Odey Adds to Shanta Gold Position

Crispin Odey’s Odey Asset Management has been adding to its holding of London listed Shanta   Gold (LON: SHG). Due to trading on October 10th,  Odey now own 16.1% of Shanta’s voting rights.  

It has been nearly a year since Odey first disclosed a stake in Shanta. Since then, they have filed eight times to disclose an increased holding. Odey seem to have bought between £17 and £9 per share, adding to their position as the price has moved downwards.

Although it has moved down considerably, Shanta’s stock price has not been as volatile as many other gold miners during the last year.

Per Google Finance - “Shanta Gold Limited is engaged in gold exploration, development and mining in Tanzania. The Company’s properties include New Luika, Lupa Goldfields , Singida, Mgusu, and Songea. The Company’s portfolio of properties includes approximately 35 prospecting licenses, which covers a total surface area of approximately 962 square kilometers. Its flagship project, New Luika Gold Mine has approximately five prospecting licenses covering approximately 199 square kilometers.”

You can view a recent interview with Crispin Odey's market outlook here.

Tiger Global Increases BBA Aviation Stake Again

Chase Coleman and Feroz Dewan's investment firm Tiger Global has been adding to its BBA Aviation (LON:BBA) stake again.  Due to trading on October 14th, Tiger Global now hold 11.14% of BBA's voting rights.  That's more than double the voting rights from their last filing back on September 17th.

As the BBA stake has grown, it has become a significant holding when compared to all of Tiger's other disclosed holdings.  Tiger initially disclosed an interest in BBA back in July of this year.

Per Google Finance: “BBA Aviation plc is a provider of aviation services and aftermarket support to   operators of business and general aviation, military and commercial aircraft. The Company delivers   its services at over 220 locations on five continents. The Company operates through two segments:   Flight Support segment and Aftermarket Services segment. The Company’s Flight Support segment   provides refuelling, ground handling and other services to the business, general and commercial   aviation markets. Its Aftermarket Services segment maintain, manufacture and support engines   and aerospace components, sub-systems and systems. The Flight Support segment consists of   Signature Flight Support and ASIG, and Aftermarket Services and Systems segment consists of Engine   Repair and Overhaul, Legacy Support and APPH. Its Flight Support has approximately 200 locations   worldwide, and its Aftermarket Services has approximately 23 locations worldwide.”

What We're Reading ~ Analytical Links 10/16/13

Being a long-term investor in a short-term world [The Big Picture]

Living in a low return world [Abnormal Returns]

The most important variable governing market prices [Minyanville]

Sears (SHLD) rally belies big worries about the retailer's prospects [Barrons]

In-depth look at Amazon's (AMZN) Jeff Bezos [BusinessWeek]

Pay TV: the future is not written [FT]

Takeaways from Liberty Media's (LMCA) analyst day [StreetInsider]

US cable companies home in on security [Reuters]

Scott Adams' secret to success [WSJ]

Iron Mountain (IRM) drops as Barclays says REIT conversion unlikely [Barrons]

How the Winklevoss twins found Bitcoin [Bloomberg]

Thoughts on Twitter's IPO & a good trade/bad investment [Aswath Damodaran]

Profile of Twitter & Square's Jack Dorsey [NewYorker]

Corsair Capital Discloses New Perion Network Stake

Jay Petschek and Steven Major's hedge fund Corsair Capital has filed a 13G with the SEC and disclosed a brand new position in Perion Network (PERI).  Per the filing, they now own 6.6% of the company with 820,236 shares.

The filing was required due to activity on October 3rd.

Per Google Finance, Perion Network is "a digital media company. The Company's products include: IncrediMail, a communication client; Smilebox, a photo sharing and social expression product and service; and Sweet IM, an instant messaging application. The Company generates revenues primarily through search, the sale of products and services, and advertising. IncrediMail is its communication client, available over the Internet it its basic version free of charge, used for managing email messages and Facebook feeds, with many graphic and personalizing capabilities. Smilebox is an Internet photo sharing service available for the desktop and smart-phone. Its product is available in seven languages in addition to English."

For more on this hedge fund, head to Corsair Capital's thesis on American Realty Capital Properties.

JANA Partners Exercises Calls on Oil States International

Barry Rosenstein's hedge fund JANA Partners has filed a Form 4 with the SEC regarding shares of Oil States International (OIS).  Per the filing, JANA has exercised 10,000 call options and converted those into 1 million shares of OIS. 

After the transaction, JANA now owns over 6.4 million shares of OIS.  The options had a exercise price of $80 with an expiration date of October 11th.

David Einhorn's Greenlight Capital is also involved in this company as it's one of his largest positions.  Earlier this year, our Hedge Fund Wisdom newsletter analyzed OIS and outlined the investment thesis.  You can subscribe here to read it.

Per Google Finance, Oil States International "is a provider of specialty products and services to natural resources companies worldwide. The Company operates in oil and natural gas and coal producing regions, including Canada, onshore and offshore the United States, Australia, West Africa, the North Sea, South America and Southeast and Central Asia. Its customers include national oil companies, oil and natural gas companies, onshore and offshore drilling companies, other oilfield service companies and mining companies. It operates in four segments: accommodations, offshore products, well site services and tubular services. In September 2013, Oil States International Inc sold Sooner, Inc. and its subsidiaries (Sooner) to Marubeni-Itochu Tubulars America, Inc."

For more on this hedge fund, we posted Barry Rosenstein's recent interview.

Eminence Capital Adds to Group 1 Automotive Position

Ricky Sandler's hedge fund Eminence Capital has filed a 13G with the SEC regarding Group 1 Automotive (GPI).  Per the filing, Eminence has revealed a 5.4% ownership stake in GPI with 1,312,745 shares.

This marks a 77% increase in the number of shares they own since the end of the second quarter.  The SEC filing was required due to portfolio activity on October 4th.

Eminence has been involved in other auto-related names and we've highlighted Sandler's position in Sonic Automotive recently as well.

Per Google Finance, Sonic Automotive is "an operator in the automotive retailing industry. Through its operating subsidiaries, it markets and sells a range of automotive products and services, including new and used cars and light trucks; arrange related vehicle financing; service and insurance contracts; provide automotive maintenance and repair services, and sell vehicle part. In June 2013, Group 1 Automotive Inc acquired Rountree Ford Lincoln. In October 2013, the Company acquired Joe Marina Honda in Tulsa, Oklahoma."

