What We're Reading ~ 5/27/15

On investing in bad businesses [Aswath Damodaran]

10 non-investing quotes with great investing lessons [Clear Eyes Investing]

Kahneman: clients driven by losses, not gains [Think Advisor]

Mary Meeker's 2015 internet trends [Kleiner Perkins]

Qualcomm: the biggest bargain in large cap tech [Capital Observer]

Are declining businesses good shorts? [Young Money]

The ability to focus and make the best move when there are no good moves [Farnam Street]

Big cable is coming for big wireless [Bloomberg]

Charter's deal for Time Warner Cable is classic John Malone [FT]

Meet Altice founder Patrick Drahi [Venture Beat]

Inside the trillion dollar war on packaged food [Fortune]

What makes Danaher such a stock market star? [Bloomberg View]

Goldman on 7 trends that will reshape the auto industry [Bloomberg]

Sergio Marchionne: Detroit's chief instigator [NYTimes]

A look at Markel's Tom Gayner [WSJ]

Tech firms seek ways to fend off activist investors [WSJ]

'The Big Short' movie starts filming [WSJ]

Interview with Brunello Cucinelli, king of cashmere [PI]

JANA Partners Goes Activist on Qualcomm

Barry Rosenstein's hedge fund firm JANA Partners has gone activist on Qualcomm (QCOM).  They're looking for the company to spin off its chip unit from the patent licensing division and for the company to accelerate share repurchases.

Rosenstein was recently interviewed by David Faber at CNBC and said that, "What we think they ought to do is a transparent review of the client businesses, and determine whether or not it makes sense to do either a partial or full split.  So we are not definitely saying that they should split it up."

JANA now owns around $2 billion worth of Qualcomm shares

Embedded below is the video of Rosenstein's interview with CNBC:



For more from this hedge fund, we've highlighted other recent portfolio activity from JANA.

Sohn London Conference Notes 2013: Hohn, Armitage, Tangen, Gaonkar & More

The 2013 Sohn London Conference just took place and MarketFolly has notes below.  The event featured hedge fund managers presenting their latest investment ideas benefiting paediatric cancer and childhood disease research.


Sohn London Conference Notes 2013

Chris Hohn – The Children’s Investment Fund  

Following on from last week’s disclosure that TCI had bought a large part of the UK’s privatised post office, Royal Mail, in the secondary market, Hohn pitched two more privatisation ideas. He said that governments are the worst manager and that there are huge efficiency savings to be made in the aftermath of a privatisation.

Idea 1: Aurizon (Australia)  - Aurizon, formerly QR National, is a publically listed rail company in Australia. According to Hohn, Aurizon’s CEO, Lance Hockridge is a winner. Recent returns have been about 10% per year with 6% volume growth per year. The cost cutting potential is huge. Large scale redundancies are already underway. Aurizon was privatised with no debt, which Hohn said was ridiculous. Hohn implied that he has been pressing the company to re-lever and that he had had some success. Aurizon can have a double digit dividend within a couple of years. The company is a play on the Austrailian commodities market and the Chinese and Indian economic growth.

Idea 2: Long EADS  - Hohn noted that the company has had a bad record with investors – no one has made money for 30 years. Sometimes it pays to study the history of a company. He believes that the EADS will double and then triple profits in the coming years. Airbus is now competing well with Boeing. There is no chance of new competitors breaking into the market as safety concerns keep new entrants out. Pricing is increasing. Costs are falling as suppliers are squeezed for the first time. EADS is committed to 3.75bn euro of stock buybacks over the next 18 months. EADS 10x multiple can close the gap on Boeing’s 15 x multiple.



John Armitage - Egerton Capital  

Idea 1: Long Nordea (Sweden)  - Armitage said that Nordea is a simple, low risk stockpick which he referred to as a ‘teddy bear stock’ because it allowed him to sleep well at night. Nordea is the leading Scandinavian bank – being #1 or #2 in most Nordic countries. Nordea performed well in the financial crisis. The bank does not look for dynamic growth in earnings and that is its strength. Boring is good in the banking sector. Nordea will grow moderately in the future. Its market has oligopolistic qualities. Loan loss rates will drop for a prolonged period of time. Nordic banks are much better capitalised than their European or US counterparts. The dividend is likely rise over time.

Idea 2: Long Ocwen (OCN)  - Armitage said that whilst his first pick had been simple and straightforward, Ocwen was a far more complex and complicated situation. Ocwen is a mortgage servicing business which sits at the core of the difficulties that the US housing sector has faced since the financial crisis. In the US, mortgages are packaged and turned into bonds. Many of the loans made over the last decade or so are delinquent and have needed to be modified or foreclosed. Big banks have been overwhelmed and are often too unfocused to carry out the mortgage servicing task that Ocwen specialises in. Ocwen has a good technology platform which he referred to as a dialogue engine. It profiles a borrower’s ability to pay back mortgages. Making the appropriate loan modifications is a key driver of success or failure. Ocwen’s founders own 22% of the business. There will be growth in income from the existing portfolio of loans. They are producing $1.1bn of FCF. Some of that money will be used for stock buybacks which have recently been agreed. Ocwen are well placed to make acquisitions. Armitage believes that Ocwen will be able to deploy their existing expertise and technology to diversify into new markets such as car loans and subprime.  Note that Steve Eisman also pitched OCN at the Invest For Kids Chicago conference this week as well.


Nicolai Tangen – AKO Capital  

Idea: Long Experian  - Experian is the largest credit bureau in the world. It has a strong balance sheet and strong organic growth at 7%. They have lifted margin growth by 700 basis points in the last 6 years. Tangen believes margins will continue to increase in the future. Experian is selling credit data in more and more countries and the great thing about credit data is that you can often sell the same data several times. Demand for credit data has risen since the financial crisis as regulators have forced banks and other financial institutions to become more discerning about who they lend to. The rise of the internet and E-commerce is also creating demand for credit data. Experian has a significant moat as there are no other global players, just regional competitors. There are three players in the US but only 2 players in other countries. Experian is a safe play in as much as it has counter-cyclical qualities. Its gearing is falling rapidly as the cash keeps coming in.



Mala Gaonkar, Lone Pine Capital  

Mala Gaonkar is a co-portfolio manager at Lone Pine, a role she has held since 1998.

Idea: Long Qualcomm (NAS: QCOM)  - 3G & 4G wireless data and voice standards create two thirds of the business. The other one-third is from chips. Expect more unit growth in the smart phone market than most people assume. It will double in the next three years. Generally speaking, we will replace our smartphones more quickly than many analysts assume. The active broadband market is not yet mature. Royalty rates are resilient. QCOM has far more patents than their competitors. They will be able to diversify into new mobile devices in the future.  



Julian Sinclair – Talisman Global Asset Management

Idea 1: Long Tata Motors -  Sinclair valued Jaguar and Land Rover at around $17bn, the same as Tata’s market cap. Jaguar and Land Rover make up about 80% of Tata’s net worth so you get the other 20% for free. Jaguar and Land Rover are quintessential British brands. They are now competing well with the big German luxury brands in terms of quality and reliability. Tata is producing more reliable cars than it used to and that has been backed up by recent JD Power surveys. Tata is trading at 6x earnings. Sales are expected to expand by 20% during the next five years. There is potential for the share price to double Tata can even attain the double digit margins that Porsche has achieved. Tata is growing top line and bottom line simultaneously. Tata is also has potential as an emerging market recovery play.

