Macro Hedge Funds Bet Against Recovery

Interesting story out of Bloomberg yesterday citing our friends over at Tudor Investment Corp and Clarium Capital Management. Paul Tudor Jones and Peter Thiel's hedge funds are bearish on a macro level and think the true recovery will be delayed. We've already seen that Tudor has called this a bear market rally and Clarium has been net short US equities numerous times this year.

From Bloomberg,

“If we have a recovery at all, it isn’t sustainable,” Kevin Harrington, managing director at Clarium, said in an interview at the firm’s New York offices. “This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”

Tudor, the Greenwich, Connecticut-based firm started by Jones in the early 1980s, told clients in an Aug. 3 letter that the stock market’s climb was a “bear-market rally.” Weak growth in household income was among the reasons to be dubious about the rebound’s chances of survival, Tudor said.

Clarium watches the unemployment rate that accounts for discouraged job applicants and those working part-time because they can’t find full-time positions, Harrington said. July joblessness with those adjustments was 16 percent, according to the Department of Labor, rather than the more widely reported 9.4 percent.

Clarium, which oversees about $2 billion, is positioned for an equity bear market through investments in the U.S. dollar, Harrington said. Falling stock prices will strengthen the currency by forcing leveraged investors to sell equities to pay down the dollar-denominated debt they used to finance those trades, he said.

High unemployment, lower wages and potential missteps by policymakers around the globe may stifle economic growth in 2010, Tudor said. The firm, which manages $10.8 billion, is at odds with 55 economists projecting an average of 2.3 percent growth next year, according to the Bloomberg survey.

Macro managers’ pessimism is fueled in part by the U.S. government’s response to last year’s financial crisis, which they say fails to address the root cause. Banks still hold hard- to-sell assets on their balance sheets, the managers said.

Clarium, whose assets were mostly in fixed income, dropped 6 percent this year through June. Horseman’s fund slid 16.3 percent. Tudor’s BVI Global Fund Ltd. returned 11 percent.

The funds held up in 2008 amid the industry’s record 19 percent loss. Horseman’s Global Fund USD, which focuses on stocks, made HSBC’s private bank list of top 20 performers by gaining 31 percent. Tudor’s and Clarium’s funds fell 4.5 percent.

Macro managers are examining China for hints on how to place currency and commodities bets. Tudor said the country’s spending spree on raw materials inflated commodity prices and weakened the U.S. dollar.

The ultimate problem, as always, is to make money from such theses. A frequent disconnect during this crisis has been the ability for many to predict what will happen, only to fail to profit from their call. This just goes to show how difficult these markets have been. While we've agreed with a lot of Clarium's research and thoughts on the economy, they are still down for the year performance wise.

Eric Mindich's Eton Park Capital: Loaded With Options Positions (13F Filing)

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is Eric Mindich's hedge fund firm, Eton Park Capital. Mindich started the fund back in 2004 with $3 billion under management with a $5 million minimum investment. Nowadays, Eton Park manages over $6 billion. Their investment strategy draws upon Mindich's time at Goldman Sachs where he focused on merger arbitrage. He was so good at his job that he became the youngest partner in Goldman Sachs' history at the age of 27. In addition to merger arbitrage, Eton Park focuses on long/short equity strategies and even invests up to 30% of their portfolio into private investments.

Eton Park's solid track record has landed them in our Market Folly portfolio where we seek to replicate hedge fund holdings into a cohesive portfolio. We can do so with the help of Alphaclone and the backtested results are quite impressive. Our combination of Eton Park, Baupost Group, and Shumway Capital Partners into a single unique portfolio has yielded over 25% annualized since inception. The portfolio is rebalanced quarterly and you can click the links above to see how it has performed and how it was created. Turning back to Eton Park's current setup, let's take a look at their portfolio.

The following were Eton Park's long equity, note, and options holdings as of June 30th, 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):
US Steel (X) Puts, Pfizer (PFE) Calls, Caterpillar (CAT) Puts, Deere (DE) Puts, CF Industries (CF), General Electric (GE) Puts, Liberty Media (LMDIA), ML Retail Holdrs (RTH) Puts, Comcast (CMCSK) Calls, SPDR Retail (XRT) Puts, Materials SPDR (XLB) Puts, Pepsi Bottling Group (PBG), Deere (DE) Calls, Data Domain (DDUP), iShares Brazil (EWZ) Calls, Verisign (VRSN) Puts, Netapp (NTAP) Calls, Vale (VALE) Calls, Emulex (ELX), and PepsiAmericas (PAS).


Some Increased Positions (A few positions they already owned but added shares to)
iShares Brazil (EWZ): Increased by 327.5%
Wyeth (WYE): Increased by 172.6%
Caterpillar (CAT) Calls: Increased by 148.9%
Schering Plough (SGP): Increased by 129.5%
Comcast (CMCSK): Increased by 77.6%
Amdocs (DOX): Increased by 57.8%
Alcoa (AA) Calls: Increased by 33.3%
Potash (POT) Puts: Increased by 29.5%
Lorillard (LO): Increased by 25.67%


Some Reduced Positions (Some positions they sold some shares of)
Petroleo Brasileiro (PBR) Puts: Reduced by 75%
SPDR Gold Trust (GLD): Reduced by 68.9%
iShares Brazil (EWZ) Puts: Reduced by 50%
Ebay (EBAY): Reduced by 46.4%
VimpelComm (VIP): Reduced by 42.5%
SPDR Gold Trust (GLD) Calls: Reduced by 36.4%
Goodyear Tire (GT): Reduced by 34.8%
iShares Emerging Markets (EEM) Puts: Reduced by 32%
Hansen Natural (HANS): Reduced by 21.9%
Wells Fargo (WFC) Puts: Reduced by 17.9%


Removed Positions (Positions they sold out of completely)
SPDR Gold Trust (GLD Puts, Google (GOOG), Google (GOOG) Calls, Suncor (SU), Grupo Televisa (TV), Walter Industries (WLT), News Corp (NWS-A), Select Sector Financial (XLF) Calls, Lamar Advertising (LAMR), General Motors (GRM), Allergan (AGN) Calls, EMC (EMC), Cisco Systems (CSCO) Calls, News Corp (NWS), Nokia (NOK), and CV Therapeutics (CVTX).


