Paul Tudor Jones Interview: Sees Rate Jumps & Stock Market Higher Later This Year

Paul Tudor Jones of macro hedge fund Tudor Investment Corp recently sat down with CNBC for an interview.


Tudor said that, "Three things that are driving the world today... and they all start here in the United States. Fiscal policy, monetary policy, and of course a trade irritant, rather than a trade problem."  He says you have to monitor for signs of a further trade war escalating.

If Tudor was running the Fed, he said interest rates would be 150 basis points higher than they are now. 

Single best investment that's working for him right now: "Literally as light as I've been... I can't remember the last time I've been this light."  He doesn't have a lot of macro positions on right now, as the reward/risk is diminished at this particularly point in time.

"I like to have significant leveraged positions when I think there's an imminent price move directly ahead."

He thinks the third and fourth quarters are going to be phenomenal trading periods after a summer lull.  He thinks rates will move significantly higher and the stock market also has "the ability to go a lot higher at the end of the year."

Comparing this time period to past ones, he mentioned 1987 ( but "not necessarily saying we're going to have a crash").  He also listed 1999, or 1989 in Japan.  He thinks this will end with a lot higher prices and forcing the Fed to shut it off.  "It's an old story, we'll probably play it again."

"Rates have got to go up enough to either shut the economy down, and overwhelm from real money selling like we had in '07 those buybacks, or to make it economically less compelling for companies to issue debt and buyback stock, this is real simple."

On North Korea:  Unless it escalates into some military issue, it was a non-event and non-issue.  He thinks it will fade away.  The summit was anti-climactic.


Embedded below is the full half-hour video of Paul Tudor Jones' interview with CNBC:

Paul Tudor Jones Interview on Bloomberg: "Choppier Market" Ahead

Paul Tudor Jones of macro hedge fund Tudor Investment Corp recently sat down with Bloomberg to talk about the macro picture, the Federal Reserve, and more.

Jones said that, "But I think the reality is it's clear low interest rates hurts savers and help borrowers. I think what the Fed is doing and the reason why they won't raise interest rates now, I think it's kind of acknowledging to me a much larger macro issue, which is if you think about the last 50, 60 years, there's is a perfect negative correlation between the interest income paid by the Federal government and interest rates. So the higher the share of GDP that's paid in interest income by the Federal government, typically that correlates high interest rates also. So what the Fed is doing is recognizing there is a tail risk with low interest rates. There's a tail risk with zero. We seem to run perpetual deficits at minus two, minus percent."

When asked what QE4 would do, he replied, "Again, I think it's a really interesting time in the market. It's if you kind of just look at financial conditions index, if you look at where global growth is going, this is typically historically associated, been associated with the Fed lowering interest rates, some type of interest rate relief. And that's always typically been good for stock markets. And yet now we have a central bank that I think for the first time is actually -- is managing towards the credit side of the equation, as opposed to the economic side of the equation.     And by that I mean they're looking at the balance sheet. They're uncomfortable with the size of it. That's why they want to get rates away from zero. I think they're concerned about the expanding global debt-to-GDP. And I think they're trying to probably insert back into the equation the fact that interest rates can rise and that people need to manage their balance sheets accordingly, particularly the federal government."

Jones was then questioned as to why they haven't already raised rates.  He said:

"I think they had their opportunity last spring. They probably missed it. They're trying to catch up. And again, all you have got to do think about at zero rates it encourages this nonstop borrowing from the federal governments because of the fact that interest income as a percentage of GDP is at one of the lowest levels in the past 34 years because rates are at zero. It encourages bad behavior by a variety of different stakeholders, not the least of which is our federal government.

Well, again, I think the Federal Reserve Board is managing for the balance sheet, as opposed to local economic conditions. Every time we've had this kind of set of macro variables, a huge bear market in commodities, slowing global growth, you have typically seen the Fed respond with an easing. I think of '98 in particular. And normally it would be a great time to own stocks.     Now I think for the first time since Volcker, probably, you see the Fed managing, in my mind, they're managing for the balance sheet to take out the tail risk associated, and associated with expanding debt virtually globally, and not to mention our federal debt. And I don't know if they necessarily say that avowedly, but to me it makes the most sense."

When asked if he thinks this points to a bear market, Jones said it points to a choppier market. He went on to add, "Again, the BOJ seems to be a reluctant easer, their balance sheet constrained, ECB, everyone expects them to go, but it will be an incremental step because I think they're, to a certain extent, balance sheet constrained and uncomfortable with it. So normally where you would be seeing a lot of interest rate relief globally, it's different this time. And I think that's one reason why the markets are going to be much choppier going forward."

Tudor Jones then ended the interview by noting that, "I think it's challenging times. There are a lot of crosscurrents. Again, it would be really easy to be super bullish on equities, given what the response function should be, but it's not going to happen."

Embedded below is the video of Jones' appearance on Bloomberg:

Robin Hood Investors Conference 2014: Summary of Stock Picks

The 2014 Robin Hood Conference took place over the past two days in New York where hedge fund managers presented their latest investment ideas to benefit the Robin Hood Foundation which fights poverty.  Julia La Roche of Business Insider tweeted tidbits from the event and here's an aggregation of them all.


Stock Picks From Robin Hood Investors Conference 2014


David Einhorn (Greenlight Capital): long SunEdison (SUNE), Greek banks like Alpha and Piraeus (via warrants).  Short French debt.

David Tepper (Appaloosa Management): short the Euro.

Larry Robbins (Glenview Capital): long Community Health (CYH), Realogy (RLGY), VCA (WOOF), Fidelity National Financial (FNF)

Dan Loeb (Third Point): long Amgen (AMGN) and has talked to management

Paul Tudor Jones (Tudor Investment Corp): Thinks commodities will be a mess until 2020, likes US stocks.

Jim Chanos (Kynikos Associates): Short Petrobras

Scott Ferguson (Sachem Head): Long Comcast (CMCSA).  He previously worked at Ackman's Pershing Square.

Keith Meister (Corvex Capital): Long Crown Castle International (CCI), also long Allergan (AGN).

Zach Schreiber (PointState Capital): ex-Duquesne guy, used to work with Stan Druckenmiller.  Long Cheniere Energy (LNG).

Nehal Chopra (Tiger Ratan Capital): long Charter Communications (CHTR)

Fred Wilson (Union Square Ventures): Venture Capital, not equities but insinuated he'd be short Netflix (NFLX), Amazon (AMZN), and eBay (EBAY).

Tom Wagner (Knighthead Capital): long American Airlines (AAL)

Matthew Sidman (Three Bays Capital): long Churchill Downs (CHDN)

Ricky Sandler (Eminence Capital): long Telefonica Brasil (VIV) and eBay (EBAY)

Traci Lerner (Chesapeake Partners): long American Airlines (AAL), Gencorp (GY) and Eagle Materials (EXP)

Whitney Tilson (Kase Capital): long Sodastream (SODA) and Micron (MU).  Short Lumber Liquidators (LL) and Exact Sciences (EXAS)

Ivy Zelman (Zelman Associates): long homebuilders, Lennar (LEN), Pulte (PHM), Toll (TOL), as well as Fortune Home & Security (FBHS) and Mohawk (MHK).