Idea 2: Shared Appreciation Mortgages (SAMs)  SAMs are a form of mortgage backed security created in the late 1990s by banks like Barclays and Royal Bank of Scotland in the UK. Sinclair sees SAMs as the last great post-crisis credit trade. If house prices go up by 2-3% they will pay out 11% and if prices go up by more they will pay out even more. SAMs have a defensive quality too. If house prices were to fall by 5% SAMs would still pay out a similar return to Gilts (UK government bonds).



Eashwar Krishnan – Tybourne Capital Management  

Eashwar Krisnan spent 12 years as a Managing Director and Senior Analyst at Lone Pine. In 2007, he moved to Hong Kong to set up and manage Lone Pine’s operation in Asia. He set up his own fund  Tybourne Capital in 2012. Tybourne focuses mostly on equities in the consumer, financial and TMT   sectors in Asia.

Advertising in India is 20x cheaper than in the US. Over time the gap will narrow. TV dominates advertising spending in Asia. There is a favourable environment for investing in commercial TV businesses in Asia at the moment. Indonesians watch an average of 5 hours Television per day. He likes companies run by owner operators with skin in the game. Advertising growth rates can grow at double digits for many years.

Idea 1. Long Media Nusantara Citra MNC (Indonesia). Nusantara has 42% of audience share; it’s the industry price leader.

Idea 2. Long Surya Citra Media (Indonesia). Surya has 22% of primetime TV. It develops and owns content, which produces high returns on capital.

Idea 3. Long Zee Entertainment Enterprises (India)  - Zee is the #2 provider after Star owned by Fox (Tybourne hold Fox stock too). Zee will be a beneficiary of digitalisation. Two-thirds of TV viewers in India receive an analogue signal at present.

Idea 4. Sun Investments (India). Sun is the #1 player in Southern India.



Ross Turner – Pelham Capital  

Ross Turner was an equity partner with Lansdowne Partners and set up Pelham Capital in 2007.

Idea: Long DCC Plc  - DCC was listed in Ireland but has transferred its main listing in the UK. It is a distributions services company with a large energy division – oil and LPG. This part of the business is straightforward involving the pickup of the product from terminals and distribution to the customer. In oil distribution in the UK, they are the only distributor with a national network giving them a dominant market position. DCC have developed their market position through bolt on acquisitions. The LPG market is more consolidated but they have greater pricing power there. Europe only makes up 15% of DCC’s income, but they are beginning to make in-roads via the same strategy of bolt on acquisitions. DCC is a stable business with a strong competitive position. Turner believes the valuation is still attractive as no one takes into account the continued impact of the acquisitions. He   sees 15% earnings growth per year going forward.



Mas Siddiqui – Naya Management  

Before founding Naya in July 2012, Mas Siddiqui was a partner at TCI Fund where he was responsible for global investments in credit and equities. Previously he was Managing Director at Canyon Partners.

Idea 1: Long Salvatore Ferragamo (Italy)  - Salvatore Ferragamo creates, develops and produces clothes and shoes for men and women and fragrances and eyewear. Despite being based in Italy, only 25% of its sales are in Europe. Sales in emerging markets are larger and this should continue as the EM consumer becomes better off. They are growing top line growth and they have scope to increase their prices. Salvatore is an ‘undermanaged company’ with plenty of room for improvement. Labour costs are 50% higher than its peers and they could reduce them. He did not say whether he had been pressuring the company for change but it seems quite possible given his background at TCI and his take on the company. The company has a clean balance sheet and is considering a large return of cash via a special dividend, which Siddiqui indicated is being sought by family owners who hold a 60% of the stock.

Idea 2. Short Essilor International   - Essilor is an ophthalmic optics company based in France. It is a world leader in the manufacturing of lenses for glasses. Using FCF and organic growth, Siddiqui believes the company is wildly overvalued. Naya’s research shows that brands do not have much impact in the lenses market. New digital production techniques will cut costs and lead to deflation in the sector. Competition from Zeiss and Hoya will intensify.



Bruno Rocha – Dynamo Capital  

Rocha started by using data from Dimson, Marsh and Staunton’s data set (see the Credit Swiss   Yearbooks) to argue that there is no relationship between GDP and equity returns. In fact he said that the data suggested that slow growing countries produce better equity returns that fast growing counties. Rocha said that what goes for countries is true too for business sectors where growth in earnings is different from growth in earnings per share. Slow growing countries and companies can create better returns for investors than fast growing countries and companies.

Idea: Long Anheuser Busch Inbev (BUD) -  In the beer business, Rocha showed that contrary to popular wisdom, Inbev was more profitable in wine drinking France than in beer drinking Germany. Rocha noted that there are only four big beer companies left in the western world. Inbev has economies of scale allowing it to benefit from the mature, consolidated markets.



Andrew Weiss – Weiss Asset Management  

Intriguingly, when Andrew Weiss was introduced it was suggested that his presentation at Sohn London was the first time he had ever spoken to a large investment audience as he normally prefers to address academic gatherings. Weiss then pitched one of his own funds as his investment idea.

Idea: Long Weiss Korea (LON: WKOF) - Weiss Korea invests in the listed preferred shares of companies incorporated in South Korea.  Andrew Weiss said that there are four things going for the investor in South Korea. Firstly stocks are cheap. Secondly, there is potential for future economic growth as the demographics are good; the workforce is well educated; the road, rail and internet infrastructure is sound; there is low debt to GDP and good natural resources. Thirdly there are catalysts to change including changes to the regulatory environment in favour of shareholders. Fourthly, there are exceptional access products like preferred shares. In Korea preferred shares are similar to ordinary shares but without the voting rights. Preferred stock tends to trade at a large discount to ordinary shares in Korea. 


For more hedge fund conference coverage, check out notes from other recent events:

- Invest For Kids Chicago notes: Lasry, Eisman, Cooperman & more

- Great Investors Best Ideas notes: Price, Akre, Pickens & more

- Excellence in Investing San Francisco notes: Burbank, Billick, McGuire & more

- Value Investing Congress notes: Ubben, Smith, Yacktman, Roepers & more

Lee Cooperman on 3 Stages of a Bull Market: Interview

Omega Advisors' Lee Cooperman spoke with CNBC this morning.  He thinks markets are fairly valued and he thinks a 15-16x multiple is about right.  He doesn't think it's a bargain anymore.

Cooperman on the 3 Stages of a Bull Market

Phase 1: "Wow we survived."  As the market bottoms and pessimism slowly starts to fade.
Phase 2: "Reflecting that which is perspective."  4-5 years of rising economic activity.
Phase 3: "Exuberance phase, the silliness phase where people forget about the mistakes."  He doesn't think we're quite there yet, but there are pockets of silly valuation like Potbelly (PBPB) and Telsa (TSLA).


His Stock Picks Now

"What we're looking for is to find more growth at a lower valuation."  He said he's looking at 'red chips' instead of 'blue chip' stocks and specifically touched on Sprint Nextel (S).   He also likes Motorola Solutions (MSI), Swatch Group (UHR), Sandridge Energy (SD), and Qualcomm (QCOM).

Embedded below are the videos of Cooperman's interview:


Video 1 on bull market stages


Video 2 on Sprint (S)


Video 3


Video 4 on Qualcomm (QCOM)


For more hedge fund thoughts, we also posted up David Tepper's interview from today.

