Eric Mindich's Eton Park Capital Buys More Gold: 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 is Eric Mindich's Eton Park Capital, who was ranked 53rd in Alpha's 2008 hedge fund rankings. Mindich received an Economics degree from Harvard and then worked at Goldman Sachs' risk-arbitrage desk. After becoming the youngest partner in the history of Goldman Sachs at the age of 27, it was clear he had a bright future. In 2004, he started his hedge fund Eton Park Capital with a record $3 billion in assets and a $5 million minimum investment required of investors. Today, Mindich manages over $6 billion. Typically, Eton Park invests in long/short equity and convertible arbitrage strategies. Additionally, as much as 30% of the fund can be invested in private investments.

Their stellar performance and solid strategy are some of the main reasons we have included them in our Market Folly portfolio that we created with Alphaclone. Our custom portfolio takes the positions of Eton Park (and 2 other hedge funds) that are disclosed in the 13F filings. It then combines them into a unique hedge fund portfolio clone that is yielding 17% annualized returns since mid-2002. As you can see, the numbers speak for themselves. And, a large part of that solid performance can be attributed to Eton Park's stockpicking.

Lastly, we had also previously noted that Mindich was starting to see opportunity in the markets in an excerpt from an investor letter. The following were their 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):
Google (GOOG) Calls
Allergan (AGN) Calls
Energy ETF (XLE)
EMC (EMC)
Wyeth (WYE)
Homebuilders ETF (XHB) Calls
Financials ETF (XLF) Calls
Amdocs (DOX)
Suncor (SU)
Caterpillar (CAT) Calls
Harmony Gold Mining (HMY)
Schering Plough (SGP)
Grupo Televisa (TV)
Neustar (NSR)
America Movil (AMX) Puts
Scripps Networks (SNI)
Petroleo Brasileiro (PBR) Puts
Alcoa (AA) Calls
Brazil ETF (EWZ) Puts
Viacom (VIA-B) Calls
Emerging Markets ETF (EEM) Puts
SPDR Gold Trust (GLD) Puts


Some Increased Positions (A few positions they already owned but added shares to)
Potash (POT) Puts: Increased by 1384%
SPDR Gold Trust (GLD) Calls: Increased by 266%
Comcast (CMCSK): Increased by 252%
Silver ETF (SLV): Increased by 129%
Potash (POT) Calls: Increased by 100%
Vimpelcom (VIP): Increased by 58.8%
Mobile Telesystems (MBT): Increased by 36%
SPDR Gold Trust (GLD): Increased by 31%
Ebay (EBAY): Increased by 27%
Goodyear Tire (GT): Increased by 21%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Beckman Coulter (BEC): Reduced by 34.3%
Qualcomm (QCOM): Reduced by 29.8%
Lorillard (LO): Reduced by 28%
Wells Fargo (WFC) Puts: Reduced by 27.5%
Gold Fields (GFI): Reduced by 18.9%
Comcast (CMCSA): Reduced by 16.6%
Walter Energy (WLT): Reduced by 11%
Hansen Natural (HANS): Reduced by 10%


Removed Positions (Positions they sold out of completely)
Citigroup (C)
Emerging Markets ETF (EEM) Calls
Akamai (AKAM)
Constellation Energy (CEG)
Qualcomm (QCOM) Calls
Covidien (COV)
Foundation Coal (FCL)
AK Steel (AKS)
Lorillard (LO) Calls
News Corp (NWS-A) Calls
Newmont Mining (NEM)
NRG Energy (NRG)



Top 15 Holdings (by % of portfolio)

1. SPDR Gold Trust (GLD) Calls: 15.9% of portfolio
2. SPDR Gold Trust (GLD) Puts: 7.2% of portfolio
3. Potash (POT) Puts: 6.48% of portfolio
4. Brazil ETF (EWZ) Puts: 6.05% of portfolio
5. SPDR Gold Trust (GLD): 5.3% of portfolio
6. Emerging Markets ETF (EEM) Puts: 4.97% of portfolio
7. Hansen Natural (HANS): 3.69% of portfolio
8. Verisign (VRSN): 3.63% of portfolio
9. Viacom (VIA-B) Calls: 2.81% of portfolio
10. Potash (POT) Calls: 2.59% of portfolio
11. Hospira (HSP): 2.35% of portfolio
12. Goodyear Tire (GT): 2.3% of portfolio
13. Qualcomm (QCOM): 2.2% of portfolio
14. Viacom (VIA-B): 2% of portfolio
15. Petroleo Brasileiro (PBR) Puts: 1.95% of portfolio

Mindich continued to beef up his gold position by way of GLD and GLD calls. He increased his GLD calls position by 266% and his GLD common position by 31%. However, at the same time, he also added a new stake in GLD puts to offset things a little bit. He now holds 2 calls for every 1 put on the etf. You'll remember that last quarter he started a gold position in a large way. And, he obviously still likes that play going forwards, even though he has hedged it somewhat. Just last week we noted that Stephen Mandel's Lone Pine Capital also liked gold. David Einhorn of Greenlight Capital also favors the metal and we'll be updating his portfolio soon too. Since so many prominent managers have been piling into gold, we've thought it would be prudent to include a video that looks at the current technical analysis of gold.

In addition to his clear fondness for gold, Mindich also was loading up on Puts across various emerging markets names as he thinks they may be overextended near-term. He boosted put positions in the emerging markets exchange traded fund EEM, as well as in the Brazilian exchange traded fund EWZ, and in Petroleo Brasileiro (PBR). Although not specifically emerging market related, Mindich also brought on a large Put position in Potash (POT). We found this interesting as such an agricultural nutrient can tied to emerging markets growth. As these countries grow economically and in population, they obviously require more agriculture and food. There could be a connection here with his thinking, but that's pure speculation on our part.

In terms of sales, Mindich sold out of his large Wells Fargo (WFC) Put position, as that was his 2nd largest holding in his previous 13F filing. He also got rid of his 8th largest holding last time around, Citigroup (C). So, he seems to have strayed away from the financials for now, at least from what is disclosed in the 13F filing (they're not required to disclose their short positions).

Lastly, we also wanted to point out that Eton Park continues to hold their decent sized positions in Hansen Natural (HANS) and Verisign (VRSN). Those positions remain largely unchanged for the most part and are Eton Park's 7th and 8th largest holdings. Assets from the collective positions reported to the SEC via 13F filing were $6.2 billion this quarter compared to $3.39 billion last quarter. So, Eton Park has definitely put some more capital to work over the course of the first quarter of 2009. 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, Paulson & Co (John Paulson), and Stephen Mandel's Lone Pine Capital.

Technical Analysis: S&P500 (SPX), REIT (IYR), & Copper Charts

We wanted to take our periodic look at some broad market charts real quick to see how the market is trending in the near-term. We use technical analysis as just one of the many tools in our investment toolbox as it helps tell us the "how" and the "when" behind entering and exiting stocks, while the fundamentals tell us the "why." (If you want to learn more about technical analysis, we'd advocate checking out the resource we've compiled of recommended technical analysis reading).

As such, we're going to take a quick peek at charts of the S&P500 (SPX), Copper ($COPPER), and some REITs (IYR). We have selected these three charts because the S&P is representative of the entire market, copper is often seen as a leading economic indicator, and REITs have caused quite a stir lately with their robust rally despite weak fundamentals.


Copper

Firstly, we'll start with Copper. Kevin has interestingly pointed out that Copper has been forming a symmetrical triangle pattern. As you can see with the red trending lines, a break of the trend in either direction can trigger a large move. Since the bulk of the recent action in Copper has been upwards, we'd expect this trend to continue. However, you still have to monitor things carefully as it could very well break to the downside.

