Hedge Fund Atticus Capital Shutting Down

Big news out of hedge fund land as manager Timothy Barakett has decided to close his Atticus Capital funds. To be honest, this didn't surprise us too much. After all, we have been covering Atticus' portfolio for some time now and it has been a ridiculous rollercoaster of a ride. We'd been postulating that Atticus' ship was never truly stabilized after they survived a scare in 2008. Barakett says in his farewell letter that he wants to spend more time with family and on philanthropic efforts but it's hard not to wonder if the hellish 2008 for them made his decision that much easier. While redemption issues are not to blame here, it's almost as if they've had trouble recuperating and adjusting to the volatility and wild swings of a bear market.

Let's quickly walk through the timeline of Atticus' portfolio we've covered here on Market Folly. Back in September of 2008 we saw that their European fund was -42.5% for the year and their Global fund was -27.2%, thus subjecting them to liquidation rumors. While those rumors proved to be untrue, the poor performance and mass of investors heading for the exits was certainly the first (and largest) warning sign that things were not necessarily well at the firm. As such, Atticus found themselves ranked #2 on a list of the Top 10 Asset Losers in hedge fund land.

The massive deleveraging that went on at their hedge fund was evident in their SEC filings as they went from reporting a portfolio worth billions of dollars down to reporting only $500 million. This was the first drastic turn on the rollercoaster known as Atticus' portfolio. Then from Q3 of 2008 to Q4 of 2008, Atticus' reported assets rose from $500 million back up to $1.9 billion. It was evident that they liquidated positions the quarter prior in an effort to stop the bleeding and to meet any redemptions. The following quarter, they then ramped their portfolio back up. However, the vast majority of their positions were bought via Call options, something we hadn't seen from them before. (We detailed the portfolio changes in their entirety here). What's even more intriguing is that for the most part, they bought the exact same positions they held previously. Except, instead of buying common stock like last time, they were now almost exclusively using Call options. This was the second major peculiar act we took note of.

Then, when we examined their first quarter 2009 portfolio, we saw that they held a mere five long equity positions. While Atticus typically ran a concentrated portfolio, they by no means ran a book as small as this prior to that particular filing. Yet again, we wondered what exactly they were doing over there. In early August they started to sell shares of Sotheby's and Transatlantic Holdings. Then just last week we covered the fact that Atticus was selling shares of their only holding in UK markets. And below, we learn that Barakett has been selling the rest of his portfolio as he winds down his funds.

Here is the letter Barakett sent out to investors announcing the closure, posted up by FT Alphaville:

"
August 11, 2009

Dear Investor in Atticus Global, Ltd. and Atticus Global, LP:

I am writing to inform you of my decision to close the funds I manage, including Atticus Global, Ltd. and Atticus Global, LP (together, the “Atticus Global Fund”). This decision will come as a surprise to most of you, especially given that we have received redemptions of less than 5% of capital and your loyal support over the past 15 years.

I have used the market’s recent strength to begin liquidating a significant amount of our holdings. We currently expect that the portfolio will be fully liquidated by September 30th and that we will be in a position to return approximately 95% of your capital in early October. The balance of investor capital will be returned after the final audit is completed, which should be later this year.

My decision is solely a personal one. After fifteen years of being singularly focused on building and managing Atticus, I believe it is time to reassess my future. I intend to spend more time with my family, pursue my philanthropic interests and establish a family office to manage my own capital and charitable foundation.

Atticus (the management company) will continue to operate, and the Atticus partnership will remain intact. In addition, it is my partner David Slager’s intention to continue to manage the Atticus European Fund.

I founded Atticus in 1995 and launched our first fund in January 1996 with less than $6 million under management. The Atticus Global strategy was launched in December 1996 and has compounded investor’s capital at over 19% net annually since inception.1 I am very proud of the Atticus Global track record and our net returns through July 2009 are shown below:

Atticus Global S&P 500
1 year -13.3% -20.0%
3 year 0.8% -6.2%
5 year 9.3% -0.1%
10 year 13.6% -1.2%
Inception 19.3% 3.9%
Cumulative 835.3% 62.3%

I am also very proud of Atticus’ overall investment results: from the inception of our first fund in January 1996 through July 2009, funds managed by Atticus have generated
almost $7 billion of profits for our investors.

I have been blessed with great investors, partners, employees, and a lot of good luck. I am thankful and sincerely appreciative of the trust and confidence you have placed in me and our organization.

