What We're Reading ~ 2/22/17

Why we dig in with a long held belief instead of changing our minds [Reformed Broker]

Decision making amid uncertainty: improving your process [CFA Institute]

Inside the Snapchat roadshow [Business Insider]

On Quicken loans, the new mortgage machine [NYTimes]

China's artificial intelligence (A.I.) boom [The Atlantic]

Podcast with Ed Thorp [Meb Faber]

Prem Watsa drops long-held bearish stance on markets [BNN]

On Buffett's new stake in Monsanto (MON) [Bloomberg]

Warren Buffett's honor versus 3G [Lawrence Cunningham]

A look at Expedia (EXPE) [Value and Opportunity]

On owning a stock for five full years [Gannon on Investing]

Mark Cuban's two biggest stock holdings [Benzinga]

Apple: the greatest cash machine in history? [Aswath Damodaran]

Billions the TV show versus real life [The Ringer]

McLaren struck gold making supercars for regular drivers this year [Bloomberg]

What We're Reading ~ 7/22/15

The Emotionally Intelligent Investor [Ravee Mehta]

The smartest man is wild about innovation [Byron Wien]

Decisions under uncertainty [Farnam Street]

What's the biggest risk right now? [A Wealth of Common Sense]

A breakdown of John Malone's empire [Jnvestor]

Video on aluminum and aerospace industry outlook [YouTube]

The supply of equities may soon stop shrinking [Economist]

For eBay, a new chapter begins [Fortune]

A look at Vitec Software Group [Frenzel & Herzing]

Deep analysis on Deere & Co [HVST]

Montier goes to highest cash level since 2008 [FINalternatives]

Are GMOs safe? Yes. The case against them is full of lies [Slate]

Jet.com launches new e-commerce model [USAToday]

Bidding wars return to home market [WSJ]

Capitalist soul rises in Ho Chi Minh City [NYTimes]

On Google's return of Omid Kordestani [Recode]

Larry Robbins' 6 Best Ideas at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, Glenview Capital's Larry Robbins highlighted his six best ideas.

His stock picks were: Thermo Fisher Scientific (TMO) which has been his largest holding, Monsanto (MON) which he previously pitched here, as well as HCA (HCA), Hertz (HTZ), National Oilwell Varco (NOV) and Flextronics (FLEX), a position he added to in May.

He likes that all of these can raise money on the cheap and then buyback shares.  So basically, his favorite investment idea is a theme of companies levering up.

Also, today we highlighted that Robbins has been buying Carter's (CRI) shares recently too.

Larry Robbins' Slideshow Presentation From Sohn Conference: HUM, WLP, MON

We posted up notes from the 2014 Sohn Conference in New York if you haven't seen them.  At the event, Larry Robbins of Glenview Capital pitched longs of Humana (HUM), WellPoint (WLP), and Monsanto (MON).  The conference has recently released his slideshow presentation and it is embedded below:



Be sure to check out the rest of the Sohn conference notes here.

Larry Robbins Long Humana, WellPoint & Monsanto: Sohn Conference Presentation

We're posting up notes from the Sohn Investment Conference in New York, produced in partnership with Bloomberg LINK.  Next up is Larry Robbins of Glenview Capital who pitched HMO's long like Humana (HUM) and WellPoint (WLP) and also agriculture play Monsanto (MON).


Larry Robbins' Sohn Conference Presentation

They recapped his amazing calls at the conference, including shorting GM, and long the hospitals, which was a blockbuster trade.

Long ideas: Humana (HUM, WellPoint (WLP), Monsanto (MON).

He says "resist the temptation to think 2014 is different from 2013, just because the calendar has changed." Over last 2 years, high yield bonds yield dropped by 200 bps.

Drivers:   
1. Cheap valuations on stocks, says SPX 16.1, 14.4x 2015.   
2. Lower systemic risk   
3. Corporate deployment- management and owners must "lift up."

Concept of "Convertible equity"  - an investment in a defensive secular growth business, that also carries call options on value-enhancing events.    Need to be more contrarian now. HMOs, and Monsanto, GMO provider are both out of favor.

Managed care. Myth 1: HMO profits are reason healthcare costs are too high. Fact: their profits were only 0.4% of al healthcare spending.  HMOs are the only sector of healthcare that haven't recovered. Pain is in the rear view mirror.  All headwinds turn neutral or to tailwinds over next 5 years. Greater exposure to Medicare and Medicaid- 22% from 9% in 2007.  New management in 4 of 5 biggest HMOs. (HUM, WLP, AET)

HUM: medicare advantage company. Baby boomers are aging, 4x the growth of overall population.  HUM taking share. Seniors like medicare advantage. HUM top-line growth 10-15% range. "Options:"   
1. PBM: outsource to another scale provider to reduce costs   
2. Cash use/returns on cash. 22% D/C ratio, could take on more debt to buy back shares or a small HMO.   
3. Retiree private exchanges.   
4. New markets.    
5. Long-term consolidation.

Base case PT: $143-152 Bull case: $194-207


WellPoint (WLP): traditional managed care. PBM sale ends in 2019.  Could unlock more PBM value as early as 2017.  PT $125-134 base case.