(click to enlarge)

As we mentioned earlier, we monitor Copper since it is often looked at as a leading economic indicator. If things are being built globally, they more often than not require copper. As such, it has become a 'tell' if the economy is recovering or not. As you can see above, the metal has been trending upwards for the entirety of 2009 pretty much, which could be a favorable sign. The ultimate test is now a breakout above the recent resistance.


REITs (IYR)

REITs are a touchy subject because there is so much research out there illustrating what a deathpit they will be in the years to come. Yet, they have rallied right in the face of those claims due to equity offerings and dilution out the wazzoo forcing massive short covering. The crux of the REIT matter is that many of these companies have massive debt loads and maturities coming due in the next few years. Couple that with the fact that overall, they are seeing declining FFO (funds from operations, a popular metric in REIT land), and increasing vacancies in their properties. If their cashflow is slowing and they have a lot of debt coming due, how will they survive? As of now, their plan seems to be to dilute shareholders with equity offerings to shore up their balance for the near-term, with no real long-term solution as of yet. So, with that in mind, let's take a look at the chart. We'll be using IYR as our proxy since it is the overall index.

(click to enlarge)

As you can see, REITs have been ripping higher over the past few months. We've outlined the uptrend with the light green lines. Each time the rally sells off, it finds support and continues higher. However, as we've illustrated with the bold red line at around $36, IYR definitely has some overhead resistance. Not only did IYR fail at that level the last time around, it also is an area of resistance from back in late 2008. Lastly, you've also got the 200 day moving average (downtrending thin red line) acting as resistance at around $37.50 as well. Overall, REITs have rallied hard but will have to rally even harder to breakout of this tough range. The lower bold green line illustrates the support IYR has around $22.50. So, it has essentially traded in a range of $22 to $36 over the past 6 months. Look to buy at the bottom and take some profits at the top. If it breaks out above all the resistance we just mentioned, then look out as this thing could really rocket higher.

Take note though, that we aren't really counting on this happenning. After all, the 200 day moving average is in an extreme downtrend, and rightly so. IYR overall is downtrending over longer time frames and the recent rallies have merely brought it back to its trendline resistance where it has typically sold off. So, we would wager that shorting IYR around $36 would be a prudent bet, allowing yourself the flexibility to then get long if the name breaks out above all the resistance. The trading range has definitely outlined a line in the sand for you to play with.


S&P 500 (SPX)

The market is struggling to break through its 200 day moving average, which is coincidentally the same level as the high for the year, made earlier this year in January. As we've twittered before, this area makes logical sense for some selling to take place. (By the way, make sure you're following us on twitter for market updates that we don't post on the blog). We've seen a massive rally and profit taking is not only healthy, but long overdue. This area also is a logical place as a starting point for the next big move, in either direction. If the market continues to fail at resistance, it could setup a big move to the downside. However, if it blasts through yet another area of resistance, it would mean we're going even higher. Point being, this could be a pretty important level.

(click to enlarge)

As such, it's time to practice the art of flexibility. But, that's nothing new, as we've been preaching that for a while now. In this whacky market, you've got to be flexible and nimble. Use the technicals to help guide you as to where the market will be going in the near-term. While the fundamentals are obviously still dreary, you have to respect the market action or you'll get your face ripped off. Case in point: the market rallying 16% over the past 3 months despite no real signal that we've solved our problems. And, as illustrated in the chart we posted last week, the market has had some wild swings over the past 2 years.

Irrationality is often the name of the game in the markets and you have to abide by her rules. After all, the market can remain irrational longer than you can stay solvent. That saying has stood the test of time for a reason.

So, it's certainly time to wait and see what the market brings us. No matter what direction she heads, we've got a solid gameplan now due to a quick check on the technicals. We also recently posted up some technical analysis on Gold if you're interested as well, as it looks like the metal could be building some support currently. And, last but not least, don't forget to check out our recommended reading list: Technical Analysis edition if you're looking to hone your chart reading skills.

Hedge Fund Legend Michael Steinhardt Says Treasuries Are Foolish

The legendary hedge fund manager Michael Steinhardt has recently voiced his distaste for Treasuries over the long-term. In a recent Bloomberg television interview, he said, "To be a long-term investor in Treasuries at this point I think is foolish. The rates are low, and the danger is high." If you're unfamiliar with Steinhardt, he ran one of the first truly successful hedge funds, garnering a 20% return each year for almost thirty years. His Steinhardt Management Co, which he opened in 1967, earned 24% a year for multiple decades. He truly is a successful hedge fund manager with a proven long-term track record.

And, with that in mind, it's interesting to see that Steinhardt has joined numerous other well-tenured investors in his dislike of treasuries. He thinks that government bonds are not safe investments and shares Jim Rogers viewpoints on this subject. Rogers, of course, has a solid background as well, having run the successful Quantum fund with ex-partner George Soros. So, we now see that both Steinhardt and Rogers see Treasuries as poor investments for the future, as we noted in our Jim Rogers portfolio update. In the past, we here at Market Folly have even gone as far to lay out the rationale behind shorting treasuries. (That play has picked up steam as of late and we still need to do a follow-up post on that subject).

Steinhardt goes on to say that he thinks the current market rally will not last and that we are not out of the woods yet. He says, "The economy is still a scary place. My net feeling is that this rally doesn't have all that much more to go and the dangers out there remain consequential." Clearly he sees this as a bear market rally and thinks we have large fundamental problems still unsolved.

Nowadays, Steinhardt is the chairman of WisdomTree Investments, a firm that creates exchange traded funds (ETFs). Steinhardt also has an autobiography out entitled No Bull. It is a fascinating read detailing the life of one of the first true hedge fund managers out there, as his firm survived the collapse of the 1960's. This book also recently appeared on hedge fund Blue Ridge Capital's suggested reading list, in their biographical/historical category. We'll continue to track Steinhardt's words of wisdom whenever he makes a sporadic appearance.

The Ivy Portfolio: How to Invest Like the Top Endowments By Mebane Faber (Book Review)

We recently read through Mebane Faber and Eric Richardson's new book The Ivy Portfolio and thought it would be prudent to start off a book review series here at Market Folly. And, what better book to kick things off with than one that details how to invest like the top endowments and institutions.

Many readers may already be familiar with Mebane, as he is the co-founder of Alphaclone, the hedge fund portfolio replication tool we've covered extensively on the blog before. Additionally, Mebane is the portfolio manager for Cambria Investment Management, author of the well known World Beta blog, and has appeared in numerous financial publications. Now, to the review!

Simply put, The Ivy Portfolio details how you as an investor can replicate the returns of some of the top endowments in the country. And, you can even do so with as few as five exchange traded funds (ETFs). The book divulges the simple principles and techniques necessary to replicate their success. In addition to this focus, Mebane and Eric also cover the worlds of alternative investments as an asset class and active management, each in their own section. In terms of hedge funds and private equity as asset classes, they highlight that there is no perfect substitute for investors that cannot access the real thing. (We strongly concur and have previously written about how various exchange traded & mutual funds out there trying to replicate hedge funds leave much to be desired). The last section of the book covers active management and the use of a timing model with the 10-month moving average to avoid bear markets. As you can see, the book offers multiple flavors to sample.

We're no stranger to tracking institutional holdings, so we'd be lying to you if we said we didn't go straight to sections that deal with hedge funds. And, we found compelling content explained in a concise manner. The book includes a section entitled Following the Smart Money, where Mebane and Eric discuss how to use 13F filings to track some of the smartest hedge funds in the game (which Market Folly readers should be very familiar with). They proposition that, "If someone told you that you could have your portfolio managed by Warren Buffett, you would be interested, right?" And, almost everyone out there would say yes.