Sincerely,

/s/ Timothy R. Barakett

Timothy R. Barakett
Founder, Chairman & CEO
"

It's sad to see Barakett go because he truly did have a solid track record minus the bump encountered over the past year or so. But that just goes to show you how hard bear markets can be to adapt to. We now add Atticus to an ever-growing list of hedge fund closures throughout this crisis. And while Atticus did not truly implode like many other funds on the list, they have still closed nonetheless. This is another major fund closing that we've covered on the blog, as we've previously detailed the closure of James Pallotta's Raptor Capital, William von Mueffling's Cantillon Capital, and Art Samberg's Pequot Capital among many other major names.

We'll end this piece re-emphasizing this interesting statistic that Barakett noted: "from the inception of our first fund in January 1996 through July 2009, funds managed by Atticus have generated almost $7 billion in profits for our investors." Now that is simply astonishing. To see the positions they hold/held/are liquidating, head to their hot-off-the-press 13F filing for Q2 2009 which was just released. Ironically, they finally now disclose a healthy & normal $4.5 billion worth of long positions. Imagine that.

R.I.P. Atticus, we'll miss tracking your rollercoaster of a portfolio.

Atticus Capital Sells Shares Of Unite Group, Their Only UK Holding

Just yesterday, the London Stock Market announced through the Regulatory News Service that Timothy Barakett's hedge fund Atticus Capital had reduced its stake in Unite Group from 4.1% to 3.8%. Unite Group Plc (UTG) is a developer and manager of student accomodation and is Atticus' only disclosed holding in a British company. Unite Group's share price fell significantly during the last couple of years from a high of 549P in February 2007 to a low of 39P in March of this year; that's quite some fall! If Atticus were clever enough to start accumulating Unite Group stock in February or March of 2009, it is likely that they will have turned a good profit on the small amount of shares they have just sold. However, we are unable to know for sure at what price Atticus paid for the first part of their position. This is due to the rules of UK disclosures, as funds are not required to disclose a position until they have acquired 3% or more of any given company.

In terms of U.S. positions, we also disclosed yesterday that Atticus Capital had amended two separate 13G filings. In the filings, we saw that Timothy Barakett's hedge fund was selling shares of Sotheby's (BID) and Transatlantic Holdings (TRH).

This article is a new edition to Market Folly's expanding hedge fund coverage. Typically, we've covered U.S. equity positions as disclosed to the SEC. Now, thanks to a reader's help, we are also detailing the changes prominent hedge funds make to their portfolios in the UK market. We kicked off our coverage in this regard yesterday by detailing the UK positions of Stephen Mandel's hedge fund Lone Pine Capital. And the post above regarding Atticus marks our second article in this new coverage. Stay tuned as we continue to cover both the U.S. and UK holdings of top hedge fund managers.

Below you will find the breakdown of Atticus' transaction. Lastly, for background information on Barakett & Atticus, head to our post here.

Unite Group Plc

Date of transaction	No. of shares	% of total shares	Estimate of price per share
04/06/2009	3852513	3.1	-
18/06/2009	5163291	4.1	125p
31/07/2009	4806652	3.8	128p

Timothy Barakett's Atticus Capital Sells Shares Of Sotheby's (BID) & Transatlantic Holdings (TRH): 13G Filings

Atticus Capital has amended 2 separate 13G filings recently. In a 13G filed due to activity on July 31st, 2009, Timothy Barakett's hedge fund is now showing a 3.9% ownership stake in Sotheby's (BID) with 2,612,942 shares. They have decreased their position from a previous 5.4% stake when we covered their initial 13G filing on Sotheby's. That original disclosure was made due to activity on June 11th, 2009. So, in a little over a month, Atticus has sold 971,168 shares of BID.

In a second 13G filing made due to activity on July 29th, 2009, Atticus is also now showing a 2.4% ownership stake in Transatlantic Holdings (TRH) with 1,589,800 shares. This is a decrease from their previous 5.6% ownership stake reported when they filed their initial 13G on TRH in early June of this year. So, yet another position that Atticus has been selling down. Between June 8th and July 29th, Atticus sold 2,099,800 shares. To see what else Atticus holds, you can view the rest of their portfolio.

This is yet another development on the rollercoaster of a ride otherwise known as: "tracking Atticus' portfolio." In the past, we've detailed how Atticus has ramped up their portfolio, only to drastically scale it back... and then ramp it up again. These filings are the perfect illustration of that. They assembled large positions in both BID and TRH in early June and are already selling sizable pieces of their stake just over a month later. If you think about it, you can't really blame them as they will have locked in some nice profits over a short period of time. Still though, the whipsawing and rollercoastering is making us a bit seasick. Either things are still not quite totally stable over there after their rough 2008, or they are more concerned about locking in solid gains while they have them. Either way, the portfolio turnover game at Atticus plays on.

