Jim Chanos: Short Construction, Long Power Grid Buildout

Jim Chanos, noted short seller and manager of hedge fund Kynikos Associates recently appeared on CNBC and shared some of his views. His bearish stance on infrastructure in general is not necessarily new. He likes being short construction plays, but also likes being long infrastructure that plays the power grid buildout. Chanos says,

"We're short construction companies that are still doing physical build-out of buildings, say, for example, in Las Vegas."

In terms of the power grid, Chanos likes being long names such as Quanta Services (PWR). This name is intriguing because Jeffrey Gendell's Tontine Associates also once had a large stake in PWR. But, due to his funds troubles, he has since sold out of the name. CNBC suggests other ways to play the power grid are through McDermott (MDR), Jacobs Engineering (JEC), Shaw Group (SGR), and Foster Wheeler (FWLT). Keep in mind that these plays also have general infrastructure exposure and are not exclusively focused on the power grid. PWR certainly seems to have some of the most exposure in this area though, as Chanos has highlighted.

Additionally, Chanos is short numerous education plays such as DeVry (DV), Grand Canyon Education (LOPE), ITT Educational (ESI), Strayer Education (STRA), Universal Technical Institute (UTI). Being a shortseller, Chanos had a successful last year, but even he saw withdrawals as investors scrambled for cash.

Here's his video with CNBC:

Tudor Investment Corp Opens Momentum Fund

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

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

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

Peter Thiel's Clarium Capital 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 is Clarium Capital Management, LLC ran by Peter Thiel, the co-founder of PayPal. Clarium is a $2 billion global macro hedge fund that currently has the majority of its holdings in the debt and currency markets. Keep in mind that the equity portion of their portfolio has always been minimal, so the stocks below only represent a small sliver of their overall holdings. 2008 was a roller coaster year for Thiel and company, to say the least. Earlier in 2008, they were up over 45%. But, with a mistimed move into equities, they began to give back their gains and found themselves -4.5% for 2008 as we noted in our year end post of hedge fund performance numbers. The bulk of the losses were sustained in October, where they were down 18% for the month. Assets under management had recently ballooned to the highest amount in Clarium's history, but that didn't last long as redemption requests rolled in and markets continued to tank.

Thiel's fund is unique in that it employs a slightly different management fee structure than most of the hedge fund world. Typical funds charge a flat 2% management fee on assets and then a 20% performance fee. Clarium, on the other hand, does not charge a management fee, but charges only a 25% performance fee. They obviously have more incentive to perform well, to ensure they get paid. And, 2008 didn't go too well in that regard. Thiel recently sat down and opined on numerous macro topics, including whether the US is the next Japan. And, to those who want a little more background on Thiel & his investment style, we first wrote about him here. Clarium has started off 2009 on a positive note, finishing the month of January up 6.7%, as we noted in our latest Clarium update. We'll have to see if they give back the gains like they did in 2008; hopefully they've learned from their mistakes.

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):
S&P 500 (SPY)
Walgreen (WAG)
Intel (INTC)
Playboy (PLA)
Teradata (TDC)
NCR Corp (NCR)
Meadow Valley (MVCO)
National Coal (NCOC)


Some Increased Positions (A few positions they already owned but added shares to)
American Express (AXP): Increased position by 1020%
T3 Energy (TTES): Increased position by 318%
Altria (MO): Increased position by 106%
NRG Energy (NRG): Increased position by 75%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Burlington Northern (BNI): Reduced position by 95%
Hewlett Packard (HPQ): Reduced position by 91%
Exxon Mobil (XOM): Reduced position by 90%
Procter & Gamble (PG): Reduced position by 85%
Philip Moriss International (PM): Reduced position by 84%
Interval Leisure (IILG): Reduced position by 83%
Microsoft (MSFT): Reduced position by 79%
Mastercard (MA): Reduced position by 73%
Schering Plough (SGP): Reduced position by 39%


Removed Positions (Positions they sold out of completely)
Pimco Municipal fund (PMF)
Wendys (WEN)
Nvidia (NVDA)
Oracle (ORCL)
Pimco Floating Rate fund (PFN)
Mylan (MYL)
Iron Mountain (IRM)
Consolidated Edison (ED)
Kimberly Clark (KMB)
Natus Medical (BABY)
Colgate Palmolive (CL)
Walmart (WMT)
Chevron (CVX)
Johnson & Johnson (JNJ)
CVS Caremark (CVS)
Ishares Municipal Bond fund (MUB)
Lazard (LAZ)
United States Oil Fund (USO)
Ishares Brazil (EWZ)
Canadian Superior Energy (SNG)
SPDR Gold Trust (GLD)
Occidental Petroleum (OXY)
Fairfax Financial (FFH)
Conoco Phillips (COP)
US Natural Gas fund (UNG)
McDonald's (MCD)
Google (GOOG)
Yahoo (YHOO)
Select Sector Financial (XLF)


Top 20 Holdings (by % of portfolio)

1. S&P 500 (SPY): 21.35% of portfolio
2. American Express (AXP): 16.38% of portfolio
3. Walgreen (WAG): 11.67% of portfolio
4. Altria Group (MO): 8.55% of portfolio
5. NRG Energy (NRG): 5.15% of portfolio
6. Microsoft (MSFT): 4.9% of portfolio
7. Procter & Gamble (PG): 3.9% of portfolio
8. Philip Morris International (PM): 3.43% of portfolio
9. Schering Plough (SGP): 3.29% of portfolio
10. Mastercard (MA): 3.16% of portfolio
11. Hewlett Packard (HPQ): 2.86% of portfolio
12. Alabama Aircraft (AAII): 2.2% of portfolio
13. Diageo (DEO): 1.8% of portfolio
14. Intel (INTC): 1.4% of portfolio
15. Playboy (PLA): 1.28% of portfolio
16. Exxon Mobil (XOM): 1.23% of portfolio
17. T3 Energy (TTES): 1.17% of portfolio
18. Teradata (TDC): 1.17% of portfolio
19. Burlington Northern (BNI): 0.96% of portfolio
20. MFA Mortgage (MFA): 0.93% of portfolio

Clarium's assets listed in the filing decreased, undoubtedly because of their move away from equities and into other asset classes. They completed sold out of some of their massive holdings from last quarter: GOOG, YHOO, & XLF. This isn't the first time that Thiel has had only a tiny sliver of his portfolio in equities. Assets from the collective long US equity, options, and note holdings were $2.8 billion last quarter and were $31 million this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, David Einhorn's Greenlight Capital, and Seth Klarman's Baupost Group. Look for our updates as we will be covering a new fund each day.