Bill Eigen (JPMorgan): Short bonds to play volatility

Nathaniel August (Mangrove Partners): Short Worldwide Wrestling Entertainment (WWE), long Fortress Investment Group (FIG)

Oleg Nodelman (EcoR1 Capital): long Clovis (CLVS)

Amish Mehta (SQN Investors): long Blucora (BCOR)

Sohn Conference Notes New York 2014: Einhorn, Tudor Jones, Shumway, Laffont & More

Below are notes from the 19th annual Sohn Investment Conference in New York, produced in partnership with Bloomberg LINK.  As always, top hedge fund managers pitched their latest investment ideas to benefit pediatric cancer research.  Here's this year's edition.


Sohn Investment Conference Notes: New York 2014

David Einhorn (Greenlight Capital): Short Athena Health

Bill Ackman (Pershing Square): On GSE's Fannie/Freddie

Philippe Laffont (Coatue Management): Long Liberty Global

Chris Shumway (Shumway Capital): Short the CNH, long Moody's

Larry Robbins (Glenview Capital): Long Humana, WellPoint, Monsanto

Paul Tudor Jones (Tudor Investment Corp): On the macro environment

Michael Novogratz (Fortress Investment): The case for Brazil

James Grant (Grant's Interest Rate Observer): On Russia and Gazprom

Jeff Gundlach (DoubleLine): Short homebuilders

Zach Schreiber (PointState Capital): Long refiners Valero & Marathon

Mariko Gordon (Daruma Capital): 3 long ideas

Dan Ariely (Duke University): On the psychology of money

Investment Contest Winner: Michael Guichon: long Fiat


And if you missed it earlier, we also posted up notes from the Next Wave Sohn Conference.  This was the mini-conference that took place before the main event where emerging managers pitched their latest ideas.

Paul Tudor Jones on Macro Trading Environment: 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 Paul Tudor Jones of Tudor Investment Corp who talked about the macro trading environment.


Paul Tudor Jones' Sohn Conference Presentation

"Manic depressive trading in a volatility-compressed world."

Macro trading has been as difficult as he can recall it ever in his career. He spent several charts bemoaning the lack of interest rate changes and fixed income volatility. Even stocks and FX have had very low volatility over the last 2-3 years.

Bad for macro guys who need volatility to trade. According to his models, US bonds should be shorted April 2015, based on a July 2015 rate hike.

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

Notes From Virginia Investment Symposium 2013: Julian Robertson, Paul Tudor Jones & John Griffin

The University of Virginia's McIntire School of Commerce recently held its 2013 Spring Symposium entitled "Investing in Markets, Society, and Ourselves: Views from Investment Masters."  The panelists included hedge fund legends Julian Robertson of Tiger Management, Paul Tudor Jones of Tudor Investment Corp and John Griffin of Blue Ridge Capital.

Market Folly obtained access to a recording of the event through a Freedom of Information Act request and we wanted to highlight some brief notes and pearls of wisdom from these great investors.


Notes From UVa's Spring Investment Symposium 2013


Julian Robertson (Tiger Management)

On starting his fund:  He founded the firm with $8 million and at its peak managed $22 billion.  He noted how there wasn't as much short selling going on when he started.  He also said shorting is much harder today and back then you essentially had interest rate arbitrage on your shorts because interest rates were so much higher than dividends.  

Julian says he learned from Bob Wilson, who he labeled as one of the first hedge fund managers out there.

On traits he looked for in making hires at Tiger:  "We found out subsequently some real personality traits: competitiveness is right up there with brains and honesty."

As our Hedge Fund Wisdom newsletter drew attention to, Robertson recently sold out of Apple (AAPL) and he mentioned that at the event.  He says it's because he went back and re-read the book on Steve Jobs and realized his importance to the company as an innovator.

On the other hand, Robertson continues to like Google (GOOG) and thinks it's a great company.  He joked he can't wait to get some Google Glasses.  He also mentioned he still owns Daiwa Securities (TYO:8601) and has for a long time.

He says he feels you have to be playing Japan now given the policies there and notes that someone he knows is starting an all-Japan hedge fund.

Robertson called the hedge fund business 'a lifesaver' after losing his wife as he's been re-energized seeding managers and looking at businesses/investment ideas.


Paul Tudor Jones (Tudor Investment Corp)

He emphasized his focus on technical analysis as that's the method he learned for trading commodities originally.  He said, "I have one strong rule and that is when it comes to a stock if it's above the 200 day moving average, I'm gonna be long it, and if it's below it, I'm either not gonna own it or I'm gonna be short it, period end of story and I just let that govern every single thing that I do."

On crashes/financial crises:

"The crash of 1987 was a 100% derivatives inspired event.  So someone from my background, that came from trading futures, it was very easy for me to see what was about to transpire, because I understood that at that point in time, the tail was going to wag the dog.  If you look at the biggest financial crises of the past three decades, generally speaking they've been derivatives inspired.  Because that's the easiest way to bring knowingly and unknowingly a huge amount of leverage into any kind of particular instrument and it's the leverage that brings the volatility."

On Japan: Jones says to watch late next year for verification if Japan has been able to reduce their debt-to-GDP.   He said, "If it doesn't work, and all of a sudden they have a debt crisis, I would think you could just take 35% off all equity markets, including this one, by the time that one unwinds."

He also thinks Europe is pretty interesting with all the central bank action over there.

On when he might retire: He originally planned to potentially retire when his last child graduated from college, but he really enjoys the business and sees it as the biggest game in the world.  He wants to hang around to see how the Japan situation plays out. He said, "I think the next few years are gonna be, I think some of the most exciting times for macro in the last couple of decades."

On long/short strategies:  "When I think of long/short business, to me there's 5 ways to make money: 2 of those are you either play mean reversion, which is what a lot of long/short strategies do, or you can play momentum/trend, and that's typically what I do.  We've seen cheap companies get cheaper many, many times.  If something's going down, I want to be short it, and if something's going up, I want to be long it.  The sweet spot is when you find something with a compelling valuation that is also just beginning to move up.  That's every investor's dream."

Tudor Jones also noted that it's hard for a macro trader to not be perpetually long the US dollar against the South African Rand.

On short selling:  "I spent 20 years doing it, it's not the right way to make a living trading.  It's simply not.  And I've done really well on the short side.  There's nothing more exciting than a bear market.  But it's not a wonderful way for long-term health and happiness."


John Griffin (Blue Ridge Capital)

Griffin moderated the panel, though he also added some anecdotes of his own.

On Tiger's hiring practices: "Julian was always willing to take a risk on people who knew nothing if he felt they had characteristics of integrity, competitiveness, smart, and would be interested in the business.  And I think in someways that was a breakthrough back then."

Griffin impersonating Robertson after he initially met Andreas Halvorsen (who worked at Tiger and eventually founded Viking Global):  "Well, I mean, he may be one of the smartest people I've ever met, that's number one.  Number two, he's one of the most aggressive person I've ever met."

Griffin cited mentoring and having the open office layout at Tiger as some of the biggest reason for its success and the success of people who left to start their own funds.

Adding on to Jones' comments about Europe, Griffin said that if Draghi follows actions of other banks then "Europe stocks would fly because they're half the valuations."

