Bill Ackman Thinks General Growth Properties Can Double Over the Next Several Years "If Done Correctly"

Pershing Square Capital Management founder and hedge fund manager Bill Ackman recently appeared on CNBC in an extended segment. In his interview, he talked about the Goldman Sachs fraud case, the benefits of short selling, and most notably, some of his investments. They segment also noted that Bill Ackman is the subject of Christine Richard's new book, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff. The book focuses on Ackman's campaign against bond insurer MBIA (MBI) and we will be reading & reviewing the book here shortly.

We're going to do things a bit backwards here and start with Ackman's closing thoughts from the interview because they deal with his investments. Pershing Square's founder updates us on his stakes in General Growth Properties (GGP) and Target (TGT). Readers will know that we've previously disclosed Pershing's economic exposure to GGP as they bet on the emerging-from-bankruptcy REIT player. Ackman notes that Pershing invested $50-60 million GGP equity when shares were seemingly on life support and that investment is now worth over $1 billion and was the "best investment (he's) ever made." He also hopes for the mall operator to emerge from bankruptcy, "hopefully come September or sooner." Lastly, Ackman thinks shares of GGP could double over the next several years if everything is "done correctly." Here's the video:

Regarding his Target position, Ackman notes that Pershing still owns over $1 billion of stock and it is one of their largest investments. Email readers please note that you'll need to come to the site in order to watch all these videos. Here's the video where Ackman discusses his investments:




In the next video, Ackman turns to financial reform and he is in favor of regulatory implementations. Here's his thoughts:




Turning to the last video interview, we get some commentary from Christine Richard, the author of the new book on Ackman, Confidence Game. Additionally, Ackman discusses the Goldman Sachs case:



Overall, an intriguing set of talking points as Ackman was a guest at CNBC for an extended period of time. While some readers will crave more investment specific conversation, he still chatted about relevant and important topics. While his General Growth Properties investment is the best he's ever made, he was also correct and successful in his past wager against MBIA. You can read about how his hedge fund manager mind works in the new book Confidence Game. We'll be reading it and reviewing it shortly.

For more of our coverage on hedge fund Pershing Square, we see that they recently sold their Sears Canada stake, and we detailed their newly disclosed Yum Brands position (YUM). Lastly, to learn more about Ackman and his hedge fund, head to our past profile of Pershing Square.

Phil Falcone's Harbinger Capital Still Owns Mercer International (MERC)

Philip Falcone's hedge fund firm Harbinger Capital Partners recently filed an amended 13G with the SEC due to activity on April 23rd, 2010. In it, we learn that they own a 6.11% stake in Mercer International (MERC) with 2,228,194 shares. This is the exact same amount of shares they held on December 31st, 2009 when we took a look at Harbinger's portfolio. So, there has been no change in their position. While not as exciting as a 'buy' or 'sell', we just wanted to update you on their 'hold' status since they filed a disclosure.

While Harbinger still owns shares of MERC, we just recently learned that David Einhorn's hedge fund Greenlight Capital recently sold their Mercer stake after holding it for many years so we see a little difference in opinion here. In their letter to investors, Greenlight Capital mentioned that they first purchased their stake in 1997 and sold most of their common shares in 2008. They continued to hold their debt position and Einhorn's fund just sold this in the first quarter. Greenlight said they were, "happy to move on."

Taken from Google Finance, Mercer International is "a producer of market northern bleached softwood kraft (NBSK), pulp in the world. The Company operates in the pulp business. It is a kraft pulp producer, and producer of pulp for resale, known as market pulp, in Germany."

If you've been following all of our coverage regarding Harbinger Capital Partners, you know it's been a bit of a zoo in terms of SEC filings. Falcone's fund recently sold New York Times shares (NYT), started a stake in Palm (PALM) and the hedge fund also interestingly planned a 4G wireless network. We'll continue to keep you updated on all their disclosed activity.

Eric Mindich's Eton Park Acquires Sable Mining (SBLM) Shares

We've just learned that Eric Mindich's hedge fund firm Eton Park Capital have acquired 42,000,000 shares of Sable Mining (LON:SBLM) due to a placing held on April 16th, 2010. Eton Park's stake is representative of a 4.53% stake in the company. Keep in mind that another prominent hedge fund, Phil Falcone's Harbinger Capital, also recently boosted their stake in Sable Mining. As we detailed previously, Harbinger owned a 23.35% stake in SBLM as of March 23rd, 2010.

In terms of other activity out of Mindich's hedge fund, we recently detailed a portfolio update on Eton Park. For more of our coverage on Mindich, we recommend checking out some of his thoughts from a hedge fund panel regarding whether or not there is alpha in asset allocation. Lastly, we've also covered how Eton Park has expanded their UK positions recently as well. Their addition of a Sable Mining stake of course bolsters these actions even further.

Sable Mining Africa Ltd is small company listed on the AIM market in London. It was re-named in November 2009 and used to be called BioEnergy Africa. Sable changed in 2009 with a move away from bio-ethanol related assets into mining related energy assets. Sable Mining is now focused on the acquisition or investment in early stage coal and uranium with a particular emphasis on Namibia, Botswana, Zimbabwe and Zambia.

Sable Mining intends to be an active investor in an attempt to add value both operationally and strategically to the businesses it acquires or invests in. The company’s objective is to own entire or majority interests in suitable businesses or assets rather than holding minority investments. To facilitate the new strategy, the company undertook a fundraising via a placing of new ordinary shares in December 2009. It is likely that Harbinger bought shares in the placement at a price below the quoted market share price. Sable’s Chairman is ex-England cricketer and slow left arm bowler, Phil Edmonds.

Head here for a recent portfolio update on Eton Park to see what else they've been up to.

Steven Cohen's SAC Capital Raises Inspire Pharmaceuticals (ISPH) Stake

Steven Cohen's hedge fund firm SAC Capital recently filed a 13G with the SEC regarding shares of Inspire Pharmaceuticals (ISPH). According to the filing, SAC Capital now shows a 4.9% ownership stake in Inspire Pharma with 4,033,829 shares. This is a massive increase in their position as back on December 31st, 2009 they owned 3,932 shares of ISPH. Keep in mind though that SAC Capital is a trading oriented firm and as such moves in and out of positions much more swiftly than the hedgies we normally track here at Market Folly.

We've covered other recent activity out of Cohen's hedge fund such as their updated stake in The Talbots (TLB) as well as their newly disclosed position in InterMune (ITMN) and lastly their stake in Psychiatric Solutions (PSYS).