Atticus was ranked #2 on the Top 10 Asset Losers for 2008 in hedge fund land. And as we mentioned above, their portfolio has been all over the place. Over the course of 3 quarters, they've gone from selling a ton of long equities exposure one quarter, loading up on options positions the next, then most recently only reporting 5 material long equity positions. In two weeks time when the next round of 13F filings come out, one can only guess what their portfolio will look like next.

Timothy Barakett received both his BA in Economics and his MBA from Harvard. It's very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. A fun fact about Barakett is that he was a Harvard hockey teammates with Philip Falcone of Harbinger Capital Partners, whom we also cover.

Taken from Google Finance,

Sotheby's is "an auctioneer of fine art, antiques and decorative art, jewelry and collectibles. The Company’s operations are organized into three business segments: Auction, Finance and Dealer. In addition to auctioneering, the Company’s Auction segment is engaged in a number of related activities, including the brokering of private purchases and sales of fine art, jewelry and collectibles."

Transatlantic Holdings "conducts its operations principally through its three operating subsidiaries: Transatlantic Reinsurance Company (TRC), Trans Re Zurich (TRZ) and Putnam Reinsurance Company (Putnam). The Company offers reinsurance capacity for a range of property and casualty products on both a treaty and facultative basis. These products are offered directly and through brokers, to insurance and reinsurance companies, in both the domestic and international markets."

Image courtesy of NewYorkSocialDiary

Timothy Barakett's Atticus Capital Files 13G on Sotheby's (BID)

Timothy Barakett's hedge fund Atticus Capital has filed a 13G on Sotheby's (BID) disclosing a 5.4% ownership stake in the company. The filing was made due to activity on June 11th, 2009 and they now own 3,584,110 shares. This is a brand new position for Atticus, as they previously did not hold it when we examined their portfolio in its entirety.

It definitely looks as if Atticus is starting to move back into equity positions and put money to work. We recently also covered their 13G filing on Transatlantic Holdings (TRH). On the surface, these type of filings just represent portfolio holdings. But, below the surface, it could very well mean much more for Atticus. We say this because Atticus' portfolio over the last 3 quarters has been all over the place. They had a lot of assets tied up in stocks, then they moved the bulk of their portfolio to cash, and then they moved a chunk of money into mainly options positions. Then, this past quarter, we noticed that they only held 5 long positions.

Whether it was raising cash levels due to a cautious stance on the market or possibly continued worries regarding investor redemptions after their poor performance in 2008, Atticus has definitely been trying to steady their ship. Either way, its pure speculation on our part. All we know is that they moved a lot of assets out of the markets. But, 13G filings like these indicate to us that they are starting to put money to work again in the markets, which is a good sign for them. After all, last year Atticus was ranked 2nd on the top 10 asset losers list. For more background on Atticus and a look at their portfolio, head over to our Atticus article here.

Taken from Google Finance,

Sotheby's is "an auctioneer of fine art, antiques and decorative art, jewelry and collectibles. The Company’s operations are organized into three business segments: Auction, Finance and Dealer. In addition to auctioneering, the Company’s Auction segment is engaged in a number of related activities, including the brokering of private purchases and sales of fine art, jewelry and collectibles. The Company also operates as a dealer in works of art through its Dealer segment, conducts art-related financing activities through its Finance segment and is engaged, to a lesser extent, in licensing activities."

Atticus Capital (Timothy Barakett) Files 13G on Transatlantic Holdings (TRH)

In a 13G filed with the SEC yesterday, hedge fund Atticus Capital has disclosed a 5.6% ownership stake in Transatlantic Holdings (TRH) due to activity on June 8th, 2009. They now hold 3,689,600 shares. This is a brand new position for them, as we previously did not see it in their portfolio per their 13F filing. Timothy Barakett's hedge fund has been on a rollercoaster ride lately, to say the least. And it finally appears that they are getting back to business and establishing positions. When we checked their entire portfolio out last week, we saw that they only held 5 positions as of March 31st, 2009. So, this TRH position is a new addition for them.

Atticus had a rough year last year, as they were subject to liquidation rumors (which were later proven untrue) amidst poor performance. They were ranked #2 on the Top 10 Asset Losers for 2008 in hedge fund land. As such, their portfolio has been all over the place, loading up on options positions one quarter and then just recently only reporting 5 material long equity positions. So, this stake in TRH makes it seem like they are ready to get back to investing after stabilizing their ship.