Monsanto (MON).  "In the real world, we cannot solve world hunger on an organic basis."  GMO seeds are best option for environment, and for feeding the world. Looks expensive at 19x this year, but it has new products that could $1.50-2.00 per share earnings. Near-monopoly position with multiple upside levers, Monsanto is suboptimally hoarding capital and value is trapped. 

Be sure to check out the rest of the presentations from the 2014 Sohn Investment Conference.

John Mauldin on Value Investing in Age of Uncertainty: VIC Presentation

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes from the presentation of John Mauldin of Millennium Wave Advisors.  His talk was entitled 'How Will the Elections Affect the Endgame?  Finding Value in an Upside Down World.'

He's not a stock picker, but a macroeconomic thinker and writer (author  of "Thoughts from the frontline" a newsletter.

Differences between uncertainty and risk: Uncertainty is the "unknown unknowns" the term used by Rumsfield.  The things we don't even know we don't know.   Investors are obsessed with risk.  We can model it, it makes us feel like scientists.  We have more ways to quantify risk, yet me walked into 2008 missing the obvious.  We think we can model risk. Surprises aren't only the bad things, but the good things (like the invention of the iPhone? or the steam engine)

In 1850 the number one job in the USA was a farm worker, in 1900, it was personal servant.  The cheapest thing was to hire a laborer to do the hand labor.  Uncertainty comes in all forms.  The problem with uncertainty is you can't model it.

For example, the island dispute between Japan and China. It's tough to model because it's based on human nature, and we are irrational.

Lenin: "There are decades when nothing happens and there are weeks when decades happen."  "It's not the lion that you can see that's the problem.  It's the lion in the grass..."

Frederic Bastiat:  A law produces not only one immediate, seen effect, but the other effects which emerge only subsequently, they are not seen. It almost always happens that when the immediate consequence is favorable, the later consequences are disastrous and vice versa.


Mauldin's Macro Thoughts

Europe:  the trade imbalances will force a wage readjustment SOMEHOW.  The wages in Germany must go up, or the wages in Spain, Greece must drop.  "Europe is a disaster!!! there is no way they can get out of their present malaise, they are going to have a depression, the adjustment will be painful."  The problem is the policy mistake of forming the Eurozone 14 years ago.  It's just basic accounting, Spain can't balance it's budget until it balances its trade.

"Japan is a bug in search of a windshield.  They will have their issue in the next couple of years."

China: Can't keep investing 50% of GDP at 8% growth.    Pay attention to the macro but also look at secular trends, and still expect some positive surprises.  

America: In the US, we have to solve the deficit.  You have to raise taxes and cut spending.  No matter who's elected, it will take a compromise.  You can't run on this policy, yet they will do it after the election.

You can't model this economy.  But you can say, you can't spend more than you collect forever. He claims bond market will take over. (But now we have the worst budget situation, with record low interest rates- so everything economists say isn't happening)

He believes in the march of technology.  Biotech, robotics, telecommunications will all make progress.

He likes Monsanto (MON), says they have an edge, people will be eating in 20 years.    The value you can find is when you look "over" the current situation.   Europe mess will not change the march of technology, Asia growing, etc.


Long Term Trends

A few long term trends:

1.  End of the debt super cycle
2.  End of the secular bear market
3.  The millennium wave
4.  Demographic destiny.  Boomers will live a lot longer than expected.
5.  The rise of Asia and Decline of Europe (not just a China story). 


Question & Answer:

Since money velocity is dropping rapidly like it has been, you can increase the quantity without inflation.  Fed is trying to cause some inflation.  We can do this today, because we're deleveraging.  It's working today, only because the velocity hasn't turned yet, but it will.

What is the catalyst for Japan to unwind?  It's when japanese savings goes negative.  It's come down from 16% to 1%.  He says short the Yen, and long the japanese technology companies.  He says they'll print a massive amount of yen.

He's still bearish, thinks we will see new stock market lows, the secular bear market isn't over yet.  We WILL have another recession.


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




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

Lone Pine Capital's Current Investment Themes

Today we're covering the current investment themes from Steve Mandel's hedge fund Lone Pine Capital.


*Update: excerpt removed per request by representatives of Lone Pine


In more recent portfolio activity, we've detailed how Lone Pine nearly doubled its SolarWinds (SWI) stake and has been buying the dip in VanceInfo Technologies (VIT).

Kleinheinz Capital: Inflation is Biggest Threat to Emerging Markets

John Kleinheinz's hedge fund Kleinheinz Capital recently sent out its year-end market commentary and 2011 outlook. The focus? Emerging markets and why inflation is the biggest threat to the belief that those countries can rebalance global growth.


Emerging Markets / Developing Economies

In the hedge fund's third quarter commentary, Kleinheinz said Russia is the cheapest emerging market. Their commentary this time around focuses on developing nations in general. They feel that food inflation is a large threat as it causes social unrest. However, the most important reason inflation is a concern is because,

"if developing economies cannot grow at above trend levels in a non-inflationary way then the whole proposition that these economies can gently rebalance the world economy may be untrue. The above average rates of growth in markets like China may simply be the result of trade surpluses that arise from lower cost of labor and fast monetary growth spurred by large domestic and foreign investment in capacity. Without real productivity advances and a migration to higher value-added products and services, which would allow higher incomes, the citizens of those countries cannot be expected to upgrade to a Western lifestyle that favors consumption over savings."