Delivering Alpha Best Ideas Panel: Mark Kingdon, Chris Hohn, Jim Chanos, Lee Cooperman

The Delivering Alpha Conference today featured a 'best ideas' panel that featured some hedge fund titans including Jim Chanos (Kynikos Associates), Chris Hohn (Children's Investment Fund), Mark Kingdon (Kingdon Capital), and Lee Cooperman (Omega Advisors).  Here's a brief summary of their picks:

Mark Kingdon, Kingdon Capital

Long Japanese automakers: Long Toyota (TM), Long Fuji Heavy (7270.TO) Long Mazda (7261.JP)

He says these companies obviously benefit from Abenomics in Japan.  Toyota he likes as an innovative leader with focus on hybrid technology.  Fuji Heavy (Subaru) is moving from low margin to high margin products.   He says Mazda might have the most upside of the names. 

Chris Cooper-Hohn, Children's Investment Fund

Long Porsche (PAH3.DE) - It's basically a holding company owning 150 million shares of Volkswagen.  If the two merge eventually, the stock doubles.  We've highlighted Hohn's thesis on Porsche before.

Long EADS (EAD.FR) - A liquid large cap with a new focus on making money.  Could double over 2 years. 

Long Aurizon Holdings (AZJ.AU)- Australian railroad, a total turnaround story as the company has transitioned from government-owned to a company more aimed at profit.  He thinks it could double over next 3 years


Lee Cooperman, Omega Advisors

Long Qualcomm (QCOM) - points to a large amount of cash on the balance sheet and a lot of pessimism on the name.

Long Sandridge (SD) - could be a double.

Long Express Scripts (ESRX) - company is growing and buying back stock.  We've also posted up another Cooperman interview recently where he talked about other stocks he likes.


Jim Chanos, Kynikos Associates

Short Caterpillar (CAT) - a bet on China's property development slowdown and he says the company is just exposed to the wrong products at the wrong part of the cycle.  Here's Chanos' pitch on CAT here.

Short Hewlett Packard (HPQ) - he also reiterated his call against the PC, saying it's dying a slow death.  This has been a longstanding short and we've posted up Chanos' thesis on HPQ as he called it a value trap last year.



For more from the Delivering Alpha Conference, head to:

- John Paulson on gold, real estate & merger arbitrage

- Nelson Peltz on PepsiCo & Mondelez

- Larry Robbins & Jacob Gottlieb on healthcare plays

- Carl Icahn on activism 

Lee Cooperman Says Market Fairly Valued, Talks Stocks He's Been Buying (Interview)

Lee Cooperman of hedge fund firm Omega Advisors made an appearance on CNBC today to talk about what he's been buying and what his portfolio looks like.

Cooperman thinks the market is fairly valued right now and that the "Fed will have to remain friendly." He thinks the rest of the year will be determined by which valuation camp wins out.

He thinks a radical change in Fed policy or a recession would cause a drop in the market, but he's not terribly worried about either of those scenarios.

At the same time, he points out how many investors have de-risked drastically and are underinvested.  He says, "what the wise man does in the beginning, the fool does in the end."


Stocks Cooperman Likes

Cooperman mentioned Thomas H Lee Credit (TCRD), a mezzanine lender that yields over 9% and he thinks the dividend goes higher.

We recently posted up excerpts from Omega's Q1 letter if you missed it where he talks about some of his other stock picks.

He likes to buy MLP's when they're trading below net asset value and especially if he can get a decent yield.  He thinks Linn Energy (LINE) has assets worth "in the area of 40."

Cooperman has also sued Tetragon Financial and he believes management should be barred from the industry due to 6 years of bad governance in his opinion and possibly unlawful acts.  He still thinks the stock is undervalued (he owns 14 million shares of it and he started buying in 2009 back during the financial crisis).  In sum, he feels it's solely a management problem.

The Omega Advisors man also talked about Sprint (S), saying he bought it at $2 and then again at $7 and likes that there were 2 interested parties in the company (Softbank and Dish Network), but it looks like.  He said he'll tender 80% of his position, but if it trades at the right price, he'll get back into that chunk of his position.

Cooperman has owned Dish (DISH) for six years and he said it's a mature business and he thinks it'd be worth more with Sprint than without it.  He likes management there.

The hedge fund manager noted that he's "very bottom-up" and some things Omega has been buying recently include Express Scripts (ESRX), Halliburton (HAL), Transocean (RIG), Qualcomm (QCOM), Motorola Solutions (MSI). Sandridge (SD), and Chimera (CIM).


Embedded below is the video of Cooperman's 18-minute interview:



For more on this manager, check out Lee Cooperman's thesis on Covidien (COV) and Sirius XM Radio (SIRI).

Lee Cooperman Says Market is Fairly Valued, Talks Some of His Positions

Lee Cooperman, founder of hedge fund Omega Advisors sat down with CNBC this morning to share his thoughts on the market.

Is the Market Fairly Valued?

"Bernanke's told us everyday since 2009 that he wants higher inflation, more economic growth, lower unemployment,  he wants to create high stock prices to create wealth, to create consumption ... you have to ask yourself as a money manager: has he gotten the market to a zone of overvaluation?"

Cooperman thinks the market is now fairly valued and he thinks every bull market ends at overvaluation.  He concluded that, "So the market's still ok, but it's not a bargain anymore."


On Stocks With Yield

He says he has around 90 holdings and touched on  how investors are looking for yield, so he highlighted some of his positions that fit this mold:

- KKR Financial (KFN): 7.4% yield, growing 5% a year
- Chimera (CIM): accounting issues that he thinks will be resolved this year
- Atlas Pipeline (APL): 7% yield, growing
- Linn Energy (LINE): good yield and growing
- Transcoean (RIG): 4.2% yield and notes Carl Icahn's presence in the name as well

He made an interesting comment on yield as well, saying: "Almost half the S&P 500 right now yield more than bonds."


Growth Stocks He Likes

Cooperman also rattled off some of the stocks he likes that fit under the growth category:  Express Scripts (ESRX), Google (GOOG), and Qualcomm (QCOM).


On Short Selling

Cooperman was asked about Herbalife (HLF) and short selling in general.  He does not have a position in the company but made these comments about shorting: "It's not a wise thing to publicize your short position, and I would not publicize being short 20% of a company."

He also went on to say: "I have no problem with short selling, I think short selling adds some discipline to the market.


Embedded below are the videos of Cooperman's interview:

Video 1


Video 2



Video 3


We've published the rest of Omega's portfolio in the new issue of our Hedge Fund Wisdom newsletter.

Delivering Alpha Best Ideas Panel: Cooperman, Chanos, Feldstein & More

CNBC and Institutional Investor's Delivering Alpha Conference is going on today and we wanted to aggregate the highlights.  The "best ideas" panel included Omega Advisors' Leon Cooperman, Kynikos Associates' Jim Chanos, BlueMountain Capital's Andrew Feldstein, Queen Anne's Gate Capital's Kathleen Kelley, and BlackRock's Robert Kapito.

From the conference, we've also posted up the global opportunities panel as well as the chasing yield panel.