Following the smart money for free is easy, so why not do it? The Ivy Portfolio walks you through what a 13F filing is, the benefits of using them, and how to track hedge funds through the SEC. And, the book also focuses on three case studies, examining Warren Buffett, David Einhorn (Greenlight Capital), and John Griffin (Blue Ridge Capital). Readers of the blog will of course be familiar with all three of those names. The book walks you through how to do what we here at Market Folly do each day: track the 'smart money.' As mentioned earlier, Mebane has also taken it one step further by replicating their portfolios and gains with the Alphaclone web-based software.

We found The Ivy Portfolio to be succinct, educational, and a great read for those who love investing. The book has sections geared towards numerous types of investors, so everyone is bound to find something they like. Investors using asset allocation will love the endowment section, those curious about alternatives will enjoy the private equity and hedge fund section, and active investors will love the timing model. The main thing to take away here is that regardless of your background or investment methodology, you will learn something. This book teaches you to be a better investor by helping you learn from some of the best out there with proven performance. What's not to love about that?

There's really only one thing we can say: If you enjoy reading the content on Market Folly, then you will thoroughly enjoy reading The Ivy Portfolio. That's all there is to it.

Gold Technical Analysis Video

In light of the fact that hedge fund manager John Paulson recently bought tons of gold and gold miners, we thought it would yet again be prudent to examine what the technicals are saying about the metal this time around. Is it time to pick some up? Check out the video here.

Although Paulson & Co have said they bought the gold as a hedge, we've noticed a confluence of smart minds flocking to large gold positions over the past few quarters. At one point or another, David Einhorn of Greenlight Capital, Eric Mindich of Eton Park Capital, and Dan Loeb of Third Point have all been in gold (among many other funds we're sure). On one hand, Loeb was using it as a 'hideout' and safety net from market irrationality and volatility, and has since sold out, as noted in his investor letter. Einhorn, on the other hand, holds gold due to future inflationary fears.

The guys over at MarketClub have pulled up the charts in their latest free video and are seeing some possible consolidation signs in the metal. Check out some technical analysis on Gold here.

What We're Reading 5/22/09

In an effort to try and provide viewpoints contrary to our own, we want to highlight this particular article. We have been bearish on the REIT sector from a macro perspective as leverage takes it's toll and massive debt maturities come due. Not to mention, we keep seeing and hearing about 'for lease' signs literally all over the place. This article takes a different view and says now is the time to Buy REITs [DailyWealth]

Baltic Dry Index not a good leading indicator [Research Reloaded]

The Master of Money (Warren Buffett) [by Michael Lewis, on The New Republic]

And also, congrats to the StockTwits guys on their series of funding [AllThingsD]

Blue Ridge Capital's Behavioral Finance Recommended Reading List

This is the fourth and final installment of hedge fund Blue Ridge Capital's recommended reading list. Previously, we've revealed Blue Ridge's recommended Analytical Reading List, their Historical/Biographical List, and their Economics List. This week, we'll turn to their recommended Behavioral Finance reads.

Long-time blog readers will know that we track Blue Ridge because they are the pure definition of a 'Tiger Cub'.   John Griffin was Julian Robertson's right-hand man while at Tiger Management before founding Blue Ridge.


Behavioral Finance

Investment Psychology Explained: Classic Strategies to Beat the Market by Martin Pring: A 'back to basics' book on how to beat the market.

Beyond Greed and Fear by Hersh Shefrin: A look at how bias, perception, and psychology run the stock market. 

The Money Game by Adam Smith: Book hypothesizing that the stock market is just a game; explains technical analysis, fundamental analysis, psychology, and more. 

Influence: The Psychology of Persuasion by Robert Cialdini: Understanding the foundation of persuasion and marketing.

The Inefficient Stock Market by Robert Haugen: 'What works and why.' This book looks at how the market is inefficient and argues that financial models based on economic behavior cannot explain certain aspects of (often irrational) market behavior.

Why Smart People Make Big Money Mistakes by Gilovich & Belsky: Close examination of the psychological reasons behind how and why people invest, spend, and save.

The Psychology and Judgment of Decision Making by Scott Plous: Examination of your own psychology of decision making.

How We Know What Isn't So by Thomas Gilovich: Focuses on errors humans make when forming opinions and trying to comprehend things.

Decision Traps: 10 Barriers to Brilliant Decision Making by J. Russo: Training to become a good decision-maker (one of the most important business skills out there). 

Extraordinary Popular Delusions and the Madness of Crowds by Tobias & McKay: A book discussing "the herd mentality" at its finest, where the masses collectively assemble and follow each other like lemmings.

Hare Brain, Tortoise Mind by Guy Claxton: How to handle complex situations by way of perception, problem solving, and creativity. 

The Moral Animal: Why We Are the Way We Are by Robert Wright: Evolutionary psychology and human nature.


That finishes up the Behavioral Finance category and also concludes Blue Ridge's recommendations. If you've missed some of our past lists, here is our archived compendium.


Recommended Reading Lists

- Blue Ridge Capital's Recommended Analytical Reading

- Blue Ridge's Recommended Historical/Biographical Reading

- Blue Ridge Capital's Recommended Economics Reading

- Fundamentals

- Technical analysis

- Good Market Reads

- Gurus

- John Burbank's hedge fund Passport Capital: Suggested Reading List



Background on Blue Ridge:

Griffin is a Tiger Cub, and as mentioned above, he was Julian Robertson's right hand man. So, needless to say, he knows his stuff. Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems. While hedge funds typically closely guard their short positions, we've gotten a sneak peek in the past at what Blue Ridge had been shorting. Both Griffin at Blue Ridge and Lee Ainslie over at Maverick Capital like to effectively hedge with a solid balance of both long and short positions (like a true hedge fund... not like some of the crazy funds these days that aren't truly hedged). Griffin attended the University of Virginia for undergrad and received his MBA from Stanford.

S&P500 Chart: Wild Market Swings 2007-2009

Great chart from The Chart Store that illustrates just how volatile and seesaw-ish this market has been over the past 2 years. There have been rapid, massive declines and equally massive rallies. The current rally from the lows in March 2009 extends over 39%. Maybe we should highlight contrarian signals more often, as we did back in early March. Those signals we highlighted turned out to be a great barometer for a short-term turn in the markets.

Buy when there is blood in the streets and pessimism abounds. Sell/short when everyone is plunking money down in the market thinking they're invincible.

The ultimate question now is, what's up with the current action? Typical bear market rally? Foundation for something constructive? Time will tell.

(click to enlarge)

Stephen Mandel's Lone Pine Capital Still Likes Qualcomm, Visa: 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.

The third fund we're covering is Lone Pine Capital, managed by Stephen Mandel Jr. His $7 Billion fund has returned over 25% annually since its inception in 1997. The term 'lone pine' comes from Mandel's days at Dartmouth College, where the school has a historical lone pine tree. Although Mandel has a solid track record, 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. We've already covered another one of the Tiger Cubs for Q1 2009 in Andreas Halvorsen's Viking Global. And, below, you'll definitely see some similarities between their two portfolios.

Recently, Lone Pine was named to Alpha's 2009 hedge fund rankings list, where they were ranked 21st for 2009, slipping from being 18th the year prior. Lone pine was pretty busy filing 13G's back in March of this year, where they disclosed positions in Strayer, Deckers, and Ctrip. All three of these positions are also now reflected in their filing below.