Top 15 Holdings by percentage of long portfolio *(see note below regarding calculations)

1. SPDR Gold (GLD) Calls: 8.94% of portfolio
2. Potash (POT) Puts: 8.43% of portfolio
3. US Steel (X) Puts: 5% of portfolio
4. iShares Emerging Markets (EEM) Puts: 3.84% of portfolio
5. iShares Brazil (EWZ) Puts: 3.7% of portfolio
6. Caterpillar (CAT) Calls: 3.46% of portfolio
7. Viacom (VIA-B) Calls: 3.2% of portfolio
8. Pfizer (PFE) Calls: 3.15% of portfolio
9. Verisign (VRSN): 3.11% of portfolio
10. Schering Plough (SGP): 2.74% of portfolio
11. Hospira (HSP): 2.56% of portfolio
12. Caterpillar (CAT) Puts: 2.54% of portfolio
13. John Deere (DE) Puts: 2.52% of portfolio
14. Potash (POT) Calls: 2.48% of portfolio
15. Viacom (VIA-B): 2.46% of portfolio

Eton Park's portfolio is absolutely loaded with options positions. The vast majority of their top holdings are bearish plays as they own puts on a variety of exchange traded funds (ETFs) and global growth type names. Additionally, their call position on Gold via GLD remains their top holding which is also a cautionary measure (although they did reduce this position by 36.4%). At the same time, they also sold off a ton of their common shares of GLD and they sold completely out of their GLD puts position.

This highlights a big problem with tracking Eton Park this time around (and most likely going forward as well). Since they own both common shares and (in some cases numerous) options positions on the underlying shares, it is impossible for us to tell what kind of directional bet they truly have on. Complicating the matter even further is the fact that many of their options positions have a higher notional value than their common share positions. Additionally, we cannot decipher the strike prices or expiration dates of these options positions they purchased either. Not to mention, they could have sold options positions against their holdings to hedge what they were buying, which we also cannot see.

All around, this simply means you need to take the data presented above with a giant grain of salt. While many of their top holdings are put positions, there's no real way for us to know exactly the extent of their directional bet on some of these holdings once you add in all the other possible variables. So, instead we will want to focus on their equity holdings as those are easier to track and decipher. The construction of Eton Park's portfolio makes it difficult to clone a portfolio from and as such we will be removing them from our Market Folly clone going forward. Although the performance numbers generated by mimicking just their equity holdings is still outstanding, we feel it is in our best interest to find funds that are more purely focused on equities so that we can track and clone portfolios to the most accurate degree possible. We'll have a separate post detailing the changes to the portfolio soon.

Turning to major activity of note that is easily trackable, we look at their stakes of Wyeth (WYE) and Schering Plough (SGP). They boosted both holdings substantially over the past quarter and this fits right into Eton Park's risk arbitrage game. But other than that, there wasn't a whole lot of activity that is decipherable enough to mention.

*Note regarding portfolio percentages: Assets from the collective holdings reported to the SEC via 13F filing were $7.1 billion this quarter compared to $6.2 billion last quarter, so quite a noticeable uptick in assets on the long side. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. In reality, the percentages are more watered down in their actual hedge fund portfolio. If you were to calculate percentage weightings in the actual hedge fund portfolio, they would obviously be different since you would divide position sizes by their total assets under management.

This is just one of the 40+ prominent funds that we'll be covering in our Q2 2009 hedge fund portfolio series. So far, we've already covered the holdings of Bill Ackman's Pershing Square Capital Management, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Dan Loeb's Third Point LLC, and Stephen Mandel's Lone Pine Capital, George Soros (Soros Fund Management), Lee Ainslie's Maverick Capital, Philip Falcone's Harbinger Capital Partners, and David Stemerman's Conatus Capital. Check back each day as we cover prominent hedge fund portfolios.



*image cropped courtesy of a photo from NYSocialDiary

Lone Pine Capital: New Green Mountain Coffee Roasters (GMCR) Stake (13G Filing)

In a 13G filed with the SEC, Stephen Mandel's hedge fund Lone Pine Capital has disclosed a brand new position in Green Mountain Coffee Roasters (GMCR). The filing was made due to activity on August 19th, 2009 and they now show an 8.3% ownership stake in the company with 3,603,364 shares. When we just recently examined Lone Pine's portfolio, they did not hold any shares of GMCR. This means that in the time elapsed between June 30th and August 19th, Lone Pine acquired their large position.

Green Mountain is an interesting story for two reasons. Firstly, there has been a large hedgie presence in this one for a while. And secondly, it is intriguing because of the high levels of short interest it has typically garnered. Those shorts were squeezed back in March/April of this year and we were all over that colossal move as we anticipated it and posted about it in real-time on our twitter page. It continued to reach new highs and pushed the bears out of the name. Year to date for 2009, GMCR is up over 133% and had a 3:2 stock split back on June 9th. Yet, GMCR still clearly have their detractors. According to Yahoo Finance, 33.4% of GMCR's float is sold short (10.26 million shares) as of August 11th, 2009. This is up from the month prior when there were 9.91 million shares short. This is definitely an interesting battleground to watch as the growth-at-a-reasonable-price (GARP) tolerable investors like Mandel take on the valuation naysayers who are heavily short. We'll continue to watch for any flesh wounds and will report from the battlefield.

Just this morning we also updated readers on the fact that Lone Pine has been selling shares of one of their UK holdings, Rightmove. And, in the recent past, we took a look at the rest of their positions in UK markets. In terms of other notable recent activity, Lone Pine has boosted their stake in Vistaprint (VPRT), as filed in a 13G earlier in August.

We track Stephen Mandel because he has returned 25% annually since inception back in 1997. Although he had a rough year in 2008, he is by far one of the best stockpickers in the game. He currently manages over $7 billion and you can read more about him in our post on Lone Pine's portfolio.

Taken from Google Finance, Green Mountain Coffee Roasters Inc. is "engaged in the specialty coffee industry. The Company sells over 100 whole bean and ground coffee selections, hot cocoa, teas and coffees in K-Cup portion packs, Keurig single-cup brewers and other accessories. The Company manages its operations through two business segments, Green Mountain Coffee (GMC) and Keurig, Incorporated (Keurig)."