Leon Cooperman (Omega Advisors):  He pitched going long US stocks and called them the best house in the financial neighborhood, a tune he has been singing for well over a year.  However, he did make an excellent point that the maximum "pain trade" is going higher as tons of people are sitting on large sums of cash earning nothing. 

As for specific names he likes: Capital One (COF), Express Scripts (ESRX), Halliburton (HAL), Gannett (GCI), Kinder Morgan (KMI), MetLife (MET), Qualcomm (QCOM), Watson Pharma (WPI) and Western Union (WU).  He also likes AIA Group (1299.HK) traded in Hong Kong.

The Omega Advisors founder also continued to bash bonds, saying "buying US bonds right now is like walking in front of a steam roller and picking up dimes.  It's just not a good policy."

As far as the election goes, he thinks that if Romney wins, the market will spike by 150 points, but if Obama wins, it drifts lower. For more from the Omega man, we just posted up Leon Cooperman on 14 attributes that make a good portfolio manager.


Jim Chanos (Kynikos Associates):  The noted short-seller was out again negative on tech companies.  He mainly pitched the bear case on Hewlett Packard (HPQ), calling it a value trap.  We just recently highlighted Chanos' presentation on global value traps where HPQ was highlighted among other names.

He says that "when you lose the paradigm shift, you spend an awful lot of money defending what you have."  He compared HPQ to Eastman Kodak as the company is in declining businesses.

Chanos also touched on how instead of giving cash back to shareholders, companies will make value-destroying acquisitions.  He cited HPQ's buy of Autonomy last year.  The Kynikos man argues that HPQ has overspent on acquisitions and they're hiding research & development expenditures through them.

He's also negative on Dell (DELL) saying that the company finances its subprime customers (financing their revenue growth).  For more on Chanos we just recently posted up his thoughts on the psychology of short selling.


Andrew Feldstein (BlueMountain Capital):  He likes less liquid credit, angling for 8-12% returns over a 3-7 year time horizon.  He says you have to be patient as this opportunity is available due to everyone's obsession with liquidity (i.e. don't put your money here if you don't have an appropriate time horizon).  He mentioned bonds such as Prospect Medical if you can buy and hold.  Feldstein also mentioned he's less excited about legacy distressed assets in Europe.


Kathleen Kelley (Queen Anne's Gate Capital):  Formerly of Tudor and Kingdon, she pitched two ideas: short the British pound (against long US dollar) as well as short platinum, targeting 20-30% moves to the downside.  She wants to be long the USD against the sterling because the USD can be a commodity currency.

She also likes shorting platinum as there's an oversupply due to slowing Euro auto sales.  At the Ira Sohn conference two months ago, Ospraie's Dwight Anderson pitched going short platinum as well (in addition to going long palladium).


Robert Kapito (BlackRock):  He's going for the "income hog" approach by focusing on equity dividend funds, dividend stocks like AT&T (T), Verizon (VZ), Merck (MRK), Johnson & Johnson (JNJ), high yield bond funds (or individual issues from Sprint, Ally) and municipal bonds such as the San Francisco Airport, New Jersey Tolls.  He thinks that default worry surrounding munis is "overrated."


Sources: Notes sent by readers, II's blog, @iimag,  @ldelevingne, @footnoted, @aarontask

For more from Delivering Alpha, head to the global opportunities panel (featuring Richard Perry) as well as the hunt for yield panel (featuring Marc Lasry)

Goldman Sachs VIP List: Most Important Stocks To Hedge Funds: Q1 2012

Goldman Sachs is out with its Q1 2012 Hedge Fund Trend Monitor report.  In it, they reveal the latest VIP list of 50 stocks that are most important to hedge funds.  These are the positions that appear most frequently in the top 10 holdings of fundamental focused hedge funds.

This quarter, they've also released a new list of very important short positions to hedge funds which we've posted up as well.

Goldman's VIP list of the most important holdings is accessible on Bloomberg via < GSTHHVIP >.  It has "outperformed the S&P 500 by 55 bp on a quarterly basis since 2001."

Goldman Sachs VIP List (Q1 2012)

Stock: Number of funds with stock as top 10 holding

1. Apple (AAPL): 106
2. Google (GOOG): 73
3. Express Scripts (ESRX): 56
4. Microsoft (MSFT): 46
5. Qualcomm (QCOM): 38
6. Citigroup (C): 31
7. General Motors (GM): 29
8. Priceline.com (PCLN): 29
9. JPMorgan Chase (JPM): 27
10. Liberty Media (LMCA): 26
11. Delphi Automotive (DLPH): 24
12. BP (BP): 23
13. Pfizer (PFE): 23
14. Tyco (TYC): 22
15. Visa (V): 21
16. Yahoo (YHOO): 21
17. LyondellBasell (LYB): 20
18. Anadarko Petroleum (APC): 19
19. Bank of America (BAC): 17
20. Ford Motor (F): 17
21. WellPoint (WLP): 17
22. American International Group (AIG): 16
23. Charter Communications (CHTR): 16
24. eBay (EBAY): 16
25. Rock-Tenn (RKT): 16


It's no surprise that Apple (AAPL) is the most widely owned top position amongst fundamental hedge funds.  But despite that, Greenlight Capital's David Einhorn argued hedge funds actually have less than 2% of assets in his Ira Sohn conference presentation.  We've also posted Dan Loeb's thesis on AAPL as he was a big buyer of shares.

Both Tyco and Priceline were featured in the equity analysis section of our Q4 2011 Hedge Fund Wisdom newsletter due to heavy ownership by top funds.  TYC is an event-driven play while PCLN is a huge growth and international play.


Here's the rest of Goldman's VIP list:

26. Seagate Technology (STX): 16
27. Berkshire Hathaway (BRK.B): 15
28. Cisco Systems (CSCO): 15
29. Equinix (EQIX): 15
30. Hertz Global (HTZ): 15
31. Liberty Interactive (LINTA): 15
32. Pioneer Natural Resources (PXD): 15
33. Visteon (VC): 15
34. Valeant Pharmaceuticals (VRX): 15
35. Wells Fargo (WFC): 15
36. Baidu (BIDU): 14
37. Dollar Thrifty (DTG): 14
38. Hess (HES): 14
39. Mastercard (MA): 14
40. News Corp (NWSA): 14
41. Williams Companies (WMB): 14
42. Barrick Gold (ABX): 13
43. CIT Group (CIT): 13
44. Capital One (COF): 13
45. Calpine (CPN): 13
46. Devon Energy (DVN): 13
47. EMC (EMC): 13
48. Hewlett Packard (HPQ): 13
49. Illumina (ILMN): 13
50. Salesforce.com (CRM): 12

Of the above, we've previously highlighted why Passport Capital likes LINTA.  And in the brand new issue of our Hedge Fund Wisdom newsletter, we've analyzed Equinix (EQIX), a big new position by Philippe Laffont's Coatue Management and John Thaler's JAT Capital.

Some of the stocks on the list are brand new additions as enough hedge funds boosted their positions in Q1: ABX, AIG, BRK.B, COF, CPN, CRM, DVN, EBAY, EMC, EQIX, F, HES, HTZ, ILMN, RKT, WLP.


Be sure to also check out Goldman's brand new list of hedge fund very important short positions.

Leon Cooperman on Bonds, Stocks, and Apple vs. Research in Motion

Leon Cooperman of hedge fund firm Omega Advisors yesterday sat down with Bloomberg Television to talk about the markets, his portfolio, and what he likes/dislikes at this juncture.