SAC Capital finished 2009 up over 28% as noted in our post on hedge fund 2009 performance numbers. Famed manager Stevie Cohen of course was recently featured in Forbes' billionaire list as well. Again, please remember that SAC is a trading oriented firm and typically has much shorter holding periods than the other hedge funds we track.

Taken from Google Finance, Inspire Pharmaceuticals is "a biopharmaceutical company focused on researching, developing and commercializing prescription pharmaceutical products for ophthalmic and pulmonary diseases."

For more on Steven Cohen, check out all our coverage on hedge fund SAC Capital.

Roberto Mignone's Bridger Management Starts 2 New Positions

Roberto Mignone's hedge fund Bridger Management recently filed 13G's on The Princeton Review (REVU) and Medifast (MED). Due to activity on April 15th, Bridger Management has disclosed a 6.3% ownership stake in The Princeton Review (REVU) with 3,000,000 shares. Secondly, due to activity on April 16th, Roberto Mignone's hedge fund has disclosed a 5.1% ownership stake in Medifast (MED) with 787,144 shares. This position is interesting because back in March we revealed that Steven Cohen's hedge fund SAC Capital started a new position in MED. So, we now have two prominent hedge funds invested in this company.

The Princeton Review and Medifast are both brand new positions for Mignone's hedge fund as they did not own shares on December 31st when we detailed Bridger Management's portfolio. Somewhere in the last three and a half months they've assembled these stakes. In terms of other recent portfolio activity, we made note a few weeks ago of Bridger's new stake in Centene (CNC) as well.

Bridger is a $2.8 billion hedge fund focused on long/short & event driven strategies and often focus on healthcare related names. Prior to founding Bridger, Mignone co-founded Blue Ridge Capital with John Griffin in 1996. For more insight from Bridger, head to Mignone's thoughts at a previous hedge fund panel.

Taken from Google Finance, The Princeton Review is "a provider of classroom-based, print and online education products and services targeting the high school and post-secondary markets."

Medifast is "engaged in the production, distribution, and sale of weight management and disease management products and other consumable health and diet products. The product lines include weight and disease management, meal replacement, and vitamins. "

You can view the rest of Bridger Management's portfolio here.

David Einhorn Dumps Boston Scientific (BSX): Greenlight Capital's Investor Letter

David Einhorn recently sent out hedge fund Greenlight Capital's first quarter investor letter. In it, we learn that the fund has exited their position in Boston Scientific (BSX). Readers will remember that Einhorn had just started this position and mentioned it in his fourth quarter investor letter. They purchased shares of BSX for $8.42 and sold them for $7.57. So, Greenlight has cut their losses quickly on this one and moved on to the next investment.

The Greenlight team writes, "We had bought BSX based on the view that new management had been brought in to execute a significant turnaround plan, which after careful study, it would detail contemporaneously with fourth quarter results. Instead, management decided not to provide any meaningful targets, raised new operating issues, and seemed to say that turning the company around would be harder than they thought and would take a long time. We re-assessed our thesis and forecasts, and limited our loss by selling the position."

Overall, Greenlight notes that they didn't have much portfolio turnover to report. Greenlight's Offshore fund was down 1.3% for the year as of the end of March as noted in our hedge fund performances post. However, keep in mind that Greenlight has also returned 22% annualized since inception.

Einhorn's five largest positions as of the first quarter were:

1. CIT Group (CIT)
2. Gold
3. Lanxess (LXSG)
4. Pfizer (PFE)
5. Vodafone Group (VOD)

Remember that if you want a peak inside Greenlight's investment research process, we recommend reading David Einhorn's book: Fooling Some of the People All of the Time. In regards to his recent VOD position, we recently examined Einhorn's Vodafone thesis for those of you seeking their investment rationale. Keep in mind also that their gold position is in physical gold, as they were one of the first major hedge funds to use this rather than proxies for gold like exchange traded funds.

Possibly the most notable thing to take away from Greenlight's investor letter are their exposure levels. Excluding credit derivatives, gold and foreign currencies, Greenlight Capital had an average exposure to equities and fixed income of 100% long and 70% short. This 30% net long level coincides with what we've seen lately from various hedge fund research outlets that have indicated hedgies currently have below average net long exposure. Hedge funds have definitely become more cautious as of late.

Embedded below is Greenlight Capital's first quarter investor letter:



You can directly download a .pdf here.

In the letter we also learned that Greenlight closed out various longs in BJ Services (BJS), McDermott (MDR), LiveNation (LYV), MEMC Electronics (WFR), and Mercer (MERC). Additionally, we saw that they covered shorts in Abercrombie & Fitch (ANF), Federal Realty Investment Trust (FDR), and HSBC (HBC). While Einhorn and company exited Live Nation, we've made note recently that Jay Petschek's hedge fund Corsair Capital started a new position in LYV and Stephen Mandel's Lone Pine Capital started a stake as well, so it's intriguing to see the divergence of opinion here.

That about wraps things up on Greenlight's end. To learn how to invest like Einhorn, we highly recommend reading his book: Fooling Some of the People All of the Time. And for more insight, you can also read David Einhorn's previous investor letter here.

Bill Ackman's Pershing Square Sells Sears Canada Stake to Eddie Lampert's Sears Holdings

Bill Ackman's hedge fund Pershing Square has sold its 17.3% stake in Sears Canada (TSE:SCC) for around $560 million to Sears Holding (Nasdaq:SHLD), the company owned by Eddie Lampert and his hedge fund RBS Partners. Upon completion of the transaction, Sears Holdings will own around 90% of Sears Canada. This is not the first time that Lampert has tried to buy Ackman's stake in Sears Canada either. Back in 2006, Lampert attempted to purchase shares at around $16 per share and Ackman declined, deeming the offer too low. This time around, Ackman accepted an offer of CAD 30 per share (Canadian Dollars). With this, it seems as though Sears Holdings will possibly look to buy out the remaining shares of Sears Canada.

For more of our coverage on Ackman's hedge fund, we recently covered their newly disclosed position in Yum Brands (YUM) and their economic exposure to General Growth Properties (GGP). Turning to Eddie Lampert's recent activity, we noted that he recently bought AutoNation shares (AN).

Taken from Google Finance, Sears Holdings is "the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). The Company is broadline retailer with 2,235 full-line and 1,284 specialty retail stores in the United States operating through Kmart and Sears, and 402 full-line and specialty retail stores in Canada operating through Sears Canada Inc. (Sears Canada)."