David Einhorn Shorts More Green Mountain Coffee: Q3 Letter

David Einhorn is out with his Greenlight Capital Q3 letter.  In it, Einhorn discloses that they've shorted more Green Mountain Coffee Roasters (GMCR).  They write,

"Although the company again missed the consensus estimate for sales, bullish analysts scrambled to lower forward revenue forecasts while insisting that all is well in mudville."  Their updated take on GMCR is below and we've previously posted Einhorn's original short case on GMCR.

He also talks about his long positions in Apple (AAPL) and Vodafone (VOD), both of which were quite profitable in the quarter.

Einhorn also discloses that Greenlight built a 'medium-sized long' in Osram Licht AG (Germany: OSR).  Additionally, they exited Gjensidige Forsikring (Norway: GJF) and Oaktree Capital (OAK).

At the end of Q3, Greenlight's largest positions in alphabetical order were:  Apple, General Motors, gold, Marvell Technology, Oil States International, and Vodafone.

Embedded below is David Einhorn's Q3 2013 letter:



For more on this hedge fund, we also posted a recent interview with Einhorn talking about his positions.

David Tepper: Markets Could See a 18-20x Multiple (Interview)

Appaloosa Management founder David Tepper appeared on CNBC today and gave his market thoughts.

Tepper thinks an 18-20x market multiple could be the 'new normal' while Lee Cooperman said earlier today he sees a 16x multiple.  Regardless, Tepper thinks stocks will be up next year and feels we'll see a higher multiple on the markets.

Regarding tapering, he feels that they're not going to taper for some time.  "My basic belief has been when you have this large QE, markets go up."  Generally speaking, despite the near-term uncertainty, he expects the markets to go up. 


The videos of Tepper's interview are embedded below:

Video 1 on tapering


Video 2 on interest rates


Video 3


For more hedge fund interviews, head to Lee Cooperman on the 3 stages of a bull market from earlier today.

Lee Cooperman on 3 Stages of a Bull Market: Interview

Omega Advisors' Lee Cooperman spoke with CNBC this morning.  He thinks markets are fairly valued and he thinks a 15-16x multiple is about right.  He doesn't think it's a bargain anymore.

Cooperman on the 3 Stages of a Bull Market

Phase 1: "Wow we survived."  As the market bottoms and pessimism slowly starts to fade.
Phase 2: "Reflecting that which is perspective."  4-5 years of rising economic activity.
Phase 3: "Exuberance phase, the silliness phase where people forget about the mistakes."  He doesn't think we're quite there yet, but there are pockets of silly valuation like Potbelly (PBPB) and Telsa (TSLA).


His Stock Picks Now

"What we're looking for is to find more growth at a lower valuation."  He said he's looking at 'red chips' instead of 'blue chip' stocks and specifically touched on Sprint Nextel (S).   He also likes Motorola Solutions (MSI), Swatch Group (UHR), Sandridge Energy (SD), and Qualcomm (QCOM).

Embedded below are the videos of Cooperman's interview:


Video 1 on bull market stages


Video 2 on Sprint (S)


Video 3


Video 4 on Qualcomm (QCOM)


For more hedge fund thoughts, we also posted up David Tepper's interview from today.

Julian Robertson Calls Environment 'Precarious,' Likes Ulta Salon, Delta & Others

Tiger Management's Julian Robertson was on CNBC last week and we wanted to highlight some of his comments from the transcript.  Stocks Robertson mentioned in the interview that he likes include Ulta Salon (ULTA), Delta Airlines (DAL), WuXi Pharma (WX), DigitalGlobe (DGI) and Norwegian company Schibsted,


On the economic landscape: "Well, I would-- characterize it as precarious. And-- I think everyone knows that. And-- I think that-- rather than just sitting back and-- saying, "What if this happens or that happens"-- we go ahead and find good companies and invest in them and-- bad companies and-- them."


On Ulta Salon (ULTA): "But I do see sweet stocks that I really love and like and-- think are going to do well. And-- one is-- a company that-- probably makes that beautiful toenail polish you've got on. A company called Ulta. And it has just beautiful beauty salons all over the country.  And it sells all the great products. And it's growing-- probably at 25%-- or so, will grow that way over the next three or four years. This year won't be quite that good. But-- it is just amazing what's happened. And-- how well they've caught this great movement. And-- we've interviewed a lot of women and Ulta is where they're going."


On what he looks for when picking stocks:  "Well, I-- one of the things that I'm particularly interested in is-- stocks and who's already picked them. And-- we've had some really good people here who have excelled in certain fields and-- I love to see really what they had bought recently. And-- Ulta is one of those stocks. And-- I think it's going to be a real good one for next year, so."


On the market: "That's really the way I'm looking at stocks primarily now. I think we're in the middle of a kind of a bubble market, where it's going to take something-- bubble-like to happen. And-- prick the bubble and we'll probably have pretty bad-- reactions to the breaking of the bubble. But-- probably not right now. And somehow I think we'll wallow through the political and fiscal crisis we have in front of us. And then we'll sort of see what happens ... I think the market is reasonably -- yes, is fully valued."


On DigitalGlobe (DGI):  "Digital Globe is I think a really great company. And it's had its virtual monopoly in the area where it is. And-- I think they're really these satellites that are up flying around are-- it's a great business to be in."


On WuXi Pharma (WX): "This year one of our best stocks has been-- a Chinese company which-- disintermediates-- PhDs. In other words, instead of getting a U.S. PhD for maybe-- $20,000 a month, you get a Chinese PhD for-- $3,000 a month.  And-- it's a company that's named Wuxi that supplies the really good Chinese researchers. And-- I've been in that stock for several years and it's just been lately that it's started to do anything. And I don't know why that is or was or anything. But it's been a really good performer of late-- Wuxi.  you're buying-- something at a fifth the price you were paying before. And-- you figure that's going to work at some time. And these Chinese PhDs are really well-trained and very, very good and-- Wuxi is able to come up with good ones."


On Twitter's IPO: "I don't plan to be (a buyer of the IPO).  That isn't to say that I won't.  But I don't expect to at this point.  I think social media is very long-lasting.  I just don't know the particular thing with Twitter."


On the airlines:  "Well, we're beginning to put some money in the airlines. And-- I mean, Delta airline, the airlines have been weeded down. And-- Delta Airlines (DAL) a very good story. I mean, it's at a very reasonable price and it's a good airline. I've talked to you about Ryanair (RYAAY), which is a low-cost producer in the world. I think that-- area is something to look at. And there-- they-- there have been-- I think some really interesting moves made in that industry.  Seems so much (consolidation) that I think it will slow down from here."


On Europe:"I think a lot of smart Europeans think that Europe has bottomed. And I-- I've been hearing that increasingly. And-- I-- I'm not completely sure of that. But-- it's certainly better than it was."