The following were their 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):
Apollo Group (APOL)
Coca Cola (KO)
CTRIP (CTRP)
Deckers (DECK)
Mead Johnson Nutrision (MJN)
Medco Health (MHS)
Philip Morris International (PM)
PepsiCo (PEP)
SLM (SLM)
Strayer (STRA)
VistaPrint (VPRT)


Some Increased Positions (A few positions they already owned but added shares to)
Fomento Economico (FMX): Increased by 380%
Las Vegas Sands (LVS): Increased by 67.8%
SPDR Gold Trust (GLD): Increased by 50%
Coach (COH): Increased by 42%
JPMorgan Chase (JPM): Increased by 26%
Carnival Paired CTF (CVC1): Increased by 7%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Sears (SHLD) Puts: Reduced by 84%
Activision Blizzard (ATVI): Reduced by 67.8%
Dolby Labs (DLB): Reduced by 56.7%
MSC (MSM): Reduced by 38.9%
XTO Energy (XTO): Reduced by 32.2%
Google (GOOG): Reduced by 29.9%
Precision Cast Parts (PCP): Reduced by 27.9%
Mastercard (MA): Reduced by 28%
Priceline (PCLN): Reduced by 27.8%
America Movil (AMX): Reduced by 22%


Removed Positions (Positions they sold out of completely)
Abercrombie & Fitch (ANF)
Bunge (BG) Puts
Lorillard (LO)
Teradata (TDC)


Top 15 Holdings (by % of portfolio)

1. Qualcomm (QCOM): 11.07% of portfolio
2. Visa (V): 7.7% of portfolio
3. America Movil (AMX): 7.68% of portfolio
4. JPMorgan Chase (JPM): 6.3% of portfolio
5. Monsanto (MON): 5.5% of portfolio
6. Philip Morris International (PM): 5.45% of portfolio
7. Mastercard (MA): 5.35
8. Union Pacific (UNP): 4.5% of portfolio
9. Medco Health (MHS): 3.74% of portfolio
10. SPDR Gold Trust (GLD) Calls: 3.64% of portfolio
11. Google (GOOG): 3.13% of portfolio
12. Priceline (PCLN): 3.11% of portfolio
13. Fomento Economico (FMX): 3% of portfolio
14. PepsiCo (PEP): 2.8% of portfolio
15. Carnival (CVC1) Paired CTF: 2.79% of portfolio

Mandel and Lone Pine definitely show their Tiger Cub background with many of these holdings. They share numerous holdings with other Tiger Cubs, including Andreas Halvorsen's Viking Global. Viking likes both MA and V, and so does Lone Pine. Lone Pine clearly favors V as they brought it up to be their 2nd largest position. Additionally, many of the Cubs hold paired CTF's in Carnival. What is unique about Lone Pine's portfolio compared to other Tiger Cubs is the fact that they still hold AMX. Many other funds used to have large stakes in the name, but they all sold out. Lone Pine, on the other hand, stands by the name and continues to be invested in a big way. So, while all the Tiger Cubs definitely have some similar positions, they each also bring their own unique style and research to their portfolios.

While it is only his 10th largest holding, it is also interesting to note that Mandel has a stake in gold through GLD (via calls). A plethora of prominent hedge fund managers now have positions in this name. Just yesterday, we detailed how John Paulson has built up a large gold position. Another interesting move was Mandel's addition to his LVS position. Even though it is only 1.43% of his portfolio, you have to consider he was looking at this prominent Vegas name as a great value play when it was under $2 a share in March. In terms of positions they dumped, they no longer own Lorillard or Teradata. This is intriguing simply because over the past few quarters, numerous value oriented hedge funds had been accumulating these names. Lone Pine apparently does not see value anymore and has sold completely out of both. It will be interesting to see what the other value players have done with their positions in these names.

Assets from the collective holdings reported to the SEC via 13F filing were $6.1 billion last quarter and were boosted up to $6.5 billion this quarter. 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 and Paulson & Co (John Paulson).

John Paulson Starting Real Estate Recovery Fund

Fresh off of our unofficial 'John Paulson' day on the blog yesterday, we're back again to highlight that Paulson will be going forwards with his Real Estate Recovery fund that will be aimed on investing in distressed assets. Just yesterday we examined Paulson's equity holdings, and now it looks like he's getting ready to make a splash in other asset classes. The fund will manage a few hundred million in its initial capacity (though no cap has been set) and will be managed by Mike Barr. Mike was previously at Lehman Brothers where he has experience in real estate and private equity. Paulson's initial goal is to run the fund for 7 years, investing in both residential and commercial properties. This news comes fresh off the new mortgage-market proposal by Paulson's colleague and ex-portfolio manager, Paolo Pellegrini. The two of them undoubtedly have compelling ideas on how to solve the crisis.

This fund isn't really new news, as we had heard of his proposal a while ago. However, we're finally getting concrete details and the 'green light' that it is ready to go. With his front-row seat to the mortgage and housing crisis, Paulson's timing call might prove to be very prudent. He has played the market perfectly thus far and has already gotten constructive on the sector by buying up the types of assets he was previously shorting (mortgage backed securities). Now, however, he is taking his constructiveness to a new level: by buying outright real estate. Obviously, he has a longer-term time frame in mind and will take his time sorting and sifting through the right deals. But, the fact that he is getting constructive in this arena cannot be ignored.

At the same time, it is also interesting to note his large purchase of gold which we just detailed. The hedge fund firm has said it is merely a hedge for them, as they have a share class denominated in gold. However, his large stakes in both gold and numerous gold miners is intriguing. Paulson may be getting constructive in the real estate arena, but he must still be overall cautious on the economy, the US dollar, or something of the sort. After all, why buy so much gold and so many miners? Either way, it's always interesting to note his major moves and this new fund certainly is classified as such.

Paulson's hedge fund has generated massive returns over the past two years, as he bet against financials and all things subprime. One of his funds was even up 589%. Check out his recent portfolio movements.

Bloomberg Terminal: Command Shortcuts / Cheat Sheet

For those of you who have access to Bloomberg terminals or are trying to learn the ropes, we thought it would be good to post up this resource, courtesy of the Columbia Investment Management Association (CIMA) of the Columbia Business School.

They've gone through and put together a quick .pdf of some key shortcuts and keystrokes to use in a Bloomberg Terminal. This is definitely a great resource for people trying to learn the system or for people who get stuck and can't remember how to access something. Post this cheat sheet up right next to the terminal and you're good to go. (RSS & Email readers will need to come to the blog to view the .pdf).


Bloomberg Cheat Sheet -

Paulson & Co (John Paulson) Buys Tons of Gold: 13F Filing 1st Quarter 2009

(click to enlarge)

Since today is pretty much 'John Paulson day' here at Market Folly, we thought it was appropriate to begin with this interesting (yet already outdated) graphic of Paulson's overall winnings. Obviously, he's been quite successful. This post is a part of our 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.

The second hedge fund in our series is Paulson & Co ran by John Paulson. His hedge fund has generated massive returns over the past two years, as he bet against financials and all things subprime. One of his funds was even up 589%. And, in the first part of 2009, he had also profited by shorting UK banks. Although Paulson is obviously one of the main brains behind the operation, there are also many talented individuals there. Unfortunately for Paulson, one of his co-portfolio managers has left to start his own fund, and we'll be keeping an eye on that. At the end of 2008, Paulson's Advantage Plus fund ended the year +37.58%, as detailed in our year end 2008 hedge fund performance post. For more information on how Paulson performed in 2008, be sure to check out their year end letter & report.

Paulson began shorting collateralized debt obligations and buying credit default swaps back in 2005 as he had conviction in his bet. His Credit Opportunities fund launched in 2006 with $150 million aimed to short subprime mortgage backed securities. This fund enjoyed immediate success, causing him to launch the Credit Opportunities II fund. At the end of 2007, the Opportunities fund was up 590% and his Opportunities II fund was up 353%. Such sterling performance led Paulson's hedge funds to be the #1 and #4 funds as ranked in Barron's hedge fund rankings (top 100). Paulson's funds earned this distinction due to their solid 3 year annualized performance metrics. Additionally, Paulson sits at #3 on Alpha's hedge fund rankings list for 2009, which is compiled based on assets under management (aum).