Stephen Mandel's Lone Pine Sells Rightmove (RMV) Shares

Stephen Mandel’s hedge fund Lone Pine Capital last week significantly reduced its holding in Rightmove (RMV), according to the London Stock Exchange. As can be seen in the table below, it would appear that Lone Pine have begun to lock in a handsome profit on this investment.

Date of stock purchase / sale	No. of shares	% of company’s total stock	Estimate of price paid/ share (Sterling)
28/01/2008	8422252	6.5	-
18/07/2008	10629059	9	249p
22/09/2008	10438107	8.8	302p
12/12/2008	11938107	10.2	171p
25/03/2009	11429616	9.72	245p
21/08/2009	10004087	8.5	470p
24/08/2009	9051477	7.7	525p
25/08/2009	7443038	6.3	535p
26/08/2009	6893038	5.9	540p

The table above highlights the timeline of their ownership stake in RMV and so they now have a 5.9% ownership stake, down from a previous 8.5%, due to the recent sales as listed above. Special thanks as always to a reader in the UK for compiling this data. We've also covered Lone Pine's other UK positions for those interested. And, in terms of US equity holdings, we've also recently covered Lone Pine's 13F filing that details their portfolio.

Rightmove’s operates the Rightmove.co.uk website which provides residential home buyers with properties to search online. Its customers include estate agents, letting agents, new homes developers and overseas homes agents who pay fees for the right to display properties on the website. The company provides data to property professionals and property related businesses. It also provides support services including property valuation for lending purposes. Rightmove trades on the London Stock Exchange.

Hugh Hendry's Eclectica Fund August Commentary

Many of you may have already read this, but we found it prudent to post up the latest from Hugh Hendry's Eclectica Fund. The resident deflationist is back with his August 2009 commentary and you can read it below. As we noted in our hedge fund news update recently, Hendry sees a very crowded trade in that so many people are confident inflation is in our future. You can also view Hendry's previous letter here.

Without further ado, Hugh Hendry's Eclectica Fund August 2009 Commentary (Email readers will need to come to the blog to view the embedded document, or you can attempt to download the .pdf via this link):

Eclectica August Commentary

David Stemerman's Conatus Capital Likes Apple (AAPL), Medco Health (MHS): 13F Filing

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is David Stemerman's hedge fund Conatus Capital. This is just the third time we've covered their portfolio because this is literally only their third 13F filing. They are obviously a newer fund, but their manager and analysts certainly have quite the pedigree. Conatus raised $2.3 billion and began trading last year after David Stemerman left Lone Pine Capital to start his own hedge fund. Conatus is an interesting story to follow because, as we all know, Stemerman's old employer, Lone Pine Capital, is a prominent 'Tiger Cub' hedge fund. And now many years later, Lone Pine is seeing its own progeny spin off their own funds. Matt Iorio also left Lone Pine to start his own firm, White Elm Capital, who we will also track for the first time in the coming days. We find it appropriate to track these two gentlemen because they are well-versed in the successful bottom-up 'Tiger' investing style and have contributed to Lone Pine's solid track record.

The following were Conatus' long equity, note, and options holdings as of June 30th, 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):
Walter Energy (WLT)
Mastercard (MA)
Amazon (AMZN)
Itau Unibanco (ITUB)
Google (GOOG)
Urban Outfitters (URBN)
Ctrip (CTRP)
Priceline (PCLN)


Some Increased Positions (A few positions they already owned but added shares to)
SBA Communications (SBAC): Increased by 56.6%
Crown Castle (CCI): Increased by 38.9%
MedcoHealth (MHS): Increased by 32.5%
Baxter (BAX): Increased by 20.8%
Range Resources (RRC): Increased by 19.9%
Apple (AAPL): Increased by 16.7%


Some Reduced Positions (Some positions they sold some shares of)
Qualcomm (QCOM): Reduced by 46.8%
Cisco Systems (CSCO): Reduced by 45.4%
Petrohawk Energy (HK): Reduced by 41.4%
Goldman Sachs (GS): Reduced by 40.2%
Discovery Communications (DISCA): Reduced by 39.2%
Southwestern Energy (SWN): Reduced by 38%
Visa (V): Reduced by 34.9%
Teradata (TDC): Reduced by 28%
JPMorgan Chase (JPM): Reduced by 26.9%
Cognizant Tech (CTSH): Reduced by 21.9%


Removed Positions (Positions they sold out of completely)
People's United Financial (PBCT)
Walmart (WMT)
Activision Blizzard (ATVI)
Bed Bath & Beyond (BBBY)
Carnival (CCL)
Discovery Communications (DISCK)


Top 15 Holdings by percentage of long portfolio *(see note below regarding calculations)

1. Apple (AAPL): 6.46% of portfolio
2. MedcoHealth (MHS): 6.33% of portfolio
3. Apollo Group (APOL): 5.63% of portfolio
4. Range Resources (RRC): 5.62% of portfolio
5. Express Scripts (ESRX): 4.94% of portfolio
6. Cognizant Technology (CTSH): 4.3% of portfolio
7. JPMorgan Chase (JPM): 4.23% of portfolio
8. Walter Energy (WLT): 4.22% of portfolio
9. Baxter (BAX): 3.62% of portfolio
10. Mastercard (MA): 3.57% of portfolio
11. Visa (V): 3.52% of portfolio
12. American Tower (AMT): 3.44% of portfolio
13. Amazon (AMZN): 2.97% of portfolio
14. Itau Unibanco (ITUB): 2.93% of portfolio
15. Strayer Education (STRA): 2.92% of portfolio

Like Lee Ainslie's Maverick Capital, David Stemerman's Conatus has Apple (AAPL) as their top holding. While a majority of this can be attributed to AAPL's share price appreciation over the past quarter, Conatus did add 16.7% to their position. Also like Maverick, Conatus has a large stake in Cognizant Technology (CTSH). We've mentioned it numerous times before that the 'Tiger Cub' hedge fund portfolios are often very similar and this is no different.

However, Conatus is not technically a Tiger Cub, but rather a 'Grandcub' if you want to get ridiculous with the terminology. Lone Pine Capital is a Tiger Cub in the true sense of the definition. So, since Stemerman left a 'Cub' fund to form his own fund, that technically makes Conatus a 'Grandcub'. We only highlight this to showcase the true extent and reach of the Tiger investing style. The Tiger Family Tree is quite expansive and has a reach far and wide in the hedge fund industry. We track them for their bottom-up focus on equities. Since SEC filings only require the disclosure of US equities, options, and note positions, we need funds that do the bulk of their investing in that realm in order to accurately track them.

