MBI)
8. Netflix (NFLX)
9. Salesforce.com (CRM)
10. St. Joe (JOE)

Tilson and Tongue highlight that their short book caused them much pain last year. Accordingly, they set aside a portion of their letter to address how they manage short positions that move against them. In short (no pun intended), they re-evaluate their analysis to determine whether to add to the position, do nothing, or trim/exit.

Specifically, they trimmed their position in Netflix (NFLX) and replaced part of it with put positions. (We posted why Tilson is short Netflix here). They've also done this with other short positions in order to better manage risk. After all, remember that these stakes are merely hedges to their long book as T2 is always net long (they are currently 40% net long).

Embedded below is T2 Partners annual letter to investors for 2010:



You can download a .pdf copy here.

It's great to see a manager with such transparency in an otherwise secretive and guarded industry. T2's portfolio overlaps with positions many other hedge fund managers own that we've highlighted as well.

T2 is short JOE and so is Greenlight Capital (see David Einhorn's short thesis on JOE). While T2 is short ESI, hedge fund Blum Capital is long ESI. And while Tilson and Tongue are short AIG, Bruce Berkowitz's Fairholme Capital is long AIG. It's fun to see hedge funds take different stances on various stocks because that's what makes a market.

Pershing Square Q3 Letter: Ackman Provides Updates on Positions

Bill Ackman's hedge fund Pershing Square's third quarter letter is pretty much an investor's dream. The manager provides commentary and updates on practically all of his positions and is the epitome of transparency. But then again, it's not necessarily that hard when you run such a highly concentrated book like Ackman does. Pershing Square of course is one of the 23 prominent hedge fund portfolios we detail and analyze in the new issue of our Hedge Fund Wisdom publication.

Pershing Square has returned 292.7% net of all fees since inception in 2004. For 2010, their main fund is up 7.6% year-to-date. The only real noticeable change in their portfolio is that they exited Landry's Restaurants, as the company was bought out.

Fortune Brands (FO)

A while back we highlighted Ackman's new position in Fortune Brands (FO). His letter highlights that he thinks their Spirits business is a great consumer niche as it has high barriers to entry, sustainable profit margins, and economic resiliency. What's comical here is that Ackman filed a 13D signifying his activist intent with the investment and even though he hasn't really done much in that regard yet, the stock is already up 40% since he purchased it. It appears though that management will work with Ackman to unlock value.

J.C. Penney (JCP)

The other new position in Pershing Square's portfolio is J.C. Penney (JCP). Ackman likes JCP's cheap valuation, solid assets, and brand name. Their average purchase price was $25.28 and the stock already trades north of $33. The hedge fund manager doesn't necessarily outline his thesis in the letter, though he does point out Vornado Realty Trust's (VNO) involvement in the stock. The publicly traded REIT also acquired a large ownership in JCP shares. In the past, we've highlighted Ackman's potential JCP real estate thesis.

Ackman notes that his firm sold some shares of their Kraft (KFT) and Target (TGT) positions to finance the purchase of their two new positions. The rest of Pershing Square's letter delves into updates regarding their positions in Automatic Data Processing (ADP), General Growth Properties (GGP), Howard Hughes (HHC), Corrections Corp (CXW), and Citigroup (C). This was interesting mainly because it's been a while since we heard from Ackman regarding his Corrections Corp position, a name we originally posted his investment thesis on.

Embedded below is Pershing Square Capital Management's third quarter letter to investors:



You can download a .pdf copy here.

In other recent investment ideas from Ackman, he recently declared he is bullish on housing. And interestingly enough, John Paulson says to buy housing as well.

Bill Ackman Updates General Growth Properties (GGP) Stake

Bill Ackman's hedge fund Pershing Square Capital Management has filed a 13G on General Growth Properties (GGP). This comes as the company has exited bankruptcy, spun off the Howard Hughes Company (HHC) and now trades as 'new' GGP shares. As such, Ackman discloses a 9.34% ownership stake in the new General Growth Properties entity with 89,237,316 shares.

This 13G filing replaces a previous activist 13D filing on the 'old' GGP entity. This ownership calculation in new GGP is based on 962,622,559 shares of common stock outstanding as of September 30th, 2010 as reported in Form S-11.

Ackman has labeled this the best investment he's ever made. To see what else is in his portfolio in the third quarter update, head to our Hedge Fund Wisdom newsletter. For other recent investment conference commentary from Pershing Square, we detailed how Ackman is bullish on housing.