End of Bull Market in Treasury Bonds?

Another interesting focus of Kleinheinz's year-end letter is the notion that the three decade long bull market in US Treasuries is over. In the past, Kleinheinz held some bonds as a hedge. However, they sold out of those positions in the third quarter of last year.

Since then, they've begun "tactically shorting bonds ... until we become more certain about the timing and magnitude of a secular decline in longer dated bonds."


Japanese Yen

On the other side of the spectrum, the hedge fund has also started short positions in the Japanese Yen and Japanese government bonds. The rationale behind the play?

"Simply put - because Japan cannot afford to let its interest rates go higher, its currency will likely go lower to adjust interest rate differentials, slowing trade surplus and dwindling savings."

Readers will recall that hedge fund colleague Kyle Bass is short Japanese government bonds as well.


At the end of 2010, here were Kleinheinz's Top Holdings:

1. Apple (AAPL)
2. Research in Motion (RIMM)
3. China Mobile (CHL)
4. Veeco Instruments (VECO)
5. Monsanto (MON)
6. Hong Kong Exchange & Clearing (HK:0388)
7. LUKoil Holdings
8. Google (GOOG)
9. Major Drilling Group (MDI)
10. Yahoo! (YHOO)

From the third quarter to the fourth quarter, the most notable change in the upper echelon of their portfolio was Baidu (BIDU) falling just outside of the top 10 and their position in VECO ramping up a few spots.

Since inception, the fund has seen a compound annual growth rate of 26.6%. Intriguingly, you can replicate Kleinheinz's portfolio via Alphaclone. Investing in Kleinheinz's top 10 US equity holdings returned 19.5% 2010 compared to the hedge fund's actual performance of 22.86% (get free access to Alphaclone here).

To conclude, we'll leave you with a quote from John Kleinheinz's letter that stuck out the most: "A broad correction in stock market multiples will only occur if ten year U.S. government bond rates exceed 5% and corporate earnings growth slows to low single digit levels."

Julian Robertson's Tiger Management Bets on Intel, Wal-Mart & Monsanto: 13F Q1 2010

(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 investment guru and legend Julian Robertson who founded one of the lauded hedge funds of the era, Tiger Management. He grew the fund from $8 million at inception to over $22 billion at its peak. Between 1980 and 2000, Tiger compounded a gross rate of 31.5%, but after losses of 4% in 1998 and 19% in 1999, Tiger shut down. For more information on Julian, check out Daniel Strackman's book entitled, Julian Robertson: A Tiger in the Land Of Bulls And Bears.

Since Tiger's dissolution, Robertson's former employees have started successful funds of their own, deemed the 'Tiger Cubs'. Additionally, Robertson has himself seeded some other managers with vast potential, dubbed the 'Tiger Seeds'. This vast and expansive network of hedge fund managers is almost akin to a farm system for stockpickers and we track the majority of these funds. To learn more about Tiger Management, head to our in-depth profile of Julian Robertson.

While his hedge fund Tiger Management closed down years ago, Julian Robertson still makes investments via the Tiger Management LLC vehicle as evidenced by SEC filings. As such, we will continue to track Robertson's holdings via this vehicle's public disclosures. In the past, we've gotten a tiny glimpse at Robertson's portfolio when in late 2009 we saw he had placed a bet that interest rates would rise in the future via constant maturity swaps. We haven't heard too much from him as of late but we'll of course post anything of interest in the future. If you want to jump back in time, we've posted an interview with Robertson from back in 1998 around Tiger's peak.

The positions listed below were Tiger Management'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
Priceline.com (PCLN)
Apollo Group (APOL)
Hologic (HOLX)
LCA Vision (LCAV)
Madison Square Garden (MSG) ~ due to a spin-off from Cablevision
Sensata Technologies (ST)


Increased Positions
Verisk Analytics (VRSK): Increased position size by 30.3%
Intel (INTC): Increased by 20.6%
EMC (EMC): Increased by 17.5%


Reduced Positions
Solutia (SOA): Reduced position size by 31.9%
Mastercard (MA): Reduced by 24.5%
Lamar Advertising (LAMR): Reduced by 19.7%
Fidelity National Information (FIS): Reduced by 19.6%
DirecTV (DTV): Reduced by 18.6%
Talisman Energy (TLM): Reduced by 15.1%
Visa (V): Reduced by 14.8%
Skyworks Solutions (SWKS): Reduced by 13.6%


Positions They Sold Out of Completely
Google (GOOG)
Walmart (WMT)
Thermo Fisher Scientific (TMO)
SBA Communications (SBAC)
Teradata (TDC)
Maxim Integrated (MXIM)
Genoptix (GXDX)
IAC Interactive (IACI)


Top 15 Holdings (by percentage of assets reported on 13F filing)

1. Wal-Mart Stores (WMT) Calls: 8.22%
2. Monsanto (MON) Calls: 5.96%
3. Intel (INTC): 4.58%
4. Wuxi Pharmatech (WX): 3.68%
5. Apple (AAPL): 3.48%
6. CVS Caremark (CVS): 3.47%
7. DigitalGlobe (DGI): 3.45%
8. Visa (V): 3.44%
9. Solutia (SOA): 3.35%
10. Mastercard (MA): 3.26%
11. Skyworks (SWKS): 3.15%
12. Dick Sporting Goods (DKS): 3.13%
13. Verisk Analytics (VRSK): 3.13%
14. DirecTV (DTV): 3.09%
15. EMC (EMC): 3.08%

