Glenview Capital Q4 Letter on McDonald's, T-Mobile, Auto Dealers & More

Larry Robbins' hedge fund firm, Glenview Capital, is out with its fourth quarter letter to investors. Glenview's Opportunity Fund returned 25.25% net in 2014. 

In the letter, Robbins outlines his thesis on auto dealers (Group 1 Automotive ~ GPI), Flextronics (FLEX), McDonald's (MCD), PHH (PHH), T-Mobile (TMUS), and pharma roll-up plays like Actavis (ACT) and Endo (ENDP).


Glenview's Q4 Letter Takeaways

On McDonald's (MCD):  This is a new stake for Glenview and they feel there's basically 5 ways to make a 'happy meal' to help the company: operational turnaround, SGA rationalization, refranchising, additional leverage, and real estate.  They feel this could trade as high as $169 (currently trades around $99.)

On MCD, Robbins writes, "Fundamentally, McDonald’s has a number of characteristics that we look for in good businesses. Approximately 75% of EBITDA is driven by royalties and rent, which is a secure, stable earnings stream free of operating leverage. Food, in general, is a defensive end market, and McDonald’s positioning at the value end of the spectrum provides further insulation from material cyclicality as evidenced by positive same store sales in the U.S. and positive consolidated EPS growth in every year throughout the last recession."


On T-Mobile (TMUS): Glenview has owned this company since 2013 but bought more shares in December 2014.  They feel the company has a few positive things going for it to continue its growth: aggressively going after new subscribers, deploying spectrum to address new customers, and seeing positive FCF generation this year. 

They also like that the company is a "key strategic asset" and that their parent company Deutsche Telekom is looking to sell.  Glenview feels TMUS could either: try to tie-up with Dish Network and their spectrum, seek a sale to a foreign buyer, or again try to merge with Sprint once a new political administration takes office in 2016.


Embedded below is Glenview's Q4 letter:



For more from this hedge fund, yesterday we posted up some more of Glenview's recent portfolio activity.

Glenview Capital Increases PHH & Teradyne Stakes

Larry Robbins' hedge fund Glenview Capital has filed two 13G's with the SEC recently.


Increases PHH Corp (PHH) Stake

First, Glenview has disclosed a 7.59% ownership stake in PHH Corp (PHH) with over 3.85 million shares.  This means that Robbins boosted his position by 1 million shares since the end of the third quarter.  The filing was made due to activity on November 21st.

The company has a large share buyback program in place, a common link in many of Robbins' investments these days.

Per Google Finance, PHH is "an outsource provider of mortgage and fleet management services. PHH operates in three segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company provides mortgage banking services to a range of clients, including financial institutions and real estate brokers, throughout the United States. The Company’s mortgage banking activities include originating, purchasing, selling and servicing mortgage loans through its wholly owned subsidiary, PHH Mortgage Corporation and its subsidiaries (collectively PHH Mortgage). It provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary."


Boosts Teradyne (TER) Position

Second, Glenview has revealed a 5.53% ownership stake in Teradyne (TER) with over 11.9 million shares.  They've boosted their holdings in the company by over 4 million shares since the end of Q3.  The 13G filed with the SEC was required due to portfolio activity on November 6th.

Robbins recently pitched TER at the Invest For Kids Chicago conference.

Per Google Finance, Teradyne is "a supplier of automatic test equipment. The Company designs, develops, manufactures and sells automatic test systems and solutions used to test semiconductors, wireless products, hard disk drives and circuit boards in the consumer electronics, wireless, automotive, industrial, computing, communications and aerospace and defense industries. The Company's automatic test equipment products and services include semiconductor test systems, wireless test systems, and military or aerospace test instrumentation and systems, storage test systems, and circuit-board test and inspection systems. The Company’s customer base includes integrated device manufacturers, outsourced semiconductor assembly and test providers, wafer foundries, fabless companies, developers of wireless devices and consumer electronics, manufacturers of circuit boards, automotive suppliers, wireless product manufacturers, storage device manufacturers, and aerospace and military contractors."