On Treasuries:

Cooperman said that, "I have great confidence the Fed is ultimately going to get their way. The Fed is trying to elevate asset prices, help consumption, help the economy and in two-three years time, we will be worrying about inflation and interest rates will be materially higher. An instrument that I have absolutely no interest in - the most widely traded instrument in the world - is US government bonds. I don’t think people understand how risky a US government bond is at 2% return."

On Equities:

After bashing government bonds, Cooperman also examined the potential of investing in high yield bonds but dismissed them as fully priced. So he turned to equities and said that, "the S&P, which is 13 ½ earnings, yields a bit over 2%, 10% below the historical multiple at a time when interest rates are below historical and you can find lots of cheap stocks out there that will yield more than bonds today that are good companies that will grow over time."

This is largely in line with what the hedgie has been preaching for sometime now. We've highlighted in the past his trademark phrase that equities are the best house in the financial asset neighborhood.

On Apple (AAPL) versus Research in Motion (RIMM):

The Omega Advisors founder thinks Apple (AAPL) is worth north of $600. On Research in Motion (RIMM), he notes that, "It's funny, it was really like a mass hysteria. We put about a half of one percent of our assets into RIM late last year on a theory that they had a revenue base that was being mispriced by the market. Which was 20% of what we had in Apple, we've owned Apple now for a long time, and we continue to own a big position, so we had five times more Apple investment than RIM."

He says they sold RIMM due to stop loss discipline, but he admits that it's still intriguing. David Einhorn's hedge fund Greenlight Capital recently bought shares of RIMM, as highlighted in this free excerpt from our newsletter.

Cooperman also mentioned that he likes gold, Qualcomm (QCOM), JPMorgan (JPM), Bank of America (BAC), Altisource Portfolio Solutions (ASPS), Unitedhealthcare (UNH), WellPoint (WLP), Boston Scientific (BSX), Echostar (SATS), and Dish Network (DISH).

Embedded below is the video from Cooperman's interview with Bloomberg TV:



For more from this hedgie, you can view Cooperman's presentation on risks to the equity outlook.

Leon Cooperman's Value Investing Congress Presentation

At day two of the Value Investing Congress, Leon Cooperman of hedge fund Omega Advisors gave the case for going long Apple (AAPL) and E*Trade (ETFC) in a presentation entitled "The Investment Outlook & Some Attractive Values."

Be sure to check out all of our notes from the Value Investing Congress.


Leon Cooperman (Omega Advisors)

Embedded below is the full slideshow presentation from Cooperman:




"Like it or not, we've entered a world of risk-on risk-off macro world." Four conclusions that require four assumptions:

1. Assume US will avoid recession; remain slow growth at worst: Metrics suggest we are not on a recession track. Bank lending improving, consumer savings rate up to 4% from 1%, debt service ratio good. Not a “feel good” environment, with 9% unemployment, 10% only part-time. “I take very strong exception to the idea that 2011 is another 2008.” Corporate America most cash on balance sheets since 1955. Oil drop from 115 to 80.

2. Assume that Eurozone will effectively ring-fence Greek sovereign debt issues: “We expect sane policies to prevail, since there is no choice.” His view, based on 45 years of experience, is when the problem is so catastrophic, and expected to occur, it doesn’t occur. He thinks they’ll follow the US banking model, raise capital, shed noncore assets, delever.

3. Assumption that failed, Obama would come to the center: He says it’s not happening. Old expression: “When the President is in trouble, the market is in trouble.” He rants against Obama- says he only wants to tax the wealthy, debase the dollar, borrow from the world to create a welfare state.

4. Assume the Middle East settles down, oil prices stay reasonable: At 1100, the SPX had already discounted a mild recession that was not happening. He says stocks are compelling valuations here. Says market dropped 20%, a traditional recession market correction is 25%. Thinks the recent lows of 1100 are the downside for the cycle. Requires two of the top 4 assumptions.

Even if we did have a recession, SPX eps usually only drops 15-20%, so even if they did drop, he says 14 times trough earnings to be very compelling. He still expects SPX eps of $100 or more in 2012. Still in early stages of an economic recovery.

Valuation: Stocks are cheap relative to history, inflation, and interest rates. Last 50 years, SPX ave P/E was 15x. Now multiple is 11.6x, with only 2% interest rates vs. 6.6% average. Highest ERP in 20 years. Average bear market bottom the P/E was 12x, where we are now. Just had one of the worst 10 year return years in history, believes will mean revert. Corporate bonds are nowhere near where they were in 2008/9, down 70% in yield, yet SPX is 2 multiples lower than it was back then. He is starting to buy corporate bonds with 9% yields. 45% of the SPX stocks now pay higher yields than 10-year treasury bonds- same high level as 2009, we haven’t seen this in 50 years.

Avoid treasuries: Says 10-year bonds historically yield same as nominal GDP. Says if you believe we get 2% growth, plus 2-3% inflation, that’s 4-5% yield, and bonds will lose a lot of money. Still predicts low growth for next decade: 2-2.5% GDP, 2-2.5% inflation, 4-5% nominal GDP, stocks make 7-9%, treasuries negative return.

“You don’t have to have a strongly rising stock market to make a lot of money.” 1967 Dow was 1000, 10 years later, 1982, the Dow was 1000. Over time, there is ample opportunity to find things that are mispriced to the market. (They had EP yesterday as a 2% position before the buyout).

He’s 78% net long, says things look very cheap. With a little patience, can make a great deal of money.


Top Ten Long Ideas:

Apple (AAPL): Less than 10x multiple net of cash. Succession clear. Financial policies somewhat destructive, sitting on $80B in cash, but that may change.

Boston Scientific (BSX): 20% FCF yield

Qualcomm (QCOM): 16% grower trading for 12x

Sallie Mae (SLM)

ACE (ACE)

Transocean (RIG): Says deep water drilling cycle is turning. 6.5% yield, well covered dividend, day rate is improving. Says stock is discounting $5-10B, but will settle for $1-2B

Exxon Mobil (XOM)

KKR (KKR): Dividend paying stock, but get K1, getting 9% yield, and expects growth.

Energy XXI (EXXI)

E*Trade Financial (ETFC): Ken Griffin involved, TD Ameritrade (AMTD) could buy them. Mortgage losses over, even with no deal, management is on the right track.


For more from the Omega Advisors manager, head to Cooperman's thoughts from Delivering Alpha.


Don't miss the rest of the hedge fund manager presentations in our notes from the Value Investing Congress.

Lone Pine Capital's Current Investment Themes

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


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


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

Lee Ainslie's Maverick Capital Bullish on CVS Caremark (CVS) & Technology: 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 Lee Ainslie's hedge fund Maverick Capital. Lee founded the firm with seed capital from the Wyly Family in Texas after he left Julian Robertson's hedge fund Tiger Management. Maverick focuses on intensive fundamental research on both the long and short sides of the portfolio, but doesn't employ pairs trades. Ainslie likes to focus on risk management and positions typically do not exceed more than 8% of the portfolio. Maverick's analytical team is divided up by sector and place an emphasis on enterprise value to sustainable free cash flow.