Thoughts From Bob Janjuah, RBS Chief Credit Strategist

I almost stopped reading this piece from Bob Janjuah, the Chief Credit Strategist at RBS after the first two sentences when he mentioned he was a fan of Liverpool Football Club (English soccer to those of you who might be confused). After all, I've supported Manchester United Football Club since I was 13, who just happen to be Liverpool's bitter rivals (and that's an understatement). Yet, it is a great read and you have no idea how much I'm struggling with the fact that a Liverpool fan's work is on the blog. But, a good read is a good read. Sigh. [hat tip again to Zero Hedge].


Bob's World - Free Legal Forms

Seth Klarman's Baupost Group 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 is Baupost Group ran by Seth Klarman. Klarman received his MBA from Harvard Business School and started working at Baupost at age 25. Over the past 25 years, Baupost has seen an annual compound return of 20% and is ranked 49th in Alpha's hedge fund rankings. Klarman has always considered himself a value investor and has been patient through the market turmoil. The past few years they have had nearly half their $14 billion in assets in cash. But, with turmoil comes opportunity. And, as such, Baupost's cash has been gradually deployed by Klarman and Baupost's 100 employees, leaving them with around a fourth of assets left in cash. Klarman's investment process is detailed in his book Margin of Safety. In it, he lays out a "how-to" on risk-averse value investing. The book is no longer actively printed and is very hard to find. His take on recent market action can be viewed in his recent interview with Harvard Business School. Baupost was very active in filing numerous 13Gs in January, and again in February. They've also been buying more RHIE (RHI Entertainment).

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):
Facet Biotech (FACTV)
Theravance (THRX) Bond
Capital Source (CSE) Bond
IStar Financial (SFI-PG) Preferred G Bond
Liberty Media (LCAPA)
Capital Source (CSE)


Some Increased Positions (A few positions they already owned but added shares to)
News Corp (NWS): Increased position by 237%
Capital Source (CSE) Bond: Increased position by 144%
Exterran Holdings (EXH): Increased position by 70%
Domtar (UFS): Increased position by 50%
Theravance (THRX): Increased position by 44%
Breitburn Energy Partners (BBEP): Increased position by 32%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Prepaid Legal (PPD): Reduced position by 75%
Atlas Pipeline Holdings (AHD): Reduced position by 40%
IAC Interactive (IACI): Reduced position by 22%
Linn Energy (LINE): Reduced position by 20%
Liberty Media (LMDIA): Reduced position by 13%
Horizon Lines (HRZ): Reduced position by 6%


Removed Positions (Positions they sold out of completely)
Wellpoint (WLP)
Acusphere (ACUS)
NRDC Acquisition (NAQ)
Claimsnet (CLA)
Triplecrown (TCW)
Prospect Acquisition (PAX)
Enterprise GP (EPE)
SP Acquisition Holdings (DSP)
Unitedhealth (UNH)
Atlas Pipeline Partners (APL)
Sapphire Industrials (FYR)


Top 20 Holdings (by % of portfolio)

1. News Corp (NWS-A): 12.95% of portfolio
2. Linn Energy (LINE): 10% of portfolio
3. Theravance (THRX): 9.4% of portfolio
4. Exterran Holdings (EXH): 8.8% of portfolio
5. PDL Biopharma (PDLI): 7.5% of portfolio
6. Liberty Media (LMDIA): 6.1% of portfolio
7. Breitburn Energy (BBEP): 4.8% of portfolio
8. Domtar (UFS): 4.7% of portfolio
9. News Corp (NWS): 4.3% of portfolio
10. IAC Interactive (IACI): 3.6% of portfolio
11. RHI Entertainment (RHIE): 2.5% of portfolio
12. Viasat (VSAT): 2.5% of portfolio
13. Facet Biotech (FACTV): 2.2% of portfolio
14. Syneron Medical (ELOS): 2.2% of portfolio
15. Theravance (THRX) Bond: 2.1% of portfolio
16. CapitalSource (CSE) Bond: 1.8% of portfolio
17. GHL Acquisition (GHQ): 1.7% of portfolio
18. IStar Financial (SFI-PG) Preferred G Bond: 1.5% of portfolio
19. Alliance One International (AOI): 1.5% of portfolio
20. Liberty Media (LCAPA): 1.4% of portfolio

As you can tell, Baupost has a fondness for News Corp and Liberty Media. Additionally, it was interesting to see them add a range of bond holdings. Assets from the collective long US equity, options, and note holdings above were $1.1 billion this quarter. For more information about Klarman, check out his most recent thoughts on the market, as well as his hedge fund manager interview. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, and David Einhorn's Greenlight Capital. Look for our updates as we will be covering a new fund each day.

Lone Pine Capital Files 13G & Discloses 8.4% Stake in Deckers (DECK)

Stephen Mandel and Lone Pine Capital are wagering that those fuzzy, borderline ridiculous looking, viking-esque UGG boots are more than just a fashion trend. In a new 13G filing, Lone Pine Capital has disclosed an 8.4% stake in Deckers (DECK), the makers of the popular UGGs. The filing was made due to activity on February 20th, 2009 and they now show ownership of 1,092,072 shares. In their most recent 13F filing in which they disclosed their entire portfolio of long positions as of December 31st, 2008, Lone Pine did not show a position in DECK. And, they also did not show a position in their 13F from the period ending September 30th, 2008 either. So, they've come in an added this new position with size.

Assumming they made their initial purchase before February 25th, Lone Pine is already losing on the position. On February 25th, DECK traded around $55 and as of yesterday (March 2nd) trades around $37. It will be interesting to see if they increase their position size given the recent plunge after DECK released earnings and guidance. This sort of play is right up Mandel's alley, as it is a value play in the consumer sector that he is so vastly familiar with. Such a play on discretionary spending in the midst of a consumer recession could also be seen as contrarian. Or, maybe he feels that the brand's popular UGG boots are more than just a fashion fad. Either way, this play is very Lone Pine-esque as it combines their expertise in the consumer sector with their value oriented strategy.