Background on Atticus: Barakett received both his BA in Economics and his MBA from Harvard. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. A fun fact about Barakett is that he was a Harvard hockey teammates with Philip Falcone of Harbinger Capital Partners, whom we also cover. Check back each day as we cover a new hedge fund in our portfolio tracking series.

Taken from Google Finance,

Transatlantic Holdings "conducts its operations principally through its three operating subsidiaries: Transatlantic Reinsurance Company (TRC), Trans Re Zurich (TRZ) and Putnam Reinsurance Company (Putnam). The Company offers reinsurance capacity for a range of property and casualty products on both a treaty and facultative basis. These products are offered directly and through brokers, to insurance and reinsurance companies, in both the domestic and international markets."

Timothy Barakett's Atticus Capital Drastically Scales Back Portfolio: 13F Filing Q1 2009

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

Next up we have Atticus Capital, the hedge fund ran by Timothy Barakett. In 2005, Atticus' funds were up a combined 45%. And, they finished well over 30% for 2006. Barakett founded the firm at age 29 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps.

Barakett received both his BA in Economics and his MBA from Harvard. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. A fun fact about Barakett is that he was a Harvard hockey teammates with Philip Falcone of Harbinger Capital Partners, whom we also cover.

You may have heard about Atticus over the past year simply because their performance has not been up to par, to put it politely. In a September 2008 hedge fund performance update, we noted that Atticus European was -42.5% for 2008 while Atticus Global was -27.2% over the same timeframe. And, consequently, Atticus was a victim of liquidation rumors, which were quickly denied.

More recently, we turned our focus again to Atticus when we checked out the 2009 Hedge fund rankings: Top 10 Asset Losers. Unfortunately for them, Atticus was #2 on that list, as their assets dropped 60% on a year over year basis. Something is definitely afoot over there, but the only SEC filed development we have seen is sales of Legend International (LGDI).

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


Some New Positions (Brand new positions that they initiated in the last quarter):
Wyeth (WYE)
Costco (COST) Puts
Nokia (NOK)


Some Increased Positions (A few positions they already owned but added shares to)
n/a


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Mastercard (MA): Reduced by 92%
Visa (V): Reduced by 79%


Removed Positions (Positions they sold out of completely)
Google (GOOG) Calls
Mastercard (MA) Calls
Potash (POT)
Microsoft (MSFT)
Microsoft (MSFT) Calls
Boeing (BA) Calls
NYSE Euronext (NYX)
Baidu (BIDU)
Google (GOOG) Puts
Intercontinental Exchange (ICE)
CME Group (CME)
CSX (CSX) Calls
Vale (RIO) Calls
Union Pacific (UNP)
Oracle (ORCL) Calls
Emerging Markets ETF (EEM)
Boeing (BA) Puts
CME Group (CME) Puts
CME Group (CME) Calls
Burlington Northern (BNI)
Oracle (ORCL)
Monsanto (MON)
Boeing (BA)
CSX (CSX)
Norfolk Southern (NSC)
Freeport McMoran (FCX) Calls
Valero (VLO)
Mastercard (MA) Puts
NYSE Euronext (NYX) Calls
NYSE Euronext (NYX) Puts


Their Entire Long Portfolio (by % of portfolio)

1. Wyeth (WYE): 47.2% of portfolio
2. Costco (COST) Puts: 40.36% of portfolio
3. Visa (V): 5.74% of portfolio
4. Nokia (NOK): 3.46% of portfolio
5. Mastercard (MA): 3.24% of portfolio

Yes, you are reading that correctly; Atticus has only listed 5 positions. They have yet again drastically reduced their portfolio size. On a quarter to quarter basis, this hedge fund's portfolio is most akin to a rollercoaster. They initially scaled back their portfolio to an extreme when they were faced with poor performance and redemption requests back in Q3 2008. Once they survived that scare, they ratcheted positions back up in Q4 2008, but curiously enough in the form of many options positions, rather than their typical plays of common stock. Then, we arrive at the present. Assets from the collective holdings reported to the SEC via 13F filing were only $118 million this quarter compared to $1.9 billion last quarter. And, obviously, that's quite a change.

A lot of the positions they sold out of over the first quarter 2009 were their options positions that they had purchased the quarter prior. Of the positions they still hold, they cut their Mastercard and Visa stakes substantially, which is notable considering how we've seen so many hedge funds invested in those two payment processors. Of their other holdings, we note a large position in Wyeth (WYE), as they too seem to be playing the arbitrage/event-driven game with that name. Concurrent with their MA and V positions, their Wyeth position is also widely held amongst hedge funds we cover in our series. They started their WYE stake as a new holding this past quarter and it is worth around $55 million. While it is listed at an obscene 47% of their portfolio, you also have to consider that their invested long portfolio decreased substantially.