It should come as no surprise that the Tiger Management founder himself has a portfolio reminiscent of other 'Tiger Cub' hedge funds. After all, since Robertson often gets to listen in on meetings and chat with these managers, he can cherry pick their best ideas as well as add his own into the mix. Julian has a large position in CVS Caremark, just like Lee Ainslie and Maverick Capital which is probably hurting performance after the recent plunge in shares. Additionally, Robertson owns DirecTV which we've seen Chase Coleman's Tiger Global is bullish on. Lastly, Tiger holds perennial favorites like Apple, Mastercard, Visa, and Verisk Analytics.

On a sector level, Robertson severely decreased technology exposure and ramped up positions in services. In terms of sales, Robertson liquidated his Google (GOOG) position which is intriguing because many other managers own this name as it's one of the most important stocks to hedge funds. Since Robertson exited in the first quarter, it seems to have been the right decision as GOOG shares have spiraled down. He also sold off Wal-Mart (WMT) common stock but maintains a very hefty position in WMT call options. Tiger Management's portfolio overall saw more selling than buying as assets reported decreased. The 13F filing shows Tiger had $574 million in reported assets this quarter, down from over $600 million in the quarter prior (remember that these filings are not representative of the hedge fund's entire base of AUM).

To see the latest hedge fund portfolios, we recommend using Alphaclone as Market Folly readers receive a special free 14 day trial. It's our source for hedge fund data, replication, backtesting and more. 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. We've covered investment gurus such as: Seth Klarman's Baupost Group and Warren Buffett's Berkshire Hathaway, and George Soros.

Additionally, value and activist funds such as: Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, Bruce Berkowitz's Fairholme Capital Management, Dan Loeb's Third Point.

'Tiger Cub' funds like: Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Andreas Halvorsen's Viking Global, Roberto Mignone's Bridger Management, and Shumway Capital Partners.

'Tiger Seed' funds that were seeded by Julian Robertson, including: Chase Coleman's Tiger Global.

Our latest addition, hedge funds started by former employees of various Tiger Cub/Tiger Seed funds: David Stemerman's Conatus Capital.

And lastly, other hedge funds employing various other strategies ranging from risk arbitrage to distressed to global macro: John Paulson's hedge fund Paulson & Co, Phil Falcone's Harbinger Capital Partners,

Be sure to check back daily for new hedge fund updates.

Soros Fund Management's Portfolio: Adds Citigroup & Monsanto, Dumps Potash (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 13F filings.)

Next up is hedge fund Soros Fund Management. While many will automatically attribute this fund to George Soros, much of the credit also goes to his son Robert Soros who runs the flagship Quantum Endowment Fund. But for those of you wanting an inside look at George Soros' portfolio, look no further. We follow Soros' portfolio movements due to his macro sense and solid track record. We like to see what sectors he is flocking to and these filings are the perfect example of possible themes his firm might be seeing. Soros Fund Management is a true global macro player as they dabble in pretty much any asset class they desire, so just keep that in mind as the below only details their equity and options holdings.

In the past Soros has said one of his main concerns is the deleveraging of the US consumer over a longer period of time which will hurt consumer spending and thus growth going forward. More of Soros' thoughts on the financial markets are detailed in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.

For 2009, Soros' Quantum Endowment Fund was up 28% as noted in our hedge fund performance numbers list. In the past we've also detailed some of their recent portfolio maneuvers. The positions listed below were their long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Brand New Positions
Citigroup (C)
DirecTV (DTV)
Select Sector Financials (XLF)
Calls Bunge (BG)
Kinross Gold (KGC)
Autonation (AN)
The rest of their new holdings were less than 0.5% of reported assets each:
Dollar General (DG), Heinz (HNZ), Orbital Sciences Bonds, Shanda Games (GAME), Hasbro (HAS), CTrip (CTRP), RailAmerica (RA), Sandridge Energy (SD), Energy XXI (EXXI), CVR Energy (CVI), Sina (SINA), Transatlantic (TAT), American Axle (AXL), & China Real Estate Information (CRIC)


Increased Positions
Select Sector Financials (XLF): Increased by 63,730% (no, not a typo)
Pfizer (PFE): Increased by 365%
Monsanto (MON): Increased by 244.4%
Suncor (SU): Increased by 171%
SPDR Gold Trust (GLD): Increased by 152%
Emdeon (EM): Increased by 54.6%
Plains Exploration (PXP): Increased by 14%
Hess (HES): Increased by 11.2%


Reduced Positions
Linear Technology Bonds: Reduced by 8%


Removed Positions (Sold out completely):
Potash (POT)
Goldman Sachs (GS) Puts
Audiocodes Notes
S&P 500 (SPY)
Wyeth (WYE) ~ merger transaction complete
iShares Emerging Markets (EEM) Puts
Applied Materials (AMAT)