You can view the rest of Lone Pine's portfolio holdings here, which we recently updated last week. Mandel's $7 Billion fund has returned over 25% annually since its inception in 1997. But obviously, last year was rough on them and many others, as noted in our list of 2008 year end hedge fund performance numbers. Why is Mandel worth following you might ask? Well, he served as a consumer/retail analyst for Tiger Management back in the day for legendary investor Julian Robertson. Robertson's proteges/right-hand men have been nicknamed the "Tiger Cubs" and many have started their own funds. So, not only has Mandel learned from one of the best, but he has put up some very solid returns himself. Mandel is well versed in the ways of finding undervalued companies and his funds typically like to sniff out solid companies with good management that are trading below their intrinsic value. Make sure to check out the rest of the prominent hedge funds we're covering in our Q4 portfolio tracking series as we cover a new fund each day.

Jim Chanos' Kynikos Suffers Withdrawals & Perry Cuts Performance Fee

We wanted to take a second to highlight these two stories as they are very reflective of what is going on in the hedge fund industry. We all know that redemptions were rampant. And, to that point, they probably still are winding down. It was postulated that December could have possibly been the halfway point in redemptions. But, if the market tanks yet again, that could undoubtedly set off another wave of redemptions. People need capital. That's all there is to it. In such an environment, cash, quite literally, is king. Case in point: Short seller Jim Chanos has undoubtedly had a solid year given that the market has declined so much. Yet, despite his performance, he is still seeing clients redeem almost 20% of their investment in his Kynikos Associates hedge funds. Chanos cited that, "We were like an ATM machine." Doug Kass, another short seller and hedge fund manager, has recently said that markets cannot recover until redemptions ease.

Many funds out there have suspended redemptions, or 'gated' investors from pulling out their money. As such, investors were left scrambling to pull money from wherever they could. Luckily, some funds have started to release those gates and Citadel addressed this issue in their latest letter to investors. Additionally, investments in funds that have been obliterated are now pretty much worthless. So, what do those investors do when they need capital? They sell their winners. And, Chanos' funds are the perfect illustration of this. Despite his great performance, he still saw outflows due to market conditions and the overall cash crunch.

Secondly, we've also seen that Perry Capital has cut its performance fee to those willing to pay it immediately. Apparently, the offer is to cut the performance fee on their International fund in half, to 10%. If investors accept this cut, they will basically begin paying the performance fee right away, despite the water mark. Such a move illustrates yet another casualty of the markets: performance fees. Hedge funds raked in the gains when they were printing money left and right. But, with many funds having lost money in 2008, they didn't receive their performance fee. And, not only did they not receive this nice bonus, but they dug themselves a ditch in terms of a high water mark. In order for them to collect performance fees going forward, they will need to recoup all their losses from last year and more.

Simply put, cash is king. And, we're not just talking about from an investment standpoint here. Investors need their cash after many of them lost some in 2008. Hedge funds aren't making the cash they once were due to lack of performance fees in many instances. So, they're searching for new ways to generate cash flow. Its interesting to see the industry adapt on the fly like this, as we face a crisis on multiple fronts. And, only time will tell how the industry morphs going into 2010. But, we do know one thing: 2008 certainly expanded the hedge fund graveyard.

Recent Thoughts From Baupost Group's Seth Klarman

An excerpt from Value Investor Insight, where they extract thoughts from Seth Klarman's latest Baupost Group letter. [hat tip Zero Hedge].


Klarman - Free Legal Forms

David Einhorn's Greenlight Capital 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 is Greenlight Capital, a $6 billion fund ran by David Einhorn that specializes in spin-offs and value investing and has seen annual returns of over 20%. Einhorn's name has been popping up in the media a lot over the past year, as he talked about his well documented short position in Lehman Brothers (LEH). And, while that position paid off handsomely for him, it barely offset losses he experienced from other positions. He was caught in the massive Volkswagen short squeeze as he detailed in one of his latest investor letters. Einhorn has also recently detailed the saga between his fund and Allied Capital, a company he shorted, in his book Fooling Some of the People All of the Time: A Long Short Story. It gives you an inside perspective as to how Greenlight constructs and researches their investment theses and we highly recommend it. Greenlight approaches things by identifying mispricings in the markets and going from there.

He has recently advocated getting long gold (GLD), gold miners (GDX), and the Japanese Yen. And, at the same time, he has advocated shorting commercial real estate property REITs, saying that a drop in rents of 10% hurts values due to leverage and also points to the difficulty they will have trying to refinance debt coming due. We covered more of his recent thoughts and ideas in our Greenlight portfolio update. In terms of recent performance, his offshore fund finished 2008 -16.5% as detailed in our 2008 year end hedge fund performance numbers list.

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):
SPDR Gold Trust (GLD)
Allegheny Energy (AYE)
Commscope (CTV)
Market Vectors Gold Miners ETF (GDX)
MEMC Electronic Materials (WFR)
CF Industries (CF)
Dow Chemical (DOW)
Aspen Insurance (AHL)
Proshares Ultrashort Treasuries (TBT)
JA Solar (JASO)
Focus Media (FMCN)
Cadence Design (CDNS)
Patterson-Uti Energy (PTEN)
Carpenter Technology (CRS)
Healthnet (HNT)
Foster Wheeler (FWLT)
McDermott (MDR)
Lawson Software (LWSN) Bond
Patriot Coal (PCX)
Western Digital (WDC)
Cadence Design (CDNS) Bond
Ensco International (ESV)
Colonial Properties (CLP)
Smithfield Foods (SFD)
Huntsman (HUN)
Aercap Holdings (AER)
Corning (GLW)
Duke Realty (DRE)


Some Increased Positions (A few positions they already owned but added shares to)
EMC (EMC): Increased position by 437%
Ticketmaster Entertainment (TKTM): Increased position by 283%
Guaranty Financial (GFG): Increased position by 234%
URS Corp (URS): Increased position by 86%
Teradata (TDC): Increased position by 66%
Echostar (SATS): Increased position by 49%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Dr Pepper Snapple (DPS): Reduced position by 91%
MDC Holdings (MDC): Reduced position by 91%
Dana Holding (DAN): Reduced position by 72%
Triple-S Management (GTS): Reduced position by 50%
Helix Energy Solutions (HLX): Reduced position by 37%
Health Management Associates (HMA): Reduced position by 35%
Energy Partners (EPL): Reduced position by 34%