Taken from Google Finance, General Growth Properties is "a self-managed real estate investment trust (REIT). The Company has ownership interest in, or management responsibility for, over 200 regional shopping malls in 43 states, as well as ownership in master planned communities and commercial office buildings."

Bill Ackman's Question & Answer Session at the Value Investing Congress

Instead of giving a presentation at the Value Investing Congress, Pershing Square hedge fund manager Bill Ackman engaged in a question and answer session. We'll dive into each of the various topics he addressed below. Keep in mind that we've published notes from John Burbank and Lee Ainslie's presentations, as well as further notes from day 1 of the Congress if you missed either of those.

Bill Ackman ~ Pershing Square Capital

On the topic of JC Penney (JCP): Ackman recently started an activist position in JCP and he says this is the most economically sensitive stock that Pershing Square owns. While it is an activist investment, he has not yet spoken to the company's management. However, he believes it is very cheap and a high quality asset. This is mainly due to its real estate assets (arguably better than Macy's ~ M or Sears Holdings ~ SHLD). Ackman also highlights JCP's strong balance sheet as the company is close to being debt neutral. He also says JCP has significant non-operating assets, something that he interestingly enough stumbled upon during his work on the General Growth Properties (GGP) bankruptcy.


On the economy & markets in general: Ackman is pretty bullish on the economy and thinks the stock market is relatively cheap. He believes that the weak dollar is a huge advantage for US companies but the unemployment situation continues to be a problem. Also, he opined that the environment is ripe for corporate acquisitions and thinks this should help boost the value of equities. The one thing he believes is missing is confidence in both business and the consumer.

Interestingly enough, Pershing Square only has 7% short exposure to equities. As we've pointed out in the past, this is most likely due to the fact that Pershing likes to utilize credit default swaps (CDS) for shorting and hedging. In fact, we've detailed how Ackman bought BP credit default swaps.

Pershing Square only has a 7-person investment team and likes to seek companies with high cashflow. Ackman likes to focus on investments in the US as the companies are easier to deal with and he is familiar with the legal system. Via his past experience with Sears Holdings, he says his biggest takeaway was the ability to enact change. Ackman said that (paraphrasing here): 'our competitive advantage is the ability to buy a stake in a company and make something happen.' Undoubtedly he will lean on this mantra with his new activist investment in Fortune Brands (FO).


On the topic of financials: He notes that many banks have aggressively marked down their books and cited Citigroup (C) and Bank of America (BAC) as perfect examples. Keep in mind that Ackman bought Citigroup earlier this year.

On the topic of General Growth Properties (GGP): Ackman pointed out that GGP has some prime real estate in Las Vegas via the Summerlin property. GGP's new spin-off, Howard Hughes Co, owns this property and will also own the South Street Seaport (a property Ackman sees value in). Via GGP's emergence from bankruptcy and re-structuring into two separate companies, GGP will retain the high quality cashflow properties while the Howard Hughes spin-off will focus on lesser developed assets.

This concludes notes from Bill Ackman's Q&A session at the Value Investing Congress. For more on Ackman's hedge fund, be sure to check out our profile of Pershing Square.

Stay tuned later this morning as we'll be providing live updates of the second day at the Value Investing Congress so follow @marketfolly on Twitter. Be sure to also check back at MarketFolly.com frequently for full notes.

Bill Ackman's Ira Sohn Presentation: Rating Agencies, General Growth Properties & Citigroup

We had previously covered a brief summary of Bill Ackman's thoughts at the Ira Sohn Investment Conference and now we'll take an in-depth look at the Pershing Square hedge fund manager's thoughts. Below is his full presentation encompassing topics of how to save the ratings agencies, his continued bullish stance on General Growth Properties (GGP), a new book he is the subject of, and his brand new purchase of Citigroup (C).

Ackman first critiqued the ratings agencies and laid out a plan on how to 'save' them. He mainly thinks they need to negate conflicts of interest, institute a new payment scheme as well as a new issue ratings moratorium. Ackman feels we need a new system whereby investors are not so overly reliant on ratings and can do their own due diligence. In the end, he believes NRSROs should be removed from the structuring and underwriting process and you can view his full thoughts in the presentation below. You'll recall of course that fellow hedge fund manager David Einhorn of Greenlight Capital is bearish on the sector. In fact, he mentioned in his new Ira Sohn presentation that he was still short the ratings agencies and we've also covered his original thesis from last year, The Curse of the Triple A.