One of Lone Pine's favorite positions is Strayer Education (STRA) as Stephen Mandel presented the bullish case for the name at the Ira Sohn conference. (At the conference, numerous hedge fund managers outlined investment ideas). Due to his Lone Pine background, it is unsurprising that Stemerman has added Lone Pine portfolio plays to his arsenal. He too holds shares of STRA at their 15th largest position.

Stemerman trimmed positions in QCOM, CSCO, HK, and GS by a significant margin. The only positions he really added to in size were SBAC and CCI. He brought on brand new positions in WLT, MA, and AMZN and added them with enough size to land them in their top 15 holdings.

*Note regarding portfolio percentages: Assets from the collective holdings reported to the SEC via 13F filing were $1.2 billion this quarter compared to $1.1 billion last quarter. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. In reality, the percentages are more watered down in their actual hedge fund portfolio. If you were to calculate percentage weightings in the actual hedge fund portfolio, they would obviously be different since you would divide position sizes by their total assets under management.

This is just one of the 40+ prominent funds that we'll be covering in our Q2 2009 hedge fund portfolio series. So far, we've already covered the holdings of Bill Ackman's Pershing Square Capital Management, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Dan Loeb's Third Point LLC, and Stephen Mandel's Lone Pine Capital, George Soros (Soros Fund Management), Lee Ainslie's Maverick Capital, and Philip Falcone's Harbinger Capital Partners. Check back each day as we cover prominent hedge fund portfolios.



*image courtesy of NewYorkSocialDiary

Bear Market Comparisons, Similarities & Projections (Charts)

We wanted to quickly compile a great set of charts we've stumbled upon in order to put some things in perspective. Specifically, we want to focus on stock market comparisons between the current bear market and bear markets of past. Let's dive right in and start with a prediction.

Steve Puri has posted up an Elliott Wave projection chart for the S&P 500 and has also overlayed Fibonacci retracements:

(click to enlarge)

As you can see above, Steve hypothesizes that the S&P could hit 1,120 before reaching major resistance. He sees one more short-term pullback followed by a spring higher up to 1,120. That level, however, will prove difficult to spring above due to both the downtrending line and the fibonacci retracement level serving as resistance. This somewhat coincides with the video we posted up just last week regarding possible market scenarios outlined by fibonacci retracements. (If you're unfamiliar with fibonacci, then this educational video serves as a great primer).


Next, turning to some historical comparisons, we want to highlight a series of charts that point out some intriguing similarities. Dshort has compared the current crisis, the Nikkei collapse in 1989, and the 1929 Great Depression.

(click to enlarge)

The overlay is intriguing as it puts the timeframe and severity of drops in context. All three charts would seem to imply that there is still another drop and then another subsequent rally in store on this bumpy ride. The current market is in blue, the Nikkei in red, and the Great Depression in grey.


Zero Hedge then furthers this comparison by overlaying only the Nikkei on top of the current US market via the S&P 500.

(click to enlarge)

Once again, the comparisons are interesting. However, in this specific instance, it could possibly imply a much more abrasive rally is still ahead. Even though US markets are already up 50+% from the lows, a rally to match that of Japan's would mean there's quite a bit more room to run. We would however like to point out though that each crisis is specific and no two are identical in nature.


In another intriguing chart from Zero Hedge, they highlight the correlation between shares of AIG and the overall stock market.

(click to enlarge)

They are indeed quite similar and echo the fact that some of the stocks with the highest volume traded as of late have essentially determined where the market is headed. (AIG in orange and the S&P in white).


Lastly, shifting our focus away from the overall market, we see that Kevin has highlighted the practically omnipresent symmetrical triangle in Gold (via exchange traded fund GLD). This chart has been in this pattern for some time now, as evidenced by the weekly chart below.

(click to enlarge)

When symmetrical triangles breakout to the upside, they can be quite powerful. At the same time, you still have to be aware that they can breakout to the downside as well. Simply put, just wait for a break in either direction of the lines drawn. This also shifts the focus yet again to the $1000 level in gold that we've highlighted in the past as a very important level. In order for gold to really breakout, it has to get above the monster psychological and technical level of $1000. Kevin points out that the level of $95.25 is important for an upside breakout specifically for the exchange traded fund that tracks gold, GLD.

We highlight the gold chart in conjunction with the stock market charts because we've seen many investors flock to gold as a safe haven in times of uncertainty. And, if the market begins to plummet or if uncertainty rises again, we could potentially see a surge in GLD. After all, Third Point LLC hedge fund manager Dan Loeb flocked to GLD as he waited for uncertainty to pass at the beginning of the year. Not to mention, hedge fund Sprott Asset Management was also out recently with a recent research piece calling gold the 'Ultimate Triple-A Asset.'

That wraps up the interesting charts we've been taking a gander at lately. As such, we have yet again received conflicting research. Fibonacci retracements could imply further upside before encountering resistance. A potential gold spike could imply a negative future for markets if investors begin to flee from uncertainty. If we're comparing this crisis to that of Japan's, then the current market rally could have further to run. But just last week, we also focused on two reasons to be bearish. Around, around, and around in circles we go.

It is important to evaluate both sides of the argument and determine which one makes the most sense. Unfortunately, we may just have too much conflicting data at this point. Instead, we'll simply let the market guide us in the mean time since we're pretty much at her mercy. Because while the economy may be doing one thing, it's unfortunately perfectly normal for the market to be doing something completely different.

Fibonacci Retracements S&P 500: Technical Analysis Video

Since we like to look at both sides of the argument, we thought it would be prudent to highlight a potential bullish scenario as identified by technical analysis. This comes after we just earlier today looked at two reasons to be bearish.

The bullish scenario stems from a potential inverse head and shoulders and levels identified by Fibonacci retracements. Here's the video that outlines the potential scenario. (Unfamiliar with Fibonacci? Watch this educational video).