Removed Positions (Positions they sold out of completely)
Ameriprise Financial (AMP)
Kinross Gold (KGC)
Pomeroy IT Solutions (PMRY)
Mercer (MERC)


Top 20 Holdings (by % of portfolio)

1. SPDR Gold Trust (GLD): 15.9% of portfolio
2. URS Corp (URS): 9.4% of portfolio
3. Allegheny Energy (AYE): 7.5% of portfolio
4. Target (TGT): 5.97% of portfolio
5. Commscope (CTV): 5.4% of portfolio
6. Market Vectors Gold Miners ETF (GDX): 5.4% of portfolio
7. MEMC Eletronic Materials (WFR): 5.2% of portfolio
8. EMC (EMC): 5.2% of portfolio
9. Teradata (TDC): 4.8% of portfolio
10. CF Industries (CF): 4.4% of portfolio
11. Einstein Noah Restaurant Group (BAGL): 3.1% of portfolio
12. Dow Chemical (DOW): 2.33% of portfolio
13. Echostar (SATS): 2.3% of portfolio
14. Helix Energy (HLX): 2.1% of portfolio
15. MI Developments (MIM): 2% of portfolio
16. Employers Holdings (EIG): 1.9% of portfolio
17. Health Management (HMA): 1.3% of portfolio
18. Aspen Insurance (AHL): 1.1% of portfolio
19. Guaranty Financial (GFG): 1.1% of portfolio
20. Republic Airways (RJET): 0.9% of portfolio

Considering how Einhorn brought Gold (GLD) up to his largest holding over the course of last quarter, he must be sitting pretty with the recent surge in gold, which is up over 18% or so since December. Assets from the collective long US equity, options, and note holdings above were $2 billion this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, and Timothy Barakett's Atticus Capital. Look for our updates as we will be covering a new fund each day.

Dennis Gartman: Long Cheap Retail, Short Malls

Dennis Gartman says he has survived this mess because he is a hedger. He is long something, and short something against it; or vice versa. And, we track him on the blog for this exact reason. We run our portfolio in a similar manner and believe that if you're going to try to run a hedge fund-esque portfolio, you truly need to be hedged. So many funds these days have employed leverage and have ran such concentrated portfolios with 'all-in' bets that they have deviated from the original defintion of a hedge fund. We hope to highlight what a hedge fund should be in the true sense of the world. We like to keep it old school.

Noted trader and author of the Gartman Letter, Dennis Gartman, recently sat down and basically said that he likes being long Canada and short the US. Gartman likes Canada's commodity exposure and so he is bullish on Canadian equities, relative to the US, as well as the Canadian dollar compared to the US dollar. If you're unfamiliar with Gartman, check out his Rules of Trading to get a better idea of how he thinks and positions himself.

In terms of specific equities, Gartman likes Family Dollar Stores (FDO) in that they are the cheapest of the cheap. From the beginning of this recession, we here at Market Folly have preached that you want to be long the cheap goods and short the expensive. We've been long Walmart (WMT) and McDonald's (MCD) and short the retail indexes, some discretionary retailers, and commercial real estate plays that focus on malls and retail such as Simon Property Group (SPG). Gartman harps on this point and claims that FDO is the lowest of the low in terms of cheap retail and says he likes to be long the cheap plays. Additionally, he has joined us on our 'short the malls' play and is short SPG as well, as mall traffic and consumer spending continue to decline.

He also mentioned to keep an eye on the Yen/Euro Cross in forex markets. This pairing began to rollover as the crisis began and he has postulated that the recent turning in this cross could possibly be bullish for markets. He cautioned to monitor it carefully, as it could just as well rollover yet again and signal another leg down.

In terms of Canadian equities, Gartman specifically likes Canadian banks. He is long the Royal Bank of Canada (RY) because of the technicals. He stated that there is no way he can go in there and examine every little detail of their balance sheets. That's the big mystery of financials; their balance sheets are like an abyss. He's simply gauging the price action and has noted that the chart has shown some signs of improvement. He also mentioned that he was looking at CIBC and BMO. Plus, he's bearish on US banks, so that sets up nicely.

He has liked being long infrastructure and short the general markets. But, that position started to move against him and he has now shifted into a long Copper position. He sees this as an alternative infrastructure play for the mean time and would like to move back into his infrastructure play.

We've covered Gartman numerous times on the blog before, as he recently said he saw Gold becoming the world's second reserve currency. He has also mentioned to keep an eye on the Baltic Dry Index and Transports, as they are leading indicators of global economic activity.

Warren Buffett's Berkshire Hathaway Letter to Investors / Annual Report (BRK.A)

Hot off the presses, here's Warren Buffett's letter to Berkshire Hathaway investors. (RSS & Email readers will need to come to the blog to view it).

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Publish at Scribd or explore others: Business & Legal buffet berkshire 200

Follow Market Folly on Twitter and StockTwits

Just wanted to take a second and let everyone know that we here at Market Folly have been posting over at Twitter and StockTwits for some time now and if you aren't already, you should definitely follow our posts there. Why? Because we post up our portfolio activity there, as well as unique market insight that is not featured here on the blog. (Cliff's Notes on how to follow us listed at the bottom of this post).


What is Twitter?

Twitter is a service for friends, family, and co-workers to communicate and stay connected through the exchange of quick, frequent answers to one simple question: What are you doing?

It is essentially a mini-blog where you post messages that are 140 characters in length. Think of it as blogging meets texting meets facebook status updates meets instant messenger. You can post up your thoughts, converse with people, and "follow" each others posts by clicking the follow button on their page. Here is Market Folly's Twitter page: Follow Us! (And, if you haven't noticed, our Twitter updates are posted on the right-side column of the blog as well). In order to follow us, all you have to do is sign-up for Twitter for free. And, there's also another reason to sign-up for Twitter.

What is StockTwits?

StockTwits is an application linked to Twitter specifically geared for those interested in trading, investing, and markets. (Check out the WSJ press coverage & the 'how to' guide). Basically, a huge community has sprouted up on Twitter that talks about all things financial markets. Stocktwits is where this happens. Included in this community are well known traders/investors like Doug Kass, Eric Bolling, James Altucher, Paul Kedrosky, Howard Lindzon, and many more. There's also a large amount of prominent financial bloggers on there as well. Simply put, its an awesome community full of knowledgeable and helpful people.