Maverick is part of the Tiger Cub Portfolio created with Alphaclone where you can replicate the holdings of some of the top hedge funds in the game. For recent market insight from Ainslie, we covered Maverick's investor letter where Ainslie saw a decline in the price of risk. Additionally, he gave some of his thoughts at a hedge fund panel. To learn more about Ainslie, head to our profile of Maverick Capital.

The positions listed below were Maverick'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
Abercrombie & Fitch (ANF)

Dell (DELL)

Google (GOOG)

Hewlett Packard (HPQ)

Ironwood Pharmaceuticals (IRWD)

JPMorgan Chase (JPM)

Men's Wearhouse (MW)

Office Depot (ODP)

PNC Financial (PNC)

Solarwinds (SWI)

Stanley Black & Decker (SWK)


Increased Positions
Qualcomm (QCOM): Increased position by 269.7%

Bank of America (BAC): 159.3%

Pfizer (PFE): Increased by 125.8%

Expedia (EXPE): Increased by 95.4%

Family Dollar Stores (FDO): Increased by 88%

CVS Caremark (CVS): Increased by 85%

Davita (DVA): Increased by 68.8%

Wellpoint (WLP): Increased by 67.1%

Marvell Technology (MRVL): Increased by 60.9%

Corning (GLW): Increased by 56.9%

Visa (V): Increased by 48.6%

DirecTV (DTV): Increased by 30.6%

Mead Johnson Nutrition (MJN): Increased by 39.3%

Dish Network (DISH): Increased by 9.5%


Reduced Positions
Berkshire Hathaway (BRK.A): Reduced position by 99.6%

Gilead Sciences (GILD): Reduced by 47.2%

Healthnet (HNT): Reduced by 43.8%

Express Scripts (ESRX): Reduced by 42.2%

FedEx (FDX): Reduced by 30.6%

Athenahealth (ATHN): Reduced by 29.2%

Tyco International (TYC): Reduced by 22%


Positions They Sold Out of Completely
Autodesk (ADSK)

AIG (AIG)

Amgen (AMGN)

American Movil (AMX)

Anadys Pharmaceuticals (ANDS)

Apache (APA)

Autozone (AZO)

Brocade (BRCD)

Berkshire Hathaway (BRK.B)

Banco Santander (BSBR)

Citigroup (C)

Citrix (CTXS)

Cablevision (CVC)

Discovery Communications (DISCK)

Equinix (EQIX)

Green Mountain Coffee Roasters (GMCR)

Illumina (ILMN)

Infinera (INFN)

Lorillard (LO)

Priceline (PCLN)

Pepsico (PEP)

Parker Hannifin (PH)

RenaissanceRe (RNR)

Rovi (ROVI)

Sears Holdings (SHLD)

State Street (STT)

Target (TGT)

South Financial Group (TSFG)

Ultra Clean Holdings (UCTT)

Wells Fargo (WFC)

XenoPort (XNPT)

XTO Energy (XTO)

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

1. CVS Caremark (CVS): 4.04%

2. Marvell Technology (MRVL): 3.89%

3. Apple (AAPL): 3.88%

4. Corning (GLW): 3.88%

5. Qualcomm (QCOM): 3.82%

6. Pfizer (PFE): 3.80%

7. Wellpoint (WLP): 3.75%

8. Apollo Group (APOL): 3.73%

9. Family Dollar Stores (FDO): 3.73%

10. DirecTV (DTV): 3.67%

11. Hewlett Packard (HPQ): 3.54%

12. Progressive (PGR): 2.29%

13. Expedia (EXPE): 2.78%

14. Google (GOOG): 2.71%

15. Visa (V): 2.62%

CVS Caremark is Maverick's largest stake and here's a brief history with their position: Back in the first quarter of 2009, we actually saw Ainslie sell out of CVS and buy into rival Walgreens. Then in the fourth quarter of 2009, we posted on our Twitter account that Ainslie mentioned he was very keen on shares of CVS at an investment conference as it was one of his highest conviction picks. That much is now evident in his portfolio as CVS sits as Maverick's largest holding as of the first quarter in 2010. CVS was also mentioned on a list of analysts' best stock picks for 2010.

Earlier this morning we saw that John Griffin's Blue Ridge started a huge new position in Google (GOOG). Maverick did the same, albeit on a slightly smaller scale. So you have two very prominent hedge funds adding shares of GOOG in size and the stock now trades below any price they would have purchased at this past quarter. Additionally, we see that both Maverick & Blue Ridge sold out of data center play Equinix (EQIX). It should also be highlighted that Ainslie started a sizable stake in tech bellwether Hewlett Packard (HPQ) as well.

We also see Maverick sold over 40% of their Express Scripts (ESRX) position which is interesting because fellow Tiger Cub hedge fund Viking Global favors it as one of their top picks. If we were to hazard a guess, we'd say Maverick reduced this position because they have CVS (another pharmacy benefit management company) as their top holding. We also wanted to highlight Maverick's Family Dollar Stores (FDO) position because this is a name we've seen popping up on numerous 13F filings as of late as it attracts hedge fund interest (and as you'll see in our continuing coverage). Lastly, we make note of Ainslie's departure from some high flying stocks such as Priceline (PCLN) and Green Mountain Coffee Roasters (GMCR).

On a sector basis, Maverick's largest weightings are in technology and consumer services. This is along the lines of what we saw last quarter from Maverick as they bet on technology then as well. Assets reported on the 13F filing were $9.3 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'sGreenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, and John Griffin's Blue Ridge Capital. Be sure to check back daily for new hedge fund updates.

Stephen Mandel's Lone Pine Capital Discloses Large New Stake in Cognizant Technology Solutions (CTSH): 13F Filing

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

Next up is Stephen Mandel's hedge fund Lone Pine Capital. Mandel's firm is named after a historical lone pine tree at his alma mater, Dartmouth College. Before founding his own firm, Mandel worked at Julian Robertson's legendary Tiger Management and he seeks to identify companies with good management teams that are trading below intrinsic value. Recent activity out of Lone Pine includes a new stake in Longtop Financial Technologies (LFT) as well as a new position in Live Nation Entertainment (LYV).

For 2009, Lone Pine's main fund Lone Cypress was up 17.7% as noted in our hedge fund performance numbers post. Additionally, their Lone Kauri was up 12.1%, Lone Cascade up 44.4%, and Lone Dragon Pine up 72.9%. For other investment ideas from Mandel's hedge fund, we previously saw that they are bullish on education plays as well.