Griffin also basically confirmed what everyone largely knew already: that Tiger alums often talk and share ideas.  He said Julian would call him and ask him for his favorite short idea then joked that after he told him the idea Julian would take off before Griffin could get Julian's best idea.

On investing: "In stock investing, the way I do it, because I'm not an activist, you're completely helpless.  You buy the stock, and if you don't like what the company's doing, you can sell the stock ... In investing, the only way to be really good at it, you have to accept the fact that everything is greater than yourself.  If it ever becomes anything to do with your action, unless you're an activist, you're smoked.  You're a taker.  The markets are like the ocean... you can't be in a boat and say 'bring it on' to the ocean."  


Investment Pitches

Two current students and one former student pitched investment ideas to the panel:

1. Long ADT (ADT): They highlight ADT's position as the market leader in a fragmented industry and cited their dealer network as compelling.  The main part of the thesis centers around the company's new Pulse product where people can turn off lights and control other household functions in addition to home security from their smartphones.

While the street is seeing 30% adoption rate of this system, dealers they spoke to are seeing 80% installation rates.  They think concerns from competition from cable companies like Verizon (VZ) and AT&T (T) is overblown as they've tried to enter the business in the past and haven't been as successful.


2. Short Canon (CAJ): Melting ice cube short as the company faces lower unit sales & average selling prices, as well as increased competition.  They think that smartphones are replacing 'point and shoot' cameras and that mirrorless cameras will be favored over DSLR cameras.

They also cite the company's weak printer market and think the conservative management team is a drag on the stock.  Julian Robertson said he thinks it's a very good idea.


3.  Short Truworths:  Additionally, a former UVa student and former analyst at John Griffin's Blue Ridge Capital, Hoda Alibair, came up and presented a negative view on South Africa's lenient consumer credit policies.

She highlighted that 66% of the GDP is from household expenditure and there's been a significant growth in unsecured lending and 76% of households are running at a 76% household debt to income ratio.  So what's the best way to play this?

She noted how the tendency would be to short the banks exposed to this (and we highlighted how Conatus Capital's David Stemerman said to short African Bank at the Ira Sohn Investment Conference).

She instead looked for other plays on this in the consumer sector and she laid out the case to short TruWorks.  She says the company has peak margins that just aren't sustainable.  Zara, a big retail competitor, is just now moving in to the country as well.  Over 60% of Truworths' growth came from a brand called Identity, and these consumers are truly low-income consumers.

Tudor Sells Completely Out of Renewable Energy Holdings (LON: REH)

Just yesterday, we highlighted that Paul Tudor Jones' hedge fund had reduced its position in Renewable Energy Holdings (LON: REH) to a 3.99% ownership stake in the company. They've just filed another regulatory disclosure which reveals that the hedge fund sold completely out of REH and now own 0 shares due to trading on September 24th, 2010.

What's interesting here is that Weiss Asset Management (the investment manager to Brookdale International and Brookdale Global), have just acquired a 6.5% holding in Renewable Energy Holdings due to trading on the exact same day. So, it's somewhat likely that Tudor was essentially selling to Weiss.

Taken from Google Finance, Renewable Energy Holdings is "a United Kingdom-based renewable energy company. It owns and operates the European on-shore windfarms, the Kesfeld and Kirf Windfarms in Germany and the Gwynt Cymru Landfill Gas site in Wales. The Company operates in five segments: head office, CETO development, German windfarms, polish windfarms and landfill gas."

Head to all of our coverage of hedge fund positions in the UK for more.

Tudor Investment Corp Sells Renewable Energy Holdings (LON: REH)

Paul Tudor Jones' hedge fund Tudor Investment Corp recently filed regulatory disclosures in the UK regarding its position in Renewable Energy Holdings (LON: REH). Back in March 2008, Tudor owned 9.5% of the company's outstanding shares. Ever since then, they've been slowly reducing their position as we detailed back in October 2009 when they owned 8% of the company and that dwindled to 6.7% of the company in March 2010. As of September 21st, 2010, Tudor now only owns 3.99% of REH with a remaining position of 2,784,333 shares. To see what other hedge funds have been buying and selling in UK markets, scroll through our coverage here.

Taken from Google Finance, Renewable Energy Holdings is "a United Kingdom-based renewable energy company. It owns and operates the European on-shore windfarms, the Kesfeld and Kirf Windfarms in Germany and the Gwynt Cymru Landfill Gas site in Wales. The Company operates in five segments: head office, CETO development, German windfarms, polish windfarms and landfill gas."

If you're interested, you can check out our past coverage of Paul Tudor Jones here.

Reminiscences of a Stock Operator: Jon Markman's Annotated Edition (Book Review)

Financial authors have been cranking out some good books as of late on topics relating to the crisis and current investment landscape. Award winning journalist and veteran hedge fund manager Jon D. Markman, however, has added a twist to an investing classic. Recently, he published an Annotated Edition of Edwin Lefevre's Reminiscences of a Stock Operator. Markman has put out a historical and insightful version of the life and times of Jesse Livermore that includes a foreword and appendix by legendary hedge fund manager Paul Tudor Jones.

The original story, Lefevre's Reminiscences of a Stock Operator, is by far one of the most well known and acclaimed books on financial markets. It was one of the first books listed in our recommended reading list because it teaches many valuable lessons about financial markets via a fictionalized account of Jesse Livermore's rollercoaster trading ride. This book is well known for its timeless advice such as, "the trend is your friend" and "let your winners run and cut your losses quickly." We could go on, but Lefevre's tale is literally laced with hundreds of insightful anecdotes. Hedge fund manager Paul Tudor Jones received a copy from his first boss and now gives a copy to every new trader at hedge fund Tudor Investment Corp, regardless of their experience level. The book is that useful.

Now, what Markman has done with his Annotated Edition of Reminiscences of a Stock Operator is added a sense of history and context. He has helped modern day readers connect with what now seem like ancient times. To today's reader, the people, places and events of the 1920's are distant and disconnected. Markman connects the dots by incorporating newspaper clippings, biographies, pictures, descriptions and more in his annotations. Almost every single page is chalk full of information and we can only imagine how long it took him to compile such historical resources.

This annotated edition is both a story and a history book. It adds a layer of vintage facts and really draws you in to what trading and financial markets were like back in the 1920's. When we first read Lefevre's Reminiscences many years ago, we'll be the first to admit that some of the people, places and events had little to no meaning or relevance for us; they were just 'part of the story.' Markman's work truly rectifies this as he bridges the gap and provides you with many "ah-ha!" moments. Needless to say, many elements of the book now have much more meaning and relevance.

While these annotations are highly useful, they definitely slow the flow of the story. You'll undoubtedly find yourself reading every single notation and it will take you almost twice as long as the original to read. That being said, it is definitely worth the time as it made us discover so many elements we missed in prior reads. Not to mention, Paul Tudor Jones' interview at the end of the book offers you a glimpse through his legendary hedge fund trading eyes. Simply put, Jon D. Markman's Annotated Edition of Reminiscences of a Stock Operator enhances an already must-read investing classic.

We'll leave you with one timeless bit of wisdom from the book: never argue with the tape.


For other insightful investing books, be sure to check out our recommended reading lists as well as our other book reviews.