In order to participate, just sign up for Twitter and make sure you "follow" @StockTwits and @marketfolly. Fill in your bio and add a picture so we can get an idea of who you are or how you trade/invest. After you've signed up, go to StockTwits and log in with your information. Poke around and take it all in so you can see how everything works. There's some great tutorials on their site and blog. Then, when you're ready, start to interact and contribute.

There's two ways to participate in the market talk. First, if you're talking about an individual company/ticker, just preface the ticker with a '$' sign. For instance, AAPL becomes $AAPL. This ensures your message is picked up by the community. If you just have general market commentary without a specific ticker, add a '$$' to the very beginning or the very end of your message. For instance: $$ The banking system is insolvent. Or: The market is doomed $$. Note that if you mention a ticker prefaced by the '$' in your post, you don't need to use the $$. You can also talk about futures and forex, and that info is covered on the StockTwits blog.

The easiest way to learn is to observe for a little bit and then to jump right in, as people will help you along the way. If you're confused, you can read some of the articles we've linked to below which help to explain everything.

In the end, there's really only 3 steps:

1. Sign up for Twitter
2. Follow @marketfolly & @StockTwits
3. Log in at StockTwits and poke around to learn.

We'll be posting a follow-up with some more specifics on how you can really utilize Twitter and StockTwits. If you have any questions at all, feel free to email us (marketfolly at gmail dot com) and we'll help you get started out. Now, hurry up and find out what you've been missing out on!

Helpful articles:
- StockTwits 'How to' Guide
- Wall Street Journal article on StockTwits
- MSN Money / Twitter's New Status: Investing Tool
- Macro talk on StockTwits

S&P Dividend Aristocrats

Barron's video on the S&P Dividend Aristocrats (RSS & Email readers may need to come to the blog to view):

What We're Reading (2/27/09)

Tell Congress to Block the Trader Tax (Widespread Petition)

Smart Profits on the Smart Grid (GetReallist)

A look at General Growth Properties (GGP): 8-K Filing (Value Plays)

Icahn among the bulls entering Lions Gate (Barrons)

Bubble in TBT (Accrued Interest)

Stressing the system and the TARP repayment race (zero hedge)

When Consumers Cut Back - A Lesson from Japan (NYT)

Charlie Munger Speech

Berkshire Hathaway's Charlie Munger gave a speech at UCSB and here is the text:

Munger UCSBspeech

Publish at Scribd or explore others: Presentations Other Politics-Humor

[Hat tip to ValuePlays for finding it]

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.

New Hedge Funds: James Pallotta (Raptor Capital) & Christopher Pia (Pia Capital)

James Pallotta, formerly of Tudor Investment Corp, and Christopher Pia, formerly of Moore Capital Management have finally set out to launch their own funds. And, understandably, the market for raising capital has tempered their ambitious launches a bit. They are both launching, but with undoubtedly less capital than they probably anticipated.

Pallotta was in charge of the Raptor fund while at Tudor, where he placed global macro style bets on equities. We covered it when he announced he was starting his own fund and here we are again with his new fund spin-off/launch: Raptor Capital Management. We'll be tracking him from now on considering he was the one running the equities we tracked at Tudor. Raptor (while at Tudor) has seen 14% annual returns since 1993. The recent turmoil marks the longest losing record of Pallotta's career.

Pia, on the other hand, will not be trading equities, but rather currencies, commodities, bonds, and stock indexes in the true global macro style. Pia Capital Management will seek to hold 20-40 positions between 3 weeks to 3 months. So, unfortunately, we won't be tracking him since he won't be doing equities. Pia also has an outstanding track record, locking in 17% annual returns while at Moore Capital, having never had a down year.

Next, turning to Citadel, we see that Misha Malyshev has left with 2 members of his team. Malyshev was in charge of the high frequency trading unit at Citadel. And, while Citadel's main funds floundered last year, Malyshev was up around 40% last year. Its unlikely Malyshev will start a new fund in the next 18 months or so, due to restrictions in his contract.

Short Seller Jim Chanos (Kynikos Associates) Interview

Here's noted short seller Jim Chanos' latest interview where he talks investment opportunities in the current market on the PBS Nightly Business Report, citing his distaste for the Healthcare and Defense sectors: Video

We've chronicled some of his previous interviews as well.

Technical Analysis Using Multiple Timeframes By Brian Shannon

In our recent post, Recommended Reading List: Technical Analysis Edition, we omitted one book from the list because it deserves its own post:

Technical Analysis Using Multiple Timeframes by Brian Shannon: This is one of the best books on charts and trading out there. It comes from the highly successful trader and well known blogger Brian Shannon of Alphatrends.net. Highly recommended. The description: "The trend is your friend, but which one? Opposing trends can be found on various timeframes in the same stock, at the same time creating confusion and worse, unnecessary losses. Understanding market structure and trend alignment allows you to put emotions aside and focus on the right stocks at the right time. Techniques covered in this book are appropriate for anyone (from daytraders to investors) who is looking to improve accuracy in their buying and selling."


Check out his book and read the reviews from other readers. This one goes to the top on our list of good technical analysis reads because its for both investors and traders... anyone looking to add technical analysis to their arsenal of tools.

Andreas Halvorsen's Viking Global 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.

Andreas Halvorsen is one of the many 'Tiger Cub' fund managers we cover here on the blog. 'Tiger Cubs' are the progeny of legendary investor and hedge fund manager Julian Robertson of Tiger Management. Many of the critical members of Tiger started their own funds, and Halvorsen is no different. We've already covered one other 'Tiger Cub' portfolios in our hedge fund tracking series: Stephen Mandel's Lone Pine Capital. Although both Andreas Halvorsen of Viking Global and Stephen Mandel Jr. of Lone Pine Capital both learned the tricks of the trade under Robertson in their time at Tiger Management, both have taken what they've learned and added their own spice to the value oriented, yet growth at a reasonable price (G.A.R.P.) tolerable investment style. Viking employs a fundamental strategy, using a bottom-up process to pick stocks. Viking Global's Equities III fund was +1% for December and finished the year -1.14% as we noted in our hedge fund 2008 performance numbers. You can view their month by month performance breakdown here.