The rest of the stakes they dumped were quite small, each less than 0.5% of the previously reported assets: Petrohawk (HK), Focus Media (FMCN), SPSS Bonds, RPM (RPM), Liberty Media (LMDIA), Conexant Systems Bonds, Renesola (SOL), MSC Software (MSCS), Navistar (NAV), Covanta (CVA) Calls, S&P 500 (SPY) Puts, & Anadarko Petroleum (APC) Calls


Top 15 Holdings by percentage of assets reported on 13F filing

1. SPDR Gold Trust (GLD): 7.5%
   
2. Petroleo Brasileiro (PBR): 4.2%
   
3. Hess (HES): 3.9%
   
4. Monsanto (MON): 3.6%
   
5. Citigroup (C): 3.5%
   
6. LSI Bonds: 2.88%
   
7. Suncor (SU): 2.86%
   
8. Petroleo Brasileiro (PBR-A): 2.82%
   
9. Interoil (IOC): 2.42%
   
10. Linear Technology Bonds: 2.4%
    
11. Pfizer (PFE): 2.4%
    
12. Plains Exploration (PXP): 2.18%
    
13. RF Micro Bonds: 2.1%
    
14. Select Sector Financials (XLF): 1.95%
    
15. Mcdata Notes: 1.94%
    

Much has been made in the media recently about the fact that George Soros has been out calling gold a bubble but has more than doubled his exposure to the gold exchange traded fund GLD. First, keep in mind that these portfolio disclosures were as of December 31st, 2009. So technically he could have sold completely out by now. It's also possible that they are merely using this position as a hedge of some sort. Also keep in mind that George is probably less involved with the day-to-day operations of the hedge fund these days as his son Robert is more responsible for running the show at Quantum. So, take that position with a grain of salt considering George Soros' recent comments. And for those of you tracking the precious metal's every move, check out this interesting technical analysis video on gold.

Of the positions they sold, the most notable is definitely Potash (POT). They completely exited their stake and it was previously one of their largest positions. They also exited LMDIA but keep in mind that they received new shares in DTV as a result of the merger transaction. Soros Fund Management continues to hold a large stake in Petroleo Brasileiro as they own both share classes. And while Soros sold off POT, they massively added to MON, another agricultural giant. Like many other hedge funds we've seen, Soros also added shares of Citigroup (C) in the fourth quarter. Soros also significantly boosted their stake in Pfizer, a stock we recently saw that was one of the top hedge fund holdings.

Overall though, some intriguing portfolio changes. To learn how to invest like George Soros, we recommend checking out his first book, The Alchemy of Finance. Data used for this article comes from Alphaclone, our source for backtesting strategies and sorting through all the hedge fund portfolio maneuvers with ease. Assets reported on the 13F filing were $8.8 billion this quarter compared to $6.2 billion last quarter, over a 40% increase in exposure. Remember that these filings are not representative of the hedge fund's entire base of AUM.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, Dan Loeb's Third Point, Eddie Lampert's RBS Partners, David Ott's Viking Global, and Chris Shumway's hedge fund Shumway Capital Partners, Chase Coleman's Tiger Global, Philip Falcone's Harbinger Capital Partners, Roberto Mignone's Bridger Management, Thomas Steyer's Farallon Capital, John Burbank's Passport Capital, and Brett Barakett's Tremblant Capital. Check back daily for our new updates.

Chase Coleman's Tiger Global Shows Large DirecTV & Apollo Group Stakes: 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 13F filings.)

Next up is Chase Coleman's hedge fund Tiger Global. Chase Coleman is a 'Tiger Cub' because he previously plied his trade under mentor Julian Robertson at Tiger Management. Coleman is also considered a 'Tiger Seed' because he is one of the few managers that Robertson actually seeded himself in an effort to recognize talented up and coming managers. Coleman is one of the many managers selected to be in the Tiger Cub Portfolio created with Alphaclone where you can piggyback the investment portfolios of some of the top investors out there.

The positions listed below were Tiger Global's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Brand New Positions
DirecTV (DTV)
Apollo Group (APOL) ~ this position was disclosed back in January
Lockheed Martin (LMT)
Liberty Global (LBTYA)
Harbin Electric (HRBN)
Ebix (EBIX)
Hewlett Packard (HPQ)


Increased Positions
IAC Interactive (IACI): Increased by 212%
McDonald's (MCD): Increased by 100%
Qualcomm (QCOM): Increased by 63.5%
Monsanto (MON): Increased by 62%
E*Trade Financial (ETFC): Increased by 52%
Pepsico (PEP): Increased by 43.5%
Apple (AAPL): Increased by 36%
Western Union (WU): Increased by 32%
Yahoo (YHOO): Increased by 15%


Reduced Positions
Teradata (TDC): Reduced by 66.3%
Discovery Communications (DISCA): Reduced by 49%
Gushan Environmental (GU): Reduced by 42.7%
Google (GOOG): Reduced by 39.5%
Priceline.com (PCLN): Reduced by 35%
Lorillard (LO): Reduced by 33.5%
IMS Health (RX): Reduced by 32.8%
Visa (V): Reduced by 27.7%
Longtop Financial (LFT): Reduced by 21.5%
Cablevision (CVC): Reduced by 19.6%
Mastercard (MA): Reduced by 17%