Paul Tudor Jones Favors Gold & Curve Flatteners (Investor Letter)

In his latest letter to investors, hedge fund manager and legendary trader Paul Tudor Jones outlines his firm's thoughts on the topics of equities, bonds, and currencies. Tudor's letter is one of those 'must reads' as his macro sense is phenomenal and he is one of the greatest traders of all time (performance returns summary here). What's interesting about his latest letter is the fact that they included a special section addressing the all too talked about precious metal.

Gold

The macro perspective section of their letter notes how gold is not consumed but rather accumulated as a store of value as it has been a 'medium of exchange for over 5,000 years.' What's interesting is that they plot out inflation-adjusted gold prices and note that we are still far off from the highs seen over 2 decades ago. Tudor puts the inflation-adjusted peak price of gold to be between $1,600-$2,400, with the previous high coming in at $2,422. While Tudor says he has never been a gold bug, he says all assets have a time and a place. And conveniently enough, he says now is gold's time. Tudor joins an army of other prominent hedge fund managers bullish on the precious metal including David Einhorn of Greenlight Capital who has gone as far as storing physical gold. Additionally, John Paulson of Paulson & Co has $4 billion in gold investments, among many other managers.

Tudor's econometric model has determined that gold is 20% undervalued over the next 24 months. This takes into consideration real rates on the price of gold, inflation, and M2 growth. Tudor expects the velocity of money to rise over the next two years, enhancing the bullish case for gold. Additionally, they also cite the supply/demand equation and prudently bring up the fact that a new class of investors has arrived: retail investors gaining access to the metal through exchange traded funds (most notably GLD). Tudor then presented these amazing facts: "The trailing 12-month ETF accumulation has "bought" the equivalent of 25% of new mine production consistently since the beginning of the year. By year-end 2009, the total ETF gold position will hold 3% of global available supplies, making ETFs the sixth largest holder of gold in the world." Tudor expects inflows into these vehicles to continue, furthering the case for a position. Lastly, Tudor highlights another important factor in the gold equation: central banks. He notes that in the second half of this year, the 'official sector will become a net buyer of gold.' We also yesterday posted up an excellent technical analysis video on gold which concurs that gold is in a long-term uptrend. The video outlines $1000 as a key level to stay above and outlines buy points at support as well as price targets going forward (watch it here).

Curve Flatteners

Turning to the bond markets, Tudor has found it difficult to find good risk/reward setups with only the curve flattener seen as appealing. This is very interesting to note given that we've covered prominent hedge fund player Julian Robertson had previously been in the opposite trade, a curve steepener. It's always great to see two prominent minds in hedge fund land differ in this ongoing debate. (Interestingly enough, Robertson also disagrees with Tudor in regards to gold, as he favors gold miners instead). Tudor notes that curve flatteners provide 'tail risk insurance' against the trades of long gold, short the US dollar, and long equities. Tudor writes, "As deflation recedes to the background, market participants will start expecting a removal of policy accommodation. If the markets begin to price early, fast and large tightening before inflationary expectations are allowed to take hold, then curves could bear-flatten significantly from current historically high levels."

Currencies

On the topic of currencies, Tudor shares the views of many other hedge fund managers in that they feel currencies of commodity producing nations should benefit, specifically citing the Australian Dollar. And, of course, we would be remiss not to mention that Tudor thinks the dollar will continue its decline.

Equities

Turning his focus to equities in the letter, we found this paragraph on the technicals to be intriguing: "Technical considerations can be characterized as suggesting that near-term risk should be limited at worst. Market breadth has remained mostly favorable, even rendering a third "thrust" signal of the rally in early September. These are noteworthy not only because they are rare, but more importantly, because they indicate a level of demand that typically proves sustainable. Within the half-year following such signals it is unusual to see corrections of even 10%. Seasonally, equity markets will soon exit a period of traditional weakness to enter one flattened by the impulse to chase performance and generate returns by year-end. While many of our surveys of aggregate hedge fund positioning would say net long exposure has rebounded to late 2007 percentages (though on a smaller base), and mutual fund cash/asset ratios have come in significantly, markets continue to trade as if most are not satisfied with their current commitment to equities." Great insight from Tudor and we'll have to see if that pans out. As far as their equity selections go, they favor emerging markets and in particular Brazil and Taiwan.

Overall, great insight and it's definitely interesting to see an in-depth presentation on gold from the global macro specialists. In the letter, we also find out that Tudor is up 14.88% year to date for 2009 and currently has over $11 billion in assets under management. Jones has somehow managed to perfectly summarize the market action, labeling it "The Great Liquidity Race: Wall of Money Climbs Wall of Worry."

Embedded below is Tudor's Q3 letter, courtesy of Dealbook where we recommend using the full-screen option for reading:




For more on Paul Tudor Jones' hedge fund firm Tudor Investment Corp, check out our post where we covered their UK positions. Also, you can see Tudor's historical returns here as well as their August commentary where they deemed action in US markets a bear market rally. As always, we'll continue to track the movements and insight from one of the greatest traders and hedge fund managers in the business, Paul Tudor Jones.

Hedge Fund Tudor Investment Corp's UK Positions

Hedge Fund Tudor BVI Global Eyes Sustainable Development & Africa

As always, we're continuing our tracking series where we are looking at positions prominent hedge funds hold in UK markets. If you've missed some of our previous posts, make sure you check out the positions of Harbinger Capital Partners, Stephen Mandel's Lone Pine Capital, and Citadel's positions too. If you're unfamiliar with our new series tracking UK positions, check out our preface here. Today, we're covering Paul Tudor Jones' hedge fund Tudor Investment Corp. The positions listed below are taken from their main BVI Global Fund. Keep in mind that tracking Tudor is a bit trickier since they are a global macro fund and can trade all asset classes under the sun. Not to mention, they typically move in and out of positions much faster than the majority of funds we track on the blog in our hedge fund portfolio tracking series. We've already covered one global macro fund's UK positions as we previously examined Louis Bacon's Moore Capital Management. We find it prudent to track global macro funds to see if we can get a glimpse as to what sectors they are flocking to or what macro themes they may be playing. In reviewing Tudor's UK positions, two themes standout: sustainable development and Africa.

	symbol	date	shares	% issued equity
Africa Opportunity Fund	AOF	10/06/2009	13,750,229	32.3

Tudor bought into the African Opportunity Fund (AOF) through a tender offer held in May of this year. AOF is an interesting fund as its objective is to earn capital growth and income through value, arbitrage, and special situation investments in the continent of Africa. Earlier in the year, the managers were focused on investing in companies with minimal debt and little need to access the capital markets with a particular emphasis on goods and services in short supply in Africa.

The managers, Francis Daniels and Robert Knapp, adopt a deep value approach and sprinkle their annual reports with quotes from Graham and Dodd and Warren Buffett. In June the portfolio was invested: 50% equities, 40% debt equity and 10% cash. The fund pays a dividend yield of 4.8% and in September of this year the fund was trading at a discount to net asset value of approximately -14%. As of June 2009, the two fund managers collectively owned over 23% of the issued stock.