Halvorsen attended Williams College and received his MBA from Stanford, while his work history includes stays at Morgan Stanley and Tiger. In Alpha's latest hedge fund rankings, Viking was ranked #70 in the world. You can view Viking's most recent year end investor letter, as well as their Q3 2008 investor letter here in .pdf format.

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):
Alcon (ACL)
Axis Capital Holdings (AXS)
Bank of America (BAC)
BCE (BCE)
Illumina (ILMN)
ITT Education (ESI)
JP Morgan Chase (JPM)
Mastercard (MA)
McKesson (MCK)
ModusLink (MLNK)
NRG Energy (NRG)
Renaissance Re (RNR)
Sherwin Williams (SHW)
Vulcan Materials (VMC)


Some Increased Positions (A few positions they already owned but added shares to)
Priceline (PCLN): Increased position by 28.6%
Verisign (VRSN): Increased position by 18.4%
Invesco (IVZ): Increased position by 2.6%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
First Horizon (FHN): Reduced position by 32%
Kroger (KR): Reduced position by 30%
Aon (AOC): Reduced position by 25.5%
Qualcomm (QCOM): Reduced position by 22%
Apollo Group (APOL): Reduced position by 21.9%
Davita (DVA): Reduced position by 10.6%
St Jude (STJ): Reduced position by 7.9%


Removed Positions (Positions they sold out of completely)
Idearc (IDAR)
Monster Worldwide (MWW)
RH Donnelley (RHDC)
Associated Bancorp (ASBC)
Federated Mogul (FDML)
Och Ziff (OZM)
Arkansas Best (ABFS)
Fair Isaac (FIC)
Sina (SINA)
Alexander & Baldwin (AXB)
Jefferies (JEF)
Susquehanna (SUSQ)
Glacier Bancorp (GBCI)
Charles River Labs (CRL)
Whitney Holdings (WTNY)
The Stanley Works (SWK)
National Financial Partners (NFP)
Avalonbay Communities (AVB)
Transocean (RIG)
Herbalife (HLF)
National City (NCC)
Thor (THO)
Humana (HUM)
Expedia (EXPE)
Franklin Resources (BEN)
Autodesk (ADSK)
Coach (COH)
Blackrock (BLK)
Harley Davidson (HOG)
Beckman Coulter (BEC)
Keycorp (KEY)
Alliance Data (ADS)
Quest Diagnostic (DGX)
Mettler Toledo (MTD)
Visa (V)
Tidewater (TDW)
Ace (ACE)


Top 20 Holdings (by % of portfolio)

1. Apollo Group (APOL): 18.58% of portfolio
2. BCE (BCE): 11.21% of portfolio
3. Invesco (IVZ): 7.68% of portfolio
4. ITT Educational (ESI): 6.45% of portfolio
5. Bank of America (BAC): 6.32% of portfolio
6. Qualcomm (QCOM): 5.95% of portfolio
7. Davita (DVA): 5.76% of portfolio
8. Priceline (PCLN): 4.9% of portfolio
9. NRG Energy (NRG): 4.53% of portfolio
10. Mastercard (MA): 3.94% of portfolio
11. MSCI (MXB): 3.38% of portfolio
12. JP Morgan Chase (JPM): 2.9% of portfolio
13. Verisign (VRSN): 2.63% of portfolio
14. First Horizon (FHN): 2.15% of portfolio
15. McKesson (MCK): 2.1% of portfolio
16. Sherwin Williams (SHW): 2.1% of portfolio
17. Illumina (ILMN): 1.7% of portfolio
18. Aon (AOC): 1.63% of portfolio
19. Kroger (KR): 1.57% of portfolio
20. Macrovision (MVSN): 1.4% of portfolio

Viking changed up their portfolio a substantial amount over the last quarter. Take the bottom half of their portfolio from the previous filing, and chop it off. That's essentially what happened if you examine their filings quarter to quarter. And, they came in and replaced that void with a whole new slew of companies. Interesting to see them also basically swap out of Visa in favor of Mastercard. Assets from the collective long US equity, options, and note holdings were $3.5 billion last quarter and were again around $3.5 billion this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, and Bill Ackman's Pershing Square. Look for our continual updates each day over the next few weeks.

Simple Mohamed El-Erian Portfolio

Great post by Roger Nusbaum highlighting how simple it is to create an 'El-Erian' styled portfolio using simply exchange traded funds (ETFs). If you're unfamiliar with Mohamed El-Erian, he is the CEO of the largest bond manager in the world, PIMCO. And, he's a pretty smart guy. You should definitely check out his book When Markets Collide by Mohamed El-Erian. It discusses the current fundamental changes going on in the global economy and financial markets/systems. This book also recently won the Business Book of the Year for 2008. In the book, he touches on a new type of portfolio and this is what Roger has sought to re-create in simple form.

The breakdown of the portfolio is as such:

• 15% Domestic Equities: 10% PBP (S&P BuyWrite), 5% IJR (S&P Small Cap)
  
• 15% Foreign Developed Equities: 10% DOL (Intl Large Cap), 5% GWX (S&P Intl Small Cap)
• 12% Emerging Markets Equities: 12% ADRE (Emerging Market index fund)
• Private Equity: Traditionally, this would garner a % by El-Erian, but it is very hard for a retail investor to replicate such an investment.
  
• 9% Domestic Bonds: 6% SHY (1-3 yr treasury), 3% AGZ (agency fund)
  
• 15% Foreign Bonds: 15% IGOV (S&P Intl treasury)
  
• 5% Real Estate: Also hard to replicate, but you can use REITs if you wish. DRW (Real estate ETF)
  
• 11% Commodities: 6% GLD (Gold trust), 5% DBA (Agriculture)
  
• 5% TIPS: TIP (TIPS fund)
  
• 5% Infrastructure: IGF (Global infrastructure fund)
  
• 8% Special Opportunities: Roger suggests a myriad of options for this category. GXG (Colombia ETF), VXX (VIX futures), PHO (Water).
  

Great overall write-up from him with easy implementation of ETFs into El-Erian's new model portfolio. In terms of expanding upon his suggestions, here's our take: On the commodities front, we would try to add some SLV (Silver) or other types of commodities into the mix. In special opportunities, there are literally a myriad of ETFs that could fall into this category. We might suggest something exotic like a Carbon Trading fund (ASO or GSN) or possibly some currency exposure through FXA, FXC, FXF, etc. Other than that, all the other ETFs are pretty self explanatory as to what they track. Check out Roger's article.