Ackman's next topic revisited an old (and still current) investment. At least year's Ira Sohn Conference, you may remember that Bill Ackman made a presentation on General Growth Properties. Back then, the stock was trading around $1 per share as the mall REIT operator was on the verge of bankruptcy. Ackman's investment turned out to be his most successful ever, but he's not done yet. His new presentation details the plan to save the company from bankruptcy as well as the continued bullish prospects. He cites a bouncing-back US consumer, demand for mall REIT debt and equity capital, increased mall traffic, as well as decreasing cap rates.

Most notably, Ackman delves into General Growth's bankruptcy emergence where the company will become two separate entities: General Growth Properties (GGP) and General Growth Opportunities (GGO) He notes an estimated value of GGP at $15 and an estimated value of GGO at $5. GGP would be considered the cashflow cow as it holds all the income producing assets while GGO holds more non-income producing properties (via real estate development assets). Ackman also makes note that shares of GGP would have to be added back to real estate indices, thus generating natural buyers because when the company entered bankruptcy it was removed from these indices. You'll recall of course that we previously detailed how Ackman thinks GGP could double over the next few years. Hedge fund Pershing Square is definitely still in the bullish camp as we've detailed their large economic exposure to GGP. For the rest of Ackman's investments, head to Pershing Square's equity portfolio.

Rounding out Ackman's presentation, he then casually mentions that people have always accused him of talking his book (who doesn't talk their book these days?) As such, he ties in the suggestion that you buy Christine Richard's new book, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff, which he is the subject of. Lastly, Ackman leaves one presentation slide up regarding Pershing Square's brand new purchase of 150 million shares of Citigroup (C) and comically comments that he doesn't have time to talk about this large new addition. Later in the week though, we did manage to determine why Bill Ackman bought Citigroup.

Embedded below is Bill Ackman & hedge fund Pershing Square's full presentation from the Ira Sohn Investment Conference analyzing the ratings agencies, General Growth Properties, and more:



You can download a .pdf copy here.

Given his new Citigroup purchase, we'll probably see an in-depth slide show on that investment at some point in the future from Pershing. Even though General Growth Properties has already been his single most successful investment, Ackman thinks shares are still heading higher. For more on Bill Ackman, head to our profile of Pershing Square. For more hedge fund manager presentations, head to the summary of the Ira Sohn Investment Conference as well as David Einhorn's presentation and Steve Eisman's presentation.

Bill Ackman's Pershing Square Sells Automatic Data Processing (ADP): Q1 2010 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up is Bill Ackman's hedge fund Pershing Square Capital Management. Ackman runs a value and activist fund with a highly concentrated portfolio so it is ideal for tracking purposes. He received his undergraduate degree from Harvard and his MBA from Harvard Business School. As we recently reviewed, Ackman and the saga surrounding his short position in MBIA (MBI) is the subject of Christine Richard's new book, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff. It's definitely worth a read if you want to learn more about Ackman, the short selling process, and perseverance in general. Additionally, for more background on Bill Ackman's hedge fund, we've previously detailed a profile of Pershing Square.

The positions listed below were Pershing's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:


Brand New Positions
Kraft Foods (KFT)


Increased Positions
Yum Brands (YUM): Increased position by 10%


Reduced Positions
Target (TGT): Reduced position by 0.51%


Positions With No Change
General Growth Properties (GGP)
Corrections Corp of America (CXW)
Landry's Restaurants (LNY)
Borders Group (BGP)
Greenlight Capital Re (GLRE)


Positions They Sold Out of Completely
Hyatt Hotels (H)
Automatic Data Processing (ADP)


Pershing's Entire Long US Equities Portfolio (by percentage of assets reported on 13F filing)

1. Target (TGT): 32.79%
   
2. Kraft Foods (KFT): 29.89%
   
3. Yum Brands (YUM): 17.56%
   
4. General Growth Properties (GGP): 11.62%
   
5. Corrections Corp of America (CXW): 6.55%
   
6. Landry's Restaurants (LNY): 0.84%
   
7. Borders Group (BGP): 0.55%
   
8. Greenlight Capital Re (GLRE): 0.20%
   

Given Ackman's concentrated portfolio, there's not a lot to cover in terms of portfolio adjustment. However, we want to first immediately address misinformation that is floating around in mainstream news land regarding Pershing Square's portfolio. Firstly, we'll start with the fact that CNBC yesterday wrongly reported that Pershing added 23.9 million shares of General Growth Properties (GGP). Other news outlets have mistakenly followed suit. This is merely the exact same position that Pershing has held all along. As we've detailed countless times, General Growth Properties traded on the pink sheets for a period of time under the ticker GGWPQ. When this occurred, these shares became a security that was not deemed reportable by the SEC. As such, Pershing Square still owned it but was not required to disclose it.