One drawback for potential investors is that AOF is listed on AIM. While it is denominated in US Dollars, it clears through Euronext which will make it hard to trade through many brokers. It’s an offshore fund that is incorporated in the Cayman Islands. One of the portfolio managers, Robert Knapp, is also the managing director of Ironsides which runs a managed account for Millennium Partners, a multi-billion dollar hedge fund based in New York City.

	symbol	date	shares	% equity	price
Camco International	CAO	29/05/2008	23284999	14	na

Taken from Google Finance - Camco International Limited is engaged in identifying and developing greenhouse gas emission reduction projects, and providing carbon and sustainable development consultancy services, including emissions assessment, carbon management and strategy and policy work. The Company is a climate change business in the carbon and sustainable development markets. It offers a range of carbon-related services to public and private organizations worldwide. Among its clients are the World Bank, the European Commission, Land Rover, BP and industrial, power and utilities companies throughout China and Russia. On April 30, 2007, the Company acquired ESD Partners Ltd., the holding company for the Energy for Sustainable Development Group of companies (together ESD), which is engaged in the provision of consulting services in the field of climate change science and technology. On May 10, 2007, it acquired Bradshaw Consulting Limited. In May 2008, the Company acquired ClearWorld Energy Ventures Limited.

Modern Water	MWG	12/06/2007	4201681	7.14	119p
		01/04/2009	4193181	7.12	32.3p

Modern Water Plc is a United Kingdom-based company. The principal activities of the Company is sourcing, developing and deploying technology-based solutions for fresh water and treatment of wastewater. The Company’s has 53% interest in its subsidiaries include Cymtox Limited. The Company also has 45% interest in joint venture, AguaCure Limited.

Renewable Energy Group	REH	05/02/2008	5604333	8.63	na
		18/03/2008	6204333	9.5	45p
		24/08/2009	6004333	8.7	27p

Taken from Google Finance - Renewable Energy Holdings plc owns and operates the Kesfeld and Kirf windfarms in Germany, and the Bryn Posteg Landfill Gas site in Wales. The Company’s subsidiaries include Seapower Pacific Pty Limited, REH Verwaltung GmbH, Windpark Kesfeld Heckhuscheid GmbH & Co KG, Windpark Kirf GmbH & Co KG, REH Global Limited and Gwynt Cymru Limited. The principal activity of Seapower Pacific Pty Limited is research and development for the purposes of developing technology to capture energy produced by ocean waves to generate electricity and produce, as a by-product, desalinated water. The principal activity of Windpark Kesfeld Heckhuscheid GmbH & Co KG and Windpark Kirf GmbH & Co KG is the ownership and operation of the Company’s windfarms in Germany. The principal activity of Gwynt Cymru Limited is the operation of the Company’s landfill gas site. During 2008, it purchased 49% interest in CETO Development Company Limited. In August 2009, the Company completed the acquisition of Gamar GL.

That wraps up this edition of hedge fund UK position tracking. It was definitely interesting to see the possible themes Tudor might be playing considering their status as one of the premier global macro funds in the world. As of the end of August, Tudor was up 12.5% for the year. To see further performance figures, you can see Tudor's historical returns here. As noted in early August, Tudor was out saying that the recent action in US markets was nothing more than a bear market rally. Now that we've started to see some weakness in the markets, it will be interesting to see if selling intensifies or not. Make sure you check out Paul Tudor Jones in true action as he trades in the scarcely available 1987 PBS Film, "Trader: The Documentary" that we've embedded for readers to watch. For more resources on Tudor Investment Corp, we've covered their US equities portfolio here. And lastly, you can read an excellent compilation of quotes from Paul as well as his hedge fund manager interview.

Tudor Investment Corp Says Bear Market Rally

Hedge fund manager and macro trader Paul Tudor Jones has claimed that the massive 40%+ rally we've seen in equities since March is nothing more than a bear market rally. In Tudor Investment Corporation's latest letter to investors, Jones says that, "impressive counter-trend rallies are a feature, not an oddity, of secular bear markets. We are not inclined to aggressively chase the market here. Many doubts remain about the sustainability of this recovery, most prominently the weakness of household income growth."

Tudor essentially sees the market rallying then falling, and then repeating the cycle again. We are currently in the midst of a large rally which he feels will subside and give way to a decline in markets come September of this year. Tudor cites numerous negative catalysts for the move, including slowed growth in China. However, he still thinks that the markets will end the year then on a positive note and would be a buyer on large dips purely for the trade. This is because he thinks that 2010 could be another negative year for stocks as the rallying then declining cycle plays on. Being nimble is the name of the game and letting the tape lead you is the key here.

If you're unfamiliar with Paul Tudor Jones, he is regarded as one of the best traders around and some of his early work is showcased in the 1987 PBS Film, Trader: The Documentary. Years after the film's release, Tudor sought to buy every copy in existence in an effort to stop circulation. Since the video was so hard to find, it almost became a form of Wall Street contraband and fetched hundreds, if not thousands of dollars on eBay. However, the video recently surfaced and you can watch Paul Tudor Jones in action here.

Back then, Tudor managed a little over $100 million. Today, his firm manages in excess of $10 billion. $8.9 billion of those assets are in their main BVI Global fund, which is up 10% this year through the end of July. For the year of 2008, Tudor was down 4.5%, as noted in our year-end hedge fund performances post.

Since Tudor is a macro trader, we also wanted to point out some macro themes that he is seeing right now. For one, he thinks that Japan is an interesting story going forward due to the lower-house elections where the Liberal Democratic Party lost. Tudor feels this will spur new investment into the country and he is not the only hedge fund manager that we've seen talking about Japan lately. This will be an interesting theme to follow as more and more managers begin to warm-up to the previously frigid investment opportunities in that country. Additionally, Paul Tudor Jones is bearish on the U.S. dollar as he feels, "reserve accumulation and diversification trends will be persistent and mutually reinforcing the direction of the U.S. dollar."

For more resources on Tudor Investment Corp, we've covered Tudor's equity portfolio. Then, turning to Paul Tudor Jones himself, we posted an excellent compilation of quotes from Paul Tudor Jones as well as his hedge fund manager interview.


Pictured above is Paul Tudor Jones back in the day with one of his favorite phrases on the wall, "Losers average losers."

Trader The Documentary: Paul Tudor Jones In 1987 PBS Film Glory

*Update: The link to the third party site hosting the video has been removed at the request of the copyright holder. For more information on the documentary, please see this link.




Paul Tudor Jones drinks Budweiser and trades Deutsche Marks in the early morning Hong Kong time. No lie.

Paul Tudor Jones 1987 PBS Film 'Trader: The Documentary'

*Update: The link to the third party site hosting the video has been removed at the request of the copyright holder.

The 1987 PBS Film on Paul Tudor Jones entitled 'Trader: The Documentary'. This video has been extremely hard to find and those possessing a precious copy guard it with their life and/or sell it on eBay for hundreds if not thousands of dollars.

This is hedge fund manager & legend Paul Tudor Jones in his element. He is notorious for predicting and profiting from the stock market crash in 1987. The video takes you inside Tudor Investment Corp back when they were only 22 employees large and managing around $130 million. Today, obviously, they are much, much bigger. We cover Tudor Investment Corp here on the blog because of Tudor's excellent track record and legendary status. We've covered Tudor's recent equity portfolio, as well as good quotes from Paul Tudor Jones in the past. Lastly, we also posted up his hedge fund manager interview. This documentary is insider footage of what things were like at Tudor's firm during the build-up to some of the most interesting times in the stock market's history. Enjoy the videos!