Bill Ackman's Pershing Square Capital 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 Pershing Square Capital Management. Bill Ackman runs Pershing Square Capital, a well known value/activist based hedge fund that started in 2003 after Gotham Partners broke up. The past few years, he has had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). But, he has recently closed those shorts. Recently, he also detailed his plans for Target to spin-off its real-estate to unlock value. His Pershing Square IV fund, which invests solely in Target (TGT), has seen abysmal performance, as Ackman apologized for in their recent letter. We'll have to see if this proposal picks up any steam, but so far it hasn't. A great quote from Ackman has arisen from all the Target hoopla. He states, “The investment business is about being confident enough to know that you’re right and everyone else is wrong. Yet you have to be humble enough that you recognize when you’ve made a mistake. Earlier in my career, I think I had the confidence part pretty solid. But the humbleness part I had to learn.’’ We track Ackman on the blog extensively and have a lot of resources on him and his fund. Pershing has been busy lately, filing a 13D on General Growth Properties (GGP) and a 13G on Barnes & Noble (BKS). Furthermore, you can view Pershing Square's Q3 2008 investor letter here. Besides their recent 13D/G filings, let's look at what they've been up to with the rest of their portfolio.

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):
General Growth Properties (GGP)
Alexanders (ALX)


Some Increased Positions (A few positions they already owned but added shares to)
EMC Corp (EMC)
Target (TGT)


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Dr. Pepper Snapple Group (DPS): Reduced position by 51%
Wendy's (WEN): Reduced position by 15%
Sears Holdings Corp (SHLD): Reduced position by 39.5%


Removed Positions (Positions they sold out of completely)
Wachovia (WB)
Longs Drug Stores (LDG)
Barnes & Noble (BKS)
American International Group (AIG)
Mastercard (MA)


Top Holdings (by % of portfolio)

1. Target (TGT): 37.91% of portfolio
2. EMC (EMC): 25.19% of portfolio
3. Wendys (WEN): 9.54% of portfolio
4. Dr Pepper Snapple (DPS): 7.22% of portfolio
5. General Growth Properties (GGP): 1.06% of portfolio
6. Sears (SHLD): 0.48% of portfolio
7. Borders Group (BGP): 0.17% of portfolio
8. Greenlight Capital Re (GLRE): 0.13% of portfolio
9. Alexanders (ALX): 0.09% of portfolio

Assets from the collective long US equity, options, and note holdings above were $2.4 billion this quarter. As you can tell, Ackman is running quite a slim, concentrated portfolio on the long side of things. His massive (and well documented) stake in Target continues to hurt him and the Pershing Square IV fund. While there has been much made over Ackman's foray into shares of GGP, you can also now see that he has added Alexanders into his portfolio, but at in small size relative to his portfolio as a whole. For more thoughts from Ackman, check out his insightful interview with Charlie Rose or his recent speech at the Value Investing Congress. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, and George Soros. Look for our updates as we cover a different fund every single day.

Dennis Gartman Says Gold Becoming World's Second Reserve Currency

In his most recent Bloomberg interview, trader, economist, and author of the Gartman Letter, Dennis Gartman has claimed that Gold is becoming the world's second reserve currency behind that of only the US Dollar. He cites that all major currencies are so weak and so people are moving away from paper money and into gold. And, with gold hovering around $1000, things could get interesting. Dennis says the 'trend is up and will likely continue to be up.' Basically, he likes to buy dips here and ride the trend. He had talked gold in a previous interview as well.

He currently says to sell the yen due to the stifled economy and weakness of their administration. There are simply too many problems in Japan and the charts point to that in the Yen. He also likes to watch the EUR/JPY cross as an indicator of markets. When that currency pair has headed south over the past year, the markets trend the same way.

If you're unfamiliar with Gartman, then we suggest you check out his rules of trading so you can get an idea as to his style. We've also covered Gartman's thoughts on the Baltic Dry Index.

Here's the full video interview at Bloomberg.

Don Coxe's Latest Thoughts: Bullish on Agriculture & Food

Investment Strategist Don Coxe is recently out with his thoughts about the markets. His insight can be summed up as such:

Bullish on: Agriculture, China, India, & Inflation (i.e. he expects it)

Next great investment: Food

Basically, he harps on the 'emerging markets' adage, but notes that China and India's standard of living is rising. And, his theory is that once they taste such a lifestyle, they won't want to return to old ways and the culture will shift to consuming more food. Overall, increasing population and increased ways of living require more food, healthier food, etc. (Hence, his bullishness towards food and agriculture). If you agree with Coxe, you can use the ETF: DBA (agriculture) to play the inflationary commodity and food thesis longer-term.

And, in terms of agriculture specifically, Potash (POT) is a solid play due to its dominant market share on the nutrient. Even as demand for the nutrient has decreased (slowed global growth), prices haven't fallen off a cliff like oil. So, when demand does kick back up, these producers should have some form of pricing power once they work off supply build up. We've seen numerous hedge funds pick up POT lately, including George Soros. Check out our in-depth look at Potash for more analysis and info.

Keep in mind though, that such plays could take a long while to unfold. If you conclude that inflation is in the future, then Coxe's thoughts could be right on the money. For what it's worth, Jim Rogers and George Soros are both bullish on agriculture as well. Our stop was triggered on our Potash position way back at $160 as per our post, and we have yet to revisit the name which now trades around $80, or 6x earnings. While the story is still attractive fundamentally long-term, signs of improving technicals (chart) would be needed. Or, perhaps some return of global economic activity and a hint of inflation would do. Regardless, the funds have been buying recently, as noted in our hedge fund portfolio tracking series.

We'd agree with Coxe in that inflationary pressures are set to show up at some point. And as such, we advocated shorting long-dated treasuries (see our rationale). The question is, when does inflation hit? One could be waiting for a while. And, there is the slight possibility that it could also just never show up (stranger things have happened). Obviously, if such inflation does occur, it will show up in commodities first and Coxe makes a good point there. In short, Coxe seems to agree with Rogers and Soros on a number of issues and it will be interesting to see things play out.

You can read Coxe's thoughts here.