For more from this hedge fund manager, head to Larry Robbins' presentation at Capitalize For Kids Sohn Canada.

Citadel Ups Position in PHH Corp

Ken Griffin's Citadel has filed an amended 13G with the SEC regarding shares of PHH (PHH).  Per the filing, Citadel now owns 9.6% of the company with over 5.5 million shares.

This marks an increase of over 3.9 million shares in their position size since the end of the first quarter.  The filing was made due to activity on July 8th.  PHH recently said they would repurchase around 35% of shares.

Per Google Finance, PHH is "an outsource provider of mortgage and fleet management services. PHH operates in three segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company provides mortgage banking services to a range of clients, including financial institutions and real estate brokers, throughout the United States. The Company’s mortgage banking activities include originating, purchasing, selling and servicing mortgage loans through its wholly owned subsidiary, PHH Mortgage Corporation and its subsidiaries (collectively PHH Mortgage). It provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary. In July 2014, PHH sold its Fleet Management Services business, doing business as PHH Arval, to Element Financial Corporation."

Senator Investment Group Adds to PHH Position

Alex Klabin and Doug Silverman's hedge fund Senator Investment Group recently filed a 13G with the SEC regarding shares of PHH (PHH).  Per the filing, Senator now owns 7.6% of the company with 4,391,007 shares.

The fine print of the filing shows that this stake is inclusive of notes convertible into 391,007 shares.  The filing was required due to activity on September 20th and this updated stake includes over 1.9 million more shares than they had at the end of the second quarter.

Per Google Finance, PHH is "an outsource provider of mortgage and fleet management services. PHH operates in three segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company provides mortgage banking services to clients, including financial institutions and real estate brokers, throughout the United States. The Company’s mortgage banking activities include originating, purchasing, selling and servicing mortgage loans through its wholly owned subsidiary, PHH Mortgage Corporation and its subsidiaries (PHH Mortgages). It provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary, PHH Vehicle Management Services Group LLC (PHH VMS). PHH VMS is a fully integrated provider of fleet management services with a range of product offerings, including managing and leasing vehicle fleets and providing other fee-based services for its clients’ vehicle fleets."

Larry Robbins' Glenview Capital Aggressively Adds PHH

Larry Robbins' hedge fund firm Glenview Capital just filed a 13G with the SEC regarding shares of PHH Corp (PHH). Due to portfolio activity on July 8th, 2010, Glenview has disclosed a 5.23% ownership stake in the company with 2,898,578 shares. This is an increase in their stake as they owned 1,012,464 shares back on March 31st, 2010. Glenview has boosted its position by 186%, adding 1,886,114 more shares. In terms of other hedge funds invested in PHH, we've noted for a while that Dan Loeb's Third Point holds a position as well.

For other investment ideas from this hedge fund, Larry Robbins recently highlighted some plays at the Ira Sohn Conference. Additionally, we've previously highlighted Robbins' thoughts on the case for global equities in 2010 at a hedge fund panel.

Taken from Google Finance, PHH Corporation "conducts its business through three operating segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company's Mortgage Production segment originates, purchases and sells mortgage loans through PHH Mortgage Corporation and its subsidiaries (PHH Mortgage). Its Mortgage Servicing segment services mortgage loans originated by PHH Mortgage and PHH Home Loans, purchases MSRs and acts as a subservicer for certain clients that own the underlying mortgage servicing rights (MSRs). The Company’s Fleet Management Services segment provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary, PHH Vehicle Management Services Group LLC."

For more from hedge fund Glenview, head to Robbins' other stock picks.

Latest Exposure Levels From Dan Loeb's Hedge Fund Third Point LLC

Dan Loeb's Offshore Fund at Third Point LLC recently released its latest performance and exposure breakdown. Loeb's hedge fund is worth following simply for this fact: it's generated an annualized return of 17.7% versus 4.1% for the S&P 500 since December 1996. Not to mention, they've done so with a correlation to the S&P of 0.40. Needless to say, those are impressive figures. Those of you desiring to follow in his footsteps can check out Dan Loeb's recommended reading list for wisdom.