You can view Bill Ackman's portfolio here and you can view Eddie Lampert's portfolio here.

Hedge Fund Farallon Capital Still Shows Energy Partners (EPL) Stake

Thomas Steyer's hedge fund firm Farallon Capital recently filed a 13G with the SEC regarding Energy Partners Ltd (EPL). As of April 15th, 2010 Farallon Capital shows a 7.1% ownership stake in the company with 2,859,337 shares. This is the exact same amount of shares they owned back on December 31st, 2009 when we covered Farallon's portfolio so there is no adjustment to their position. While nothing major has happened with their stake, we do learn that they at least still hold their position and so we thought we'd pass that information along for those interested.

The hedge fund filed the amended 13G to adjust the managing members of their firm listed as beneficial owners of the stock. As we've detailed in the past, it's extremely likely that Farallon received their equity position in EPL from a debt-to-equity conversion. Thomas Steyer founded Farallon in 1986 and today it is a multi-billion dollar hedge fund that invests in equities, private investments, debt, and real estate. Typically, they focus on risk arbitrage strategies. Taken from Google Finance, Energy Partners is "an independent oil and natural gas exploration and production company."

Hedge Fund Lansdowne Increase Short Position in Prudential (LON:PRU) Again

While we realize this is the third such update in a short span of time, it's rare you see public disclosures of short positions by hedge funds so we figured we'd provide as much detail as possible when we get the chance. Late last week we disclosed that UK based hedge fund Lansdowne Partners was short Prudential plc (LON:PRU - traded in London. It's not the American insurer that goes by the same ticker symbol). Then, we saw that they increased their short position from -0.32% of the company's shares to -0.42%.

We now see that Steven Heinz and Paul Ruddock's hedge fund firm have increased their short position in PRU a second time. Lansdowne Partners are now short -0.84% of the company's stock, essentially doubling their short position from the last time we detailed their position. This most recent disclosure represents their position as of April 22nd, 2010.

We've heard from contacts in the UK that shares of PRU on the London exchange are now hard to borrow with brokers wanting 3% interest if/when they locate the shares to short. So, Lansdowne have definitely created a stir here and there are obviously a few people piggybacking this trade. Keep in mind that this position is apparently a hedge to Lansdowne's long positions in UK banks. Last week we disclosed that Ruddock's hedge fund was also long Lloyds Banking Group (LON:LLOY, NYSE:LYG).

Performance wise, Lansdowne's UK Equity fund was up 8.28% through the end of March as we mentioned in our hedge fund performance numbers post from the first quarter. Additionally, in the past we've seen that their flagship fund has returned 19.37% annualized since 2001. When we took a look at Lansdowne's portfolio late last year, we also saw that they favored large cap plays in developed countries.

Hedge Fund Lansdowne Partners Increases Prudential Short Position

Steven Heinz and Paul Ruddock's prominent UK based hedge fund Lansdowne Partners have increased their short position in Prudential Plc (LON:PRU). American readers please keep in mind that this is not the Prudential that trades on the NYSE, it is a different company. Earlier this week, we initially reported that Lansdowne was short Prudential to the tune of -0.32% of Prudential's stock. Well, we just recently learned that Lansdowne has increased their short stake to -0.42% of the company's shares. On Wednesday when we disclosed that Ruddock's hedge fund was also long Lloyds Banking Group (LLOY), we learned that their short of PRU is effectively a hedge to their long positions in UK banks. So, it seems that they've boosted their hedge.

Taken from Google Finance, Prudential is "a financial services company. The Company has operations in the United States, Asia, Europe and Latin America. Through its subsidiaries, it offers products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services."

You can view some of Lansdowne's other portfolio holdings here.

Jay Petschek & Hedge Fund Corsair Capital Bullish on Expedia (EXPE) & W.R. Berkley (WRB) ~ Investor Letter

Today we're detailing the first quarter investor letter out of Jay Petschek (pictured) and Steven Major's hedge fund Corsair Capital Management. For the first quarter, they were up 6.7% net of fees. So, why should you care what Corsair has to say? Well, how about the fact that they've returned 15.5% annualized since inception in 1991 and have seen a total return of 1509%, absolutely demolishing the S&P 500 over the same timeframe. In January, we covered their previous investor letter and below we'll detail their latest thoughts.

First off, we see that their five largest positions are in Global Specialty Metals (GSM), Innophos Holdings (IPHS), Kapstone Paper & Packaging (KS), Lyondell bank debt, and Maiden Holdings (MHLD). In the first quarter of 2010, they also started some brand new positions including Expedia (EXPE), W.R. Berkley (WRB) and Live Nation (LYV). Stephen Mandel's hedge fund Lone Pine also started a LYV position recently.

Corsair's stake in EXPE is interesting as we've previously seen many hedge funds hold shares of Expedia's rival Priceline.com (PCLN) ~ it was a favorite stock among many Tiger Cub hedge funds. We even saw one fund add shares of Orbitz (OWW), another competitor in the online travel space. However, the only fund we've seen with a sizable position in Expedia is Roberto Mignone's Bridger Management. It's intriguing that more funds are starting to look into this space and this name in particular. Corsair's thesis in Expedia revolves around flat to rising ADRs and continued strong transaction growth. The company has a 10% free cash flow yield and they highlight a good point that EXPE definitely holds an asset in TripAdvisor. Online travel sites are gaining a hedge fund following certainly.

Additionally, we see that Capitalsource (CSE) was Corsair's largest winner in the first quarter. We make note of this because many prominent hedge funds hold a stake in CSE, including Seth Klarman's Baupost Group and Mohnish Pabrai as well. Lastly, Petscheck's hedge fund is bullish on shares of W.R. Berkley (WRB) as they think the property & casualty insurance company is only trading at an 'average' price, despite being one of the better names out there. Corsair notes that, "the P&C sector is trading at its cheapest valuation in at least a decade because we are at the weak point in the cycle." They've written an entire page summarizing their bullish stance on WRB at the end of their letter so we will defer to that for their thoughts.

Embedded below is the first quarter letter from Jay Petscheck's hedge fund Corsair Capital Management:



You can directly download a .pdf here.

We found their update an insightful read just like their previous letter as well so hopefully you enjoyed it. We'll continue to track Corsair as they are an ideal long/short equity fund to follow. We're starting to receive first quarter commentaries from hedge funds, so make sure to catch up on all the other hedge fund letters we've started to post.