On Schibsted: "Schibsted is a very interesting company. We came upon-- Schibsted-- it was-- we had-- a model we were setting up on-- newspaper stocks. And Schibsted had come out as being wildly overpriced. And then we went into it in thorough detail and-- although it's true that-- Schibsted had still had its papers, it had gone tremendously into internet products.  And-- it is really an internet-- producer-- media producer of internet products-- throughout the world now and-- is going to grow at very rapid rates for the next several years. And-- so I think Schibsted is quite a terrific-- Norwegian company."


On his success: "(What) I've done is-- hired really good people and never been self-conscious of hiring people that were smarter than I am. And-- it's been fun for me to work with them and-- to play with them in all that we've had together. And-- so that's the secret sauce."


On being long or short this market:  "Well, I think you have to have kind of-- a little more--sort of lean towards-- being conservative in a market like this. It's just-- gotten a little too -- I would say raising cash or going short."

What We're Reading ~ Hedge Fund Links 10/11/13

Mandel's Lone Pine to launch first hedge fund in a decade [II Alpha]

Jim Chanos' recent WSJ Conference speech [ValueWalk]

This once $14b hedge fund's future is in doubt [CNBC]

Andrew Ross Sorkin's interview with Bill Ackman [NYTimes]

On Bruce Berkowitz's new hedge fund [WSJ]

George Soros on the future of Europe [GeorgeSoros]

Hedge funds expand bets with most junk since 2008 [Bloomberg]

Record hedge fund inflows come at a price [FT]

Meredith Whitney raising money for new hedge fund [Reuters]

Some Tiger Cub performance numbers [II Alpha]

DE Shaw shuts doors to new investors [FT]

Legal giants wage ware over role of activist investors [Forbes]

Cannell Capital Files 13D on Hooper Holmes (HH), Sends Letter to Board

Carlo Cannell's hedge fund Cannell Capital filed a 13D on shares of Hooper Holmes (HH).  They've disclosed a 14.24% ownership stake in the company with 9,946,766 shares.

The activist 13D details that Cannell was out buying in mid-August at prices between $0.36 and $0.38.  Carlo Cannell then attached a letter to the board as well with comments.


Cannell's Letter To Hooper Holmes

"Mr. Ronald Aprahamian
Chairman of the Board
Hooper Holmes, Inc.
170 Mt. Airy Road Basking Ridge, NJ 07920 

Dear Mr. Aprahamian, 

Cannell Capital LLC ("CC") writes today with several suggestions and comments for Hooper Holmes, Inc. ("HH"), the common equity of which CC, or accounts managed by CC, owns 14.2% as of September 30, 2013. 

First, in our opinion, the size and remuneration of the Board of Directors ("BOD") is too large.  The $73,000 to $104,000 each non-executive member has received per annum as the stock price has slid from $17.43 in April 2000 to $0.36 in August 2013 is galling.  We estimate aggregate cash compensation of $1.0 million for its six directors.  That is simply not reasonable (see Exhibit "A" enclosed).  Given the pro forma size following the divestiture of Portamedic, which we reckon should decrease revenues 60%, we call for the removal of Elaine Rigolosi for two reasons (i) as Chair of the Compensation Committee she is culpable for the egregiousness of compensation over her 25 terms; (ii) she is in our opinion less qualified than other new members of the Board. 

Second, the BOD should "downgrade" the auditor of HH. The $593,000 that KPMG LLP received last year is excessive given the current manifestation of HH. As part and parcel of this downgrade we call for the BOD to effect a reverse stock split sufficient - amongst other measures - to effect in a Form 15 filing a notice of its intent to "go dark." (Here is list of pros and cons for which we suggest for illustrative purposes: http://www.andrewskurth.com/pressroom-publications-126.html ). 

Lastly, we wish to congratulate HH for negotiating the sale of Portamedic. Our 2015 forecast of the Health & Wellness segment, now unencumbered by the Portamedic "cancer", is as follows: 

(FY Dec, $ Million)             Good            Great
Health & Wellness Growth  20%             25%
Revenue                                $72              $78
Net Income                           2                  4  


We are gratified by the recent progress.  We think the current pro forma enterprise value of $12 million is a paltry price to pay for a growing and good margin business, now liberated from the musty legacy business.  Combined with continued and robust reduction of superfluous expenses, we believe this "phoenix" could yield over $8 million in cash flow from operations in the next couple of years.  This would imply an attractive high-double-digit-percent return should a strategic buyer become interested in this growing niche - an outcome for which we both foretell and hope. 

Sincerely, 
/s/ J. Carlo Cannell
Managing Member"


About Hooper Holmes

Per Google Finance, Hooper Holmes is "engaged in providing health risk assessment services to the life insurance and health industries Hooper Holmes operates in one business segment and provides paramedical and medical examinations, personal health interviews and record collection, and laboratory testing, which help life insurance companies evaluate the risks associated with underwriting policies. It also conducts wellness screenings for wellness companies, disease management organizations and health plans. The Company's core activities consist of arranging for paramedical examinations on behalf of insurance carriers, primarily in connection with such carriers’ processing and evaluation of the risks associated with underwriting insurance policies - mainly life insurance policies. In October 2013, the Company sold its Portamedic service line to American Para Professional Systems, Inc."


Hear Cannell's Latest Investment Ideas

Carlo Cannell will be presenting his latest investment ideas at the Las Vegas Value Investing Congress next spring.  For a limited time, Market Folly readers can receive a huge 50% discount by clicking here.

Eminence Capital Boosts Sonic Automotive Stake

Ricky Sandler's hedge fund firm Eminence Capital filed a 13G with the SEC regarding shares of Sonic Automotive (SAH).  Per the filing, Eminence has disclosed a 5.1% ownership stake with 2,065,739 shares.

This marks an increase of 3% in the number of shares they own since the end of the second quarter.  The filing was required due to portfolio activity on September 30th.

Eminence has also held another automotive play as their top holding at the end of Q2 was Advance Auto Parts (AAP).

Per Google Finance, Sonic Automotive is "engaged in automotive retailing in the United States. The Company’s dealerships provide services, including sales of both new and used cars and light trucks; sales of replacement parts, performance of vehicle maintenance, manufacturer warranty repairs, paint and collision repair services (Fixed Operations) and arrangement of extended service contracts, financing, insurance and other aftermarket products (F&I) for its customers."

Head here for more recent activity from Eminence.

Barry Rosenstein Talks Outerwall, JANA Reduces Agrium Stake

JANA Partners founder Barry Rosenstein appeared on CNBC yesterday and we wanted to highlight some of his thoughts.  Additionally, JANA Partners filed an amended 13D with the SEC, indicating they've reduced their stake in Agrium (AGU).