Obviously, such great performance has led to many other accolades for Paulson on a personal level. Recently, Paulson graced Forbes' billionaire list, but that one is almost a no-brainer. More notably, he was among the top 25 highest paid hedge fund managers of 2008. In terms of recent portfolio performance, Paulson's Advantage Plus Fund returned 4.8% through April as noted in our round up of hedge fund performance numbers.

The following were their 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):
SPDR Gold Trust (GLD)
Gold Fields (GFI)
Gold Miners ETF (GDX)
Anglogold Ashanti (AU)
Capital One Financial (COF)
JPMorgan Chase (JPM)
Petro-Canada (PCZ)
Schering Plough (SGP)
Wyeth (WYE)


Some Increased Positions (A few positions they already owned but added shares to)
St Jude Medical (STJ): Increased by 134%
Peoples United Financial (PBCT): Increased by 12%
Kinross Gold (KGC): Increased by 8%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Rohm & Haas (ROH): Reduced by 11.5%


Removed Positions (Positions they sold out of completely)
BCE (BCE)
Genentech (DNA)
Istar Financial (SFI)
Merrill Lynch (MER)
NRG Energy (NRG)
National Citty (NCC - inactive, acquired by PNC)
Northern Trust (NTRS)
Teva Pharma (TEVA)
Time Warner Cable (TWX)
Tronox (TRXAQ)
UST (UST)
ProShares Ultrashort Financial (SKF)
Wachovia (WB)
Wells Fargo (WFC)


Top 15 Holdings (by % of portfolio)

1. SPDR Gold Trust (GLD): 30.37% of portfolio
2. Wyeth (WYE): 13.96% of portfolio
3. Rohm & Haas (ROH): 13.44% of portfolio
4. Boston Scientific (BSX): 8.4% of portfolio
5. Gold Miners ETF (GDX): 6.81% of portfolio
6. Kinross Gold (KGC): 5.87% of portfolio
7. Philip Morris International (PM): 3.42% of portfolio
8. Petro-Canada (PCZ): 2.96% of portfolio
9. Schering Plough (SGP): 2.26% of portfolio
10. Mirant (MIR): 2.22% of portfolio
11. Gold Fields (GFI): 2.21% of portfolio
12. JPMorgan Chase (JPM): 1.65% of portfolio
13. Anglogold Ashanti (AU): 1.15% of portfolio
14. St Jude Medical (STJ): 0.91% of portfolio
15. Embarq (EQ): 0.81% of portfolio

The first major move that everyone will be talking about is Paulson's big entrance into gold. His position in the Gold Trust (GLD) is brand new and is brought up to a whopping 30% of his portfolio. Now, there are indeed a few caveats with this move: Paulson & Co have said themselves that they have done so as a hedge, as they now own well over 8% of this exchange traded fund (ETF). Their hedge funds have a share class that is denominated in gold (instead of in US dollars or Euros). Still though, that's quite a large hedge to have. Not to mention, Paulson also has a copious amount of gold miners now littered throughout his equity portfolio. Previously, we had posted up when he started his large stake in Anglogold Ashanti. Now though, he has boosted his stake in Kinross Gold (KGC) and he has also started new positions in Gold Fields (GFI) and the Gold Miner ETF (GDX). Gold is clearly the name of the game for Paulson at present. And, such a massive position in gold and gold miners has to be for more than merely a hedge.

One other thing to consider with Paulson's portfolio is that these holdings listed above are only his long equity holdings. The main reason why we bring this up is because the holdings above represent only a piece of his overall portfolio pie. Many of the positions above are merger arbitrage and event driven positions. While his gold stakes may be a large part of the assets disclosed in this filing, they are not quite as big when you compare them to his total assets under management. So, keep that in mind.

As many are already aware, Paulson bet against subprime and made a ton of money. As such, a lot of his holdings are in other markets. And, since the SEC only requires funds to disclose their equity, options, and note/bond positions, there is much of Paulson's portfolio left unseen. Besides any omitted positions in mortgage backed securities or other markets, we also do not get to see Paulson's shorts. The only short positions we can ever see in these filings (as per SEC regulations) are via positions in put options. And, Paulson does not have any such positions.

Another major move Paulson made last quarter was to buy a new stake in Wyeth (WYE). They brought their new WYE position all the way up to their #2 holding, which will turn a few heads. Aside from those major moves, Paulson also still retains the rest of his merger arbitrage style positions in Boston Scientific and Rohm & Haas, which we've covered previously. Additionally, Paulson still holds a position in Mirant (MIR), whom he filed a 13G on back in January.

We also noticed that Paulson essentially swapped out of Merrill Lynch, Northern Trust, Wells Fargo, and Wachovia in favor of Capital One and JP Morgan Chase. While this move is intriguing, it is fairly insignificant (at least at this time). All his financial positions are relatively tiny to his overall portfolio, with JPMorgan being the largest at only 1.65% of their portfolio, which is not saying much. We'll have to monitor this development going forward to see if Paulson is getting constructive here, or mainly using these as proxies for something else in the shorter-term.

Assets from the collective holdings reported to the SEC via 13F filing increased from $6 billion last quarter up to $9.36 billion this quarter. Overall, Paulson is a great fund to keep an eye on simply because they nailed the crisis and have a solid track record. However, much of his portfolio is not present in these 13F filings, so take everything with a grain of salt. If you want to keep an eye on someone else who had worked with Paulson in betting against subprime, then check out our recent piece on Kyle Bass of Hayman Capital, where we divulge his latest prediction.

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, as we've already covered Andreas Halvorsen's Viking Global.

Paolo Pellegrini Proposes Mortgage Solution

Over on Dealbook, there is a fascinating piece up by Paolo Pellegrini. "Who's that?" And, "why should I care?" you ask. Well, Pellegrini was previously a co-portfolio manager at John Paulson's hedge fund Paulson & Co. Pellegrini has since started his own fund, PSQR Management. Needless to say, he is very familiar with the housing and mortgage crisis, as he has been playing it from the investment side with precision. We thought that today would be the perfect day to post up Pellegrini's thoughts, as we've just covered Paulson & Co in our quarterly hedge fund portfolio tracking series.

Pelligrini proposes a market solution complete with bidding and aid from government financing, wherein homeowners and institutions alike can benefit. He writes,

"With more than a fifth of United States homes worth less than their mortgages, restructuring residential debt is the most important step to restore our country to prosperity and economic growth ... The government can assist struggling homeowners, remove bad loans from bank balance sheets and free up credit while utilizing a transparent, competitive process to minimize the taxpayer subside required."

His proposal is lucid and almost a no-brainer. However, such a simple system would ultimately require some complexities in its infancy. While the government searches for solutions, many close to the heart of the matter are voicing their opinion. Hopefully the government is listening. After all, if they should be listening to anyone regarding this matter, it's Pellegrini and Paulson. Those two have played the market pretty much perfectly thus far. And, suggesting an alternative mortgage solution in market form plays directly into their fortes.

Make sure you check out his entire proposal over at Dealbook.

Andreas Halvorsen's Viking Global 13F Filing: First Quarter 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.

We'll start our Q1 '09 coverage with Viking Global. 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. Halvorsen has taken what he learned/used at Tiger and added his 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. In terms of recent performance, They were +0.99% for March, and +9.27% year to date as of that time. We covered Viking and other hedge funds in our March performance update.

Halvorsen attended Williams College and received his MBA from Stanford, while his work history includes stays at Morgan Stanley and Tiger. In Alpha's 2008 hedge fund rankings, Viking was ranked #70 in the world. You can view Viking's most 2008 year end investor letter if you want to look through the eyes of Halvorsen and company.