For the month of June 2010, Third Point was down 2.0% largely due to their long equity positions in financials. Yet, despite the rough month, they are still up 10.2% for 2010. As of last tally, their Offshore Fund managed $1.793 billion. So while hedge funds had a brutal May, it looks like June was also a losing month for many big players.

Now, to the good stuff: the portfolio breakdown. We've covered countless times how Loeb's fund has been net long distressed debt. This trend remains unchanged. Third Point is 25.1% net long distressed credit and 19.8% net long MBS. While their distressed exposure contributed to negative performance in June, their MBS exposure contributed positively.

Here are Third Point's top positions (keep in mind they own multiple securities in each of these names):

- Chrysler
- Delphi Corp
- CIT Group
- Dana Holding
- PHH Corp

As you'll notice from previous times we've covered Loeb's portfolio, his top holdings remain pretty much unchanged. In equities, Loeb's hedge fund has their largest net long exposure in financials (at 7.8% net long) followed by consumer names (at 4.7% net long). In terms of total long/short exposure, Third Point is 37.9% net long equities and -12.2% short, leaving them 25.7% net long. This is slightly below the average hedge fund exposure levels of around 30% net long. Geographically speaking, Third Point continues to be net short Asia at -1%. They are net long the Americas to the tune of 87% and Europe to the tune of 13%.

In the equity realm, Loeb made note in a recent letter that Third Point still fancies post-bankruptcy equities, deeming them cheap. We'll have to see if any new positions pop in that regard when their next 13F filing is released in a month or so. Loeb's top winning positions last month included two shorts, Icelandic Bank debt, 'Asset Backed Security A', and Novartis/Alcon arbitrage. His top losers were PHH Corp (multiple securities), Liberty Media Interactive, Macy's, Lyondell, and CIT Group (multiple securities). Touching on some of those specific names, you'll recall that Jamie Dinan of York Capital recently stated he was bullish on Lyondell at the Ira Sohn Investment Conference (notes from the event here). Many hedge funds also own a position in Liberty Media and it appears on Goldman Sachs' VIP list. Lastly, you'll recall that David Einhorn's Greenlight Capital has a large CIT stake.

That wraps up notable information from Third Point's latest update. Be sure to savor these broad portfolio updates from Third Point as it's really all you'll get based on Loeb's new philosophy. Per his recent investor letter, his hedge fund won't be talking about their new positions until *after* they've been publicly disclosed via 13F filings. As such, these sector breakdowns are all we'll get in the mean time. As always though, we'll continue to monitor the SEC filings like a hawk. Recent disclosures made by Third Point in that regard include a stake in Xerium Technologies as well as a newly revealed position in Roomstore.

For more resources from Third Point, we of course point you to Dan Loeb's recommended reading list.

Dan Loeb's Hedge Fund Third Point Starts Multiple New Positions, Exits Citigroup: 13F Filing Q1 2010

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

Next up is Dan Loeb's hedge fund Third Point LLC. Loeb started his hedge fund with $3.3 million in 1995 and today manages billions with a focus on event-driven and value oriented investments. In the time elapsed since the 13F filing, keep in mind that Third Point has been selling Nabi Biopharma (NABI) and Loeb recently gave commentary on event-driven opportunities in Third Point's investor letter. Since inception, they've seen greater than 15% annual returns. For 2009, Third Point's Offshore fund was up 38.6% and their Ultra fund up 44.2% as noted in our list of hedge fund performance numbers.

Before we proceed, keep in mind that Loeb owns other asset classes that aren't required in these disclosures such as company debt, mortgage backed securities, etc. We recently detailed Loeb's exposure to these assets in our portfolio update on Third Point. To learn how to invest like this hedge fund manager, check out Dan Loeb's recommended reading.