On Outerwall (OUTR):  In his interview, Rosenstein said, "Nothing's off the table, there's a lot of options with this company... There's a lot of people interested in it, I've been contacted by a number of people since we showed up."  JANA's founder wants the company to return cash to shareholders.  He also thinks their Redbox DVD rental has a long life ahead of it.  We highlighted how JANA recently went activist on OUTR.

On what JANA looks for in an investment:  "We don't necessarily screen... we look for two things: value and catalysts.  Basic businesses, easy to understand business models, recurring revenues, and then there's gotta be a catalyst.

Reduced Agrium stake:   Per the SEC filing, JANA has sold over 7.3 million shares of their Agrium (AGU) stake.  The filing was required due to activity on October 8th and they're now left with just over 3.9 million shares.

Embedded below is the brief video CNBC has uploaded of Rosenstein's interview:



For more on this hedge fund, head to some of JANA's other recent portfolio activity.

What We're Reading ~ Analytical Links 10/9/13

Some big investors can't get enough of Europe's toxic assets [Quartz]

On cash flow and destiny [Horowitz]

5 things you need to know about Janet Yellen [WSJ]

For Yellen, a focus on reducing unemployment [NYTimes]

Invest in what Wall Street hates [Marketwatch]

Why does value investing work? [Turnkey Analyst]

On avoiding the next bubble [WSJ]

Verizon mega-bond could pave way for AT&T [Reuters]

A look at eBay's CEO John Donahoe [Barrons]

How Twitter's business model is just like broadcast TV, only worse [Buzzfeed]

A road map to high value healthcare delivery [Healthcare Transformation Institute]

A look at Tower Group [Aleph Blog]

Is Medifast a cry baby or corporate bully? [WhiteCollarFraud]

Nest Labs reinvents the smoke alarm [NYTimes]

Graham & Doddsville Fall Newsletter From Columbia Business School

Columbia Business School is out with its Fall 2013 edition of the Graham & Doddsville newsletter.  This issue features an interview with Aquamarine Capital's Guy Spier as well as a focus on Koch Industries, Homex (HMX) 9.75% Sr Guaranteed Notes, Wabash National (WNC), and Active Network (ACTV).

Spier gave an interesting interview about his career and investing style.  Here's a few select quotes:

"Something I believe quite strongly is that if you want to understand who an investor is, you need to understand their relationship to money in general, their relationship to the money that they specifically manage, and what the money means to them."

"At the end of the day, every successful investor ends up differentiating themselves on the unique aspects of their personality and who they are.  I'm not trying to be the best investor.  I'm just trying to be Guy Spier."

In his interview, Guy also walks through his thinking on Reciprocal Patent Exchange (RPX), as well as Fiat (FIATY).


Embedded below is the Fall 2013 edition of the Graham & Doddsville newsletter:




If you missed it in the past, Graham & Doddsville also had a great interview with JANA Partners.

Carl Icahn Reveals Talisman Energy Position, Gains Board Seats at Nuance Communications

Carl Icahn has been busy with positions in Talisman Energy (TLM) and Nuance Communications (NUAN).  The breakdown is below:


Icahn's New Talisman Energy Stake

Icahn simultaneously tweeted and filed a 13D with the SEC, disclosing a 5.97% ownership stake in Talisman Energy (TLM).  He owns 61,554,602 shares and this is a brand new position for him.

On Twitter, Icahn noted that he, "may have conversations with mgmt re strategic alternatives, board seats, etc."

So if you aren't already, follow @Carl_C_Icahn on Twitter, and don't forget to follow @MarketFolly if you haven't already.

Per Google Finance, Talisman Energy is "an oil and gas producers, through a combination of exploration, development and acquisitions. The Company's business activities include exploration, development, production, transportation and marketing of crude oil, natural gas and natural gas liquids. Talisman's three main operating areas are North America, the North Sea and Southeast Asia."


Icahn Gains Board Seats at Nuance Communications

Icahn has reached an agreement with Nuance Communications (NUAN) to gain 2 board seats.  Carl Icahn's son Brett Icahn will become a director, along with David Schecter.

Per Google Finance, Nuance Communications is "a provider of voice and language solutions for businesses and consumers globally. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents."

TPG-Axon Discloses Outerwall Stake

Per a 13G just filed with the SEC, Dinakar Singh's TPG-Axon has revealed a 5.1% passive stake in Outerwall (OUTR) with shares 1,434,429.  This is a brand new position for them and the filing was required due to activity on October 4th.

We just posted about how JANA Partners has gone activist on Outerwall and now TPG-Axon has disclosed a stake in the company formerly known as Coinstar as well.

The NYPost just highlighted that the company has "rebuffed fresh approaches from buyout firms."  Piper Jaffray has also said they see a sum of the parts value of $70 for OUTR.

Conversely, Bloomberg points out that around 30% of OUTR shares were sold short as of the beginning of October.

Per Google Finance, Outerwall is "a provider of automated retail solutions, which offers convenient products and services. The Company's offerings in automated retail include its Redbox business, where consumers can rent or purchase movies and video games from self-service kiosks (Redbox segment), and its Coin business, where consumers can convert their coin to cash or stored value products at self-service coin counting kiosks (Coin segment). Its New Ventures business (New Ventures segment) is focused on identifying, evaluating, building, and developing self-service concepts in the marketplace."

Strategist Jeff Saut's Latest Market Commentary

Market strategist Jeff Saut's latest weekly commentary is entitled "Ashes to Ashes" and that's what he thinks the budget worries turn into by this time next week.  He then focuses on investor sentiment these days.

Saut points out views from individual investors he's been seeing:

"(They) seem to be 'frozen' like deer in the headlights, believing that you need to have a feel good environment to have a secular bull market.  The reality of the matter is that when you finally get that 'feel good' environment, it tends to be pretty late in the overall scheme of things."

Saut advises caution when it comes to fixed income as that had been the 'easy buy' and rates have increased this summer.  Regarding equities, he feels that you shouldn't worry too much about the worry surrounding Q3 earnings.

Embedded below is Jeff Saut's latest commentary:




You can download a .pdf here.

Ruffer's Q3 Letter: Still Anticipating Eventual Inflation

Jonathan Ruffer is out with his Ruffer Investment Company Q3 letter with his latest market commentary.  Ruffer leads off with some prudent advice:

"Today's investment world is full of distortions, and the effect on investors is that they rationalise these fantasies, so that what is false is represented in their minds as true.  Prudent investors will want to reverse this process!"