The positions listed below were Lone Pine'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
Cognizant Technology Solutions (CTSH)
DaVita (DVA)
United Parcel Service (UPS)
Ameriprise Financial (AMP)
Coca Cola (KO)
Activision Blizzard (ATVI)
Amazon (AMZN)
Polo Ralph Lauren (RL)
Amphenol (APH)
Walter Energy (WLT)
Salesforce.com (CRM)
Live Nation (LYV) ~ we covered this back when they bought it
Longtop Financial Technologies (LFT) ~ we also previously detailed this new stake
PNC Financial (PNC)
O'Reilly Automotive (ORLY)
Apollo Group (APOL)
Invesco (IVZ)
Wyndham Worldwide (WYN)
Umpqua Holdings (UMPQ)


Increased Positions
New Oriental Education (EDU): Increased by 238.2%
Mead Johnson Nutrition (MJN): Increased by 127.1%
Autodesk (ADSK): Increased by 119.8%
Yum Brands (YUM): Increased by 87.8%
Pactiv (PTV): Increased by 74.42%
Wells Fargo (WFC): Increased by 33.9%
Accenture (ACN): Increased by 31.8%
CVS Caremark (CVS): Increased by 16.7%
Qualcomm (QCOM): Increased by 14.7%
Estee Lauder (EL): Increased by 14.6%
Dr Pepper Snapple (DPS): Increased by 7%
Bank of America (BAC): Increased by 5.22%
JPMorgan Chase (JPM): Increased by 1.88%


Reduced Positions
Monsanto (MON): Reduced position by 63.6%
Green Mountain Coffee Roasters (GMCR): Reduced by 59%
Popular (BPOP): Reduced by 47.5%
Hewlett Packard (HPQ): Reduced by 42.5%
Baxter International (BAX): Reduced by 39.4%
Staples (SPLS): Reduced by 38.2%
Visa (V): Reduced by 33.5%
Goodrich (GR): Reduced by 21.6%
Mindray Medical (MR): Reduced by 18%
Citrix Systems (CTXS): Reduced by 11.8%
McDonald's (MCD): Reduced by 8.76%
Apple (AAPL): Reduced by 7%
Strayer Education (STRA): Reduced by 5.05%


Positions They Sold Out of Completely
HSBC Holdings (HBC)
Walgreen (WAG)
Walt Disney (DIS)
FLIR Systems (FLIR)
eBay (EBAY)
Discovery Communications (DISCA)
Precision Castparts (PCP)
MSCI (MXB)
Schein (HSIC)
Southwestern Energy (SWN)
Smithfield Foods (SFD)
VistaPrint (VPRT)
Melco Crown (MPEL)
E*Trade Financial (ETFC)
Marvel (MVL)
Grupo Aeroportuario Pacifico (PAC)
Grupo Aeroportuario Sure (ASR)
Deltek (PROJ)


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

1. JPMorgan Chase (JPM): 7.73%
   
2. Qualcomm (QCOM): 5.72%
   
3. Cognizant Technology Solutions (CTSH): 5.39%
   
4. Apple (AAPL): 5.36%
   
5. Accenture (ACN): 4.67%
   
6. Yum Brands (YUM): 4.56%
   
7. McDonald's (MCD): 4.50%
   
8. Wells Fargo (WFC): 4.43%
   
9. Baxter International (BAX): 3.57%
   
10. Visa (V): 3.21%
    
11. Strayer Education (STRA): 3.04%
    
12. DaVita (DVA): 2.86%
    
13. Bank of America (BAC): 2.65%
    
14. Hewlett Packard (HPQ): 2.53%
    
15. New Oriental Education (EDU): 2.27%
    

Lone Pine's largest exposure by far is in the information technology sector, followed by consumer discretionary and financials. For us, the most notable change to Mandel's portfolio was the addition of a brand new position in Cognizant Technology Solutions (CTSH) that they made their third largest holding. Their new stake in DaVita (DVA) was also sizable.

Of positions they already owned, they added heavily to their holdings in New Oriental Education (EDU), Mead Johnson Nutrition (MJN), Autodesk (ADSK), Yum Brands (YUM), and Pactiv (PTV). We make special note of their increase in MJN as we had previously examined why hedge funds like Mead Johnson Nutrition. Many hedge funds owned it in the fourth quarter of 2009 and as you'll see from our continuing coverage of first quarter 2010 portfolios, tons of hedgies have shares of MJN in their portfolio this time around as well.

Of the positions Lone Pine sold out of completely, only HSBC (HBC), Walgreen (WAG), and Walt Disney (DIS) were previously sizable stakes. They also significantly reduced position sizes in some of the hedge fund favorite names such as Monsanto (MON), Green Mountain Coffee Roasters (GMCR), and Popular (BPOP).

Assets reported on the 13F filing were $10.3 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for sorting through all the hedge fund portfolio maneuvers and backtesting the performance (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

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

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

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

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

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

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


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


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


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


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


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

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

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

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

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

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

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

Brett Barakett's Tremblant Capital: Large Research in Motion (RIMM) Exposure

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 Brett Barakett's hedge fund Tremblant Capital. The name Barakett might ring a bell because his brother Timothy used to run fellow hedge fund Atticus Capital (who recently announced they'd be shutting down). So while Timothy may have stepped away from the hedge fund game, Brett is still going at it. Before founding his own firm, Brett was previously a portfolio manager for Louis Bacon's hedge fund Moore Capital and in his spare time he enjoys ice hockey. Taken from their site, Tremblant Capital Group's objective is "to achieve superior risk adjust returns for our investors through our focused and disciplined investment process." The only major notable portfolio activity out of Tremblant has been their 13G filing on IMAX.

Keep in mind that the positions listed below were Tremblant'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:
Qualcomm (QCOM) Calls
Procter and Gamble (PG) Calls
Wynn Resorts (WYNN) Puts
Union Pacific (UNP) Puts
Monsanto (MON)
DirecTV (DTV) Calls
Apollo Group (APOL)
Viacom (VIA-B) Puts


Some Increased Positions
Positions they already owned but added shares to:
Imax Corp (IMAX): Increased position by 187.7% (we previously detailed this)
Mastercard (MA) Puts: Increased by 115.2%
Melco Crown (MPEL) Calls: Increased by 45.9%
Green Mountain Coffee Roasters (GMCR): Increased by 42%
Walmart (WMT): Increased by 38.5%
Cheesecake Factory (CAKE): Increased by 36%
Intel (INTC) Puts: Increased by 34%
Liberty Media (LINTA): Increased by 27.3%
Charles Schwab (SCHW): Increased by 24.6%


Some Reduced Positions
Stakes they sold shares in but still own:
Red Hat (RHT) Calls: Reduced by 70.2%
Apple (AAPL) Puts: Reduced by 63.7%
RedHat (RHT): Reduced by 45.7%
Google (GOOG): Reduced by 43.5%
Melco Crown (MPEL): Reduced by 35.7%
Icon (ICLR): Reduced by 35.7%
Eclipsys (ECLP): Reduced by 31.7%
Hologic (HOLX): Reduced by 29.8%
Baidu (BIDU): Reduced by 26.8%
Costco (COST): Reduced by 24.8%
Apple (AAPL): Reduced by 24.4%
Qualcomm (QCOM): Reduced by 22.2%


Removed Positions
Positions they sold out of completely:
Apple (AAPL) Calls
Amazon (AMZN) Puts
Qualcomm (QCOM) Puts
Canadian Natural Resources (CNQ)
AU Optronics (AUO) Puts
Hologic (HOLX) Puts
Catalyst Health (CHSI)
Research in Motion (RIMM) Puts
Symantec (SYMC)
Bankrate (RATE)
Weingarten Realty (WRI)
MGM Mirage (MGM) Calls
Las Vegas Sands (LVS) Calls
MEMC Electronics (WFR)
Wynn Resorts (WYNN) Calls
Gannett (GCI) Calls
Harley Davidson (HOG) Calls
Commscope (CTV)
Sequenom (SQNM)


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

1. Research in Motion (RIMM) Calls: 8.7%
2. Qualcomm (QCOM) Calls: 5.43%
3. Procter and Gamble (PG): 5.08%
4. Procter and Gamble (PG) Calls: 4.94%
5. Visa (V): 3.21%
6. Walmart (WMT): 2.9%
7. Mastercard (MA): 2.87%
8. Research in Motion (RIMM): 2.7%
9. Apple (AAPL): 2.5%
10. Hologic (HOLX): 2.29%
11. Baidu (BIDU): 2.19%
12. Mastercard (MA) Puts: 2.12%
13. Melco Crown (MPEL): 2.08%
14. Visa (V) Calls: 1.97%
15. Green Mountain Coffee Roasters (GMCR): 1.95%
    

Tremblant was out reducing technology exposure across the board as it was previously almost 49% of their long US equity holdings. While they were moving out of that sector, they were moving into consumer goods as around 18% of their longs are in that sector now. The tough thing to decipher about their portfolio is their net position in a given name. As you can see above, they hold a bevy of puts and calls in addition to the underlying common in many stocks. As such, we do not have access to the strike prices or expirations of those options so it's hard to tell if they are net bullish or net bearish on some of their positions.