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


Brand New Positions
Liberty Interactive (LINTA)
OSI Pharmaceutical (OSIP)
Airgas (AIRG)
Walgreen (WAG)
Coca Cola Enterprise (CCE)
Aspen Technology (AZPN)
Pall (PLL)
Alcon (ACL)
Toyota Motor (TM)
Phillips Van Heusen (PVH)
RF Micro (RFMD)
Lear (LEA)
Brocade Communications (BRCD)
Madison Square Garden (MSG) ~ resulting from the spin-off of Cablevision shares they previously owned
Macys (M)
Alkermes (ALKS)
Washington Post (WPO)
Vivus (VVUS)
Kraft (KFT)
Abraxas Petro (ABP)


Increased Positions
Xerox (XRX): Increased position size by 75%
Advanced Micro Devices (AMD): Increased by 50%
CIT Group (CIT): Increased by 34.3%
Popular (BPOP): Increased by 25%
Wellpoint (WLP): Increased by 18.2%


Reduced Positions
Phoenix Companies (PNX): Reduced position size by 76.3%
Dana Corp (DAN): Reduced by 68.8%
Nabi Biophamaceuticals (NABI): Reduced by 14.2% ~ Third Point has since sold more


Positions They Sold Out of Completely
Citigroup (C)
Cablevision (CVC)
Energy Partners (EPL)
Coinstar (CSTR)
Yahoo (YHOO)
Liberty Entertainment (LSTAV)
Hewlett Packard (HPQ)
Pepsi Bottling Group (PBG) ~ inactive due to merger
Pepsiamericas (PAS) ~ same
Capitalsource (CSE)
Greenlight Capital Re (GLRE)
American Water Works (AWK)
Pain Therapeutics (PTIE)
Life Partners (LPHI)
Barclays (BCS)
TCW Strategic (TSI)


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

1. PHH Corp (PHH): 7.6%
2. Transdigm (TDG): 6.8%
3. CIT Group (CIT): 6.5%
4. Wellpoint (WLP): 6%
5. Health Net (HNT): 5.3%
6. Liberty Interactive (LINTA): 5.2%
7. OSI Pharmaceutical (OSIP): 5.1%
8. Xerox (XRX): 4.9%
9. Airgas (ARG): 4.2%
10. Walgreen (WAG): 4.0%
11. Coca Cola Enterprises (CCE): 4%
12. Mead Johnson Nutrition (MJN): 3.7%
13. Aspen Technology (AZPN): 3.7%
14. Pall (PLL): 2.9%
15. Popular (BPOP): 2.6%

Before we analyze some of their moves we need to immediately point out that the 'top positions' above are merely their top equity positions and not Third Point's 'top positions' at the hedge fund overall. According to our Third Point portfolio breakdown, Loeb's largest positions are actually via multiple securities (debt, equity, etc) in Chrysler, Delphi, CIT Group, Dana Holding, and PHH. So, just keep in mind that some of his debt positions are actually the largest positions in Third Point's portfolio.

One of the main things that caught our eye was Loeb's sale of Capitalsource (CSE). Third Point had previously held a position and now joins a slew of other hedgies that sold out of CSE in the first quarter. Interestingly enough, Seth Klarman's Baupost Group still holds their CSE equity stake though. We also highlight Loeb's exit from Citigroup (C) because in the fourth quarter of 2009 it was their second largest US equity position.

In the first quarter, Loeb's hedge fund started sizable new stakes in Liberty Interactive and OSI Pharm, positions that were Third Point's sixth and seventh largest US equity holdings. In fact, the vast majority of Third Point's top equity holdings are new positions they started in Q1 including Airgas, Walgreen, Coca Cola Enterprise, Aspen Technology, and Pall.

Third Point's exit of PepsiAmericas and Pepsi Bottling Group is a result of a merger transaction with PepsiCo that closed. This is the perfect example of an event-driven play that Loeb typically seeks. We see that Third Point maintains a sizable position in Mead Johnson Nutrition (MJN) as well. We previously outlined Loeb's rationale behind MJN in a post: why hedge funds like Mead Johnson Nutrition. We're also starting to see numerous hedge funds that show new or increased positions in Xerox (XRX) as of the first quarter. Loeb's firm was one of them and so that might be something to keep an eye on as well.