The following were their 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):
ACE (ACE)
Alliance Data Systems (ADS)
Career Education (CECO)
Charles River Labs (CRL)
Cognizant (CTSH)
CVS Caremark (CVS)
Danaher (DHR)
Google (GOOG)
Lender Processing Services (LPS)
Oracle (ORCL)
Suntrust Banks (STI)
Teleflex (TFX)
Travelers Companies (UHS)
Thermo Fisher Scientific (TMO)
Thoratec (THOR)
Universal Health Services (UHS)
Visa (V)
Walmart (WMT)


Some Increased Positions (A few positions they already owned but added shares to)
Mastercard (MA): Increased by 176%
JPMorgan Chase: Increased by 72%
Invesco (IVZ): Increased by 23%
Qualcomm (QCOM): Increased by 12%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
DaVita (DVA): Reduced by 46%
First Horizon National (FHN): Reduced by 45%
Illumina (ILMN): Reduced by 37.5%
Aon (AOC): Reduced by 34%
Apollo Group (APOL): Reduced by 32%
McKesson (MCK): Reduced by 27%


Removed Positions (Positions they sold out of completely)
Alcon (ACL)
Bank of America (BAC)
Axis Capital (AXS)
BCE (BCE)
ITT Educational (ESI)
Kroger (KR)
ModusLink (MLNK)
Renaissance Holdings (RNR)
St Jude Medical (STJ)
Sherwin Williams (SHW)
Verisign (VRSN)
Vulcan Materials (VMC)


Top 15 Holdings (by % of portfolio)

1. Apollo Group (APOL): 12.67% of portfolio
2. Mastercard (MA): 12.51% of portfolio
3. Invesco (IVZ): 8.88% of portfolio
4. Qualcomm (QCOM): 7.11% of portfolio
5. Google (GOOG): 5.83% of portfolio
6. Visa (V): 5.8% of portfolio
7. Priceline (PCLN): 5.33% of portfolio
8. JPMorganChase (JPM): 4.12% of portfolio
9. NRG Energy (NRG): 3.4% of portfolio
10. Cognizant (CTSH): 3.24% of portfolio
11. Career Education (CECO): 3.13% of portfolio
12. MSCI (MXB): 3% of portfolio
13. DaVita (DVA): 2.7% of portfolio
14. Macrovision (MVSN): 1.96% of portfolio
15. Charles River Labs (CRL): 1.87% of portfolio

From Q3 to Q4 of 2008, Viking had some substantial turnover in their portfolio. And, the most recent quarter is no different. In the first quarter of 2009, they sold completely out of 12 names and then started new positions in 18 other names. Last time around, we focused on Viking's decision to sell out of Visa and instead buy Mastercard. Well, this time around, they bought both. Viking re-bought their Visa position and brought it all the way up to their 6th largest holding. Additionally, they boosted their current Mastercard position by an additional 176%. They clearly have conviction in this payment-processing duopoly. (And, so do many other hedge funds for that matter).

Viking also started a new position in Google (GOOG) and brought it up to their fifth largest holding. That about covers all the major moves in the portfolio (besides the names they sold out of completely). Viking's top position remains Apollo Group (APOL). However, they did sell a substantial part of their position from quarter to quarter.

Assets from the collective holdings reported to the SEC via 13F filing were $3.5 billion last quarter and were $3.57 billion this quarter. 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, or get our updates for free via email or for free via RSS Reader.

Barron's Hedge Fund Rankings 2009: Top 100 List

Barron's is out with their annual hedge fund 100 list and we wanted to post up all the media relating to it. They mention that hedge fund assets plummeted from $1.9 trillion to $1.4 trillion throughout the course of 2008. That is a staggering number, but it definitely highlights the real problems the industry had during the year. While redemptions were fierce over the last year, reports are out saying that nearly 80% of redemption activity was high net worth and retail investors, rather than institutions. This will definitely be interesting as it could affect the health of the industry moving forwards. If institutions suddenly drop their allocations to hedge funds, then there will be big ramifications across the industry.

While many funds faltered, there have been a few all-stars over the past three years and Barron's highlights them on their list. Firstly, here's the hedge fund 100 list in it's entirety (RSS & Email readers may need to come to the blog to view the slidedeck). Or, you can download the .pdf here.

Publish at Scribd or explore others: Finance Business & Law hedge fund 100

There is also a supplemental video below where the author/compiler of the list Jack Willoughby discusses the rankings and the hedge fund industry in its current state:




Barron's breaks down their top 100 hedge fund list by 3 year annualized returns. They rank by individual investment partnerships, so a couple of firms actually have multiple hedge funds on the list (like Paulson & Co, Galleon Group, etc). Barron's list does have a few criteria though, as they require a minimum AUM of $300 million and have excluded funds that invest in a single "sector, country, or region."

Overall though, the list is definitely a "who's who" of the hedge fund elite. John Paulson's Paulson & Co occupies the #1 and #4 slots, with a 62.67% and 46.81% 3 year annualized returns respectively. Of other hedge funds we cover on the blog, Shumway Capital has a fund listed at #11. Fellow Tiger Cub Paul Touradji has one of his funds in the #16 spot.

Some higher frequency trading firms are also high up on the list, including D.E. Shaw's Oculus fund at #21 and SAC Capital's International fund at #17. Noticeably absent from the list though, is Jim Simons' Renaissance Technologies. This is hard to believe, seeing how their prestigious and secretive Medallion fund returned 80% in 2008 and has one of the most pristine track records in all of hedgie-land. Maybe Barron's was tracking Rentec's sub-par performing funds like RIEF, which would explain their absence from the list. Medallion's exclusion, however, makes zero sense.

We've also noted that some funds who focus on macro trends are also ranked pretty highly. Passport Capital (John Burbank) is #24, Sprott Asset Management graces the list at #49, and George Soros' hedge fund is #46. In terms of true global macro firms, Moore Capital Management has a fund listed at #33. Keep in mind that we're just about to start our hedge fund portfolio tracking series, first quarter 2009 edition. We'll be updating the positions and portfolios of many of the funds ranked in the Top 100 to see what they've been up to, so make sure to check back daily.

Barron's isn't the only hedge fund ranking list out there, as Alpha had previously released their 2009 hedge fund rankings. The difference between the two lists is that Barron's is using a 3 year annualized return figure to gauge performance and rank accordingly. Alpha, on the other hand, simply aggregates assets under management (AUM) and then ranks from top to bottom. Obviously, many will argue that Barron's has the better gauge since they are using performance based metrics, and we'd tend to agree. The problem, though, is that they only use a 3 year annualized return. We'd prefer to use a 5 year or even 10 year period. That gets a little bit more complex and complicated as you would have some out-performing funds who only have shorter track records due to their inception dates. Overall though, Barron's and Alpha both present interesting lists.

Don't forget that you can get Barron's for 40% off right now and you can also view their top 100 article in its entirety.

Hedge Fund Portfolio Tracking Q1 2009: 13F Filings

Yep, it's thaaaaaaat time again. Buckle up for a whirlwind of first quarter 2009 hedge fund portfolios. This post is the preface to the series we will be doing in the coming weeks that details what many prominent hedge funds have been up to in the prior quarter.

Four times a year (once each quarter), hedge funds & asset managers with greater than $100 million AUM (assets under management) are required to report to the SEC their long holdings from the previous quarter. These filings do not show the funds' short positions and require them to disclose their long holdings in equity markets. Additionally, they are required to file various puts or calls purchased in the options market as well as notes & bonds. These filings do not cover commodities, currencies, or other markets. So, we just wanted to clarify that for people new to 13f filings. We check these 13F filings quarterly just to get a sense as to where these funds are putting their money. If you just sit down and do some simple number crunching between this quarter's 13F and the one prior, you can see exactly where these funds have been moving their money. And, if you create a cloned portfolio based on these top hedge fund holdings, you can see 17% annualized returns like our custom Market Folly portfolio created with Alphaclone.