We're not going to begin to speculate about what is going on over there, but we're starting to get nauseous with all the swings back and forth. This constant level of portfolio re-shuffling is odd to say the least and we'll save our torts for when we have concrete information. We'll continue to monitor the developments and hopefully the portfolio will stabilize sometime soon (though at this rate we're not exactly counting on that). This is just one of the 40+ prominent funds that we'll be covering in our hedge fund Q1 2009 portfolio series. Check back each day as we cover new fund portfolios. We've already covered Andreas Halvorsen's Viking Global, John Paulson's hedge fund Paulson & Co, Stephen Mandel's Lone Pine Capital, Eric Mindich's Eton Park Capital, John Griffin's Blue Ridge Capital, and David Einhorn's Greenlight Capital, and Seth Klarman's Baupost Group.

Timothy Barakett's Atticus Capital Files Form 4 on Legend International (LGDI)

Hedge fund Atticus Capital ran by Timothy Barakett has filed a Form 4 with the SEC and has disclosed some small sales in their Legend International Holdings (LGDI) position. Our apologies for not posting this sooner, as the filing was made on March 31st, 2009 due to sales made by Atticus on March 27th. They sold 50,000 shares at $0.6105 and another 65,700 shares at $0.6069. After the sales, their holding in LGDI sits at 30,654,300 shares remaining.

Atticus Capital, the hedge fund ran by Timothy Barakett saw their combined funds up 45% in 2005. In 2006, they gained over 30%. Yet, in a complete reversal of fortunes, Atticus survived a nightmarish year last year, having been down more than 30% at one point. With a fresh year in tow, they were eager to set out on the right foot for 2009. However, their pain somewhat continued. Their European fund was -0.8% for February and sits -10% for 2009 as of that time, as noted in our series of January & February hedge fund performance numbers (March numbers here). Barakett founded the firm at age 29 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps. Barakett received both his BA in Economics and his MBA from Harvard. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. A fun fact about Barakett is that he was a Harvard hockey teammates with Philip Falcone of Harbinger Capital Partners, whom we also cover.


Taken from Google Finance,

Legend International Holdings Inc is an "exploration stage company. The Company is engaged in mineral exploration and development activities. Legend primarily focuses in the development of its phosphate interests in the Georgina Basin in Queensland. The Legend landholdings, prospective for phosphate, diamonds and base metals, cover 40,525 acres in Queensland, Australia, and 4.7 million acres in the Northern Territory, Australia."

Timothy Barakett's Atticus Capital Hedge Fund 13F Filing: Q4 2008

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

Next up, we have Atticus Capital, the hedge fund ran by Timothy Barakett. In 2005, Atticus' funds were up a combined 45%. And, they finished well over 30% for 2006. Barakett founded the firm at age 29 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps. Barakett received both his BA in Economics and his MBA from Harvard. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. A fun fact about Barakett is that he was a Harvard hockey teammates with Philip Falcone of Harbinger Capital Partners, whom we also cover.

You may have heard about Atticus over the past year simply because their performance has not been up to par, to put it politely. In a September hedge fund performance update, we noted that Atticus European was -42.5% for 2008 back in September while Atticus Global was -27.2% over the same timeframe. And, consequently, Atticus was a victim of liquidation rumors, which were quickly denied. We previously analyzed Atticus' holdings back in June and noticed that they had significant natural resource and mining positions at the time.

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


Some New Positions (Brand new positions that they initiated in the last quarter):
Google (GOOG)
Peabody (BTU)
Mastercard (MA) Puts
CME Group (CME) Calls
Wells Fargo (WFC)
Google (GOOG) Puts
CME Group (CME) Puts
CME Group (CME)
Mastercard (MA)
USG (USG)
Monsanto (MON)
Burlington Northern (BNI)
Baidu (BIDU)
Visa (V)
Google (GOOG) Calls
Intercontinental Exchange (ICE)
Norfolk Southern (NSC)
Boeing (BA)
Mastercard (MA) Calls
NYSE Euronext (NYX) Puts
Boeing (BA) Puts
NYSE Euronext (NYX) Calls
CSX (CSX)
Ebay (EBAY)
Valero (VLO)
Potash (POT)
Emerging markets index (EEM)
Vale (RIO)
Boeing (VA) Calls