The main distortion he is writing about currently is that quantitative easing has been effective at buying time and getting investors to pile into risk assets, but there hasn't been a return to long-term economic growth.

Ruffer believes that various entities around the world like the Federal Reserve are determined to stave off deflation.  As such, Ruffer believes that sooner or later they'll overdo it when it comes to money creation and we'll see inflation.  And this is how they continue to invest.

Embedded below is Ruffer's investment commentary for Q3:




For more from this investment firm, head to Ruffer on the 3 arrows of deflation.

JANA Partners Goes Activist on Outerwall (OUTR)

Barry Rosenstein's hedge fund JANA Partners filed a 13D on shares of Outerwall (OUTR) and has disclosed a new 13.5% ownership stake in OUTR with 3,777,995 shares.

The activist 13D filing includes the standard boilerplate that JANA expects to talk with management.  In particular, they want to focus on "a review of strategic alternatives including exploring a strategic transaction, selling or discontinuing certain businesses, or pursuing a sale."

Outerwall was formerly called Coinstar and is known for their Redbox DVD rental kiosks, among other businesses. 

JANA was out buying in late August around $62-63, throughout September around $48, and then bought 1 million shares on October 4th at $52.25.

This hedge fund has been busy lately and we also recently highlighted how JANA went activist on Safeway as well.

What We're Reading ~ Hedge Fund Links 10/4/13

Transcript of an old David Tepper speech [Santangel's Review]

Crispin Odey's latest views [eFinancialNews]

Highfields Capital wants to shrink [Reuters]

Pitney Bowes CEO to hedge funds: don't short us [CNBC]

Latest thoughts from hedge fund manager Daniel Khoshaba [Barrons]

Event-driven hedge funds dominate inflows & performance [Marketwatch]

New additions to the hedge fund hall of fame [II Alpha]

Short star Goshen crushed in rising market [HF Intelligence]

Buffett's Berkshire set to get nearly $2.15 billion of Goldman stock [Reuters]

Third Point bidding for Depfa? [FT]

Falcone's funds sell Harbinger Group shares to Leucadia [Bloomberg]

How to spot a hedge fund fraudster [II Alpha]

The key to hedge fund success [Wealth Professional]

Hedge funds' interest in reinsurance roils markets [PI]

Considering a hedge fund? Here's key questions to ask [WSJ]

Consultants control $830 billion of hedge fund AUM [COO Connect]

Ackman should stick with heavy industry [Dealbook]

Lone Pine Capital Starts Pandora Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding shares of Pandora (P).  Per the filing, Lone Pine has revealed a 5.3% ownership stake in P with 10,085,216 shares.

This is a brand new position for the hedge fund and the filing was required due to activity on September 23rd.  It's worth highlighting that the company announced a secondary offering in September as well.

Pandora operates in the internet radio segment and shares have been on a tear this year.  Recently, some investors have questioned whether Apple's entrance into the space via their iTunes radio offering will hurt P. 

For more from this hedge fund, head to more recent portfolio activity from Lone Pine.

Excellence in Investing San Francisco Conference: Burbank, Billick, McGuire & More

The 4th annual Excellence in Investing: San Francisco conference is coming up on October 23rd.  In partnership with the Sohn Conference Foundation, this event features hedge fund managers pitching investment ideas to support education and children's causes.  You can find out more about the event here.

2013 Speakers List

Kurt Billick, Bocage Capital
John Burbank, Passport Capital
Mick McGuire, Marcato Capital
Malcolm Fairbairn, Ascend Capital
David Herro, Harris Associates
Chris James, Partner Fund Management
Carl Kawaja, Capital World Investors
Chris Lord, Criterion Capital
Michael Moe, GSV Capital
Mason Morfit, ValueAct Capital
Brian Zied, Charter Bridge Capital
Christopher Balding, Peking University HSBC Business School


Excellence in Investing San Francisco Conference Details

When:  Wednesday, October 23rd, 2013
Where: The Bently Reserve, San Francisco, CA
Time: 2:30-6:00 PM
Website: www.excellencesf.org

The 4th annual event features a great line-up of speakers, so if you're a financial professional or investor on the West Coast, this is definitely one of the premier events in the area.

Embedded below is the conference flyer:





This is a public charity, and as such, all conference registrations and donations are tax deductible.  You can register for the event by clicking here.

Bill Ackman & Pershing Square's Q3 Letter: Converts 40% of Herbalife Short to Put Options

Bill Ackman recently sent out his letter to investors from hedge fund Pershing Square Capital.  In it, he reveals that he's switched out almost half of his Herbalife (HLF) short position from equity to put options.  He made this move largely for risk management purposes.

He also talks about his new activist position in Air Products & Chemicals (APD) where they've already made progress by replacing the CEO.

Bill Ackman's Q3 letter is embedded below, courtesy of The New York Post:

 


If you missed it: Ackman also dumped his J.C. Penney stake as well.

Citadel Boosts Global Brass & Copper Stake

Ken Griffin's hedge fund firm Citadel has filed a 13G with the SEC regarding shares of Global Brass & Copper (BRSS).  Per the filing, Citadel has revealed a 5.8% ownership stake in the company with 1,223,190 shares.

This marks a 253% increase in their position size since the end of the second quarter.  The filing was required due to activity on September 26th.

Per Google Finance, Global Brass & Copper "a converter, fabricator, distributor and processor of specialized copper and brass products in North America. The Company operates in three segments: Olin Brass, Chase Brass and A.J. Oster. The Company is engaged in metal melting and casting, rolling, drawing, extruding and stamping to fabricate finished and semi-finished alloy products from processed scrap, copper cathode and other refined metals. The Company’s products include a range of sheet, strip, foil, rod, tube and fabricated metal component products that it sells under the Olin Brass, Chase Brass and A.J. Oster brand names. The Company’s products are used in a range of applications, including the building and housing, munitions, automotive, transportation, coinage, electronics/electrical components, industrial machinery and equipment and general consumer end markets."

David Einhorn on Green Mountain Coffee, Vodafone & More: Interview

Greenlight Capital's David Einhorn appeared on Bloomberg Television today and talked about his short of Green Mountain Coffee Roasters (GMCR) and his long of Vodafone (VOD), two longstanding positions.  Here are some of the highlights and the video interview is below:


On whether he is still short Green Mountain Coffee:  “Yes. We are still short Green Mountain.  It has been on the toughest things going on in our portfolio this year. The books are over caffeinated, if you would.  The company says that they sell a lot of coffee, there is no doubt they sell a lot of coffee. We do not think they sell anywhere near as much as they say and there are real discrepancies in the accounts. They had an analyst day a few weeks ago and they were asked to explain the numbers, and the CEO’s cavalier response was they do not do straight math and they are not going to get into this now. If you do not get into this on an investor call, when are you going to?” 