Please note that these 13F's should be treated as a lagging indicator simply because the 13F's that are being released currently (May 15th-20th 2009) show the funds' portfolio holdings as of March 31st, 2009. So, in the past month and a half, they could have completely changed their portfolio. But, at the same time, its easy to see which sectors they are flocking to and what their concentrated positions are.

We like to specifically follow equity focused hedge funds as they are the easiest to track. We focus on value based (or growth-at-a-reasonable-price) hedge funds in the hope that they won't experience ridiculously high turnover and thus allow us to somewhat track their movements as they build up concentrated positions. Specifically, we follow the 'Tiger Cubs' (otherwise known as the proteges of former hedge fund Tiger Management legend Julian Robertson). Many of these former proteges/right-hand men have started their own funds and here are the ones we've been following. (Note that all the links below are to the respective holdings from Q4 2008 & will be replaced with the Q1 '09 links as we go along).

- Blue Ridge Capital (John Griffin) - Q1 updated
- Lone Pine Capital (Stephen Mandel) - Q1 updated
- Maverick Capital (Lee Ainslie) - Q1 updated
- Viking Global (Andreas Halvorsen) - Q1 updated
- Tiger Global (Chase Coleman)
- Touradji Capital (Paul Touradji)
- Shumway Capital Partners (Chris Shumway)

Additionally, we also like to follow the Commodities Corporation "offspring" which have gone off to start their own funds and typically employ a global macro strategy.

- Tudor Investment Corp (Paul Tudor Jones)
- Moore Capital Management (Louis Bacon)
- Caxton Associates (Bruce Kovner)

Additionally, we like to follow other "whales" well known for their investing prowess. These include:

- Warren Buffett
- Carl Icahn
- George Soros (Soros Fund Management LLC)

Next, there is an assortment of funds that employ various strategies ranging from activist to global macro and often run concentrated portfolios. We track these funds due to their solid returns over the years, as well as the spotlight that has been cast on a few of them in this turbulent market.

- Atticus Capital (Timothy Barakett) - Q1 updated
- Tremblant Capital (Bret Barakett)
- Clarium Capital (Peter Thiel)
- Pequot Capital Management (Art Samberg)
- Harbinger Capital (Philip Falcone)
- BP Capital (Boone Pickens)
- Paulson & Co (John Paulson) - Q1 updated
- Jana Partners (Barry Rosenstein)
- Eton Park Capital (Eric Mindich) - Q1 updated
- Farallon Capital Management (Thomas Steyer)
- Galleon Group (Raj Rajaratnam)
- Citadel (Ken Griffin)

A few deep value & activist funds:

- Third Point (Daniel Loeb)
- Pershing Square (Bill Ackman)
- Greenlight Capital (David Einhorn) - Q1 updated
- Baupost Group (Seth Klarman) - Q1 updated
- Tontine Associates (Jeffrey Gendell)

For our readers, we also track some quant and highly active trading funds. We do not track these firms to gain insight for portfolio investing ideas. Instead, it's merely for fun because for whatever reason, people like to see what they are doing. It's basically useless to track them due to their quant or high frequency trading nature and none of us could really tell you the rhyme or reason behind any one of their positions.

- SAC Capital (Stevie Cohen)
- D.E. Shaw (David Shaw)
- Renaissance Technologies (Jim Simons)

We also track a few spin-off and newer funds on the scene that are run by managers with storied pasts:

- Conatus Capital (David Stemerman, ex-Lone Pine)
- James Pallotta's Raptor Capital Management (ex-Tudor)
- Alyeska Investment Group (Anand Parekh, ex-Citadel)

And, a few other funds we're beginning to track due to high demand from our readers. We receive a lot of suggestions and take the ones we see recurring the most and add them:

- Passport Capital (John Burbank)
- Sprott Asset Management (Eric Sprott)
- Balyasny Asset Management (Dmitry Balyasny)
- Hilltop Park Fund (Stanley Shopkorn, ex-Moore)

Over the coming weeks we'll touch on some of the important position moves these funds and whales have made (new positions, removed positions, etc). That list of funds brings our coverage to 40+ prominent hedge funds. If you would like to see a specific hedge fund covered here on MarketFolly.com, post up a comment in the comments section below. We're always looking to add more funds that readers would like to see, so please drop in your suggestions. Each quarter we'll add a few more funds that the overwhelming majority of readers want to see.

Last, but not least, we're always looking for people to help us cover these hedge funds, as it gets to be a bit tedious (this is a one-man show here). If you're interested in helping out posting up 13F information, please get in contact with us at the top of the site. The hedge fund tracking series 1st quarter 2009 edition starts today, so spread the word and check back daily.

Technical Analysis & Trading Ideas: Weekly Watchlist Video

Here's a video with some good technical analysis and pricing patterns in the current market from the Option Addict. If you're looking for some trading ideas, this is a great resource. Here's his weekly watchlist for 5/18/09:



The video was having problems playing earlier, so if it does not work, try watching it here.
(Email readers will have to come to the blog to view the video).

Blue Ridge Capital's Recommended Economics Reading List

Time for the third installment in our series of 4 articles revealing Blue Ridge Capital's recommended reading list. Previously, we've revealed Blue Ridge's recommended Analytical Reading List, as well as their Historical/Biographical List. This week, we'll turn to their recommended Economics books.

Long-time blog readers will know that we track Blue Ridge because they are the pure definition of a Tiger Cub. Founder John Griffin was Julian Robertson's right-hand man while at Tiger Management and was one of the first to strike out on his own.



Economics

Capitalism and Freedom by Milton Friedman: A must-read by one of the most well-known economists out there.

The Lexus and the Olive Tree by Thomas Friedman: A book that deals with understanding globalization and argues that globalization (the Lexus) is "the central organizing principal of the post-cold war world."

Economics in One Lesson by Henry Hazlitt: With an introduction by Steve Forbes, this book is a great primer on economic thinking.

Eat the Rich by PJ O'Rourke: A tour of two years worth of economic practice, focusing on good capitalism and bad capitalism, among other things.


Other

How To Win Friends and Influence People by Dale Carnegie: The "grandfather of all people-skills books." It details fundamental techniques and principles for dealing and interacting with people.

Atlas Shrugged by Ayn Rand: Not only recommended by Blue Ridge, but by many other hedge fund managers out there, this book deals with philosophy of objectivism.

The Tao Jones Averages by Bennett Goodspeed: Touches on the mindset required to succeed as an investor.

The Tao of Pooh by Benjamin Hoff: Despite the somewhat silly title, this book examines what a Western Taoist is.

The Te of Piglet by Benjamin Hoff: Similar to the above, this book examines the Taoist embodiment of Te, or virtue.

Nonzero: The Logic of Human Destiny by Robert Wright: Address the convtroversial question of 'purpose in evolution.'


That completes their Economics and 'Other' recommendations from hedge fund Blue Ridge Capital.  Check out the rest of their recommendations in the categories below:

- Blue Ridge's Recommended Analytical Reading

- Blue Ridge's Recommended Historical/Biographical Reading

- Blue Ridge's favorite behavioral finance books



Background on Blue Ridge:

Griffin is a Tiger Cub, and as mentioned above, he was Julian Robertson's right hand man. So, needless to say, he knows his stuff. Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems.