By far and away their largest position though is calls in Research in Motion (RIMM) and this carries over from the second quarter where it was their largest stake then as well. Their second largest holding is a brand new position in Qualcomm (QCOM) calls which is notable. So while they were reducing tech exposure, don't get us wrong... they definitely still have tech positions.

Below are some graphical illustrations of the changes made to Tremblant Capital's portfolio courtesy of Drew Robertson at Financial Research Station:

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Assets from the collective holdings reported to the SEC via 13F filing were $3 billion this quarter compared to $2.7 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, Andreas Halvorsen's Viking Global, and Chase Coleman's Tiger Global. Check back daily as we'll be covering new hedge fund portfolios.

Lee Ainslie's Maverick Capital Bet Big On Technology Stocks

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 is Lee Ainslie's hedge fund firm Maverick Capital. Ainslie learned his ways under the guidance of hedge fund legend Julian Robertson and is a member of the Tiger Cub family. (You can view a Tiger Cub family tree here). As such, Maverick is a part of the Tiger Cub portfolio clone created with Alphaclone that is seeing great returns and is comprised of holdings widely held by all of the Tiger Cub hedge funds.

Maverick manages well over $8 billion and focuses on straight up stock picking on both sides of the book (long and short) but they do not employ pairs trades. They have six industry heads and each team handles their respective sector. Risk management is a big focus at Maverick and position sizes typically don't go above 5-8% of the portfolio. They focus on value and growth at a reasonable price (GARP) investments and they like to compare enterprise value to sustainable free cash flow. To learn more about this hedge fund, check out our profile/biography on Lee Ainslie & Maverick.

Keep in mind that the positions listed below were Maverick'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:
Corning (GLW)
Qualcomm (QCOM)
Citigroup (C)
Macys (M)
CVS Caremark (CVS)
Itron (ITRI)
Pfizer (PFE)
Bank of America (BAC)
Microsoft (MSFT)
Williams Sonoma (WSM)
Rovi Corporation (ROVI)
Google (GOOG)
Equinix (EQIX)
Whole Foods (WFMI)


Some Increased Positions
Positions they already owned but added shares to:
First Solar (FSLR): Increased position by 307.5%
Visa (V): Increased by 88.2%
Apollo Group (APOL): Increased by 49.4%
Gilead Science (GILD): Increased by 48.9%
Marvell Technology (MRVL): Increased by 42.9%
Priceline (PCLN): Increased by 42.2%
Berkshire Hathaway (BRK.B): Increased by 40%
Berkshire Hathaway (BRK.A): Increased by 37%
Amgen (AMGN): Increased by 31.3%


Some Reduced Positions
Stakes they sold shares in but still own:
Gap (GPS): Reduced position by 46.7%
Lorillard (LO): Reduced by 44.9%
PepsiCo (PEP): Reduced by 35.8%
Lender Processing (LPS): Reduced by 26%
Palm (PALM): Reduced by 22.3%
America Movil (AMX): Reduced by 18.9%
Davita (DVA): Reduced by 18.8%
Apache (APA): Reduced by 18.7%
Covidien (COV): Reduced by 9.9%


Removed Positions
Positions they sold out of completely:
Wyeth (WYE)
Walgreen (WAG)
Netapp (NTAP)
Research in Motion (RIMM)
Mastercard (MA)
State Street (STT)
Eaton (ETN)
Leap Wireless (LEAP)
CTrip (CTRP)
Hanesbrands (HBI)
Discovery Communications - Series C (DISCK)
Jetblue (JBLU)
Fifth Third Bancorp (FITB)
Finish Line (FINL)
Orthofix (OFIX)
BPW Acquisition (BPW-U)
Liberty Media Corp - Series A (LCAPA)
MSCI (MXB)
Officemax (OMX)


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

1. Apple (AAPL): 3.38%
2. Hewlett Packard (HPQ): 3.37%
3. Corning (GLW): 3.1%
4. Qualcomm (QCOM): 2.8%
5. Priceline (PCLN): 2.52%
6. Apollo Group (APOL): 2.5%
7. JPMorgan Chase (JPM): 2.5%
8. Gilead Sciences (GILD): 2.48%
9. Citigroup (C): 2.46%
10. Macys (M): 2.43%
11. Marvell Technology (MRVL): 2.42%
12. Amgen (AMGN): 2.3%
13. Liberty Media (LMDIA): 2.28%
14. Progressive (PGR): 2.21%
15. First Solar (FSLR): 2.2%
    

Maverick added to technology names the most on a quarter over quarter basis. Four of their top 10 holdings were brand new positions just added. Half of those were technology names (Qualcomm & Corning) and they were Maverick's third and fourth largest holdings respectively. Not to mention, Maverick's top two holdings were also tech plays in Apple and Hewlett Packard. Do you see a theme here?

Lee Ainslie's hedge fund also added largely to shares of Priceline, Apollo Group, and JP Morgan Chase. This is intriguing mainly because other 'Tiger Cub' hedge funds were buying the exact same names (see Andreas Halvorsen's Viking Global which we just covered this morning). A few other names Ainslie added to that are more unique to their portfolio include Gilead Sciences as well as First Solar, a name that they tripled their exposure in.

We also want to focus on their new portfolio addition in CVS Caremark. Way back in the first quarter of this year, Maverick sold out of CVS in favor of competitor Walgreens. Now, fast forward to the third quarter of this year and we see that Maverick has done the opposite and has sold completely out of Walgreens and started a new stake in CVS Caremark again. Possibly the most interesting aspect of this whole 'switcheroo' is that Lee Ainslie was at an investing conference in late October at the University of Virginia and he mentioned one of his current favorite plays was CVS. He obviously just added this name in the third quarter and then a few days after the conference on November 5th we saw shares of CVS drop from $36 to $28 and wondered if Ainslie was buying or not. Shares are now trading around the $30 mark. We'll definitely be interested to see what Ainslie did with this position when the fourth quarter portfolio disclosures are released given that he has been flip-flopping on various pharmacy plays throughout the year.

Below are some graphical illustrations of the changes made to Maverick Capital's portfolio courtesy of Drew Robertson at Financial Research Station:

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And also:

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Assets from the collective holdings reported to the SEC via 13F filing were $8.3 billion this quarter compared to $6.4 billion last quarter, so they deployed almost $2 billion into long US equities on a quarter over quarter basis. 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 and Andreas Halvorsen's Viking Global so check back daily as we'll be covering new hedge fund portfolios.