Nelson Peltz Not As Cautious As Others, Talks General Electric

Nelson Peltz of Trian Partners appeared on CNBC today and gave his view on the market and his holding General Electric (GE).

Peltz said that "I think Wall Street is talking themselves into a negative environment, and I think they're almost doing it unnecessarily."  He says earnings have been pretty good but revenue's been hard to get, but companies are realizing how much cost they can take out.


"I'm not a macro guy, but I think my portfolio's cheap.  I think you're gonna see a little growth in Europe this year for the first time."  He says Latin America is a problem, Europe is getting better, but 'who knows' on China.

On General Electric (GE), his largest holding, Peltz noted that GE has been a good performer since last year and he thinks "it's the best set of industrial assets on the planet.  85-90% of their revenue today is service revenue and if you look at the business peak to trough through the great recession and if you look at the businesses in there today, earnings were down 5%."

He doesn't know what the quarter's earnings are gonna be but he doesn't seem to care as he's "in this thing for a longtime."

Peltz also touched on Pepsi (PEP), which he's now out of.  They took $1 billion a year in costs out for 3 years in a row. 

On shareholder activism, Peltz floated an idea of 'private equity in public markets' where long-term owners hold stocks for longer periods of time while enacting positive change and helping a business grow.

He thinks Hillary Clinton wins the election and the market could stay where it is, unless she takes both Houses and then it'd go down.

We'll post up the video of the interview once it's released.  Be sure to also check out CNBC's interview with David Tepper from yesterday, as well as their conversation with Carl Icahn.

Nelson Peltz's Presentation on Mondelez at Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago 2013 is Nelson Peltz of Trian Fund Management.  He talked about his position in Mondelez (MDLZ).


Nelson Peltz's Presentation at Invest For Kids Chicago

•    Will talk about a Chicago company – Mondelez
•    Highlight why they own it and what the ability to drive value is
•    Like companies that cannot get disrupted and there is nothing more basic than packaged food
•    Cash growing
•    Like low private label exposure and global growth
•    Confectionary and snack
•    Private level and revenue growth are the two largest problems packaged food companies
•    Profit could rise more than 50% and EPS could double
•    Benefit of the split was creating a structure that would allow them to win
•    “Complexity lowers margins while simplicity raises margins”
•    New Kraft has 300 to 400 bps of better margin by removing layers of inefficient management
•    Mondelez is starting from lower base and can do even better
•    Exceptional emerging markets exposure – perhaps impossible to replicate
•    Most CPGs can’t figure out how to orient their products to local tastes & preferences
•    40% revenue from emerging markets
•    It has the brands, distribution, and consumers
•    Think margins could go from 12% to 18% based on peer comps by percentage of sales (lot of confectionary)
•    Working capital is a problem for Trian
•    Every target management has presented has been missed and missed large
•    EBIT margins are down over the last 6 months
•    2015 margins are 300 basis points too low
•    Margins and sales can both rise as proven by Gillette from 2001 to 2004, Hershey from 2008 to 2012 and many others…
•    Base case upside of 67%
•    Low case upside of 44%
•    Upside case upside of 93%
•    Trian has been in communication with Mondelez since July 2013 but communications not very constructive
•    Constantly evaluating all options

If you missed it in the past, we've posted up Trian's white paper on Pepsi & Mondelez.


Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

Trian Partners' PepsiCo White Paper: Nelson Peltz's PEP Thesis

Nelson Peltz's hedge fund firm Trian Partners today released a white paper on PepsiCo (PEP).  The activist investor owns $1.3 billion worth of shares and presented their thesis on PEP in a slideshow.

Trian argues that PepsiCo (PEP) is at a strategic crossroads and they've outlined 2 strategic alternatives to enhance shareholder value at the company.


Option A:  Merge PepsiCo With Mondelez

Merge PEP with Mondelex (MDLZ), creating a global snacks company.  This tie-up could lead to $175 of implied value per PEP share and approximately $72 of implied value per MDLZ share by the end of 2015.  It's also worth pointing out that Trian Partners owns a stake in MDLZ as well.