Falcone's Hedge Fund Harbinger Capital Sells New York Times (NYT) Shares

Phil Falcone's hedge fund Harbinger Capital Partners just filed a Form 4 and an amended 13D with the SEC regarding shares of The New York Times Co (NYT). In the disclosures, we see that Harbinger sold 1,500,000 shares of NYT at a price of $12.30 on April 20th. The next day, they sold 1,750,000 more shares of NYT at a price of $12.55. After these transactions, Harbinger still owns 13,636,799 shares of The New York Times. So while they definitely still own a sizable stake, this means they sold 19.2% of their position. According to the 13D filing, Falcone's hedge fund is left with a 9.43% ownership stake in the company. This is the second time in recent weeks that they've sold NYT shares and we detailed their previous sales.

Falcone's hedge fund focuses on event driven, bankruptcy, and value plays as they seek "alpha-generating ideas that are uncorrelated to investment cycles." Falcone has been quite busy as of late as we recently saw Harbinger start a stake in Palm (PALM) as the company has positioned itself to be sold. Harbinger also revealed plans for a 4G wireless network in a move we've never seen a hedge fund make before. The hedge fund was up 1.77% for the year at the end of March as noted in our first quarter hedge fund performance numbers post.

Taken from Google Finance, The New York Times Co is "a diversified media company that includes newspapers, Internet businesses, investments in paper mills and other investments. The Company is organized in two segments: News Media Group and the About Group."

To see the rest of Falcone's equity investments, head to Harbinger's portfolio.

Whitney Tilson Explains His Short Position in Lululemon Athletica (LULU)

Hedge fund manager Whitney Tilson of T2 Partners recently was interviewed by Forbes and we wanted to quickly highlight his thoughts. In the past we've covered Tilson's short positions and we highlight them because, let's face it, not many funds talk about their short books openly. Short positions are almost treated as holy grail and are often kept guarded closely to the vest. So, we like to highlight any rationale whenever we can. We've of course covered Tilson numerous times on the site and you can hear his investment ideas at the upcoming Value Investing Congress as well.

While shorts in general have not performed well due to the ever-rising equity markets of today, you'll recall that Tilson has found success with his short position in Palm (PALM). We've covered some of T2's short positions here as well. We'll have to see if he's found another winner in shares of Lululemon Athletica (LULU).

From his Forbes interview, Tilson says of his LULU short:

"Generally speaking, many dicey companies have run up a lot over the past year and our short book has hurt us a lot because everything's been running (but we've still done very well because our long book is bigger than our short book). It is both a very attractive but also very tough environment for shorting. By that I mean that there are a lot of overpriced stocks out there.

However, they've been overpriced for months and they keep going up because there's so much liquidity sloshing around. Also there's a lot of momentum in some of these stocks that's running them up. A good example is a company that makes yoga apparel called Lululemon Athletica. They have a nice little niche and they're growing rapidly--their apparel is hot and margins are very high. But it's trading at an extreme valuation and it looks like a fad to me--It's yoga clothing! We think the fad could pass and are quite certain that the valuation is extreme.

The stock is today at right now as I speak at $43.66. It bottomed in March of '09 below $5. So the stock's gone from there to almost $45 and has a $3.1 billion market cap. Its trailing 12 month earnings through January 2010 were 82 cents a share, so it's trading at close to 54 times earnings. And even if you believe analysts' estimates for their year ending January 2011, it's trading at 41 times."

It's always good to get a manager's perspective on their short positions. In addition to his Palm and Lululemon shorts, we also know that Tilson is still short Moody's (MCO), the ratings agency that has somewhat come under fire as of late. For more insight from Tilson, keep in mind that you can hear his investment ideas at the upcoming Value Investing Congress in California next month.

Taken from Google Finance, Lululemon Athletica is "a designer and retailer of technical athletic apparel primarily in North America. Its yoga-inspired apparel is marketed under the lululemon athletica brand name. The Company offers a line of apparel and accessories, including fitness pants, shorts, tops and jackets designed for athletic pursuits, such as yoga, running and general fitness."

In the past we've also posted up some of hedge fund T2 Partners' other short positions here and then previously here as well.

What We're Reading ~ 4/23/10

A good summary of AnthonyGallea's book Contrarian Investing [Dasan]

A self-sustaining recovery? Not yet [Pragmatic Capitalist]

The short case for First Solar (FSLR) [Bronte Capital]

Louis Bacon's Moore Capital warns of eurozone breakdown [Marketwatch]

Major contrarian call on natural gas prices [Reformed Broker]

A blog worth reading [Kiplinger's]

Dan Loeb & Third Point's annual report for their listed fund [Investegate]

How mortgage CDOs are made, a great animation [Wall Street Journal]

Hedge fund assets approach all-time highs [FT]

A video interview with Gotham Capital's Joel Greenblatt [Forbes]

Inside the Goldman trade [NY Observer]

Charles also has a bunch of great investment reads linked up [TheKirkReport]

Market Folly's 2nd Anniversary!

It's hard to believe that it's been two years already, but today we're celebrating Market Folly's 2nd Anniversary. Given that we cover hedge funds, we thought it'd be fun to provide you with a performance update of our own. Two years ago, the site had zero readers and zero subscribers. On our first anniversary, we noted that at the time we had 2,100 subscribers. Fast forward a year later to today and we are ecstatic to report that we now have over 8,900 subscribers, a 324% year over year increase. Last month, the site received over 337,000 hits. And since inception, the site has seen over 2,339,000 unique visitors and over 3,719,000 hits.

That absolutely blows my mind. I want to sincerely thank each and every one of you for reading. Without you, this site would not exist. To celebrate our second anniversary, we have one simple request: Tell a friend or colleague about MarketFolly.com! We started our first round of hedge fund tracking back on May 19th, 2008. And you can bet your ass that we'll be back with another round of 13F portfolio updates next month. If you have feedback and/or criticism, we welcome it with open arms, so add a comment below or send an email.

If you haven't already, subscribe to Market Folly (it's free!):

- Receieve our free Email updates or
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Also, if you want to catch up with us via social media:

- Follow us on Twitter
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Lastly, help support Market Folly: If you've found the site useful, feel free to make a donation, as we genuinely appreciate your support! You can make a donation via Paypal or Credit Card here.

Again, thank you for reading. Without you, this site would not exist. I look forward to interacting with many of you in the future and if you haven't said 'what's up' yet, then what are you waiting for? Drop me an email here as I'd love to connect.