“There is a lot of ways for Green Mountain to pan out for us. This year, so far it has not been panning out for us. The competition has been increasing; they are losing market shares in their stores. Their platform has been commoditized. Anybody can make a cakeup. The Supply is now out there. The prices are falling. I think they will miss on the business side form an earnings perspective sometime over the next year. Ultimately they will be commoditized away. In addition, you have the regulatory risk when someone wakes up one day and says these numbers are not what they are represented to be.”


On being big on Vodafone the last three years:  “When we bought it you were getting no credit for their stake in Verizon Wireless now we see that was a very valuable stake. I think $130 billion. I think Vodafone remains pretty attractive because one you strip out the consideration for Verizon, the rest of the European business is at a pretty cheap value.”    


On whether there are opportunities in the U.S. for Vodafone:  “No, I think Vodafone exits from the U.S. if anything it could ultimately be a target for someone like AT&T that wants to get exposure into Europe”    


On whether Vodafone could have held on to Verizon Wireless longer:  “I would give Vodafone an A or an A plus on this negotiation. Verizon took a very aggressive tact with them for a lot of years saying, you are a minority; we are not going to pay you dividends and eventually Verizon needed a dividend so they started paying it but sporadically. They really tried to squeak these guys out. They finally came in the spring. It turned out they could not bridge the great act. Vodafone held out. Verizon came back to the table. They paid a higher price than I think they even would have paid in the spring… Vodafone is not mostly a wireline business. They are mostly cellular in Europe. So you have that wireless component there. When you strip out the Verizon Wireless valuation, you are buying it at two turns of EBITA less than comparable companies. I think it has better prospects better growth and better network than many of its peers.”


Embedded below is the video of David Einhorn's interview with Bloomberg Television:



For more on this manager, we've posted some of Greenlight's recent portfolio activity here.

What We're Reading ~ Analytical Links 10/2/13

Why most investors/traders fail [Reformed Broker]

Red flags flying over Boulder Brands [Herb Greenberg]

The outlook for healthcare stocks [Morningstar]

Blackstone: we're in an epic credit bubble' [CNBC]

Satellite TV providers plan for survival as growth fades [BusinessWeek]

10 stealth economic trends that rule the world today [The Atlantic]

Grounded: Brazil has stalled [Economist]

Interview with Amazon's Jeff Bezos [CNBC]

Aubrey McClendon launches new gas company [CNBC]

How Mohnish Pabrai uses checklist investing [Forbes]

Why Wall Street loves houses again [The Atlantic]

Google unveils major overhaul of its search engine [USA Today]

As J.C. Penney flounders, lack of control evident [Dealbook]

Younger generations' approach to investing [NYTimes]

Third Point Becomes Sotheby's Largest Shareholder, Sends Letter & Wants Board Seat

Today Dan Loeb's hedge fund firm Third Point filed an amended 13D with the SEC regarding their position in Sotheby's (BID).  Per the filing, Third Point has disclosed a 9.3% ownership stake in BID with 6,350,000 shares.

This marks a 154% increase in the size of their position since they initially filed a 13D on Sotheby's back in August.  Third Point was out buying BID shares sporadically throughout August and then really ramped up their stake on September 30th, buying a ton of shares in the low $49's.


Loeb's Letter To Sotheby's CEO

Loeb then sent Sotheby's CEO a letter which we've embedded below:




Third Point highlights pressing issues at the company, management's lack of alignment with shareholders, and limitations in formulating and executing strategic initiatives.

As we've highlighted before, a few other activist hedge funds own BID shares as well, such as Nelson Peltz's Trian Fund and Mick McGuire's Marcato Capital Management.

One funny sidenote to the story: CNBC's David Faber spoke with Loeb, who said that BID sent him to the investor relations department when he reached out to the company.  Classic.


Third Point's September Exposure Report

Also worth mentioning: Third Point's Offshore Fund finished September up 2.6% and is up 18% year-to-date.  The hedge fund's net long equity exposure at the end of the month was 45.8% net long (61.4% long, -15.6% short).

ValueAct Capital Increases Rockwell Collins Stake

Jeff Ubben's hedge fund ValueAct Capital filed various forms with the SEC regarding their position in Rockwell Collins (COL).  Per the filing, ValueAct now shows a 9.7% ownership stake in COL with 13,113,000 shares.

The 13D filing breaks down their recent buys and shows they were purchasing COL shares between September 20th and 27th at prices in the high $68's.  They've purchased over 1.7 million shares since their last disclosure.  Also worth highlighting: COL is currently trading below levels where ValueAct bought.

ValueAct seems to like Rockwell's dominance in avionics as it gives them pricing power (their only main competitor is Honeywell).  Ubben apparently also likes the company's penchant for share repurchases.

Per Google Finance, Rockwell Collins is "engaged in design, production and support of communications and aviation electronics for commercial and military customers worldwide. The Company’s products and systems are primarily focused on aviation applications, The integrated system solutions and products it provide to its served markets include communications, navigation, automated flight control, displays/surveillance, simulation and training, integrated electronics and information management systems. The Company also provides a range of services and support to its customers through a network of service centers, including equipment repair and overhaul, service parts, field service engineering, training, technical information services and aftermarket used equipment sales. The Company operates in two segments: Government Systems and Commercial Systems."

If you missed it, be sure to check out Jeff Ubben's presentation from the Value Investing Congress.

Perry Capital Dumps Almost Half of J.C. Penney Stake

Richard Perry's hedge fund firm Perry Capital yesterday filed an amended 13D with the SEC regarding shares of J.C. Penney (JCP).  Per the filing, Perry has disclosed a 3.28% ownership stake with 10 million shares of JCP.

This means that Perry has dumped almost half of the JCP position they recently took.  Their latest filing shows they sold shares on September 27th at prices ranging from $9.02 to $9.5887.  This is around the time J.C. Penney announced that they would be issuing a ton of stock. 

When Perry initially took the stake, we pointed out that they were already down on the position as they started buying around $17.77 and added again around $14.86.  Then, a month later, they bought some of the shares that Bill Ackman was liquidating at around $12.90.  Then, as illustrated above, Perry capitulated and sold almost half of their stake in the $9's.

Things have only gotten worse as JCP now trades around $8.76.  While Perry has had a quick about-face on their JCP position size, it remains to be seen if they'll retain the rest of their shares. 

J.C. Penney has quickly become somewhat of a hedge fund graveyard.  Other hedge funds have been involved as well, such as Glenview Capital and Soros Fund.   And last month, we also highlighted that Kyle Bass' Hayman Capital had also started a J.C. Penney position.  We'll have to see if any of these other managers have a change of heart as well.