A screenshot we've taken from the video highlights that the retracement tool was drawn from the highs of October last year to the lows of March of this year. By placing it as such, it identifies four potential fibonacci retracements at S&P 500 levels of: 878, 1011, 1119, and 1227. We are currently floating around the 38.2% retracement of 1011 and looks like we may head higher. When the market initially flew past the 23.6% retracement at S&P 878, we noticed that it came back down and tested that level. That level held and the market was propelled higher. The next stop in terms of retracements where we might see resistance is 1119 and after that, 1227. If the potential inverse head and shoulders plays out to fruition, then 1227 on the S&P would be a likely upside target.

(click to enlarge)

The guys over at MarketClub have done a nice job of walking you through everything so you really only need to watch the first half of the Fibonacci retracement video. While we are not bullish at this moment, we want to be clear that it's always prudent to examine both sides of the argument. (After all, Doug Kass called a top in the market for this year). One of our favorite sayings is that the market can remain irrational longer than you can remain solvent. Hedge fund manager Paul Tudor Jones likes to let the market guide him and that's exactly what we'll do here.

Two Reasons To Be Bearish

.... At the very least for the short-term. While we could throw out all kinds of economic data and a laundry list of fundamental problems, we instead want to focus on two market related datapoints. Firstly, short interest was recently released and the fine folks over at Bespoke have highlighted that, "the average short interest as a percentage of float for stocks in the S&P 1500 is currently at 6.9% This is the lowest level since February 2007." They also point out that extremes typically happen in each polar direction. When short interest is high and all the late-to-the-party bears have arrived, the market can run. Conversely, when short interest is at the lows, be scared.

(click to enlarge)

That information all but ties into what hedge fund manager Doug Kass highlighted recently: everyone is bullish and rushing into stocks. Mutual fund inflows have risen and they have put their new cash to work while hedge funds have had their highest net long exposure in some time.

The second datapoint we want to highlight is not so much data as it is a flowchart of market possibilities. Specifically, we are talking about the four stages of secular bear markets. Barry Ritholtz over at the Big Picture has posted up an excellent chart that illustrates just that.

(click to enlarge)

As you can see, it argues that we are almost out of the 'rebound rally' phase of the secular bear market. What's on deck next, you might ask? A roughly anticipated 25% correction downwards, assuming this is a secular bear market. That's a whole 'nother debate but we wanted to post up these interesting tidbits as we start to become cautious ourselves. After all, the market is up over 50% since the March 2009 lows. While such caution is most likely warranted, we could be early with such sentiment. (Forgive us for such a sin as 'being early' ... we attribute this to the volatile market of 2007-08 that has scarred us for life). And as always, we are reminded that markets can remain irrational longer than you can remain solvent. In the mean time, our list for reasons to be bearish continues to grow.

What We're Reading 8/28/09

What your favorite blogs said at the bottom [The Reformed Broker]

As an addendum to the above article, we thought we'd link back to a post we wrote essentially at 'the (tradeable) bottom' on March 9th, 2009 entitled 'Ranting, Raving & Contrarian Signals'. (Maybe it's time for another contrarian piece in the opposite direction). [market folly]

Natural gas quandary (as it related to ETF vehicle UNG) [Abnormal Returns]

Interview with Charles Kirk re: trading [The Kirk Report] - A great read even if you're not a trader

Special report on leveraged and inverse ETFs [ETF Trends]

Interview with pro trader Brian Shannon [Wall St. Cheat Sheet]

Bruce Berkowitz of the Fairholme Fund beats the S&P [Forbes]

The greenback effect [by Warren Buffett in the NY Times]

John Paulson Buys Citigroup (C) Shares?

Please note that we don't typically like to post 'rumors' here at Market Folly as we usually focus on concrete information such as SEC filings and investor letters. So, obviously take everything in this post with a grain of salt. However, we believe the sources to be reliable/credible and as such have decided to post them.

The NY Post has a piece up stating that John Paulson's hedge fund Paulson & Co has slowly acquired a 2% ownership stake in Citigroup (C) over the past few weeks. Sources in the story say that Paulson has bought because he believes that Citi's assets are undervalued. He apparently sees shares worth book value and thinks they should trade between $5-7 per share. With his new stake, Paulson would also join the US Government, who owns roughly 34% of Citigroup.

This comes after last week when we revealed that Paulson's hedge fund had amassed large stakes in numerous financials including Bank of America (BAC), Capital One (COF), Goldman Sachs (GS), JPMorgan (JPM), and Regions Financial (RF) amongst many others. You can view a summary of Paulson's new financial additions here. We'll of course continue to monitor the situation and will post up any other concrete information we receive. (Know something we don't? Get in contact with us).

Philip Falcone's Harbinger Capital Partners Adds Natural Resource Plays: 13F Filing

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is Philip Falcone's Harbinger Capital Partners. They are a $6 billion hedge fund that started back in 2000 with $25 million in seed capital from Harbert Management. Recently, Falcone bought out Harbert to gain ownership of Harbinger. And, he is 'commemorating' his purchase by returning to his roots and launching a new Harbinger hedge fund focused on distressed assets. Harbinger returned 117% in 2007 when Falcone notoriously shorted subprime mortgages. His investment style focuses on intensive research on credit, bankruptcies and proxy fights. While he obviously holds equity positions, Falcone definitely is well versed in different asset classes.

However, despite Falcone's investing acumen, Harbinger Capital Partners lost over 60% of their assets on a year over year basis as their portfolio was down 22.7% for 2008. Poor performance and redemptions landed Harbinger in the number one slot on the list of top 10 asset losers. While the 13F details their most recently portfolio changes, we've already covered a lot of the movements right when they happened since we also track 13D and 13G filings. This is the benefit of focusing on the full gamut of SEC filings rather than just the 13F. As we've been covering on the blog, Harbinger has been decreasing their Cliffs Natural Resources (CLF) position, selling off some of their Calpine (CPN), and most recently amended their 13D on SkyTerra. Lastly, they've also been selling shares of Solutia (SOA) as if it were going out of style. We haven't covered their performance in a while but as of the end of March they were up 4.06%.