- Jay

Sahm Adrangi & Kerrisdale Capital's Quarterly Letter

While we typically cover prominent hedge fund managers (like John Paulson) here on Market Folly, we're trying to also focus on some talented up and coming managers to follow over the long haul. We recently covered the latest investor letter from Kevin Byun's Denali Investors and today we're turning to Sahm Adrangi's Kerrisdale Capital.

This is the first time we've covered Kerrisdale and we wanted to post up their first quarter 2010 investor letter. Kerrisdale performs rigorous bottom-up fundamental research on public equities and employs a long/short strategy. They are a value oriented and special situations investment manager. You may have seem some of Adrangi's investment analysis write-ups scattered around the internet as they are some of the most detailed we've seen. We'll also attach his latest thoughts on Intercontinental Exchange (ICE) below.

For the first quarter, Kerrisdale was up 17.8% net of fees and the performance speaks for itself. In their letter, Kerrisdale touches on select investments including Ruth's Hospitality Group (RUTH) and DJSP Enterprises (DJSP) Warrants. Additionally, Adrangi discusses his previous bearish stance on the solar industry and argues that solar PV cell makers were "commodity manufacturers operating in an environment suffering from massive and growing oversupply." Solar shorts were 36% of their short book at the end of March. Kerrisdale's largest solar short positions are in Q-Cells (QCE), First Solar (FSLR) and Suntech Power (STP). This is a rare look into a firm's short side of the portfolio as many often keep these investments guarded close to the vest.

Embedded below is Sahm Adrangi's Kerrisdale Capital's first quarter letter to investors:



You can directly download a .pdf here.


Additionally, if you wanted to get a sense of Kerrisdale's research process, we highly recommend checking out Adrangi's recent write-up on shares of Intercontinental Exchange (ICE). The document is embedded below:



You can also download a .pdf here.

That wraps up our coverage of Sahm Adrangi's Kerrisdale Capital. If you found their ICE write-up insightful, then we'd recommend checking out their blog where they often post up their investment theses. For more investor letters from talented investment managers, we recently covered Kevin Byun's Denali Investors and hedge fund Ellington Management's 2010 equity outlook.

Carl Icahn Acquires More Tropicana Entertainment

Corporate Raider Carl Icahn recently filed a Form 4 with the SEC regarding shares of Tropicana Entertainment (TROP). In the disclosure, we see that Icahn, through his various investment vehicles acquired 206,267 shares at a price of $16 per share on April 16th, 2010. This brings his total ownership in Tropicana (through all vehicles) to 12,870,446 shares. Last month, we detailed how Icahn exercised warrants on Tropicana.

Icahn of course graced the updated Forbes' billionaire list and is known for his activism at companies in an attempt to generate shareholder value. Other recent notable activity out of Icahn's camp includes raising his bid for Lions Gate Entertainment (LGF) and acquiring even more Take Two Interactive (TTWO) shares. He's been quite busy as of late and we'll continue to keep you posted on developments.

Taken from Tropicana Entertainment's website, they are "a privately held company that, along with its affiliates, owns or operates 9 casinos and resorts in Indiana, Louisiana, Mississippi, Nevada, and New Jersey."

You can view all our prior Carl Icahn coverage here.

Technical Analysis of Apple (AAPL): Price Target & Key Levels

Given that Apple (AAPL) just reported blowout earnings, Adam over at MarketClub wanted to take a look at the stock and sent out a technical analysis video on AAPL. In it, he pulls up the monthly candlestick chart and identifies $80 and $200 as key levels. From 2008 until early 2010, Apple traded in this range as it sold off hard throughout the crisis but then rebounded stronger. He says this area has created an 'energy field' as the stock consolidated (but that's quite a wide consolidation if you ask us).

The reason he outlines those two levels is to establish a price target. Subtracting the $80 level from the more recent $200 level, you get a 120 point move. Tacking that on top of the $200 level, he feels that a logical price target for Apple is $320 (200 + the 120 point consolidation). On a fundamental basis, this price target could be reasonable (after all, the company is firing on all cylinders.) However, we're not quite sure the technicals set up for such a move as you have to realize Apple has essentially run straight up from $80 to $258 with only one major pause. You can view Adam's video on Apple here.

We think the most notable bit of information to takeaway regarding AAPL's technicals is the $215-220 area. This level was previously an area of resistance and Apple has since blasted through it. Look for that level to serve as support going forward. In an ideal situation, this would be a great place to enter AAPL shares long if you ever see a pullback. Adam doesn't think shares will trade below that level and we'd concur. There's no denying Apple is a monster of a company right now. Not to mention, tons of hedge funds we track hold AAPL as one of their top positions. And you can bet they're not long for the technicals; they're in it for the fundamentals. Click below to watch the technical analysis video on Apple:

Seth Klarman's Baupost Group Exits Facet Biotech (FACT)

Seth Klarman's hedge fund firm Baupost Group recently filed a Form 4 and a 13G with the SEC in regards to shares of Facet Biotech (FACT). In the filings, we see that Klarman's fund sold 1,500,000 shares of FACT at a price of $27 on April 19th, 2010.

Upon completion of this sale, Baupost Group now owns 0 shares of FACT. They have completely sold out of the company and have profited quite handsomely on this investment. You'll recall that Klarman has been selling FACT shares as of late because the company is being bought out at a price of $27 per share by Abbott Laboratories (ABT). Through his activism, Klarman helped Facet Biotech engineer a materially higher takeover offer. And now, Klarman moves on to his next investment. For more on his firm, we recently posted a Baupost Group portfolio update.

Taken from Google Finance, Facet Biotech is "a biotechnology company dedicated to advancing its pipeline of several clinical-stage products and expanding and deriving value from its protein engineering platform technologies to improve the clinical performance of protein therapeutics."

Paulson & Co Clears the Air With Latest Letter to Investors

Hat tip to Barry Ritholtz for posting this up. Below is John Paulson and hedge fund Paulson & Co's letter to investors where they seek to clarify a few things as accusations regarding the Goldman Sachs fraud case start to fly. In addition to the letter below, if you want to be taken through the inside account of Paulson's subprime trade, we highly recommend Gregory Zuckerman's book that focuses on Paulson: The Greatest Trade Ever.


Embedded below is Paulson & Co's most recent letter to investors:



You can directly download a .pdf here.