Option B: Split-Up PepsiCo 

If PEP doesn't pursue MDLZ, they argue the company should separate the snacks and beverages segments.  Under this scenario, they see $136 to $144 of implied value per PEP share by the end of 2015.


Embedded below is the full .pdf of Trian Partners' white paper and Nelson Peltz's analysis of PepsiCo:




You can download a .pdf copy here.

For more on these companies, don't miss Nelson Peltz's thoughts on PEP/MDLZ from the Delivering Alpha Conference today.

Nelson Peltz on PepsiCo, Mondelez & DuPont: Delivering Alpha Conference

Trian Partners' Nelson Peltz sat down at the Delivering Alpha Conference today and talked about PepsiCo (PEP), Mondelez (MDLZ) and Andrew Ross Sorkin revealed that Peltz has been building a position in DuPont (DD).

Back in April, we highlighted how Peltz took stakes in both PEP & MDLZ.  At the event today, he laid out two scenarios for PEP which he thinks the company should pursue:


On PepsiCo and Mondelez

1. PEP should buy Mondelez (MDLZ) for $35-38 per share.  MDLZ is part of the split from the old Kraft that broke up into Mondelez and Kraft Foods (KRFT).  MDLZ is seen as the fast growing snacks business (Cadbury etc).

The problem with MDLZ he says is operational.  He loves that the CEO made important strategic moves (splitting up the old Kraft entity), but notes that management really needs to boost margins to catch up with direct competitors.


2. Separate Pepsi's beverage side from its snacks business (FritoLay).  Peltz says that these businesses have dis-synergies and they would benefit from a split.  He says Pepsi's beverage side can go to a cashflow generating company run with appropriate leverage.

Then, Peltz noted that the FritoLay snacks business can flourish on its own and even possibly pursue an acquisition of MDLZ after a potential PEP break up since they're both in the snacks business.

Peltz did acknowledge the secular trend of consumers focusing more on healthy items.  He thinks this is more-so focused on sugary drinks, but does note that sweet/salty snacks could be vulnerable as well.


Peltz's New Stake in DuPont?

Andrew Ross Sorkin also said that sources are pointing to Peltz acquiring a stake in DuPont (DD).  Peltz wouldn't really add any color when asked about it (pun intended).

Embedded below is video of Peltz's interview:



For more on this investor, we've highlighted some of Peltz's trading activity here.


And for more summary of the Delivering Alpha Conference, head to:

- John Paulson on gold, real estate & merger arbitrage

- Best Ideas Panel with Mark Kingdon, Chris Hohn, Jim Chanos & Lee Cooperman

- Larry Robbins on healthcare

- Carl Icahn on activism

What We're Reading ~ Analytical Links 5/29/13

Is the U.S. the next hot 'emerging market'? [WSJ]

Margin debt hits a record [WSJ]

The bull case on Hertz Global (HTZ) [Barron's]

TripAdvisor's (TRIP) margins could expand after years of slimming [Trefis]

On cutting your losses [The Atlantic]

Goldman Sachs says AIG shares still most loved by hedge funds [Marketwatch]

On share repurchase fever [Capital Observer]

What happens when QE ends [AllStarCharts]

Searching for yield [Mebane Faber]

If you only know 5 things about investing, make it these [Motley Fool]

Bid on lunch with Warren Buffett [eBay]

Activist investors: let's do it my way [The Economist]

Atlas of public stocks: mapping all publicly listed companies [Simoleon Sense]

Embrace the business model that threatens you [Harvard Business Review]

Behavioral investing principles are more relevant than ever [Institutional Investor]

PepsiCo (PEP) resistance against activists looks futile [Reuters]

A rush to recruit young analysts only months on the job [Dealbook]

Studying the dark art of leaking deal talks [Dealbook]

House flipping back in style [WSJ]

Nelson Peltz's Trian Fund Management Discloses Mondelez & PepsiCo Stakes

Nelson Peltz's investment firm Trian Fund Management today filed an amended 13F filing with the SEC for the fourth quarter of 2012.  This filing, detailing positions as of December 31st, 2012 now shows that Trian had positions in Mondelez International (MDLZ) and PepsiCo (PEP) at the end of the year.