David Einhorn must be pissed because Loeb sold out off Greenlight Capital Re, the reinsurance company Einhorn is chairman of. We're just kidding about the being pissed off part, but Third Point had previously owned GLRE for quite some time (although a very small position). On a serious note though, it seems as though Loeb and Einhorn agree on shares of CIT Group. As we saw earlier, Einhorn added to his CIT position. That about wraps up all the talking points from the first quarter so if you want more from Dan Loeb, make sure to check out his recommended reading list.

Assets reported on the 13F filing were $1.4 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for hedge fund tracking, replicating, and performance backtesting (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Bruce Berkowitz's Fairholme Capital Management, and Andreas Halvorsen's Viking Global. Be sure to check back daily for new hedge fund updates.

Dan Loeb's Third Point Likes Citigroup & Transdigm Group: 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 Dan Loeb's Third Point LLC. Third Point manages a series of hedge funds and focus on event driven and value oriented investments. Loeb started his hedge fund with $3.3 million in 1995 and today manages billions. To learn how to invest like a prominent hedge fund manager, check out Dan Loeb's recommended reading list. Additionally, we recommend watching a video of Dan Loeb giving some general investing advice.

Since inception, they've seen greater than 15% annual returns. For 2009, Third Point's Offshore fund was up 38.6% and their Ultra fund up 44.2% as noted in our list of hedge fund performance numbers. The positions listed below were their long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Brand New Positions
Citigroup (C)
CIT Group (CIT) ~ most likely a result of debt to equity conversion
Affiliated Comp (ACS)
Mead Johnson Nutrition (MJN)
Xerox (XRX)
Energy Partners (EPL) ~ likely a result of senior notes converting into equity
DirecTV (DTV) ~ a result of the Liberty Media merger
Yahoo (YHOO)
Liberty Media (LSTZA) ~ also a result of the Liberty Media merger
Advanced Micro Devices (AMD)
Pain Therapeutics (PTIE)
Life Partners (LPHI)
TCW Strategic (TSI)


Increased Positions
Coinstar (CSTR): Increased by 183.3%
Transdigm (TDG): Increased by 80%
Wellpoint (WLP): Increased by 37.5%
Capitalsource (CSE): Increased by 14.6%


Reduced Positions
American Water Works (AWK): Reduced by 75%
Greenlight Capital Re (GLRE): Reduced by 54%
Hewlett Packard (HPQ): Reduced by 50%
Popular (BPOP): Reduced by 43.7%


Removed Positions (Sold out completely):
Wyeth (inactive) ~ merger transaction complete
CF Industries (CF)
Liberty Acquisition (LIA)
Bank of America (BAC)
Molson Coors (TAP)
Pfizer (PFE)
Allergan (AGN)
Schering Plough (inactive) ~ merger transaction complete
Apple (AAPL)
Trian Acquisition (inactive)
Liberty Media (LSTZA)
Carefusion (CFN)
Anadrako Petroleum (APC)
First American (FAF)
Lions Gate (LGF)
Synaptics (SYNA)
Oracle (ORCL)
Resolute Energy (REN)
Alkermes (ALKS)
Blockbuster (BBI)
Stream Global (OOO)
Blockbuster b shares (BBI.B)
Loral Space (LORL)