Some Increased Positions (A few positions they already owned but added shares to)
Union Pacific (UNP)
Freeport McMoran (FCX)


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Emisphere (EMIS)


Removed Positions (Positions they sold out of completely)
Financial ETF (XLF) Puts
Synvista (SYI)
Crown Castle (CCI)
Russell 2000 (IWM) Puts
Gold Fields (GFI)
Newmont Mining (NEM)
Occidental Petroleum (OXY)
Western Union (WU)
Telekomunikasi Indonesia (TLK)
KT Corp (KTC)
China Telecom (CHA)
Grupo Aeroportuario Pacifico (PAC)
Grupo Aeroportuario Sureste (ASR)
Sony (SNE)
Petrochina (PTR)


Top 20 Holdings (by % of portfolio)

1. Google (GOOG) Calls: 10.17% of portfolio
2. Mastercard (MA) Calls: 6.9% of portfolio
3. Potash (POT): 6.3% of portfolio
4. Microsoft (MSFT) Calls: 5.9% of portfolio
5. Microsoft (MSFT): 5.25% of portfolio
6. Boeing (BA) Calls: 4.34% of portfolio
7. NYSE Euronext (NYX): 3.94% of portfolio
8. Baidu (BIDU): 3.5% of portfolio
9. Google (GOOG) Puts: 3.13% of portfolio
10. Intercontinental Exchange (ICE): 2.87% of portfolio
11. CME Group (CME): 2.79% of portfolio
12. CSX (CSX) Calls: 2.7% of portfolio
13. Vale (RIO) Calls: 2.7% of portfolio
14. Union Pacific (UNP): 2.27% of portfolio
15. Oracle (ORCL) Calls: 2.25% of portfolio
16. Emerging Markets Index (EEM): 2.23% of portfolio
17. Boeing (BA) Puts: 2.17% of portfolio
18. Mastercard (MA): 2.1% of portfolio
19. CME Group (CME) Calls: 2.1% of portfolio
20. CME Group (CME) Puts: 2.1% of portfolio

Atticus returned to many of their 'normal' portfolio holdings this past quarter having sold off a lot of equities amidst the liquidation rumors. Basically, they previously owned a bunch of the names you see in their top 20 holdings. They sold them. Then they bought a lot of them back. Isn't market volatility fun? Assets from the collective long US equity, options, and note holdings were $1.9 billion this quarter, back up from the $500 million they had last time around (which again highlights the massive deleveraging they saw during their little scare). So, things appear to be slowly stabilizing for them. This is just one of many funds in our Q4 2008 hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, and Andreas Halvorsen's Viking Global. Look for our updates as we cover a new fund each day.

Hedge Fund Tracking: Timothy Barakett's Atticus Capital - 13F Filing 3rd Quarter 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We'll be bringing you the long equity portfolios of numerous prominent hedge funds. Hedge funds we track here at MarketFolly.com include: Tudor Investment Corp, Greenlight Capital, Blue Ridge Capital, Moore Capital Management, and literally many, many more. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis of each individual fund here in the coming weeks. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, and Lee Ainslie's Maverick Capital.

Fund Background: Next up, we have Atticus Capital. Atticus Capital is a hedge fund ran by Timothy Barakett. In 2005, Atticus' funds were up a combined 45%. And, they finished well over 30% for 2006. Barakett founded the firm at age 26 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps. And, they continue to hold some of their position in what is now the combined FCX. Barakett received his BA in Economics from Harvard and his MBA from Harvard as well. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking.

You may have heard about Atticus over the past few weeks because they have not been performing well at all this year. In our September hedge fund performance update, we noted that Atticus European was -42.5% for the year as of September while Atticus Global was -27.2% over the same timeframe. And, consequently, Atticus was a victim of liquidation rumors, which were quickly denied. We previously analyzed Atticus' portfolio holdings back in June and noticed that they had significant natural resource and mining positions at the time. We'll get into the details below, but you can take a guess as to where a lot of their losses are coming from this year. Overall, it's been one of the worst years for hedge funds in a long time. And although Atticus still exists as a fund, they have definitely had a rough year and have been selling off assets.