Fast forward to the present as the new 13F filings come out and you see that General Growth Properties is listed on Pershing's disclosure. This is merely because shares now trade on the NYSE under ticker GGP, a security that *is* deemed reportable by the SEC. So, people not familiar with tracking 13F's or those who blindly follow sorted data will be viewing what *looks* like a new position in GGP, but in reality, isn't.

Ackman was on television a few weeks back talking about how he thinks GGP could double over the next few years "if done correctly." One thing this disclosure does provide us is knowledge of Pershing Square's total equity ownership in GGP of just over 23.9 million shares. Since there was essentially a 'dark period' when no one knew how much equity they owned due to the disclosure issue we touched on above, we now get clarification. To get an idea as to Ackman's total position, we've in the past detailed Pershing's economic exposure to GGP as they own other securities as well.

Secondly, back in January when we covered Pershing's fourth quarter portfolio, we made special note that they had sold out of Hyatt Hotels as per a 13G filing and it is obviously just now reflected in their latest update. They only owned shares briefly as they purchased them sometime in the fourth quarter of 2009 and then sold them in the first week of January 2010.

Thirdly, regarding their stake in Yum Brands (YUM), we just wanted to highlight that they did not disclose this position until April 2010 when in reality they owned it as of December 31st, 2009. In their original 13F for the fourth quarter 2009, Pershing did not disclose their YUM position. But via an amended 13F in April, they all of a sudden disclosed the position. So now via the first quarter 2010 13F filing we see that they have since added to the position to the tune of 10%. Whew, got all that?

In terms of other recent portfolio activity not covered via 13F filing, we saw that Pershing sold its Sears Canada stake to Sears Holdings for around $560 million. Lastly, in the past we've covered a ton of Pershing's investment presentations regarding their positions and have posted links below for those of you wanting to learn about their specific investment thesis for each name:

- Pershing's presentation on Kraft (KFT)
- Pershing's Corrections Corp of America (CXW) presentation
- Pershing's updated General Growth Properties thesis & we also detailed their original GGP presentation from when they first established the position

Assets reported on Ackman's 13F filing were $3.3 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source that seamlessly sorts through all the hedge fund portfolio maneuvers and backtests the performance (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, and Stephen Mandel's Lone Pine Capital. Be sure to check back daily for new hedge fund updates.

Bill Ackman Thinks General Growth Properties Can Double Over the Next Several Years "If Done Correctly"

Pershing Square Capital Management founder and hedge fund manager Bill Ackman recently appeared on CNBC in an extended segment. In his interview, he talked about the Goldman Sachs fraud case, the benefits of short selling, and most notably, some of his investments. They segment also noted that Bill Ackman is the subject of Christine Richard's new book, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff. The book focuses on Ackman's campaign against bond insurer MBIA (MBI) and we will be reading & reviewing the book here shortly.

We're going to do things a bit backwards here and start with Ackman's closing thoughts from the interview because they deal with his investments. Pershing Square's founder updates us on his stakes in General Growth Properties (GGP) and Target (TGT). Readers will know that we've previously disclosed Pershing's economic exposure to GGP as they bet on the emerging-from-bankruptcy REIT player. Ackman notes that Pershing invested $50-60 million GGP equity when shares were seemingly on life support and that investment is now worth over $1 billion and was the "best investment (he's) ever made." He also hopes for the mall operator to emerge from bankruptcy, "hopefully come September or sooner." Lastly, Ackman thinks shares of GGP could double over the next several years if everything is "done correctly." Here's the video:

Regarding his Target position, Ackman notes that Pershing still owns over $1 billion of stock and it is one of their largest investments. Email readers please note that you'll need to come to the site in order to watch all these videos. Here's the video where Ackman discusses his investments:




In the next video, Ackman turns to financial reform and he is in favor of regulatory implementations. Here's his thoughts:




Turning to the last video interview, we get some commentary from Christine Richard, the author of the new book on Ackman, Confidence Game. Additionally, Ackman discusses the Goldman Sachs case:



Overall, an intriguing set of talking points as Ackman was a guest at CNBC for an extended period of time. While some readers will crave more investment specific conversation, he still chatted about relevant and important topics. While his General Growth Properties investment is the best he's ever made, he was also correct and successful in his past wager against MBIA. You can read about how his hedge fund manager mind works in the new book Confidence Game. We'll be reading it and reviewing it shortly.