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

1. Transdigm Group (TDG): 9.1%
   
2. Citigroup (C): 8.9%
   
3. PHH (PHH): 8.4%
   
4. Healthnet (HNT): 7.5%
   
5. Wellpoint (WLP): 6.9%
   
6. CIT Group (CIT): 5.2%
   
7. Affiliated Comp (ACS): 5.1%
   
8. Mead Johnson Nutrition (MJN): 4.7%
   
9. Cablevision (CVC): 4.1%
   
10. Xerox (XRX): 3.6%
    
11. Nabi Biopharmaceuticals (NABI): 3.6%
    
12. Energy Partners (EPL): 3%
    
13. Coinstar (CSTR): 2.5%
    
14. DirecTV (DTV): 2.5%
    
15. Depomed (DEPO): 2.4%
    

Third Point initiated quite a few brand new positions in the fourth quarter, but keep in mind that some of them are a result of coporate transactions. After all, Third Point focuses on event-driven strategies and often holds positions in numerous asset classes. Their CIT stake is most likely a result of a debt to equity conversion, while their positions in DTV and LSTZA are from the recent Liberty Media merger. Additionally, we detailed Third Point's new EPL position that was most likely a result of senior notes converting into equity.

Their Citigroup (C) stake is brand new and they brought it all the way up to their 2nd largest US equity long. Additionally, their brand new position in baby formula producer Mead Johnson (MJN) intrigued us because we're seeing more and more prominent hedge funds add MJN.

On the selling side, they dumped CF (previously their 3rd largest US equity holding), Bank of America which was previously their fifth largest, and Popular which was their sixth largest. Interestingly they only held their Popular (BPOP) stake for one quarter.

It was also interesting to see Loeb sell over half of his Greenlight Capital Re (GLRE) stake. This has always been a very small position for them, but they've held it for quite a long time so it was curious to see them all of a sudden adjust it. GLRE of course is the casualty and property reinsurer chaired by David Einhorn of hedge fund Greenlight Capital.

A major thing to keep in mind with Third Point is that the equities above are only one small portion of their portfolio. As we've learned in some of their past investor letters, Third Point has been active in distressed debt and other markets and those positions do not show up on 13F's. Assets reported on the 13F filing were $1 billion this quarter compared to $1.2 billion last quarter. 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, and Lee Ainslie's Maverick Capital. Check back daily for our new updates.

Dan Loeb's Third Point Starts New Stakes In Popular (BPOP), TransDigm (TDG), & Health Net (HNT)

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.

Next up in our series is Dan Loeb's Third Point LLC. Third Point is a multi-billion dollar hedge fund that has seen annual returns greater than 15% since inception. Manager Dan Loeb focuses on event driven and value oriented investments and recently said he feels "like a kid in a candy store" due to all the distressed opportunities. In his past letter to investors, Loeb noted that he liked selective automotive debt plays. As noted in our hedge fund performance numbers post, Third Point was up 6.4% for August and 5.1% for September and were up 27.8% year-to-date at that time. For more market insight, definitely check out Dan Loeb's recommended reading list. Loeb started the fund back in 1995 with around $3.3 million in seed capital and today manages a multi-billion dollar portfolio. For some of his market insight and general thoughts on the industry, check out this video of a speech he gave.

Keep in mind that the positions listed below were Third Point'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):
Listed by their largest new stake first, and descending down
Popular (BPOP)
Transdigm (TDG)
Healthnet (HNT)
Wellpoint (WLP)
Cablevision (CVC)
American Water Works (AWK)
CareFusion (CFN)
First American (FAF)
Synaptics (SYNA)
Dana Holding (DAN)
Coinstar (CSTR)
Capitalsource (CSE)
Barclays (BCS)
Alkermes (ALKS)
Blockbuster (BBI)
Blockbuster B shares (BBI.B)
Loral Space & Communication (LORL)


Some Increased Positions (Positions they already owned but added shares to)
Schering Plough (SGP): Increased by 300% - inactive now due to buyout
Molson Coors (TAP): Increased by 45.5%
Pfizer (PFE): Increased by 40.7%
Pepsi Bottling Group (PBG): Increased by 33.3%
PepsiAmericas (PAS): Increased by 25%
Wyeth (WYE): Increased by 24% - inactive now due to buyout


Some Reduced Positions (Some positions they sold shares in)
Bank of America (BAC): Reduced by 54.9%
Phoenix Companies (PNX): Reduced by 7.3%


Flat Positions (Stakes with no change in amount of shares owned since Q2)
Ligand Pharma (LGND), Oracle (ORCL), Biofuel Energy (BIOF), Trian Acquisition (TUX), Greenlight Capital Re (GLRE), Lions Gate Entertainment (LGF), Liberty Acquisition (LIA), Liberty Media (LMDIA), Allergan (AGN), Hewlett Packard (HPQ), Anadarko Petroleum (APC), Apple (AAPL), PHH (PHH), Depomed (DEPO), and Nabi Biopharma (NABI).