The following were Atticus' long equity and options holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that they initiated in the last quarter):
Russell 2000 Index (IWM) Puts
CSX Corp (CSX) Calls
Financial select sector (XLF) Puts


Added to (Positions they already owned but added more shares)
Vale (RIO) Calls
Emisphere Technologies (EMIS)


Reduced Positions (Positions they sold some shares of)
Union Pacific (UNP)
Crown Castle (CCI)
Nyse Euronext (NYX)
Occidental Petroleum (OXY)
Freeport McMoran (FCX)
Gold Fields (GFI)
Freeport McMoran (FCX) Calls
Newmont Mining (NEM)
Western Union (WU)
KT Corp (KTC)
Telekomunikasi Indonesia (TLK)
China Telecom (CHA)
Grupo Aeroportuario del Pacifico (PAC)
Grupo Aeroportuario del Sureste (ASR)
Sunair Services (SNE)
Petrochina (PTR)


Positions with no change
Synvista Therapeutics (SYI)


Removed Positions (Positions they sold out of completely)
Conoco Philips (COP)
Burlington Northern (BNI)
Conseco (CNO)
Peabody (BTU)
Mastercard (MA)
Norfolk Southern (NSC)
Genomic Health (GHDX)
Visa (V)
Focus Media (FMCN)
Nyse Euronext (NYX) Puts
Banco Itau (ITU)
Boeing (BA)
Canadian Natural Resources (CNQ)
Uhaul (UHAL)
Baidu (BIDU)
Banco Bradesco (BBD)
Companhia Saneamento Basico (SBS)
Praxair (PX)
National Financial Partners (NFP)
Unibanco (UBB)
Visa (V) Calls
Conoco Philips (COP) Calls
CSX (CSX)
Clean Energy (CLNE)
General Motors (GM)
BHP (BHP)
XTO Energy (XTO)
Marriott (MAR)
Starwood Hotels (HOT)
Nymex (NMX)
Cisco (CSCO)
Microsoft (MSFT)
American Tower (AMT)
Chesapeake (CHK)
Sandridge (SD)
Monsanto (MON)
Potash (POT)
Research in Motion (RIMM)
Apple (AAPL)
Google (GOOG)


Top 20 Holdings (by % of portfolio)

1. CSX (CSX) Calls
2. Vale (RIO) Calls
3. Freeport McMoran (FCX) Calls
4. Union Pacific (UNP)
5. Financial select sector (XLF) Puts
6. Crown Castle (CCI)
7. Russell 2000 index (IWM) Puts
8. Occidental Petroleum (OXY)
9. NYSE Euronext (NYX)
10. Newmont Mining (NEM)
11. Freeport McMoran (FCX)
12. Telekomunikasi Indonesia (TLK)
13. Western Union (WU)
14. Emisphere Technologies (EMIS)
15. Gold Fields (GFI)
16. China Telecom (CHA)
17. Synvista Therapeutics (SYI)
18. Grupo Aeroportuario del Sureste (ASR)
19. KT Corp (KTC)
20. Grupo Aeroportuario del Pacifico (PAC)
    

Atticus was definitely out liquidating a lot of assets. In the quarter prior, they had nearly $8 billion in their long equity portfolio. This quarter, they had only around $500 million worth of positions. That is some serious deleveraging and unwinding. This is the seventh hedge fund we've covered in our 3rd quarter 2008 edition of our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, and Lee Ainslie's Maverick Capital.

Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds to look forward to that we will be tracking: David Einhorn's Greenlight Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Barakett & Atticus:
- Atticus Capital's 2nd quarter '08 portfolio holdings
- October Hedge Fund Performance update

Atticus Capital Letter to Investors (European Fund)

As we've noted in our most recent hedge fund performance update, Atticus European was -15.8% in September and is -42.5% year-to-date. You can view Atticus' most recent portfolio holdings here (as last updated with the SEC).

***EDIT: Removed per request of representatives from Atticus

Hedge Fund Tracking: Atticus Capital's 13F Filing (Managed by Timothy Barakett)

(Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here).

It's time to continue the Hedge Fund tracking series. If you've missed them, I've already covered Jeffrey Gendell's Tontine Partners, Bret Barakett's Tremblant Capital, Peter Thiel's Clarium Capital, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Boone Pickens' BP Capital, Louis Bacon's Moore Capital Management, Paul Tudor Jones' Tudor Investment Corp, and Bruce Kovner's Caxton Associates. And, if you want to hear some insightful thoughts from many of the hedge fund managers listed above, head over to my post on Hedge Fund manager interviews. This week, I'm taking a slightly different approach to the hedge fund tracking series. I'm doing so because the 13F SEC filings are filed on a quarterly basis, so these materials are time sensitive and the next ones are due out in November. I stated in my series preface that you need to treat these as a lagging indicator, because that's what they are. The holdings discussed below reflect portfolio holdings as of June 30th, 2008. So, since these forms are so tedious to sort through, I've condensed the rest of the hedge funds I track to summarize their major moves and top holdings.