Removed Positions (Sold out completely):
American Tower (AMT)
Electronic Arts (ERTS)
Advisory Board (ABCO)
Airvana (AIRV)


Top 15 Holdings by percentage of assets reported on 13F filing

1. DirecTV (DTV): 11.14%
   
2. Apollo Group (APOL): 9.28%
   
3. Mastercard (MA): 7.63%
   
4. Pepsico (PEP): 7.19%
   
5. Monsanto (MON): 6.16%
   
6. Google (GOOG): 5.33%
   
7. Mercadolibre (MELI): 5.16%
   
8. Transdigm Group (TDG): 4.43%
   
9. Lorillard (LO): 4.07%
   
10. Qualcomm (QCOM): 3.87%
    
11. Visa (V): 3.81%
    
12. IAC Interactive (IACI): 3.58%
    
13. Priceline.com (PCLN): 3.28%
    
14. Lockheed Martin (LMT): 3.23%
    
15. Yahoo (YHOO): 3.09%
    

Keep in mind many of these portfolio moves we had covered in our previous Tiger portfolio update. Their brand new position in Apollo Group is notable as fellow hedgie Stephen Mandel's Lone Pine Capital is also bullish on education plays. They also started a huge new stake in DirecTV (DTV). Tiger apparently believes that DTV will increase leverage to buyback shares and then their cashflow will cover current debt.

They completely sold out of American Tower which diverges from what we've seen from hedgies as of late. The vast majority of hedge funds we track have been bullish on tower stocks. Tiger Global also sold off some Google shares and this falls directly in line with previous research that showed many hedge funds slowly turning sour on GOOG. Lastly, we saw Tiger dump shares of Electronic Arts and this also fits the meme of hedgies shorting video game makers that are losing out to online games. Tiger also sold shares of Priceline.com, something we saw fellow hedgie Stephen Mandel do when his Lone Pine Capital dumped PCLN as well.

Data used for this article comes from Alphaclone, our source for backtesting strategies and sorting through all the hedge fund portfolio maneuvers with just a few clicks. Assets reported on the 13F filing were $3.3 billion this quarter compared to $2.3 billion last quarter, a 40% increase. Remember that these filings are not representative of the hedge fund's entire base of AUM.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, Dan Loeb's Third Point, Eddie Lampert's RBS Partners, David Ott's Viking Global, and Chris Shumway's hedge fund Shumway Capital Partners. Check back daily for our new updates.

Stephen Mandel's Lone Pine Capital Dumps Mastercard & Priceline: 13F Filing Analysis

(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 13F filings.)

Next up is notable stockpicker Stephen Mandel and his hedge fund Lone Pine Capital. Mandel's firm is named after a historical lone pine tree at his alma mater, Dartmouth College. Before founding his own firm, Mandel worked at Julian Robertson's legendary Tiger Management. Lone Pine seeks to identify companies with good management teams that are trading below intrinsic value. Lone Pine's main fund, Lone Cypress, was up 17.7% for 2009 as noted in our 2009 hedge fund performance numbers post. Additionally, their Lone Kauri was up 12.1%, Lone Cascade up 44.4%, and Lone Dragon Pine up 72.9%

In terms of recent coverage, we got a glimpse that Lone Pine is bullish on education plays. Additionally, Mandel's hedge fund is focused on investments in outsourcing, smartphones, emerging market consumer-driven companies, national and global financial service leaders and internet-enabled business disrupters. Conversely, they are shorting companies that have been hurt by technological obsolescence and companies in industries with global overcapacity. In the past, we've also taken a brief look at Lone Pine's UK positions too.

The positions listed below were Lone Pine's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. Note that we are only covering the major portfolio maneuvers. All holdings are common stock unless otherwise denoted.


Brand New Positions
Baxter International (BAX)
HSBC Holdings (HBC)
Accenture (ACN)
Wells Fargo (WFC)
Walt Disney (DIS)
YUM Brands (YUM)
Bank of America (BAC)
eBay (EBAY)
CVS Caremark (CVS)
Staples (SPLS)
Autodesk (ADSK)
Mead Johnson (MJN)
Marvel Entertainment (MVL)
Cninsure (CISG)


Increased Positions
Dr. Pepper Snapple (DPS): Increased by 335.6%
Estee Lauder (EL): Increased by 310%
Citrix (CTXS): Increased by 176%
Goodrich (GR): Increased by 96.1%
Walgreen (WAG): Increased by 88.4%
Popular (BPOP): Increased by 80.6%
New Oriental Education (EDU): Increased by 66.37% ~ we previously noted Lone Pine's addition to EDU shares
FLIR Systems (FLIR): Increased by 32.9%
Visa (V): Increased by 23.9%
McDonald's (MCD): Increased by 19.8%
Discovery Communications (DISCA): Increased by 11.7%


Reduced Positions
Vistaprint (VPRT): Reduced by 64.8%
Southwestern Energy (SWN): Reduced by 60.6%
Melco Crown (MPEL): Reduced by 48.9%
Mindray Medical (MR): Reduced by 34.6%
Smithfield Foods (SFD): Reduced by 32.8%
Apple (AAPL): Reduced by 18.3%
Hewlett-Packard (HPQ): Reduced by 13.4%