According to the filing, Trian's position in MDLZ totaled 19,415,193 shares at the time.  Their stake in PEP consisted of 3,932,663 shares.


Mondelez (MDLZ) Stake

It is extremely likely that this is not a new position for Trian and here's why:  Mondelez is a product of the Kraft split up into Kraft Foods (KRFT) and MDLZ in Q4.  Peltz's firm had been an owner of the old Kraft entity (old ticker KFT) back in the third quarter of 2012 per their 13F from that quarter.  KFT split up into KRFT and MDLZ on October 1st, 2012.

Trian's original 13F filing from the end of December did not show a stake in either entity, so many assumed that Trian had sold completely out of anything Kraft related in the fourth quarter.  However, their 13F also indicated that "confidential information has been omitted" from the filing and was filed separately with the SEC.

Fast forward to today when they file an amended 13F and all of a sudden a stake in Mondelez shows up again.  It then becomes clear that MDLZ (as well as PEP) were the confidential positions.  

As such, Trian most likely never sold MDLZ after they received shares from the Kraft spin-off and we assume they just didn't disclose the stake in their public 13F, but filed the position separately with the SEC.  While there's a chance they could have just bought shares in the open market post-spin, that seems less likely given their past ownership of the old Kraft entity pre-spin.

This week, we also highlighted that Bill Ackman's Pershing Square also filed an amended 13F from Q4 and also revealed a Mondelez position.  Also, hedge fund Scout Capital reported a large MDLZ stake at that time as well.


New PepsiCo (PEP) Stake: Seeking to Merge Companies?

Trian's position in Pepsi, on the other hand, is a brand new stake as they previously did not own any shares.  The Daily Telegraph has speculated that Peltz might potentially have plans to attempt to merge the two companies together.

At the same time, the piece mentions that Peltz could pursue activism with PepsiCo alone, potentially pushing them to split-up just like the old Kraft entity did. 

At the time the Telegraph piece was originally published, it was rumored that Trian had taken stakes in the companies.  And today, we get confirmation of those rumors via SEC filing.  We'll have to wait and see if Peltz has any activist tricks up his sleeve.

Grey Owl Capital on Investing in a Low-Return Environment: Q1 Letter

Jeff Erber and Grey Owl Capital are out with their Q1 letter to investors and in it they highlight how they're approaching investing in a low-return environment.  They're employing a three-pronged attack as follows:


1. Look for undervalued securities:  They've been "high-grading" their portfolio by buying cheaper, high quality US names.  This is a concept long echoed in commentary from Oaktree's Howard Marks as well as GMO's Jeremy Grantham for the past few years as rates have remained low for a prolonged period.

Here's what individual names Grey Owl's been trading in:

New stakes: Pepsico (PEP), Blackrock (BLK), BMC Software (BMC), and Excelon (EXC)
Added to existing stakes: eBay (EBAY)
Exited: Apollo Residential Mortgage (AMTG) and Western Union (WU)
Trimmed: Apollo Group (APOL), Bridge Point Education (BPI), Market Vectors Gold Miners (GDX), Lexmark (LXK), and Transocean (RIG).


2. Invest in short dated high-yield fixed income:  Given that the Fed has in the past signaled potentially raising rates in 2013, this short-dated approach makes sense.  They've purchased the following bonds (with full write-ups on each stake in the below letter):

MGM Resorts 6.75% 9/2012 - purchased in December 2011
CSC 5.5% 3/2013 - purchased in January
Western Alliance Bancorp 10% 9/2015 - purchased in early April


3. Hold plenty of dry powder anticipating better opportunities: This might look counterintuitive at first glance given that holding cash earns you practically nothing, especially in a low yield environment.  However, consider that many hedge fund managers often hold cash as a hedge and as a utility to deploy when better investment opportunities arise. That's exactly what Grey Owl has done as they've deemed the current set of opportunities less desirable and they think better prices to buy at lie ahead.


Embedded below is Grey Owl Capital Managment's Q1 letter & you can download a .pdf here:




For more investor letters we've posted up Dan Loeb's Third Point Q1 letter as well as Passport Capital's letter.