So, hopefully that helps clear the air regarding their involvement. Also, given the topic of Paulson's letter, we thought it fit to also post up a presentation from one of the CDO investments back in 2007 that Paulson was betting against. If you haven't seen it already, below you will find Goldman Sachs and ACA's flipbook on Abacus 2007-AC1, a $2 billion synthetic CDO referencing a static RMBS portfolio. Here is the document:



You can download it via .pdf here as well.

Paulson sets things straight as to how they went about their investments at the time and it's intriguing to look back on the Abacus presentation and think about how all of this was going on just a few short years ago. For more on the ongoing CDO/CDS/subprime debate swirling around, we also detailed hedge fund Magnetar Capital's recent letter to investors regarding the investments they profited from during the housing bubble as well.

For more on hedge fund Paulson & Co, keep in mind that we've been tracking their equity portfolio and recently detailed their brand new stake in American Capital (ACAS). Additionally, we've covered Paulson & Co's recent performance numbers for those interested.

Send Us Your Hedge Fund Investor Letters & Resources!

Now that first quarter hedge fund investor letters are starting to make the rounds, we want to ask our readers a favor: please send us any hedge fund letters or market related resources that you think would be useful. Your privacy is our top priority and we treat all correspondence as if it were anonymous. Please email us your resources!

If you don't want the letter itself posted, just make a note in your email to us and we can instead type out a brief summary of the letter for our article. A large part of why Market Folly has been so successful is due to our readers' willingness to share hedge fund resources. The more people that send us hedge fund letters, the more resources you as readers will gain access to. After all, our site is completely free so if you have any letters from the hedge funds we cover, please send them over! And again we remind you that anything you send us will be treated anonymously.

You can send us your hedge fund letters here. And if you receive our daily updates via email, you can simply reply to that message.

Long/Short Equity Hedge Funds: Net Long Exposure Below Average

Bank of America Merrill Lynch is out with the latest edition of their hedge fund monitor report where they examine exposure levels of various hedgie strategies. In it, we see that overall market exposure is high for market neutral funds but well below average for long/short equity funds. This is a continuation of the theme we touched on last week where we saw l/s hedgies reducing equity exposure below historical levels.

Despite having opposing market exposures, both market neutral and long/short funds have performed the best thus far for April. Both strategies have favored small cap stocks and low quality names as the high beta rally carries on. Still though, hedge funds are definitely cautious on equities. Long/short funds are now well below their historical average of 35-40% net long. They currently have about 26-28% net long exposure.

Turning now to major moves across asset classes, we see that hedgies bought gold last week and also added to a crowded long in copper. In energy, hedge funds reduced their crude oil long positions (a crowded trade) and added to their deep short position in natural gas. Across the forex landscape they continued to aggressively sell the Yen, something we've noted for a few weeks now as they show no mercy for the Japanese currency. Lastly, in interest rates, hedge funds are *very* short the long end of the curve and continue to add to crowded shorts there. We just recently posted up a report about how hedgies are net short 10 year treasuries.

Embedded below is Bank of America Merrill Lynch's latest hedge fund trend monitor report:



You can directly download a .pdf here.

Overall, long/short funds continue to ratchet down long exposure in the markets as they pay heed to a possible market correction. This concurs with market strategist Jeff Saut's recent thoughts as he is short-term cautious on the market as well.

Many of the same themes prevail across the hedge fund landscape as hedgies are really short the long end of the curve and still really short the Yen. To see what specific stocks these investment managers are buying and selling, head to our daily hedge fund portfolio updates.

Crude Oil & Gold Trading Ranges: Key Levels to Watch

MarketClub recently analyzed two of everyone's most favorite commodities: crude oil and gold. Adam just took a technical look at crude oil and wondered if it has topped out for the year. He draws a fibonacci retracement from the peak during oil's epic rise down to the trough and notes that the commodity is currently trading right around the 38.2% retracement level. In his oil video, Adam concludes that it is currently stuck in a trading range and could be for some time. But he does note that after trading ranges often come explosive moves. He highlights that the $72 level as an absolutely key level for support. If crude oil breaks that level to the downside, then he thinks it sets new lows for the year. One thing their analysis does not take into consideration, however, are the seasonal factors at play with crude. Typically, summer months command higher prices in oil so we'll have to see what happens there. Click below to watch Adam's video:



MarketClub also cranked out a technical analysis video on gold where they wonder whether or not gold is setting up for its next big move. Obviously, the longer term trend has been up and they illustrate how the metal continues to make a large move higher and then consolidate and trade sideways for a while to digest the move. It has repeated this pattern on a large scale numerous times over the past few years as you can see in their gold video. So, similar to crude oil, Adam feels there's really no trend right now and it will continue to trade sideways. He outlines $1,165 as the key level for the metal as it won't be able to start any move higher until it breaches that level to the upside. You can check out their technical look at gold below:

Don Coxe's Basic Points April 2010: A Slow Boat to China

Market Strategist Don Coxe is out with the latest edition of his Basic Points publication. His commentary entitled, 'A slow boat to China' focuses on his latest view on the markets and how he would position portfolios accordingly. As we've covered before, Coxe has been a long-time commodity and agriculture bull so it should come as no surprise that many of his recommendations center around that theme. To get a better idea as to the rationale behind a bullish agriculture bet, we recommend heading to hedge fund Passport Capital's case for agriculture.

Turning to Coxe's most recent market commentary, we see some of his main viewpoints summarized below:

- Underweight integrated oil companies ('big oil' stocks like Exxon Mobil, Chevron, etc).
- Increase equity exposure via mining stocks.
- Overweight oil producers and underweight gas producers.
- Continue to overweight oil sands companies.
- If running a US based portfolio, focus on cyclical equities.
- Within agriculture, add to companies in the equipment and logistics.
- Overweight precious metals (gold & silver).
- If you're investing in bonds, focus on Canadian bonds if you're Canadian and TIPs if you're American.

Lastly, he also lays out some ideas to 'hedge' yourself against a possible double-dip recession after the market stops receiving its heroin fix from Ben Bernanke. If you are holding high exposure to cyclicals, Coxe argues to hold some long-duration bonds as a hedge. We've obviously simplified his viewpoints here so of course read Donald Coxe's April set of Basic Points in its entirety below:



You can directly download a .pdf here.

Overall, it seems Coxe remains a staunch commodity bull, or dare we say super-bull. For a technical look at how some of his favorite commodities have been trading as of late, check out an analysis of gold as well as an analysis of crude oil.