Both Griffin at Blue Ridge and Lee Ainslie over at Maverick Capital like to effectively hedge with a solid balance of both long and short positions (like a true hedge fund... not like some of the crazy funds these days that aren't truly hedged). Griffin attended the University of Virginia for undergrad and received his MBA from Stanford.

Hayman Capital's Kyle Bass Predicts Sovereign Defaults

Hedge fund Hayman Advisors has a morbid outlook on the economy. Kyle Bass, the manager of Hayman, is betting on a massive wave of state bankruptcies and restructurings, particularly in Europe. At first glance this may seem far-fetched. But, you have to consider Bass and Hayman's track record thus far. Their fund was up 340% since inception according to their investor letter in March of this year. They were also up 6% in 2008, a year that saw the S&P drop by massive double figures. Bass collected nearly half a billion dollars from his bets against subprime. Much like John Paulson of hedge fund Paulson & Co, Bass also predicted the crisis. His next prediction is even more extreme.

Bass has gone as far to say that he thinks there will be massive sovereign defaults. We initially cited his dreary outlook in our piece, 'Ranting, Raving, & Contrarian Signals' back on March 8th, 2009. And, we did so because such extreme pessimism is usually a sign of short-term tops or bottoms. And, right on cue, the market is up over 30% since we highlighted that short-term contrarian signal. Contrarianism aside, Bass does command respect. After all, he profited handsomely by predicting the crisis and the collapse of subprime. While such extreme pessimism may be a catalyst for a short-term rally, we should be quite concerned if Bass' next set of predictions come true, as they would undoubtedly affect the long-term.

Bass has specifically turned his focus to Europe, where he sees a large cloud of denial and leverage. While he sees problems throughout the world, he claims that Europe is in the eye of the storm. A quick example of this is the fact that American banks have written down around 50% of their losses. European banks, on the other hand, have only written down around 17%. Bass says that,

"The crux of the problem is not sub-prime, or Alt-A mortgage loans, or this or that bank. Governments around the world allowed their banking systems to grow unchecked, in some cases growing into an untenable liability for the host country ... We have spent a good part of six months combing through the world's sovereign balance sheets to understand how much leverage we are dealing with. The results are shocking ... There could be a cluster of defaults over the next three years, possibly sooner."

Bass' hedge fund thinks that the hazard of default stems from a combination of both out-of-control public debt and liabilities from specific banks (like Fortis, RBS, etc) that now prominently appear on sovereign balance sheets. He seems to flirt dangerously with the phrase, 'economic depression.' He is also careful to point out that he is not Dr. Doom. He has simply studied the housing market and sovereign balance sheets to the point where he is telling it like he sees it.

Countries have largely fought off the crisis by printing money and rolling over their debt. And, here in the United States, quantitative easing has already begun. As Ambrose Evans-Pritchard points out in his Telegraph piece, "spasms of default" occur every few generations according to research by former IMF chief economist Ken Rogoff. Such data highlights that in both the 1830's and the 1930's, half of the world was essentially torpedoed. Are we in for another generational fragmentation? Kyle Bass is clearly not ruling out that possibility.

Background on Kyle Bass & Hayman Advisors: Kyle attended Texas Christian University (TCU) in Fort Worth, TX and now plies his trade at his Dallas based Hayman Advisors. He launched his hedge fund in 2006 with $33 million in initial capital. In August of 2006, he began shorting around $4 billion of subprime securities through various derivatives. Then, he eventually turned over $100 million into over $700 million based on his prediction of the crisis. He previously has worked at Bear Stearns' event-driven and special situations unit as has also headed an office of Legg Mason. His first major prediction (and victory) focused on over-leverage. We'll have to see if his second leverage-based prediction plays out.

If you haven't quite had your daily dose of pessimism yet, then check out Hayman's March letter. It will probably fill you right up.

Satellite Closes Hedge Funds

The painful year of 2008 was too much for Satellite Asset Management as they are set to shut down their flagship Credit Opportunities Fund which was down around 35% during the mayhem of 2008. They will also be closing their Overseas Fund and their Satellite Fund II. Their poor performance triggered a series of investor withdrawal requests and they were forced to suspend redemptions. Apparently they could not stop the hemorrhaging, as redemption requests simply overwhelmed them. Chalk up another victory for Ms. Market, as we add another name to the hedge fund graveyard of 2008.

The interesting thing to note here is that the fund was run by three veterans of Soros Fund Management. This is an example of another fund that was spun-off/started after managers left a big global macro style hedge fund. Just yesterday, we covered how Dwight Anderson blew up his Ospraie fund after leaving Tudor Investment Corp. However, Anderson is right back to the same tricks as he has started two new hedge funds. We'll have to see if the trio of ex-Soros managers will garner new capital to start yet another fund after already failing once. Satellite was run by Mark Sonnino, Lief Rosenblatt, and Gabe Nechamkin and they managed $7 billion around its peak and over $2 billion more recently.

What We're Reading 5/15/09

Top 25 Warren Buffett Quotes [Bankling]

Trouble in Quant-land again [Wall Street Journal]

Hedge funds cutting fees for investors [FT]

What if hedge funds had billboards [HedgeFundBlogMan]

The Credit Card Squeeze [New York Times] - Everyone is using a variation of that title these days.

Dwight Anderson To Open 2 New Ospraie Hedge Funds

If at first you don't succeed, try, try again. This cliché is the root of folly on Wall Street and in the hedge fund industry in general. Perfect example: The Ospraie Fund's Dwight Anderson is set to start two new hedge funds in July. Okay, new hedge funds, what's the big deal? Well, the problem here is that Dwight Anderson lost 39% in his Ospraie Fund in 2008 and had to liquidate the fund. At its peak, Ospraie managed $3.8 billion in commodities. But if at first you don't succeed, try, try again. And, that's exactly what Anderson is set to do.

Anderson will open two new hedge funds in July of 2009, the first of which will focus on stocks of commodity and basic materials companies (The Ospraie Equity Fund). He will also open a fund focused on commodities and derivatives (The Ospraie Commodity Fund). Anderson said that he is starting these funds because he sees significant opportunities in this market, as significant as he has ever seen in his 15 years of investing. These funds will have reduced fees where investors will pay half as much as the typical hedge fund. His new funds will charge a 1% management fee and a 10% performance fee.

His Ospraie fund is named after the osprey, a marine bird of prey. Ironically enough, his fund was the one being preyed upon in 2008. The volatile year of 2008 goes to show that anyone, regardless of their background can be humbled by Ms. Market. Anderson had previously worked at Julian Robertson's Tiger Management. While we never covered Anderson on the blog, we did cover numerous other successful Tiger Cub hedge fund managers. Anderson then went to work for global macro giant Paul Tudor Jones' Tudor Investment Corp. Contrary to Anderson, Tudor has made it through this crisis largely unscathed. Scoreboard: Master 1, Apprentice 0.

Anderson started Ospraie while at Tudor and then eventually spun it off where he saw 15% annual gains from 2000 until 2007. But, even after working and learning from some of the best in the game, Anderson still got hit... hard. Interestingly enough, we see that another fund has recently spun out of Tudor Investment Corp: James Pallotta's Raptor Capital. We just started covering Raptor in our hedge fund tracking series and only time will tell if they can avoid the fate suffered by Ospraie's prior Tudor spin-off. In an unrelated note: what's up with all the funds coming out of Tudor being named after animals of prey? We found that interesting, as everyone wants to be 'the hunter.' It's just highly ironic when you become the one being hunted.

To conclude, we rejoin our market fairytale. In typical Wall Street fashion, Anderson closed his old fund and brought two new funds to the surface. When will this pitiful cycle end? It amazes us that managers are continually given money after blowing up. But, that's Wall Street and that's the hedge fund industry; folly at its best. If at first you don't succeed, try, try again. Sigh.