Doug Grey's Presentation on the Cost of Money: Value Investing Congress

Continuing our coverage, today we're posting up more notes from the Value Investing Congress.  Below are notes and the slideshow presentation from Doug Grey of Saddle Peak Asset Management.  His presentation focused on how current interest rates are distorting things and highlighted PepsiCo (PEP).

PEP: Too cheap? Value investors must now look at the macro picture.  Pepsi is just an example to discuss how the current interest rate picture is distorting things.  Bernanke:  Fed view is the flow (buying and/or selling) that dictates the price or level of interest rates, not the quantity of securities held.

Pepsi cost of money in 2002 was 7%, now cost is 2%.  Value = EPS / (r - g).  With r plummeting 5% there is a significant implication on allocation of capital.  So, interest rates make a significance in these valuation matters.  CFO of Pepsi should be borrowing money to buy stock.  Institutional investors should think about actuarial rate considerations.

Discount rate lowered from 7.75% to 7.5%.  Saddle Peak - straightforward - use leverage (i.e. in the money calls).  Hedge interest rate risk with ETFs and interest rate futures.  "All it takes is guts because no one can tell you when interest rates turn around ... just be what you should be - a patient value investor."  The above notes are courtesy of Kyle Mowery from GrizzlyRock Capital.


Question & Answer Session

Own Pepsi - biased to high quality, growing businesses: American Express (AXP), GM (GM), Caterpillar (CAT), Halliburton (HAL) ~ 12% of his portfolio, and Exxon Mobil (XOM).

Oil drillers like HAL is cheapest way to play natural gas.

Use of options versus equity - they buy long dated in the money calls.  Black Scholes does not accurately price long dated options - rather intrinsic value growth makes these long dated calls very cheap.


Embedded below is Doug Grey's presentation on Pepsi & interest rates:




Be sure to click here for other presentations from the Value Investing Congress.

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.

Chase Coleman's Tiger Global: Portfolio Update (13F Filing)

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 next hedge fund in our series is Chase Coleman's Tiger Global. Coleman is a 'Tiger Cub' because he learned to ply his trade under mentor Julian Robertson at Tiger Management. However, Coleman is also a 'Tiger Seed' in that he is one of the few managers that Robertson actually seeded himself in an effort to recognize talent. Tiger Global is one of the hedge funds that comprises the Tiger Cub Portfolio created with Alphaclone where you can replicate their positions and enjoy 15.5% annualized returns since 2000.

Here's some Wall Street trivia for you: Which hedge fund manager is a descendant of Peter Stuyvesant, the man who built the wall that gave Wall Street its name? Yep, Chase Coleman. Chase attended Williams College and his focus in the markets has always been on smaller cap names and on technology. Although, he has since expanded his horizons. In 2007, Tiger Global returned 70%, and from 2001-2007 Coleman returned 47% on average. This year started off rough for Tiger as financial and REIT short positions hurt portfolio performance, something they talked about in a past investor letter. In terms of recent portfolio activity out of Tiger, we've seen them selling Longtop Financial shares for quite some time now.

Keep in mind that the positions listed below were Tiger's 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:
PepsiCo (PEP)
Monsanto (MON)
Yahoo (YHOO)
Electronic Arts (ERTS)
McDonalds (MCD)
Airvana (AIRV)


Some Increased Positions
Positions they already owned but added shares to:
Discovery Communications (DISCA): Increased position by 137.7%
ETrade Financial (ETFC): Increased by 80%
Cablevision (CVC): Increased by 2.8%
Transdigm (TDG): Increased by 25.4%
Qualcomm (QCOM): Increased by 22.3%


Some Reduced Positions
Stakes they sold shares in but still own:
Gushan (GU): Reduced position by 55.3%
Longtop Financial (LFT): Reduced by 52%
Priceline (PCLN): Reduced by 40%
Advisory Board Company (ABCO): Reduced by 35.4%
American Tower (AMT): Reduced by 31%
Apple (AAPL): Reduced by 29.3%
Teradata (TDC): Reduced by 27.4%
Visa (V): Reduced by 21.8%
Lorillard (LO): Reduced by 12%