Paul Tudor Jones' Hedge Fund Tudor Investment Corp: 13F Filing Q1 2009

This is the 1st Quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings series preface.

This week is 'global macro week' here at Market Folly and we'll be covering some of the equity positions of the major global macro strategy hedge funds. We want to start off this week with a slight disclaimer. Since global macro funds trade all different types of asset classes, they're not an ideal bunch to track or to clone a portfolio from. However, they are some of the smartest minds out there in terms of secular themes, trading, and market timing. As such, we monitor their movements in equities to get a sense as to what sectors they like, when they're moving out of long equity positions, and to see if we can see any secular themes they might be playing. So, this week is not so much about tracking as much as it is about taking a step back and observing the 'bigger picture.'

First up, we have legendary global macro trader Paul Tudor Jones. He comes from the group of "offspring" of the legendary Commodities Corporation. Tudor Jones emerged as a successful offspring along with fellow great macro traders Bruce Kovner (Caxton Associates) and Louis Bacon (Moore Capital Management). Taken from Wikipedia, the bio of PTJ is as follows: "In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems." So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of THE macro trader.

If you want to hear some insightful thoughts from Tudor Jones himself, head over to our post on Hedge Fund manager interviews or our post on quotes from PTJ. In terms of other activity we've covered, Tudor has been busy in the past. Previously, they filed numerous 13G's with the SEC, amending a bunch of their holdings. Additionally, we learned that they will be starting a new Momentum Fund. They still of course have their main flagship BVI Global fund that finished 2008 -4.5% as noted in our 2008 hedge fund performance numbers. Keep in mind that as of right now, Tudor has only a minuscule amount of their overall portfolio allocated to equities. They are a multi-billion dollar firm and only have equity exposure of a few hundred million, as detailed below.

The following were Tudor's long equity, note, and options holdings as of March 31st, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Select Sector Financial (XLF) Calls, iShares China (FXI), Select Sector Consumer Discretionary (XLY), Philip Morris International (PM)

The rest of their brand new positions are much smaller, as each are less than 0.5% of Tudor's portfolio: American Electric Power (AEP), Altria Group (MO), Health Care REIT (HCN), Waste Management (WMI), Omnicom (OMC), EOG Resources (EOG), Nasdaq (NDAQ), General Electric (GE), Sunoco (SUN), Alcoa (AA), Aflac (AFL), Analog Devices (ADI), NYSE Euronext (NYX), Reynolds American (RAI), Select Sector Consumer Staples (XLP), Ventas (VTR), Arch Coal (ACI), Aes (AES), Goldman Sachs (GS), Peabody Energy (BTU), International Game Technology (IGT), Consol Energy (CNX), Bunge (BG), Pfizer (PFE), Stericycle (SRCL), Supervalu (SVU)


Some Increased Positions (A few positions they already owned but added shares to)
Select Sector Financials (XLF): Increased by 643%
Select Sector Healthcare (XLV): Increased by 331%
Semiconductor Holdrs (SMH): Increased by 138%
Select Sector Energy (XLE): Increased by 20%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Kraft Foods (KFT): Reduced by 95%
Prudential (PRU): Reduced by 94%
Harris Corp (HRS): Reduced by 93%
Metlife (MET): Reduced by 92%
SLM Corp (SLM): Reduced by 82%
Devon Energy (DVN): Reduced by 62%
US Steel (X): Reduced by 60%


Removed Positions (Positions they sold out of completely)
Genentech (DNA), Wyeth (WYE), Monsanto (MON), Mako Surgical (MAKO), Berkshire Hathaway (BRK-A), Select Sector Technology (XLK), CIT Group (CIT), Mastercard (MA), Blackrock (BLK), Teva Pharma (TEVA), Wendys Arbys (WEN), Cigna (CI), Citigroup (C), Corning (GLW), Select Sector Industrial (XLI), Market Agribusiness ETF (MOO), Sandisk (SNDK), Agilent (A), Potash (POT). They also sold out of numerous other positions that were each less than 0.5% of their overall portfolio.


Top 15 Holdings (by % of portfolio)

1. Select Sector Financials (XLF) Calls: 13.63% of portfolio
2. Select Sector Financials (XLF): 11.25% of portfolio
3. Semiconductor Holdrs (SMH): 10.3% of portfolio
4. Progenics Pharmaceuticals (PGNX): 5% of portfolio
5. Select Sector Healthcare (XLV): 4.6% of portfolio
6. iShares China (FXI): 3.2% of portfolio
7. Taleo Corp (TLEO): 2.76% of portfolio
8. Select Sector Energy (XLE): 2.1% of portfolio
9. Switch & Data (SDXC): 1.4% of portfolio
10. Select Sector Consumer Discretionary (XLY): 0.87% of portfolio

Upon looking at Tudor's portfolio, many will obviously point to the fact that they have large long exposure to financials via XLF and XLF calls. And, this is worth highlighting as it is clear they've made a sector bet in that regard having increased their position there. However, we will point to the bigger picture and note that Tudor's long equity exposure is very minimal, at best. As such, we could interpret this as them seeing further downside risk in equities. Or, they could simply be pursuing opportunities in other markets. Assets from the collective holdings reported to the SEC via 13F filing were $290 million this quarter compared to $334 million last quarter, so we see a slight dip in long equity exposure on their part from quarter to quarter. However, the main thing to take away is that Tudor is a multi-billion dollar firm. They only have a couple hundred million in long equity exposure, which is not much in the bigger scheme of things. That is the main thing we've taken away from examining their portfolio.

At the same time though, there are some interesting holdings in their portfolio. Besides their interesting financials position, Tudor also has a larger stake in semiconductors and health care, as both are within their top 5 positions. While they added heavily to their financial exposure, they added quite heavily to their semiconductor position too (via SMH) and some people may overlook that. Overall, it's easy to see which sectors Tudor might like more than others on the long equity side of things due to the creations known as sector exchange traded funds (ETFs). Tudor seems to like them to gain exposure to a certain sector and that makes sense given their global trading nature. This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. We've already covered:

- Gurus such as: Soros Fund Management (George Soros), and Jim Rogers.

- 'Tiger Cub' portfolios like: Andreas Halvorsen's Viking Global, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Shumway Capital Partners (Chris Shumway), Chase Coleman's Tiger Global,

- Outperforming funds like: John Paulson's hedge fund Paulson & Co, Eric Mindich's Eton Park Capital, Raj Rajaratnam's Galleon Group,

- Value and activist funds such as: David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Whitney Tison's T2 Partners, Philip Falcone's Harbinger Capital Partners, Ricky Sandler's Eminence Capital,

- Concentrated funds that play secular/macro themes such as: Timothy Barakett's Atticus Capital, Bret Barakett's Tremblant Capital Group, Boone Pickens' BP Capital Management, John Burbank's Passport Capital

- And, newer funds on the scene: David Stemerman's Conatus Capital. Check back each day as we cover new fund portfolios.

Paul Tudor Jones' Tudor Investment Corp 13F Filing, Q4 2008

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

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

Paul Tudor Jones comes from the group of "offspring" of the legendary Commodities Corporation. Tudor Jones emerged as a successful offspring along with fellow great macro traders Bruce Kovner (Caxton Associates) and Louis Bacon (Moore Capital Management). Taken from Wikipedia, the bio of PTJ is as follows: "In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems." So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of THE macro trader.