George Soros Hedge Fund Soros Fund Management 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 is Soros Fund Management ran by George Soros. Soros is famous for his stellar returns with partner Jim Rogers when they ran their Quantum fund. Now, he has carried his investment style over to his own firm, Soros Fund Management. Whether it be equities, bonds, currencies, debt, or commodities, Soros is more of a global macro player, seeking investments in whatever market they can gain an edge. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options. 2008 was an interesting time to be investing, to say the least. Recently, Soros detailed his thoughts about his portfolio from 2008 and it makes for a good read. His fund finished '08 up 8% as noted in our hedge fund year end performances post. His success in 2008 came from making correct bets on the US dollar and betting that short term interest rates in the UK would decline. Interestingly enough, Soros was down for much of the year, until he fought his way back with overtrading.

Soros is good to track because of his excellent macro sense and formidable track record as an investor. His thoughts on the current financial landscape are detailed in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. Soros sees a vast consolidation in the hedge fund space in the near future, as we noted when we recently checked in on Quantum Fund ex-partners Jim Rogers & George Soros. If you want to get a better sense as to how Soros formulates his investment theses, we highly recommend reading his first book, The Alchemy of Finance. This book is a staple in our recommended reading list and after you read it, you'll understand why. We like to track Soros since he has a solid track record and a great macro sense. We'll see what he has in his portfolio this time around.

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):
Merrill Lynch (MER)
Mylan (MYL)
Homex (HXM)
R.R. Donnelly & Sons (RRD)
Harmonic (HLIT)
Kinross Gold (KGC)
Streettracks Gold ETF (GLD)
Genworth Financial (GNW)
EMC (EMC)
Solera (SLH)
CBL & Associates (CBL)
Discovery Communications (DISCK)
Discovery Communications (DISCA)
Yahoo (YHOO)
Amdocs (DOX)
Texas Instruments (TXN)
JB Hunt (JBHT)
Symantec (SYMC)
Cirrus Logic (CRUS)
Covidien (COV)
...among others

Some Increased Positions (A few positions they already owned but added shares to; major moves listed)
Petroleo Brasileiro (PBR)
Potash (POT)
Best Buy (BBY)
Hess (HES)
Conoco Philips (COP)
Union Pacific (UNP)
Arch Coal (ACI)
Schlumberger (SLB)
Lorillard (LO)
Teradata (TDC)
Google (GOOG)
Consol Energy (CNX)
Lattice Semiconductor (LSCC)
...among others


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed, just the major moves)
Walmart (WMT)
Wind River (WIND)
JetBlue (JBLU)
...among others


Removed Positions (Positions they sold out of completely)
Research in Motion (RIMM), ishares Dow Real Estate (IYR), Powershares QQQ (QQQQ), Auxilium Pharmaceuticals (AUXL), Whiting Petroleum (WLL), Suncor (SU), Chesapeake Energy (CHK), International Rectifier (IRF), Buffalo Wild Wings (BWLD), Anheuser Busch (BUD), Frontline (FRO), Bank of America (BAC), Collective Brands (PSS), Companhia Siderugica (SID), Centennial Communications (CYCL), Entergy (ETR), Suntrust Banks (STI), Nasdaq (NDAQ), General Growth Properties (GGP), Kimco Realty (KIM), Bank of New York Mellon (BK), CSG Systems (CSGS), Tekelec (TKLC), GATX (GMT), Carmax (KMX), Echostar (SATS), Extreme Networks (EXTR), Amazon (AMZN), Radisys (RSYS), Medivation (MDVN), ITT Corporation (ITT), Micron Technology (MU), Alcatel (ALU)


Top 20 Holdings (by % of portfolio)

1. Petroleo Brasileiro (PBR): 19.53% of portfolio
2. Potash (POT): 9.4% of portfolio
3. Merrill Lynch (MER): 5.84% of portfolio
4. Best Buy (BBY): 5.79% of portfolio
5. Hess (HES): 4.74% of portfolio
6. Conoco Phillips (COP): 3.84% of portfolio
7. Union Pacific (UNP): 1.77% of portfolio
8. Arch Coal (ACI): 1.7% of portfolio
9. Schlumberger (SLB): 1.56% of portfolio
10. RR Donnelly (RRD): 1.48% of portfolio
11. Homex (HXM): 1.37% of portfolio
12. Consol Energy (CNX): 0.75% of portfolio
13. Map Pharmaceuticals (MAPP): 0.62% of portfolio
14. Walmart (WMT): 0.57% of portfolio
15. Hologic (HOLX): 0.57% of portfolio
16. Heinz (HNZ): 0.53% of portfolio
17. JetBlue Airways (JBLU): 0.52% of portfolio
18. Home Depot (HD): 0.52% of portfolio
19. Lowes (LOW): 0.51% of portfolio
20. Citi Trends (CTRN): 0.29% of portfolio

The major moves in Soros' portfolio come from energy and agriculture. He added large to his PBR and POT positions, among many other global growth type names. He definitely seems to think all these energy related names are attractive. He sold out of a lot of his Walmart (WMT) and all of his Research in Motion (RIMM). He also added heavily to his position in Best Buy (BBY). He also started a new, large position in Merrill Lynch (MER). Assets from the collective long US equity, options, and note holdings listed above were $4.6 billion. If you want to hear some more insightful thoughts from George Soros himself, head over to our post on Hedge Fund manager interviews or check out his recent interview with Fareed Zakaria to discuss the current crisis. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, and Stephen Mandel's Lone Pine Capital. Look for our updates each day over the next few weeks.

Hedge Fund Citadel Letter to Investors Re: Redemptions

Here's Citadel's latest letters explaining the new details regarding their redemption 'policy' if you will:

Publish at Scribd or explore others: Finance & Investing Business & Legal citadel investment g

We've covered Citadel's redemptions ordeal before, and it appears they're shifting their stance. Also, here's Citadel's January performance.

(RSS & Email readers may need to come to the blog to see the file)

Rick Santelli CNBC Rant

If you've missed it, Rick Santelli of CNBC recently had a rant about capitalism which has been seen as a rallying cry. He's even talked about arranging a 'Chicago Tea Party' for capitalism. Santelli is one of the few/only brightspots on that channel.

The rant:



(RSS & Email readers might have to come to the blog to view the video)

TARP Illustrated

The TARP illustrated in all its effective glory. [hat tip to Naked Shorts]