The following were Harbinger's long equity, note, and options holdings as of June 30th, 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):
Freeport McMoran (FCX)
Teck Resources (TCK)
Ultrashort Financials (SKF)
Zapata (ZAP) - we had already covered their new ZAP position via their 13D filing
Legg Mason (LM)


Some Increased Positions (A few positions they already owned but added shares to)
Terrestar (TSTR): Increased by 22.9%


Some Reduced Positions (Some positions they sold some shares of)
Cliffs Resources (CLF): Reduced by 94%
Atlas Air Worldwide (AAWW): Reduced by 60.7%
Solutia (SOA): Reduced by 55.5% (and they continue to sell this position as we've documented in our coverage of their 13D filing)
Calpine (CPN): Reduced by 28.3%


Removed Positions (Positions they sold out of completely)
Consol Energy (CNX)
Hughes Communications (HUGH)
The rest of the positions they sold out of were less than 0.15% of their portfolio each:
MDC Partners (MDCA)
Weatherford International (WFT)
Direxion 3x Bear Financials (FAZ)
ICO Global (ICOG)


Top 15 Holdings by percentage of long portfolio *(see note below regarding calculations)

1. Calpine (CPN): 37.7% of portfolio
2. Leap Wireless (LEAP): 14.85% of portfolio
3. McDermott (MDR): 10.36% of portfolio
4. NY Times (NYT): 10.10% of portfolio
5. Atlas Air Worldwide (AAWW): 4.27% of portfolio
6. Solutia (SOA): 3.52% of portfolio
7. Terrestar (TSTR): 3.25% of portfolio
8. Freeport McMoran (FCX): 3.22% of portfolio
9. Constellation Energy (CEG): 2.89% of portfolio
10. Teck Resources (TCK): 1.77% of portfolio
11. Ultrashort Financial (SKF): 1.68% of portfolio
12. Zapata (ZAP): 1.45% of portfolio
13. Medivation (MDVN): 1.15% of portfolio
14. Legg Mason (LM): 0.81% of portfolio
15. Cliffs Resources (CLF): 0.71% of portfolio

Harbinger typically runs a pretty concentrated equity portfolio and this quarter is no different. They focus in on their best ideas and try to institute change and drum up shareholder value through various methods.

In terms of brand new positions, we can't help but notice their fondness for natural resources and mining plays Freeport McMoran (FCX) and Teck Resources (TCK). Both have rallied substantially from their lows and Harbinger started new stakes in each. FCX is Harbinger's 8th largest long equity position while TCK is their 10th. In the past, Harbinger had a huge stake in another miner, Cliffs Resources (CLF). While they still hold their position today, it is not nearly as large as it once was considering they just sold 94% of their position. We'll be interested to see if they ratchet their new positions up further in the future as they could possibly see these companies as takeover targets in an industry that seems to always be filled with merger rumors. But after the sour taste left in their mouth from the CLF merger debacle, Harbinger will be cautious not to let that happen again.

Also possibly worth highlighting is the fact that they added the Ultrashort Financials exchange traded fund SKF. This is the second prominent hedge fund we've seen do so in the latest round of 13F filings. (John Paulson bought a ton of financials and then hedged it with SKF). We will be quick to point out that these leveraged inverse ETFs suffer tracking problems the longer you hold them. They replicate the daily performance of their underlying index and as such suffer compounding complications over time. They do what they are designed to do well (track daily performance), but they are best used for quick trades. They can absolutely fly if things start to heat up in the markets. For instance, last October and November in the markets when the financials were tanking, SKF was up 10-15% on what seemed like a daily basis, which is an easy profit. That potential profit though, comes with lots of inherent risk so make sure you're aware of how the instrument operates. We're highlighting Harbinger's entrance into this play as it gives us a look at their potential directional bets. They could have established this for a few reasons: they think financials have rallied too hard recently, they are more bearish on a macro level, or they simply want a hedge for downside protection should things get ugly again. Hell, it could have just been a trade that happened to show up during the 13F reporting period... who knows. Nonetheless, it's interesting to see. Their SKF position is 1.68% of their long US equity portfolio.

While we've outlined all of Harbinger's long equity positions above, keep in mind that they were as of June 30th, 2009. Please note that since that date, they have filed various 13D, 13G, and Form 4's with the SEC as it seems they are constantly shuffling their portfolio. Those newer filings update their portfolio with more recent information and we just wanted to insert that cautionary note for those really tracking these funds in-depth. We typically try and cover all their filings on the blog but would still recommend checking out the latest movements from Harbinger as filed with the SEC here.

*Note regarding portfolio percentages: Assets from the collective holdings reported to the SEC via 13F filing were $1.5 billion this quarter compared to $1.4 billion last quarter. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. In reality, the percentages are more watered down in their actual hedge fund portfolio. If you were to calculate percentage weightings in the actual hedge fund portfolio, they would obviously be different since you would divide position sizes by their total assets under management.

This is just one of the 40+ prominent funds that we'll be covering in our Q2 2009 hedge fund portfolio series. So far, we've already covered the holdings of Bill Ackman's Pershing Square Capital Management, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Dan Loeb's Third Point LLC, and Stephen Mandel's Lone Pine Capital, George Soros (Soros Fund Management), and Lee Ainslie's Maverick Capital. Check back each day as we cover prominent hedge fund portfolios.

Doug Kass Calls Market Top For the Year

Noted shortseller and Seabreeze Partners hedge fund manager Doug Kass has had impeccable timing recently. Market timing is a b*tch, but Kass has flipped that statement upside-down and made the market his b*tch. Back on the March lows, Kass was calling 'the bottom' and buying when everyone else was calling for the end of the world. This time around, he's calling for a top in the market for the year and has been assembling a short position. His contrarianism is the polar opposite this time around as he writes, "To most investors, today the fear of being in has now been eclipsed by the fear of being out as the animal spirits are in full force. Bears are now scarce to nonexistent in the face of steady price gains in equity and credit prices. As if the movie is now being shown in reverse, the bull is persistent, stock corrections are remarkably shallow, cash reserves at mutual funds have been depleted, and hedge funds hold their highest net long positions in many moons."

We first noted Kass' bearishness a few weeks ago and he has since deepened his stance. He brings up great points and it really has all the elements of another great contrarian call. Time will tell and we'll wait and see. Back in the beginning of March, we penned a piece entitled, Ranting, Raving & Contrarian Signals to highlight the extreme bearish sentiment as if the world was imploding. We have been considering penning a piece again on this topic, only in reverse. Looks as if Kass has beat us to it and we'll gladly let him take that honor.