For more of our coverage on hedge fund Pershing Square, we see that they recently sold their Sears Canada stake, and we detailed their newly disclosed Yum Brands position (YUM). Lastly, to learn more about Ackman and his hedge fund, head to our past profile of Pershing Square.

Elliott Associates Discloses General Growth Properties (GGP) Stake

Paul Singer's hedge fund Elliott Associates has filed a 13G with the SEC in regards to shares of General Growth Properties (GGP). The disclosure was made due to activity on March 9th and they now show a 5.3% ownership stake in the company with 16,738,695 shares. This aggregate beneficial ownership includes various investment entities and subsidiaries of Elliott. The overwhelming majority of their position is via common stock while 103,695 shares are via convertible notes.

Elliott Management was founded by Paul Singer back in 1977 and managers over $12 billion today, typically focusing on distressed assets. Our additional coverage of Elliott Management's Paul Singer includes his recent insight at a hedge fund panel and his previous thoughts at the Ira Sohn conference.

Elliott's entrance into GGP means that yet another prominent investor is bullish on the company's prospects as it emerges from bankruptcy. Other notable investors that have sizable stakes in General Growth Properties (GGP) include Bill Ackman's hedge fund Pershing Square, Whitney Tilson's T2 Partners, and Bruce Berkowitz's Fairholme Fund.

Taken from Google Finance, General Growth Properties is "a self-managed real estate investment trust (REIT). The Company has ownership interest in, or management responsibility for, over 200 regional shopping malls in 43 states, as well as ownership in master planned communities and commercial office buildings. GGP’s business is focused in two main areas: Retail and Other."

To see what other stocks hedge funds are taking large positions in, head to Goldman Sachs' VIP list and the hedge fund generals list.

T2 Partners' Whitney Tilson Talks About His Positions & The Market

Whitney Tilson of hedge fund T2 Partners recently appeared on television to give his thoughts on the market and some of his positions. Specifically, he notes that they are still short Palm (PALM) and expect further downside to come. However, it is obviously a smaller sized position for them than it once was given the precipitous fall it's seen lately. We've also previously gotten a look at some of T2's other short positions.

Turning to General Growth Properties (GGP), Tilson argues that there is essentially a 'floor' here at $15 because there is a credible bid for the company at this level on top of Simon Property Group's previous bid at $9. So, the risk/reward skew is favorable here and he ultimately thinks someone will make a higher bid. Many other hedgies and prominent investors own shares and debt of this name as Bill Ackman's Pershing Square is one of the largest owners. Bruce Berkowitz's Fairholme Fund is also the largest unsecured creditor. Berkowitz and Ackman both recently teamed up to help provide funding for the latest proposed GGP bid.

Turning next to his position in Pfizer (PFE), Tilson argues that PFE is attractive because it is trading at less than 10x earnings and has a solid 4% dividend. Many other hedgies agree as we've seen Pfizer is one of the most popular holdings among hedge funds.

Embedded below is the video of T2 Partners' Whitney Tilson. RSS & Email readers will need to come to the site to view the video:



For more from Tilson and his hedge fund, head to T2's annual letter, as well as his presentation of three stock picks. Both Tilson and Berkowitz will be presenting investment ideas at the upcoming Value Investing Congress and we've secured a discount for our readers here.

Pershing Square's General Growth Properties (GGWPQ) Presentation: Ira Sohn Conference 2009 (Bill Ackman)

If you want a lengthy read, then here you go. Below is Bill Ackman's recent presentation (all 68 pages worth) at the Ira Sohn Conference regarding his General Growth Properties (GGP - now GGWPQ) stake. Previously, we had posted up some of Ackman's thoughts on General Growth. This presentation, however, goes into much more detail.

The general premise of Ackman's investment lies in his belief that GGWPQ's assets are greater than their liabilities and that shareholders could emerge out of the company's bankruptcy unscathed. This theory makes sense, but at the same time you have to consider the morbid state commercial real estate is in currently. Either way, definitely an interesting read.

Here is their presentation and RSS/Email readers will need to come to the blog to view it:


pershing square general growth ira sohn -