If you want to hear some insightful thoughts from Tudor Jones himself, head over to our post on Hedge Fund manager interviews or our post on quotes from PTJ. We should note that in the past, Tudor's equity portion of their portfolio has been run by James Pallotta in Tudor's Raptor fund. But, Pallotta recently left Tudor to start his own hedge fund. So, we've started to cover Pallotta's new Raptor Capital Management, and we will also continue to track Tudor. Pallotta was essentially responsible for the great track record at Tudor, so that's why we continue to track his 'spun-off/new' venture. We'll track Tudor simply because they have some of the greatest minds in the macro game. And, that's why we track macro funds in the first place: to monitor their sector exposure to pick up any possible macro themes they might be playing.

In terms of recent activity, Tudor has been pretty busy. They earlier filed numerous 13G's with the SEC, amending a bunch of their holdings. Additionally, we just learned that they will be starting a new Momentum Fund. They still of course have their main flagship BVI Global fund that finished 2008 -4.5% as noted in our 2008 hedge fund performance numbers. Keep in mind that as of right now, Tudor has only a miniscule amount of their overall portfolio allocated to equities. They are a multi-billion dollar firm and only have equity exposure of a few hundred million, as detailed below.

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


Some New Positions (Brand new positions that they initiated in the last quarter):
Kraft (KFT)
Genentech (DNA)
Prudential (PRU)
Harris (HRS)
Amylin (AMLN)
Monsanto (MON)
Metlife (MET)
Semiconductor Holdrs (SMH)
State Street (STT)
Berkshire Hathaway (BRK-A)
CIT Group (CIT)
Mastercard (MA)
Blackrock (BLK)
Teva (TEVA)
Vertex Pharma (VRTX)
Wendys (WEN)
Cigna (CI)
Citigroup (C)
Devon Energy (DVN)
Corning (GLW)
SLM (SLM)
Select Sector Industrial (XLI)
Market Vectors Agribusiness (MOO)
Sandisk (SNDK)
Legg Mason (LM)
Agilent (A)
US Steel (X)
Potash (POT)
Och Ziff (OZM)
Onyx Pharma (ONXX)


Some Increased Positions (A few positions they already owned but added shares to)
Select Sector Energy (XLE): Increased by 165%
Select Sector Healthcare (XLV): Increased by 137%
Dell (DELL): Increased by 61%
Select Sector Financial (XLF): Increased position by 57%
Hartford Financial (HIG): Increased by 31%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Activision Blizzard (ATVI): Reduced by 95%
Invesco (IVZ): Reduced by 92%
Coach (COH): Reduced by 61%
Wyeth (WYE): Reduced by 31%
3Com (COMS): Reduced by 26%
Ishares Emerging Markets (EEM): Reduced by 18.5%
Select Sector Technology (XLK): Reduced by 13.6%


Removed Positions (Positions they sold out of completely)
SPDR Gold Trust (GLD)
Willis Group (WSH)
NBTY (NTY)
Select Sector Materials (XLB)
Jamba (JMBA)
Tenet (THC)
Petroleo Brasileiro (PBR)
Ico Global (ICOG)
Viacom (VIA-B)
JPMorgan Chase (JPM)
Theravance (THRX)
American Eagle Outfitters (AEO)
RCN (RCNI) Calls
Accenture (ACN)
Pfizer (PFE)
Select Sector Consumer Staples (XLP)
Ishares China (FXI)
Cisco (CSCO)
Macrovision (MVSN)
Terrestar (TSTR)
Fomento Economico (FMX)
Ishares S. Korea (EWY)
Home Inns & Hotels (HMIN)
Fibertower (FTWR)
Fidelity Info (FIS)
KBW Bank ETF (KBE)
Heinz (HNZ)
Anadarko Petroleum (APC)
Ishares Japan (EWJ)
Plains Exploration (PXP)


Top 20 Holdings (by % of portfolio)

1. Kraft Foods (KFT): 9.83% of portfolio
2. Progenics Pharma (PGNX): 6.97% of portfolio
3. Genentech (DNA): 5.88% of portfolio
4. Prudential Financial (PRU): 4.98% of portfolio
5. Harris Corp (HRS): 4.86% of portfolio
6. Amylin Pharma (AMLN): 4.81% of portfolio
7. Wyeth (WYE): 4.53% of portfolio
8. Monsanto (MON): 3.73% of portfolio
9. Metlife (MET): 3.59% of portfolio
10. Semiconductor Holdrs (SMH): 3.54% of portfolio
11. State Street (STT): 3.29% of portfolio
12. Mako Surgical (MAKO): 3.16% of portfolio
13. Berkshire Hathaway (BRK-A): 2.88% of portfolio
14. Select Sector Technology (XLK): 2.56% of portfolio
15. CIT Group (CIT): 2.47% of portfolio
16. Select Sector Financial (XLF): 1.87% of portfolio
17. Mastercard (MA): 1.72% of portfolio
18. Blackrock (BLK): 1.7% of portfolio
19. Select Sector Energy (XLE): 1.69% of portfolio
20. Taleo Corporation (TLEO): 1.68% of portfolio

Last quarter, Tudor didn't have a large percentage of their assets in equity markets. And, this quarter, that trend continued. Assets from the collective long US equity, options, and note holdings were $452 million last quarter and were $334 million this quarter. As we mentioned in the beginning, due to their global macro nature, they are invested in all kinds of markets. And, more often than not, equity exposure takes a backseat to currencies, commodities, futures, and the like. But, at the same time, they had been ratcheting down their equity exposure as things started to deteriorate in the stock market, a wise move. This is one major advantage of the global macro strategy. They are nimble and move wherever they see opportunity. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Peter Thiel's Clarium Capital, Bret Barakett's Tremblant Capital, David Stemerman's Conatus Capital, James Pallotta's Raptor Capital Management, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Bruce Kovner's Caxton Associates. Look for our updates as we will be covering a new fund each day.

Tudor Investment Corp Opens Momentum Fund

Tudor Investment Corp, the global macro hedge fund firm ran by legendary trader Paul Tudor Jones has opened its Momentum Fund. The fund, ran by Steve Evans (who also runs their Tensor fund) will trade in all sorts of futures markets. Both the Tensor and now Momentum fund use computer models and Steve Evans has seemingly done well for himself. Tudor's futures fund returned 36% last year in a market covered in red and the Tensor fund has seen 15% returns each year since it began trading in 2005.

There has been some shuffling around at Tudor as they continue to go about business. They still of course have their main flagship BVI Global fund that finished 2008 -4.5% as noted in our 2008 hedge fund performance numbers. But, James Pallotta, who was in charge of their equity focused Raptor fund has left Tudor to start his own fund. Just a few weeks ago, we noted they were shuffling around their equities portfolio as they amended numerous filings.

For insightful thoughts from Paul Tudor Jones himself, head over to our post on Hedge Fund manager interviews or our post on quotes from PTJ.