Senator Investment Group Adds to PHH Position

Alex Klabin and Doug Silverman's hedge fund Senator Investment Group recently filed a 13G with the SEC regarding shares of PHH (PHH).  Per the filing, Senator now owns 7.6% of the company with 4,391,007 shares.

The fine print of the filing shows that this stake is inclusive of notes convertible into 391,007 shares.  The filing was required due to activity on September 20th and this updated stake includes over 1.9 million more shares than they had at the end of the second quarter.

Per Google Finance, PHH is "an outsource provider of mortgage and fleet management services. PHH operates in three segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company provides mortgage banking services to clients, including financial institutions and real estate brokers, throughout the United States. The Company’s mortgage banking activities include originating, purchasing, selling and servicing mortgage loans through its wholly owned subsidiary, PHH Mortgage Corporation and its subsidiaries (PHH Mortgages). It provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary, PHH Vehicle Management Services Group LLC (PHH VMS). PHH VMS is a fully integrated provider of fleet management services with a range of product offerings, including managing and leasing vehicle fleets and providing other fee-based services for its clients’ vehicle fleets."

Balyasny Asset Management Starts Walter Energy Stake

Dmitry Balyasny's firm Balyasny Asset Management has filed a 13G with the SEC regarding shares of Walter Energy (WLT).  Per the filing, Balyasny now owns 5.22% of the company with 3,264,002 shares.

The filing was required due to activity on September 10th and this is a newly disclosed position for the hedge fund as they did not own any shares at the end of Q2.

This isn't the first time they've owned a stake either.  Balyasny previously owned WLT shares a little under a year ago.

Per Google Finance, Walter Energy is "a producer and exporter of metallurgical coals for the global steel industry. The Company also produces thermal coal and industrial coal, anthracite, metallurgical coke, coal bed methane gas (natural gas) and other related products. The Company operates in two segments: the Company's United States operations segment and its Canadian and United Kingdom operations segment. United States operations segment includes the operations of the Company's underground mines, surface mines, coke plant and natural gas operations located in Alabama and its underground and surface mining operations located in West Virginia. The Canadian and United Kingdom operations segment includes the operations of surface mines in Northeast British Columbia (Canada) and an underground mine and surface mine in South Wales (U.K.)."

Market Strategist Jeff Saut's Latest Commentary: "Character"

It's been a while since we checked in with market strategist Jeff Saut, so today we read his latest investment strategy commentary entitled "Character."

In it, Saut details the worries of the debt ceiling and potential government shutdown.  For what it's worth, he thinks it's "noise' in the intermediate term and that eventually it will get resolved.

In such a scenario, he sees the stock market shifting its attention to an improving economy and better economic numbers out of China.  He also points out that mega cap stocks have been the weakest.

Embedded below is Jeff Saut's latest market commentary:




You can download a .pdf copy here.

For an older but long-term focused piece from this strategist, head to Jeff Saut's best stock ideas for the next 3-5 years.

Kyle Bass' Hayman Capital Discloses PennyMac Mortgage Investment Trust Stake

Kyle Bass' hedge fund firm Hayman Capital has filed a 13G on shares of PennyMac Mortgage Investment Trust (PMT).  Per the filing, Hayman has disclosed a 5.1% ownership stake in with 3,570,000 shares.

The filing was required due to activity on September 27th and marks a new disclosure.  Earlier this summer, we noted that Omega Advisors and Bridger Capital took stakes in PennyMac Financial Services, the company whose subsidiary manages PennyMac Mortgage Investment Trust.

Per Google Finance, PennyMac Mortgage Investment Trust is "a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company is a real estate investment trust (REIT). The Company operates in two segments: investment activities and correspondent lending. The correspondent lending segment focuses on the purchase for resale of newly originated mortgage loans. The investment activities segment focuses on mortgage assets that are acquired and held for investment purposes. The Company’s primary investment objective is to maximize the value of the mortgage loans that it acquires, a substantial portion of which may be distressed and acquired at discounts to their unpaid principal balances, either through loan modification programs, special servicing and other initiatives focused on keeping borrowers in their homes, or, when necessary, through timely acquisition and liquidation of the property securing the loan."


For more on Hayman, we recently posted up Kyle Bass' macro discussion at the Alpha Hedge West conference.

Eminence Capital & Tiger Consumer Add to Aeropostale Positions

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G on retailer Aeropostale (ARO).  Per the filing, Eminence now owns 5.4% of the company with just over 4.2 million shares.

This marks a 39% increase in their position size since the end of the second quarter when they owned just over 3 million shares.  The 13G was required due to portfolio activity on September 17th.


Tiger Consumer Management Buys Aeropostale Too

Eminence isn't the only hedge fund that's been buying shares either.  Patrick McCormack's Tiger Consumer Management has also filed a 13G on ARO in recent weeks.

Tiger Consumer now owns over 6.4 million shares and filed the 13G due to activity on September 4th.  They've boosted their holdings in ARO by almost 81% since the end of the second quarter.   Patrick McCormack's fund now owns 8.21% of the company.

Per Google Finance, Aeropostale is "a mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale stores and 4 to 12 year-old kids through its P.S. from Aeropostale stores. P.S. from Aeropostale products can be purchased in P.S. from Aeropostale stores, in certain Aeropostale stores, and online at www.ps4u.com."

What We're Reading ~ Hedge Fund Links 9/27/13

Seth Klarman's Baupost to return some capital to clients [II Alpha]

Could Bill Ackman's genius be his downfall? [Yahoo Finance]

The U.S. dominates the hedge fund industry [FINalternatives]

Tiger Global launches long-only fund [CNBC]

Stan Druckenmiller: "greatest moneymaking machine in history" [ST50]

Paul Singer hates benchmarking [HF Intelligence]

Hedge funds use Freedom of Information Act to dig for info [WSJ]

Cohen's SAC Capital up 13% for year [Reuters]

Single family offices are negotiating down hedge fund fees [Forbes]

Profile of Jim Chanos [Yale Alumni Mag]

Dalio says Japan needs another big round of stimulus [Reuters]

Buffett calls the Fed history's greatest hedge fund [Bloomberg]

Hedge fund-of-funds in midst of metamorphosis [PI]

Hedge funds cut back on fees [WSJ]

A manager who doesn't mind losing a bet [Dealbook]

Oaktree to sell US foreclosed homes [Reuters]

Money manager takes big stake in News Corp [Dealbook]

John Paulson buys Puerto Rico resort [FINalternatives]

Current SEC priorities regarding hedge fund managers [SEC]

Invest For Kids Chicago 2013: Eisman, Kingdon, Peltz, Lasry, Singh, Cooperman & More

The annual Invest For Kids Chicago Conference is coming up on October 29th and it's their 5th anniversary.  100% of the money raised is donated to 7 Chicago based children's charities.  Modeled after the Sohn conferences, this event has become one of the premier investment conferences and the speaker list this year again confirms this.