His point about mutual fund inflows is exactly what we were recently looking at as well and we tweeted about these inflows. Many a contrarian will say that when the retail/'dumb' money rushes in, it is time to get out. Another interesting statistic was the fact that hedge funds have had high net long exposures for the first time in forever. And, as we also tweeted about, hedge funds were *buying* financials hand over fist the past few quarters. Today, we also saw a unicorn and bigfoot; that's how crazy things have been getting.

In order for the market to truly recover, many fundamental problems must be addressed. Kass outlines his signs needed for a market recovery and it's a great reference to have. But in the mean time, he lists 10 things that will weigh on the economy:

1. Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life.

2. Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.

3. The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.

4. The credit aftershock will continue to haunt the economy.

5. The effect of the Fed's monetarist experiment and its impact on investing and spending still remain uncertain.

6. While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in prior upturn.

7. Commercial real estate has only begun to enter a cyclical downturn.

8. While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives.

9. Municipalities have historically provided economic stability -- no more.

10. Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom.

He ends this list by stating that he is looking, "over the visible green shoots of recovery toward a hostile assault of nonconventional factors that few business/credit cycles and even fewer investors have ever witnessed."

Now that you've seen the rationale for Kass' shift in sentiment, we now want to turn our focus to a timeline of Kass' sentiment as compiled by our friend FirstAdopter. We've mentioned our 'tweets' a few times in this article and we further want to highlight the utility of Twitter as it pertains to financial markets. The rest of this article is a guest post by FirstAdopter, whose blog and twitter we've been following for some time now.

Doug Kass is widely regarded as the guy that called the exact bottom in March by Barrons, New York Times, and CNBC anchors. Here are some tweets from his Twitter Feed. I will let them speak for themselves:

SP500 August 26th 12:17PM: 1027

SP500 August 10th: 1007

SP500 August 5th: 1003

SP500 July 28th: 980

SP500 July 22nd: 954

SP500 July 2nd: 896

SP500 June 19th: 921

SP500 May 8th: 929

SP500 April 29th: 874

SP500 April 16th: 865

SP500 March 26th: 833

SP500 March 18th: 794

Actual Low Close of SP500 March 9th: 677

SP500 February 26th: 753

SP500 February 18th: 788

SP500 February 12th: 835

So there you have it, Kass calls the top and is bearish for now. We'll wait and see if he has made not one, but two amazing market calls within the span of a year. Thanks again to FirstAdopter for the guest post. You can follow his blog here and his twitter here. Make sure to also follow @marketfolly on twitter and to follow @DougKass on twitter as well.

Hopefully this highlights the great quick insight you can gain in 140 characters or less via the Twitter platform. There's an entire finance focused group of posters on there (including yours truly) that has assembled via the great community at Stocktwits, so definitely check it out and join in (Also see our post on Stocktwits & Twitter here).

Last, but certainly not least, make sure you read Kass' latest piece where he elaborates on his 'top' call.

Hedge Fund Trend Monitor: Goldman Sachs Report

Here's an excellent in-depth read from Goldman Sachs that ties directly into our tracking of hedge fund movements. And we say this because the majority of their data was taken from SEC filings and public disclosures, exactly what we track here on Market Folly. In the report, they specifically focus on hedge fund re-risking and the fact that these funds now have net long exposure near levels unseen in a long time.

Some interesting tidbits we took away from the piece are as follows:

- Hedge funds now own 3.7% of the financial sector's market capitalization.

- Hedge funds boosted ownership in financials by 55% on a quarter over quarter basis, to $70 billion.

- They favored Bank of America (BAC) as the number of funds owning it doubled (quarter over quarter). JPMorgan Chase (JPM) was the second favorite. This echoes what we have been seeing in our 13F analysis. Notable fund managers like Dan Loeb (Third Point) and John Paulson (Paulson & Co) loaded up on shares of BAC, among many other prominent managers. It really is almost astounding how many big names piled into this play over the last quarter.

Those are just a few of the major talking points, but there is a ton of great information in this report and if you enjoy reading our posts on a daily basis then you'll love this report, hands down. Email readers please come to the blog to view the embedded document below.

Here's Goldman Sachs' Hedge Fund Trend Monitor:

Goldman Sachs Hedge Fund Monitor


If you would like to download the .pdf, you can easily do so via this link. Please be aware that Market Folly is not the one hosting this document and hat tip to that individual for doing so. And as always, make sure to check out our hedge fund portfolio tracking series as we update it daily.

Lee Ainslie's Maverick Capital Favors Apple, Wyeth, Cognizant: 13F Filing

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is Lee Ainslie's hedge fund firm Maverick Capital. Ainslie learned his ways under the guidance of hedge fund legend Julian Robertson and is a member of the Tiger Cub family. (For those of you unfamiliar, a Tiger Cub is a manager who once worked at legendary Tiger Management and eventually started their own fund. You can view a Tiger Cub family tree here). As such, Maverick is a part of the Tiger Cub portfolio clone created with Alphaclone that is seeing great returns and is comprised of holdings widely held by all of the Tiger Cub hedge funds.

Specifically, Maverick manages over $5 billion and focuses on straight up stock picking on both the long and short sides of the portfolio. However, they do not put on pairs trades. They have six industry heads and each team handles their respective sector. Risk management is a big focus at Maverick and position sizes don't normally get above 5-8% of the portfolio. They use a value yet growth at a reasonable price (GARP) tolerable investing style and they like to compare enterprise value to sustainable free cash flow. They have had great historical performance, but suffered in 2008 where their Maverick Fund was -26.2% for the year. For a more in-depth look at this hedge fund, head on over and check out our profile/biography on Lee Ainslie & Maverick.


The following were Maverick's long equity, note, and options holdings as of June 30th, 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):
Of notable size are: Hewlett Packard (HPQ), Staples (SPLS), The Gap (GPS), Covidien (COV), Apache (APA), Celgene (CELG), Tyco (TYC), State Street (STT), Black & Decker (BDK), Leap Wireless (LEAP), Ctrip (CTRP), and NII Holdings (NIHD).