Removed Positions
Positions they sold out of completely:
Philip Morris International (PM)
Gymboree (GYMB)
Partnerre (PRE)
Crown Holdings (CCK)
Broadridge (BR)
Altria Group (MO)
Green Mountain Coffee Roasters (GMCR)
Cognizant Technology (CTSH)
JPMorgan Chase (JPM)
Netezza (NZ)
Solarwinds (SWI)


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

1. Mastercard (MA): 10.31%
2. Google (GOOG): 10.02%
3. Lorillard (LO): 8.06%
4. Pepsico (PEP): 6.87%
5. Visa (V): 5.91%
6. Transdigm (TDG): 5.85%
7. Priceline (PCLN): 5.45%
8. Mercadolibre (MELI): 5.23%
9. Monsanto (MON): 5.12%
10. American Tower (AMT): 4.18%
11. Longtop Financial (LFT): 4.17%
12. Yahoo (YHOO): 4.04%
13. Discovery Communications (DISCK): 3.31%
14. Qualcomm (QCOM): 3.27%
15. Cablevision (CVC): 2.82%
    

Notable moves in hedge fund Tiger Global's portfolio include starting a brand new stake in PepsiCo (PEP) and bringing it up to their fourth largest holding. This could possibly be arbitrage driven as John Paulson's hedge fund Paulson & Co detailed some Pepsi arbitrage in their investor letter. Additionally, Tiger's new stakes in Yahoo (YHOO) and Monsanto (MON) were pretty sizable and are worth mentioning as well. Their position in Priceline (PCLN) certainly fared well for them as shares have risen sharply over the past few months. As such, they've reduced their position in it by 40%.

Another change worth mentioning is their continued selling of Longtop Financial. We've detailed those sales right after they've happened given that Tiger had to file amended 13D's on this position each time a major sale took place. They also sold off nearly a third of their American Tower (AMT) position and we mention this because shares of AMT have been a favorite stock amongst hedge funds, and particularly amongst Tiger Cub hedge funds. The only major position they sold completely out of was Philip Morris (PM), but even that was only a marginal position for them in the past, at 2.89% of the portfolio previously.

Assets from the collective holdings reported to the SEC via 13F filing were $2.38 billion this quarter compared to $2.15 billion last quarter. 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. Also, please again note that these positions were as of September 30th so two months have elapsed and they've undoubtedly shifted around their portfolio since then.

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 Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Dan Loeb's Third Point LLC, David Einhorn's Greenlight Capital, John Paulson's firm Paulson & Co, Lee Ainslie's Maverick Capital and Andreas Halvorsen's Viking Global so check back daily as we'll be covering new hedge fund portfolios.

Paulson & Co's Hedge Fund Investor Letter: Q3 2009

Dealbook has the latest investor letter from John Paulson's hedge fund firm Paulson & Co. In their third quarter 2009 letter, they give us an inside look at some of their portfolio holdings as well as a performance update on their hedge funds.

Unfortunately, the tools for the document have been disabled so you have to view it via the embedded version below (we recommend using the 'full screen' option). RSS & Email readers: you have to come to the site to read the Paulson letter.



As per the letter, Paulson executed many arbitrage and event driven plays given their background in that strategy. In particular, they reference the Wyeth/Pfizer deal which we've noted as a play that was ripe with hedge funds. Interestingly enough, Paulson & Co also had been playing arbitrage with Pepsi (PEP) and Pepsi Bottling Group (PBG). We highly recommend reading the letter above. And if you're looking for more material out of John Paulson's hedge fund, check out their 2008 annual investor letter as well.

Just two days ago, we took an in-depth look at Paulson's new offering, a gold fund. This is his latest wager and we'll have to see if he can win big twice in a row. In terms of other recent portfolio moves, we saw John Paulson beef up his stake in Cadbury (CBY), as well as file a 13D on Conseco (CNO). Stay tuned later this morning as we'll be doing our quarterly 13F analysis on Paulson & Co and will update all of their long equity portfolio holdings.