Removed Positions (Sold out completely):
Priceline.com (PCLN)
Mastercard (MA)
America Movil (AMX)
Coca Cola (KO)
Cmex (CX)
Liberty Media (LMDIA)
Walter Energy (WLT)
Coach (COH)
Philip Morris International (PM)
Fomento Economico Mexicano (FMX)
Huntington Bancshares (HBAN)


Top 15 Holdings by percentage of assets reported on 13F filing

1. JPMorgan Chase (JPM): 7.43%
2. Monsanto (MON): 6.82%
3. Baxter International (BX): 6.25%
4. Qualcomm (QCOM): 5.78%
5. Apple (AAPL): 5.43%
6. Visa (V): 4.88%
7. McDonald's (MCD): 4.85%
8. Hewlett-Packard (HPQ): 4.48%
9. HSBC Holdings (HBC): 3.89%
10. Accenture (ACN): 3.69%
11. Green Mountain Coffee Roasters (GMCR): 3.16%
12. Wells Fargo (WFC): 3.02%
13. Strayer Education (STRA): 2.93%
14. Walgreens (WAG): 2.88%
15. Goodrich (GR): 2.70%
    

Lone Pine started new positions in HSBC, Accenture, Baxter, and Wells Fargo and they are all now top fifteen holdings. One of the biggest moves in Lone Pine's portfolio from a core holding standpoint was their sale of longstanding position America Movil (AMX). In previous quarters we had noted other hedge funds were selling this name while Lone Pine held. That is not the case anymore as they have finally sound completely out of AMX.

We also make strong note that they dumped Mastercard (MA) from their portfolio, normally a perennial hedge fund favorite holding. Instead, it seems they prefer Visa in the payment processing space. Typically, we've seen hedge funds hold both of the payment giants, but now it seems more managers select one or the other. Lastly, Lone Pine sold out of Priceline, also a previously large position for them. Overall though, Lone Pine still holds many of the most popular stocks held by hedge funds.

Lone Pine still also holds on to their positions in Monsanto and Strayer Education. We highlight this because former Lone Piner David Stemerman and his new hedge fund Conatus Capital sold out of those positions. And, in fact, we're starting to see more divergences between their portfolios and just found that dynamic interesting.

Remember that Stephen Mandel's hedge fund is a part of the Tiger Cub portfolio that was created with Alphaclone where you can easily replicate a portfolio of top hedge fund holdings. Assets from the collective holdings reported to the SEC via 13F filing were $9.8 billion this quarter compared to $8 billion last quarter, so they invested almost $2 billion more on the long side in US equities. Remember that these filings are not representative of the hedge fund's entire base of assets under management. Therefore, the figures above represent the percentage of their reported 13F assets, not their entire portfolio.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, and David Einhorn's Greenlight Capital. Check back daily for our new updates.

Stephen Mandel's Lone Pine Capital Buys a Basket Full of Apple (AAPL)

This is the third quarter 2009 edition of our hedge fund portfolio tracking series. If you're unfamiliar with tracking hedge fund movements or SEC filings, check out our series preface on hedge fund 13F filings.

The third hedge fund we're covering is Stephen Mandel's Lone Pine Capital. The hedge fund, named after a historical lone pine tree at Mandel's alma mater Dartmouth College, has an assets under management (AUM) base well in excess of $8 billion. Mandel's fund had returned 25% annually from inception in 1997 up until the crisis. 2008 was a bad year for them and definitely put a chink in their armor, so now they're looking to get back to winning ways. We track Mandel due to his excellent stockpicking skills as he runs a long/short equity fund that is easy to track. They seek out companies trading below intrinsic value and they also like to see good management teams.

We've already covered some of Lone Pine's recent activity when we noted that they had started a new position in MSCI (MXB) and also a new stake in Green Mountain Coffee Roasters (GMCR). While we're covering their holdings in US equities in the following post, we've also covered their UK positions as well.

Keep in mind that the positions listed below were their long equity, note, and options holdings as of September 30th, 2009 as filed with the SEC. We don't cover every single portfolio maneuver, as we instead focus on all the big moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated last quarter, starting with the largest new position first and working down):
Apple (AAPL)
Green Mountain Coffee Roasters (GMCR)
Cemex (CX)
Walgreen (WAG)
FLIR Systems (FLIR)
Schein Henry (HSCI)
Walter Industries (WLT)
MSCI (MXB)
Goodrich (GR)
Citrix (CTXS)
Huntington Bancshares (HBAN)
Popular (BPOP)
Estee Lauder (EL)
Dr Pepper Snapple (DPS)
Etrade Financial (ETFS)


Some Increased Positions (Positions they already owned but added shares to)
Discovery Communications (DISCA): Increased by a massive 24,581% (they held relatively few shares in the quarter prior)
Sears Holdings (SHLD) Puts: Increased by 207%
Southwestern Energy (SWN): Increased by 197.6%
Mindray Medical (MR): Increased by 96.6% (but still a relatively small portion of their portfolio)
Vistaprint (VPRT): Increased by 40%
JPMorgan Chase (JPM): Increased by 30.4%
Liberty Media (LMDIA): Increased by 28.9%
Hewlett Packard (HPQ): Increased by 16.4%
Pactiv (PTV): Increased by 9.4%
Monsanto (MON): Increased by 7.2%