The rest of their brand new positions are less than 0.5% of the portfolio each: Jetblue Airways (JBLU), Fifth Third Bancorp (FITB), Capella Education (CPLA), Signet Jewelers (SIG), Digital Globe (DGI), and Office Max (OMX).


Some Increased Positions (A few positions they already owned but added shares to)
America Movil (AMX): Increased by 110.5%
Pepsico (PEP): Increased by 103%
JPMorgan Chase (JPM): Increased by 85.5%
Parker Hannifin (PH): Increased by 85.13%
Chico Fas (CHS): Increased by 73.5%
Progressive (PGR): Increased by 52.8%
Gilead Sciences (GILD): Increased by 44.4%
Wyeth (WYE): Increased by 31%
Mastercard (MA): Increased by 22.8%


Some Reduced Positions (Some positions they sold some shares of)
Research in Motion (RIMM): Reduced by 54.5%
Raytheon (RTN): Reduced by 48.5%
Marvell Technology (MRVL): Reduced by 44.3%
Walgreen (WAG): Reduced by 28.5%
Lorillard (LO): Reduced by 22.2%
Liberty Media (LMDIA): Reduced by 22.1%
Amgen (AMGN): Reduced by 19.66%
Berkshire Hathaway (BRK-A): Reduced by 16.5%


Removed Positions (Positions they sold out of completely)
Notable sales of size include: Qualcomm (QCOM), Best Buy (BBY), KLA Tencor (KLAC), Fidelity National Information (FIS), Citrix (CTXS), AmerisourceBergen (ABC), PNC Financial Services (PNC), Pfizer (PFE), Thermo Fisher Scientific (TMO), Gymboree (GYMB), American Tower (AMT), and Green Mountain Coffee (GMCR).

The rest of the sales were less than 0.5% of the portfolio each: Electronic Arts (ERTS), Advanced Micro Devices (AMD) Bond, GMarket (GMKT), Time Warner Cable (TWC), Biogen Idec (BIIB), OptionsXpress (OXPS), Citizens Republic (CRBC), Air Methods (AIRM), Petroquest (PQ), Bankrate (RATE), and Time Warner (TWX).


Top 15 Holdings by percentage of long portfolio *(see note below regarding calculations)

1. Apple (AAPL): 3.85% of portfolio
2. Wyeth (WYE): 3.65% of portfolio
3. Cognizant Technology (CTSH): 3.32% of portfolio
4. Hewlett Packard (HPQ): 3.18% of portfolio
5. Pepsico (PEP): 3.16% of portfolio
6. Walgreen (WAG): 3.01% of portfolio
7. Lorillard (LO): 2.66% of portfolio
8. Progressive (PGR): 2.57% of portfolio
9. Staples (SPLS): 2.54% of portfolio
10. Liberty Media (LMDIA): 2.53% of portfolio
11. Gap (GPS): 2.52% of portfolio
12. Netapp (NTAP): 2.37% of portfolio
13. XTO Energy (XTO): 2.37% of portfolio
14. Covidien (COV): 2.21% of portfolio
15. Gilead Sciences (GILD): 2.17% of portfolio

Like Stephen Mandel of Lone Pine, fellow Tiger Cub Lee Ainslie was out buying large cap names with very visible brands. He added Hewlett Packard (HPQ), Staples (SPLS), and The Gap (GPS) all as brand new positions and brought them up to their 4th, 9th, and 11th largest holdings respectively. Maverick's top position is Apple (AAPL) which they largely left untouched. Shares of AAPL have surged 33% from the end of March until the end of June (the time period elapsed between disclosure dates) and as such has appreciated its way up to their top holding. When we last looked at Maverick's portfolio from Q1 2009, it was their 3rd largest holding.

Wyeth (WYE) also ranks highly in their portfolio as Maverick is playing the risk arbitrage game here along with a ton of other hedge funds. They boosted their stake in this name by 31% over the past quarter as well. Keep in mind that their WYE long is most likely only one leg of the trade they have on in this arbitrage play.

Sticking to the 'play the financials' meme that so many hedge funds have adhered to last quarter, Maverick boosted their position in JPMorgan (JPM) by over 85%. We highlight this because we have seen a very visible trend amongst the various hedge fund 13F filings. John Paulson bought Bank of America (BAC) in a big way, as did Dan Loeb of Third Point, among many other hedge funds.

In terms of selling, we wanted to point out that over the past quarter Lee Ainslie's fund sold completely out of numerous positions that we had previously known as 'hedge fund darlings,' i.e. they were stocks owned by many hedge funds (and most often other Tiger Cubs). Maverick completely dumped Qualcomm (QCOM), Fidelity National Information (FIS), Thermo Fisher Scientific (TMO), and American Tower (AMT). In particular, QCOM and AMT have long been Tiger Cub favorite picks. This is where the divergences start to get interesting as other Tiger Cub funds still hold AMT while Maverick is out of it now.

On the contrary, we see they doubled their stake in America Movil (AMX). This transaction works conversely in that practically all of the ex-Tiger funds owned AMX and then sold out of it. Stephen Mandel's Lone Pine was the only one who continued to hold a position of size. So, contrary to most of his Tiger peers, Ainslie has now boosed his AMX stake. Even though it is not in the top 15 holdings, we thought it was worth pointing out. The Tiger Cubs often have very similar portfolios, so we like to highlight the divergences we see along the way.

*Note regarding portfolio percentages: Assets from the collective holdings reported to the SEC via 13F filing were $6.4 billion this quarter compared to $5.5 billion last quarter, so a large increase on a quarter by quarter basis. Please keep in mind that when we state "percentage of portfolio," we are referring to the percentage of assets reported on the 13F filing. Since these filings only report longs (and not shorts or cash positions), the percentages are skewed. If you were to calculate percentage weightings in the actual hedge fund portfolio, they would obviously be different since you would divide position sizes by their total assets under management.

That wraps up Maverick's latest portfolio update. For more on the background of Ainslie, we highly recommend checking out the profile on Maverick we've penned in the past. This is just one of the 40+ prominent funds that we'll be covering in our Q2 2009 hedge fund portfolio series. So far, we've already covered the holdings of Bill Ackman's Pershing Square Capital Management, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Dan Loeb's Third Point LLC, Soros Fund Management (George Soros), and Stephen Mandel's Lone Pine Capital. Check back each day as we cover prominent hedge fund portfolios.