Tudor Investment Corp Updates 8 Positions Via Amended 13G Filings

Hedge Fund Tudor Investment Corp ran by Paul Tudor Jones has just filed 8 separate amended 13G filings with the SEC due to activity on December 31st, 2008. They have previously held positions in all of these names and have adjusted them. Here are the position updates (in no particular order):

1. They now show a 0.04% ownership stake in Terrestar (TSTR) with 42,798 shares.
2. 1.9% ownership stake in BigString(BSGC) with 995,712 shares.
3. 0.6% ownership stake in Fibertower (FTWR) with 876,958 shares.
4. 1.2% stake in International Fight League (IFLI) with 955,886 shares.
5. 9.7% ownership stake in Progenics Pharmaceuticals (PGNX) with 2,888,513 shares.
6. 1% stake in ULURU (ULU) with 628,873 shares.
7. 12.6% stake in Enherent Corp (ENHT) with 6,593,336 shares.
8. 1% stake in KIT Digital (KITD) with 1,182,527 shares.
   

If you missed it back in late January, Tudor also filed numerous 13Ds on some other positions. If you're unfamiliar with Tudor, then here is his bio from Wikipedia,

"In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems."

So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of the macro trader. If you want to hear some insightful thoughts from Paul Tudor Jones himself, head over to our post on Hedge Fund manager interviews or our post on quotes from PTJ. We've also covered their 13F filing which details their entire portfolio. 2008 was a mixed year for them, depending on which funds you were invested in. Their Raptor global equities fund finished '08 -20%, their flagship Global BVI fund finished -4.9%, and their Tensor fund (quant) ended +35.4% as we noted in our year end hedge fund performance numbers.


Company bios taken from Google Finance,

TerreStar Corporation, "formerly Motient Corporation is in the integrated satellite wireless communications business through its ownership of TerreStar Networks Inc. (TerreStar Networks), its principal operating entity, and TerreStar Global Ltd. (TerreStar Global)."

BigString Corporation is "a technology company focused on providing online communications. The Company provides a technology that would allow the user of e-mail services to have control, security and privacy relating to the e-mail generated by the user."

FiberTower Corp is "a provider of facilities-based backhaul services to wireless carriers. The Company utilizes its wireless spectrum assets to provide backhaul services through a hybrid radio/fiber network architecture."

International Fight League, Inc. is "a sports entertainment company that uses its professional mixed martial arts (MMA) sports league, known as the International Fight League (IFL), as a platform to generate revenues from spectator attendance at live events, broadcast of television programming, sponsorships and licensing."

Progenics Pharmaceuticals, Inc. (Progenics) is "a biopharmaceutical company focusing on the development and commercialization of therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases."

ULURU Inc. is "a pharmaceutical company focused on advancing topical drug delivery and engaged in the development of wound care, plastic surgery, and topically applied therapeutics based primarily on the adaptation of existing therapeutic agents using its drug delivery platforms."

Enherent Corp. is "an information technology services firm with a primary focus of providing clients with consultative and technology staffing resources; and teams of technical consultants trained in the delivery of solutions related to systems integration, network and security, and application services."

KIT digital, Inc. (KIT Digital), "formerly ROO Group, Inc., through its subsidiaries, is engaged in the business of providing Internet software products and solutions that enable its customers to distribute video content through Internet Websites and mobile devices."

Tudor Investment Corp (Paul Tudor Jones) Files 13D's

Paul Tudor Jones' hedge fund Tudor Investment Corp has filed 2 separate amended 13D's with the SEC. Firstly, Tudor has disclosed a 19.4% ownership stake in Uni-Pixel (UNXL). This stake is derived from their ownership of 769,974 Series B Convertible Preferred Stock (which are convertible into 3,849,870 common stock shares), as well as 1,645,647 warrants to purchase common stock. They currently own 5,495,517 shares. The filing was made due to activity on December 31st, 2008. You can view the rest of Tudor's portfolio holdings here.

Secondly, Tudor also disclosed a 12.9% ownership stake in Incentra Solutions (ICNS). They currrently own 3,320,203 shares of common stock and 903,994 shares of Series A Preferred Stock that, if converted, would give them 2,711,982 additional shares of common stock.

About Tudor: Taken from Wikipedia, the bio of PTJ is as follows, "In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems." So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of the macro trader. If you want to hear some insightful thoughts from Paul Tudor Jones himself, head over to our post on Hedge Fund manager interviews or our post on quotes from PTJ. Tudor's 13F filing disclosing their portfolio positions can be found here.

Taken from Google Finance,

Incentra Solutions is "a provider of information technology (IT) services and solutions to enterprises and managed service providers in North America and Europe. Solutions offered by the Company include hardware and software products, maintenance contracts, professional services, recurring managed services and capital financing solutions."

Taken from their company website,

UniPixel "intends to become the core developer and licensor of the highest performance and most efficient display panel technologies in the industry. These display panel technologies will enhance the application devices to which they are incorporated delivering superior results to the end users of the devices."

Global Macro Hedge Funds Returning to Their Roots

If someone was asked to name a fund in the global macro game, undoubtedly Tudor Investment Corp or Moore Capital Management would be some of the most frequent responses. The global macro strategy has fared well in the world of hedge funds. Paul Tudor Jones' Tudor Investment Corp has earned an annualized return of greater than 20% over the span of two decades. Louis Bacon's of Moore Capital Management shares the same accolade. And, while they are both down this year, they have fared much better relative to many of their peers and the market indexes in general. Tudor's flagship fund finds itself -5% for the year, while Moore was -2.9% year-to-date through November as we noted in our November hedge fund performance update. But, in a never-ending quest for outperformance, Tudor and Bacon want more. And, in order to accomplish that, they see it fit to return to their roots.

Taken from Moore Capital Management's latest letter to investors, Bacon wrote,

"...We had become disheartened by the complexity of our portfolio given our results and took decisive steps to change our format....
...The combination of a streamlined and liquid portfolio, high cash balances and mostly macro-oriented managers has allowed us to focus on the opportunities in a macro period that is going to continue to be of historic proportions..."

Moore's funds saw requests for redemptions to the tune of 8% of the fund's assets. Bacon seemed worried that his firm had become almost 'too diversified' and had become overstretched, trying to hit every idea. Bacon noted that he will cease private equity investments and will allocate more money to his global macro traders and equity investment team. This decision comes as a polar opposite to what we've recently seen in Moore's portfolio. Their equity holdings decreased from $4.45 billion two quarters prior to only $1.36 billion this past quarter. So, as Bacon has noted, we should see a change there in the coming months and year.

Paul Tudor Jones shares similar thoughts to his global macro colleague. Recently, Tudor halted withdrawals from its Global BVI Fund, in an effort to separate illiquid from liquid assets. Much like Moore Capital Management, Tudor was out decreasing equity exposure across the board last quarter, as we noted in our latest update of Tudor's portfolio.

In his letter to investors, Tudor talked about returning to the global macro roots he built his firm upon, writing,

"Those of you who have visited recently have heard me refer to this return to our roots as back to the future."

Overall, global macro funds have weathered the storm relatively well this year. In part, this is due to their ability to maneuver between multiple markets, wherever they see opportunity. And, unless equity indexes can ramp up and lend a hand to value oriented players, we think macro funds will continue to be poised to outperform relative to their peers and the markets in general; especially as they cease to outstretch themselves and return to their roots.



Source: Bloomberg