Hedge Fund Lansdowne Partners Long Lloyds Banking Group (LLOY)

According to Reuters, Steven Heinz and Paul Ruddock's hedge fund Lansdowne Partners has built up a £1.1 billion position in Lloyds Bank (LON:LLOY, NYSE:LYG). They've calculated that this represents a 2.5% ownership stake in the bank and keep in mind that the UK government owns over 40% of the company as well. There has not been a regulatory filing regarding Lansdowne's position as their stake is below the 3% threshold that requires a disclosure. What's interesting here is that yesterday we revealed Lansdowne's new short position in Prudential and this position is said to be a hedge to their long positions in UK banks.

The hedge fund firm apparently believes that Lloyds should trade at a higher book value. It appears as though Lansdowne has flipped their view on banks as they had previously been short financial firms throughout the crisis. Heinz and Ruddock's firm now joins hedge fund colleagues GLG Partners who also have a position in Lloyds after recently exiting their stake in Barclays in favor of this bank. Lansdowne's UK Equity fund was up 8.28% through the end of March as noted in our first quarter hedge fund performance numbers.

Taken from Google Finance, Lloyds Banking Group plc is "a financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in four segments: Retail, Wholesale, Wealth and International and Insurance. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision."

For more on Lansdowne, you can check out their new short position here and our past look at some of their portfolio holdings.

Hedge Fund Lansdowne Partners Discloses Short Position

UK based hedge fund Lansdowne Partners has re-opened their short position in British life assurer Prudential Plc (LON:PRU). The hedge fund's bet represents -0.32% of Prudential's outstanding stock, approximately £47 million worth. This is not the first time they've been short Prudential as they previously had a larger short position in this name back in December. Prudential Plc is expected to disclose details of their $20 billion capital raise to finance a $35.5 billion acquisition of AIA, the Asian insurance division of AIG. Please keep in mind that the company referenced above (UK based Prudential) has no ownership link with Prudential of America, a company the majority of you will be familiar with that trades under the ticker PRU on the NYSE. Make sure you don't confuse them.

Lansdowne found success on the short side of their portfolio during the financial crisis as they profited off their shorts in Northern Rock and Barclays. But then again, almost all hedge funds had some sort of success with their shorts back then. For more details on on the disclosure rules for long and short holdings in UK companies see our UK primer here.

Lansdowne of course have constantly been rated as one of the top hedge funds in London and they specialize in long/short stockpicking (although they also employ other strategies as well). Their UK Equity fund was up 8.28% through the end of March as noted in our first quarter hedge fund performance numbers. Late last year we saw that their flagship fund has returned 19.37% annualized since 2001 when we took a look at Lansdowne's portfolio and saw they favored large caps in developed countries.

Taken from Google Finance, Prudential is "a financial services company. The Company has operations in the United States, Asia, Europe and Latin America. Through its subsidiaries, it offers products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services."

Brett Barakett's Tremblant Capital Boosts Liz Claiborne (LIZ) Stake

Due to activity on April 9th, 2010 Brett Barakett's hedge fund Tremblant Capital Group has updated their stake in Liz Claiborne (LIZ). They now show a 5.98% ownership stake in LIZ with 5,668,598 shares. This is an increase over their prior holdings as they previously owned only 1,200,417 shares when we looked at Tremblant's portfolio from December 31st. They've boosted their position by 372%, adding 4,468,181 shares over the past four months. Before founding his own firm, Brett previously was a portfolio manager for Louis Bacon's global macro hedge fund Moore Capital.

Taken from Google Finance, Liz Claiborne is "designs and markets a global portfolio of retail-based brands, including JUICY COUTURE, KATE SPADE, LUCKY BRAND and MEXX. The Company also has a group of department store-based brands with consumer franchises, including the LIZ CLAIBORNE and MONET families of brands, MAC & JAC, KENSIE and DANA BUCHMAN and the licensed DKNY JEANS, DKNY ACTIVE and DKNY MENS brands."

To see what other names Tremblant has gravitated towards, check out the rest of Barakett's investments.

Steven Cohen's Hedge Fund SAC Capital Shows Talbots (TLB) Position

Due to activity on April 7th, 2010 Steven Cohen's hedge fund SAC Capital has updated their stake in The Talbots (TLB). SAC now shows a 9.5% ownership stake in TLB with 6,430,231 shares. This update comes after SAC recently disclosed a position in InterMune (ITMN) as well as a stake in Psychiatric Solutions (PSYS). In the fine print of their recent Talbots filing, we see that this position includes 1,325,000 shares subject to call options and 135,963 warrant shares.

This is a massive increase over SAC's previous TLB holdings. Their last 13F filing which disclosed positions as of December 31st, 2009 showed Cohen's firm owning 370,500 shares represented by call options and 320 shares of common stock. Over the past four months they've gained exposure to 6,059,411 shares, a 1,634% increase in their position. However, we're assuming they didn't simply buy shares on the open market. To see how SAC might have come about their ownership stake in TLB, we turn you to Perella Weinberg Partners' recently filed 13D on Talbots.

In Perella's filing, we see that they have an 8.1% ownership stake in TLB with 5,500,309 shares. On April 7th, Talbots completed its acquisition of BPW Acquisition Corp and BPW was merged into the company. As per the SEC filing, "upon consummation of the merger, subject to limited exceptions, each holder of shares of common stock of BPW immediately prior to the completion of the merger became entitled to receive 0.9853 shares in exchange for the cancellation of each such share of BPW common stock. In accordance with the terms of the merger agreement, the company also offered to exchange , for each outstanding warrant to acquire shares of BPW common stock, either (i) 0.09853 shares or (ii) 0.9853 warrants to acquire shares, in each case subject to certain specified proration mechanics."

You can read more about the merger here. While there's no way for us to know for certain how SAC came about their shares, this is a likely explanation given SAC's exposure to both common stock and warrants. But again, this is purely an assumption on our part. Keep in mind that Cohen's hedge fund is a trading oriented firm and turns their portfolio over much more frequently than all the other funds we cover on Market Folly.

Taken from Google Finance, The Talbots is "a specialty retailer and direct marketer of women’s apparel, shoes, and accessories. The Company operates stores in the United States and Canada. In addition, its customers may shop online or via its catalogs. The Company’s products are sold through its 587 stores, its circulation of approximately 55 million catalogs."

For more on Steven Cohen, check out all our coverage on hedge fund SAC Capital.

John Paulson Buys American Capital (ACAS) Stake

Shares of American Capital (ACAS) were up 5% yesterday after it was revealed that John Paulson's hedge fund Paulson & Co would be buying a 13% stake in the company. This capital will be used to help restructure ACAS' $2.4 billion of debt. They were in need of an infusion, and they certainly got it.