Atticus Capital is a $13 billion hedge fund ran by Timothy Barakett. In 2005, Atticus' funds were up a combined 45%. And, they finished well over 30% for 2006. Barakett founded the firm at age 26 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps. And, they continue to hold their position in what is now the combined FCX. Barakett received his BA in Economics from Harvard and his MBA from Harvard as well. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking.

You may have heard about Atticus over the past few weeks because they have not been performing well at all this year. In my last hedge fund year-to-date performance update, we noted that Atticus was -25% for the year. And, consequently, Atticus was a victim of liquidation rumors, which have since been denied. We previously analyzed Atticus' portfolio holdings back in June and noticed that they had significant natural resource and mining positions at the time. I'll get into the details below, but you can take a guess as to where a lot of their losses are coming from this year. Overall, it's been one of the worst years for hedge funds in a long time.

So, now that we've got a background on Barakett and Atticus Capital, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Atticus' top holdings. Due to the time sensitive nature of the 13F material, I wanted to get this information posted before the next set of filings come out in November.

Top 20 Holdings by % of portfolio
1. Union Pacific (UNP) - Increased position by 61%
2. Conoco Philips (COP) - Stake rasied by only 0.3%
3. Mastercard (MA) - Decreased position by 13%
4. Burlington Northern (BNI) - Decreased stake by 6%
5. Freeport McMoran (FCX) - Decreased position by nearly 52%
6. NYSE Euronext (NYX) - Sold off 9.3% of their position
7. Occidental Petroleum (OXY) - Decreased stake by 7%
8. Crown Castle (CCI) - Decreased by only 0.4%
9. Peabody Energy (BTU) - New position
10. Baidu (BIDU) - Increased stake by 65%
11. Norfolk Southern (NSC) - Increased position by 36%
12. Canadian Natural Resources (CNQ) - Decreased stake by 16.6%
13. Visa (V) - New position
14. Boeing (BA) - Boosted stake by 440% (no, not a typo)
15. Praxair (PX) - New position
16. Focus Media (FMCN) - New position
17. Unibanco (UBB) - Sold off 36% of position
18. Amerco (UHAL) - Decreased stake by 32%
19. Conseco (CNO) - Sold off 8.8% of position
20. Vale (RIO) - New position

So, if you didn't already notice, Atticus definitely favors positions in the rails. And, you can't blame them. Those investments have paid off significantly over the course of the year. Atticus has large positions in most of the majors: Burlington (BNI), Norfolk (NSC), and Union Pacific (UNP). Atticus also holds a position in CSX Corp (CSX), but it just isn't a top 20 holding. Atticus boosted their stake in UNP by 61%, propelling it all the way up to the fund's top holding. Numerous other hedge funds have very large positions in the rails as I've noted before. Not to mention, Warren Buffett has some pretty large stakes in some of the rails as well.

Next, I noticed that Atticus was selling off a chunk of their Mastercard (MA). This position could potentially be another one that has been causing them some pain lately. Although they sold 13% last quarter when the share price was trading around $270-300, MA has since plumetted, and is currently hovering around $185. And, considering it was/is their 3rd largest holding, it has to be causing them some pain.

Freeport McMoran (FCX) comes in at the fund's 5th largest holding and could equally be responsible for the fund's poor performance this year. As I noted earlier, they gained these FCX shares through their purchase of Phelps Dodge (who was acquired by FCX). And, up until now, they had pretty much held onto the shares of the new company. But, this past quarter, we saw Barakett unload nearly half his position. At the time of this sale, FCX was trading anywhere from $100-120. But, recently, FCX has traded way down to $63. This name has seen brutal selling over the past few months and you have to think that either Atticus was getting mauled by the sell-off, or they were partly responsible for it. We'll see what the verdict is come November when the next 13F filings are released.

Atticus also added some new holdings this past quarter, and they were adding with conviction. They initiated a position in Peabody (BTU) and brought it up to the fund's 9th largest holding. Additionally, they initiated Visa (V) as their 13th largest holding, Praxair (PX) as their 15th, and Focus Media (FMCN) as their 16th largest. Also, although they already owned Boeing (BA), they boosted their stake by a whopping 440%, bringing it way up to the fund's 14th biggest position.

Overall, it's easy to see where some of Atticus' pain may be coming from this year. Barakett runs a smaller, highly concentrated portfolio. And, when it wins, it wins big. But, as you're seeing now, it can also lose big as well. To see all of Atticus Capital's holdings, you can view their entire 13F filing with the SEC.