Removed Positions (Positions they sold out of completely)
Yahoo (YHOO)
Sun Microsystems (JAVA)
Transatlantic Holdings (TRH)
Quest Communications (Q)
Legg Mason (LMI)
Maguire Properties (MPG) - we had covered them selling back in July
Guaranty Financial (GFGFQ)


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

1. Wyeth (WYE): 15.2% (inactive, bought out by Pfizer)
   
2. PHH (PHH): 7.1%
3. CF Industries (CF): 5.5%
4. Liberty Acquisition (LIA): 5.2%
5. Bank of America (BAC): 4%
6. Popular (BPOP): 4%
7. Transdigm (TDG): 3.9%
8. HealthNet (HNT): 3.7%
9. Molson Coors (TAP): 3.1%
10. Pfizer (PFE): 3%
11. Wellpoint (WLP): 3%
12. Cablevision (CVC): 2.8%
13. Depomed (DEPO): 2.3%
14. Allergan (AGN): 2.2%
15. Hewlett Packard (HPQ): 2.2%
    

Overall, the vast majority of changes in Dan Loeb's portfolio were via either buying completely new stakes, or selling out of holdings entirely. There were only a few partial adjustments to the portfolio. In terms of brand new stakes, their positions in Popular (BPOP), Transdigm (TDG), and Healthnet (HNT) were all pretty large as they landed in the top 10 of Third Point's long US equity portfolio. It's also worth highlighting that their new stakes in Wellpoint (WLP) and Cablevision (CVC) were not far behind in terms of size either.

Notable positions that they sold completely out of include Yahoo (YHOO) and Sun Microsystems (JAVA). Those positions had previously been their 6th and 7th largest US equity holdings when we covered Loeb's portfolio in Q2 of this year. One position they still hold onto but did sell some of was their large stake in Bank of America (BAC). They just started that position last quarter and in one of his past investor letters, Loeb mentioned BAC could see ~$3 per share in normalized earnings power. It is interesting though that he has already sold more than half of his position.

You'll note the vast increase in their Schering Plough stake, but keep in mind that the security is now inactive as it was bought out by Merck earlier on. So, it appears that Loeb and company were playing the arbitrage of that buyout. In another arbitrage play, Third Point boosted their holdings in Wyeth (WYE) as they were set to be bought by Pfizer (PFE). And speaking of Pfizer, Third Point also increased their stake there and it is notable seeing how David Einhorn of hedge fund Greenlight Capital is also very fond of PFE.

Overall though, not terribly too much to report on in terms of portfolio changes as they continue to play their event driven game. Keep in mind that Third Point also operates in the distressed arenas and we cannot see those portfolio holdings as the SEC only requires hedge funds to file on their equity, options, and note positions in US markets. We have already covered the fact that Loeb was seeing tons of opportunities in the distressed space a few months back. So, just realize that these equities are not representative of their entire portfolio. In terms of other recent activity of out Loeb's fund, they filed a 13G on Energy Partners (EPL) not too long ago which we also detailed.

Assets from the collective holdings reported to the SEC via 13F filing were $1.2 billion this quarter compared to $901 million last quarter, so an increase of around $299 million or so invested on the long side in US equities and notes. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. Realistically, the position percentages are more watered down in their actual hedge fund portfolio.

This is just one of the 40+ prominent funds that we'll be covering in our Q3 2009 hedge fund portfolio series. We've already covered Seth Klarman's Baupost Group, Bill Ackman's Pershing Square, and Stephen Mandel's Lone Pine Capital. Check back daily as we'll be posting up a new hedge fund's portfolio each morning.