Paulson picked up shares in a $295 million stock offering that was priced at $5.06 per share, a slight discount to where shares ended last week. Paulson will scoop up the vast majority of the offering as his firm buys 43.7 million of the available 58.3 million shares. This should make John Paulson's hedge fund the largest shareholder in ACAS. In terms of other recent investments out of the hedge fund, we recently saw them buy shares of NovaGold Resources (NG) and you can always view the rest of Paulson's portfolio here.

Todd Sullivan over at ValuePlays.net has been long shares of ACAS even before Paulson and obviously can't complain when a prominent investor starts buying shares too. While Sullivan isn't managing $32 billion like Paulson, he recently started his own hedge fund, Pennant Fund LP along with Doug Estadt and they were up an impressive 48% for the first quarter of 2010. John Paulson's various hedge funds have had mixed performance thus far this year. His Advantage Plus fund was -1.18% for the year as of February, his Advantage fund -0.93%, his International fund up 0.47%, his Credit fund up 3.35%, and his Enhanced fund up 0.99%. All of these were noted in our first quarter 2010 hedge fund performance update.

Taken from Google Finance, American Capital is "an equity firm and a global asset manager. The Company invests in private equity, private debt, private real estate investments, early and late-stage technology investments, special situation investments, alternative asset funds managed by the Company and structured finance investments."

For more on John Paulson's hedge fund, head to Paulson & Co's portfolio and of course our in-depth look at their new gold fund.

Hedge Fund Magnetar Capital's Letter to Investors Re: CDOs

John Gapper from GapperBlog at the Financial Times has just posted up hedge fund Magnetar Capital's latest letter to investors. If you peruse our 'What We're Reading' links that we post up each week, you'll recall that recently we linked to a ProPublica piece on Magnetar Capital and how they profited from the subprime trade. Needless to say, Magnetar wasn't too pleased with that and has fired back a retort, deeming the story misleading.

To follow the timeline accordingly, we of course recommend reading ProPublica's piece on the hedge fund first. Then, once you've finished, head down the page to read hedge fund Magnetar Capital's penned assault on ProPublica's story.

Embedded below is Magnetar's letter to investors, courtesy of John Gapper at the FT:



You can directly download a .pdf here.

It's obvious that Magnetar is rightly concerned with how they are being portrayed at a time when Goldman Sachs has come under siege for actions relating to their collateralized debt obligations (CDOs). Magnetar profited off of subprime's downfall much like John Paulson's hedge fund Paulson & Co did. This is certainly the time to 'set the record straight' to avoid any confrontations with the SEC now that the regulatory body seems to be on a CDO-related witch hunt.

In any event, an interesting read from Magnetar in their latest letter to investors. We haven't covered much of the Goldman Sachs fraud case as the SEC examines deals done with John Paulson's hedge fund. We figured we'd let the mainstream media cover that as the information flow has been non-stop. But if you want to learn more about Paulson's subprime trade, we highly recommend Gregory Zuckerman's The Greatest Trade Ever, which has intriguingly been a source of information regarding the recent CDO witch hunt.

Sell in May and Go Away? Jeff Saut Says Don't Wait 'Til Then

Raymond James' Chief Investment Strategist Jeff Saut is out with his latest weekly missive with the clever title, 'Don't Wait for May to Go Away.' This of course is a play on the old Wall Street adage: 'sell in May and go away.' Historically, the period between May and November has underperformed while the period between November and April has solid performance. His latest commentary comes after last week's piece where examined how inflation begins.

Saut essentially is saying take some profits here as he is increasingly cautious in his latest investment strategy publication. He cites numerous factors for this cautionary stance, including contrarian signals such as:

- Sentiment gauges that are as bullish as they were in 1987
- A CBOE equity put/call ratio of 0.32 (very heavy call volume)
- Stocks are the most overbought since the rally began in March 2009

Simply put, Saut thinks that the markets are at a near-term top but he is still long-term bullish. As such, they are recommending hedges for downside protection. You can view his entire market commentary embedded below:



You can directly download a .pdf here.

As we've mentioned in a previous post examining key technical levels in the markets, it never hurts to lock in some profits and raise cash levels as things become extended and more uncertain. While shorting is not necessarily advisable until the market starts to show more signs of weakness, reducing long exposure and employing some cheap hedges is not a bad idea at all and generally we'd agree with his thoughts here. After all, puts are quite cheap right now as Saut referenced. For more from Jeff Saut, check out his previous commentary entitled how inflation begins. Overall though, the market strategist keeps with his short-term cautious, long-term bullish stance.

Bill Ackman's Pershing Square Discloses Yum Brands (YUM) Position

Bill Ackman's hedge fund firm Pershing Square Capital Management recently filed an amended 13F for the fourth quarter of 2009. We found this a bit peculiar given that the new 13F's that will detail first quarter 2010 portfolio adjustments are due out next month. Nonetheless, upon examining their amended filing, we see that Ackman has disclosed a 13.8 million share stake in Yum Brands (YUM) as of 12/31/09.

It's a bit baffling to us as to how Pershing could omit such a material position from their 13F. After all, when you add this amendment to their original 13F, you see that YUM was their second largest position! When we originally t0ok a look at Pershing Square's portfolio, they did not show a position in Yum Brands. Obviously now looking back, that was not the case.

So, to sum up: Pershing Square owned a $483 million stake in Yum Brands as of the fourth quarter 2009 which means it was a new position for them at that time as they did not own shares in the prior quarter. However, Pershing had owned shares of YUM in the past, but not since the first quarter of 2009. Bill Ackman's hedge fund was up 3.7% for the month of March and up 5.62% for the year as noted in our first quarter hedge fund performance update. Our prior coverage of Ackman's firm includes examining Pershing's economic exposure to General Growth Properties (GGP) and their presentation on Kraft (KFT).

Taken from Google Finance, Yum Brands is "is a quick service restaurant (QSR) with over approximately 37,000 units in more than 110 countries and territories. Through the five concepts of KFC, Pizza Hut, Taco Bell, LJS and A&W (the Concepts), the Company develops, operates, franchises and licenses a worldwide system of restaurants, which prepare, package and sell a menu of food items. In addition, the Company owns non-controlling interests in entities in China who operate similar to franchisees of KFC and a non-controlling interest in Little Sheep, a Hot Pot concept."

For more background on Bill Ackman's hedge fund, check out our profile of Pershing Square.