Some Reduced Positions (Some positions they sold shares in)
Philip Morris International (PM): Reduced by 86.5%
Fomento Economico (FMX): Reduced by 86.5%
Coach (COH): Reduced by 62%
America Movil (AMX): Reduced by 57.4%
Deltek (PROJ): Reduced by 43.8%
Coca Cola (KO): Reduced by 38%
Vivendi (VIV): Reduced by 35%
Smithfield Foods (SFD): Reduced by 26.6%
Qualcomm (QCOM): Reduced by 26.2%
McDonald's (MCD): Reduced by 24.7%
Priceline (PCLN): Reduced by 20.9%



Removed Positions (Positions they sold out of completely)
Nike (NKE)
Google (GOOG)
Ecolab (ECL)
Urban Outfitters (URBN)
Union Pacific (UNP)
XTO Energy (XTO)
MSC Industrial (MSM)
Sandridge Energy (SD)
Mead Johnson (MJN)
Fifth Third Bancorp (FITB)
Suntrust Banks (STI)
Progressive (PGR)


Top 15 Holdings by percentage of assets reported on 13F filing

1. JPMorgan Chase (JPM): 8.91%
2. Monsanto (MON): 8.07%
3. Apple (AAPL): 7.12%
4. Qualcomm (QCOM): 6.55%
5. Hewlett Packard (HPQ): 5.78%
6. McDonalds (MCD): 4.51%
7. SPDR Gold Trust (GLD) Calls: 4.24%
8. Priceline (PCLN): 3.81%
9. Visa (V): 3.79%
10. Green Mountain Coffee Roasters (GMCR): 3.49%
11. Strayer Education (STRA): 3.47%
12. Mastercard (MA): 3.00%
13. America Movil (AMX): 2.73%
14. Southwestern Energy (SWN): 2.68%
15. Coca Cola (KO): 2.31%
    

The most noticeable thing about Lone Pine's portfolio is the gigantic stake in Apple (AAPL) they started. As of their last 13F filing (Q2), they did not hold a stake. So, in that three month period, they accumulated over 3 million shares and brought it up to their third largest holding in US equities. The second notable new position was the one they initiated in Green Mountain Coffee Roasters (GMCR), but we had already covered that as per their 13G filing on the name. JPM was their largest holding as of Q3 as they boosted their position in it by 30%.

In terms of positions they already held but increased, they definitely boosted their Discovery Communications (DISCA) stake in a big way. This is mainly because they held so few shares in Q2, but it's still worth highlighting. We also want to point out they ramped up their stake in Sears (SHLD) puts by over 200%, as it appears they are bearish on the name.

Their most notable sale was in shares of their longtime favorite America Movil (AMX). As we've detailed in the past, numerous of the 'Tiger Cub' hedge funds had been invested in AMX but suddenly started to sell it off. That is, all except Lone Pine, who was adding to their position in quarters prior. Now this quarter marks the first time in a while we have seen them sell shares of AMX in a big way, cutting 57% of their position. It had previously been their fourth largest long position in US equities and we'll have to keep an eye on this to see what they do with it in the future.

Also worth pointing out is that Lone Pine's portfolio is littered with a bevy of other sales. They sliced their stakes in Philip Morris International (PM) and Fomento Economico (FMX) both by over 85% and they also cut Coach (COH) by over 60%.

*Update: Lone Pine just filed an amended 13F with the SEC and actually disclosed that they still did own 2,499,729 shares of Vistaprint (VPRT) on September 30th, 2009. You can read our full update on the situation here. Originally, VPRT did not appear on their 13F so it looked as if they had sold out of the position entirely just months after boosting their stake back in August. But, in the end, it appears that they did not sell out of VPRT after all. What's interesting to note about this company specifically though, is that VPRT receives around 40% of their net from referral fees that they earn from forwarding customers' credit card information to third parties. The Senate commerce committee recently had a hearing on these practices following a 6 month investigation. So, VPRT's revenue stream could possibly be in jeopardy, but we'll have to wait and see how that plays out. In the end, Lone Pine did still own shares of the company as of September 30th, 2009 and actually increased their position by 40% on a quarter over quarter basis.

Lastly, given all the buzz about gold, it's also worth noting that they still retain their gold position via calls on SPDR Gold Trust (GLD); the position was unchanged and represents a decent chunk of their portfolio.

Assets from the collective holdings reported to the SEC via 13F filing were $8 billion this quarter compared to $7.37 billion last quarter, so a slightly noticeable tick to the upside. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. Realistically, the position percentages are more watered down in their actual hedge fund portfolio.

This is just one of the 40+ prominent funds that we'll be covering in our Q3 2009 hedge fund portfolio series. We've already covered Seth Klarman's Baupost Group and Bill Ackman's Pershing Square, and this is just the beginning of the hedge fund portfolio updates, so check back daily.

Ag Stocks Dropping Further?

That's what our buddy UpsideTrader thinks. He recently posted up two charts of Potash (POT) and Monsanto (MON). On POT, he predicts that it will fill the gap all the way down to $40 or so. And, on MON, he has drawn a line in the sand at around $68 and says to get short if the stock breaks down below that level on significant volume.

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