Invest For Kids Speakers List

Steve Eisman, Emrys Partners
Mark Kingdon, Kingdon Capital
Marc Lasry, Avenue Capital
Steve Kuhn, Pine River Capital
Lee Cooperman, Omega Advisors
Nelson Peltz, Trian Fund
Dinakar Singh, TPG-Axon Capital
Jeff Gundlach, DoubleLine Capital
Sam Zell, Equity Group Investments
Rick Rieder, BlackRock


Event Details

When: October 29th, 2013
Where: Harris Theater in Chicago, Illinois
Time:  1:30pm to 5:30 pm

This Year's Charities:  The event benefits great causes and this year's beneficiaries are Chicago Youth Programs, Citizen Schools Illinois, Genesys Works Chicago, The Kitchen Community, LEARN Charter School Network, Polaris Charter Academy, and Youth Organizations Umbrella.


Registration

You can register for the event on IFK's website here.  Below is a flyer for the event:

Bloomberg Markets 50 Summit: Hedge Fund Panel Featuring Marcy Lasry, Glenn Dubin & Bruce Richards

We wanted to post up the video from one specific panel at the Bloomberg Markets 50 Summit in New York that featured Marcy Lasry of Avenue Capital, Glenn Dubin of Highbridge Capital, and Bruce Richards of Marathon Asset Management.

Their panel talked about hedge fund strategies and their various outlooks.  Bloomberg's Stephanie Ruhle moderated the discussion and here are some of the highlights.


Marc Lasry's Comments

Lasry noted how banks don't really have trading groups as much, so hedge funds aren't dealing with the banks as much and people "come to you" now and bypassing banks.  They've got one of the largest distressed funds in Europe and lots of banks have approached them about their portfolios.

Lasry argued that smaller hedge funds have to "be up double" what a big fund is to essentially justify all the risks an investor takes on investing in a smaller fund.

"At the end of the day, all you want to be focused on is the net (return).  The reason there's a discussion on a fees is people believe that net returns have come down, and that's because of the risk-free rate."


Glenn Dubin's Comments

Asked if he would started a hedge fund again today given regulatory requirements and the landscape, Dubin said setting up a hedge fund today is much more challenging than it once was. 

He echoed Lasry's comments that banks getting out of various business has led to new opportunities for many hedge funds. 

He also said there's no question the larger funds have a competitive advantage over smaller funds when it comes to accessing dealflow.  He also notes they have an advantage in hiring and the ability to retain top talent as it's a very competitive industry now.

"Fees are an odd issue in our industry."  He feels it's a binary outcome: either you decide to invest in a manager (and the market has set the fees), or you don't.  "To negotiate with a manager is a ridiculous discussion to have."

Dubin thinks the best opportunity now is to step in to provide capital where banks used to, but no longer can due to requirements.


Bruce Richards' Thoughts

Regarding hedge fund fees, he says large institutions want discounts available for big capital allocations to funds and Marathon reduces their fees for these big tickets or longer lock-ups.

"As a global institution, you search  the world for the best risk/reward to make absolute returns." 

Richards also recently spoke at the Alpha Hedge West conference and we've got coverage of his talk there via that link.

Embedded below is the video from the Bloomberg Markets 50 Summit:



For more coverage of the various conferences lately, head to:

- Notes from the Value Investing Congress (Ubben, Roepers, McGuire & more)

- Notes from the Alpha Hedge West Conference (Bass, Burbank, Richards & more)

Jim Chanos & Jim O'Neill on China At Bloomberg Markets 50 Summit (Video)

Kynikos Associates' hedge fund founder Jim Chanos sat down with Jim O'Neill, former Chairman of Goldman Sachs Asset Management at the Bloomberg Markets 50 Summit to chat about China, real estate, and markets.  Here are some of the highlights:

Chanos & O'Neill on China

O'Neill says that most of the reason why China's slowed is because they've deliberately slowed.

Chanos' caution in regards to China stems from credit.  He prefers to bet against China by playing miners, steel companies, construction companies, the building blocks that have boosted the expansion.

O'Neill asked Chanos if he would be against European luxury goods companies that have benefited from a wealthier Chinese consumer and Chanos said he doesn't need to play "third derivative" plays as he's more covered by betting against "first derivatives" such as the miners.

Chanos is bearish on iron ore because he says demand can rise or fall, but there's a ton of supply coming to the market late this year and next year.  Greenlight Capital's David Einhorn has also bet against iron ore.

O'Neill argues that the "old China" is dead and that's what Chanos is betting against.  He thinks it's a great stockpicker's market there as you can bet against old China and bet on new China.

Chanos also recommended a book about China: Red Capitalism.

For other coverage of the Bloomberg Markets 50 Summit, we also posted up video from the hedge fund panel featuring Glenn Dubin, Marc Lasry & Bruce Richards.


Embedded below is the video of Chanos' interview from the Bloomberg Markets 50 Summit:



For more coverage of the various conferences lately, head to:

- Notes from the Value Investing Congress (Ubben, Roepers, McGuire & more)

- Notes from the Alpha Hedge West Conference (Bass, Burbank, Richards & more)

What We're Reading ~ Analytical Links 9/25/13

Notes from the Bloomberg Markets 50 summit [Reformed Broker]

Investing around Obamacare [The Big Picture]

The Buffett formula: how to get smarter [Farnam Street]

Charlie Munger: lessons from an investing giant [WSJ]

Thoughts on Blackberry endgame and Microsoft as a value trap [Aswath Damodaran]

Iron ore seen sliding as new supplies hit [FT]

The benefits of negative feedback [Harvard Business Review]

Mexico's 'Aztec tiger' economy struggles to earn its stripes [FT]

Alibaba said to move toward IPO in the US [Dealbook]

Seeking answers from Green Mountain Coffee [Dealbook]

Apple's Chiefs discuss strategy, market share & new iPhones [BusinessWeek]

7 reasons why Africa's time is now [Harvard Business Review]

Once voracious Zell puts less on real estate plate [WSJ]

The 7 deadly sins of investing [WSJ]

40 maps that explain the world [Washington Post]

Lessons from the Dell deal [Dealbook]

Free SEC filings online master class [Business Journalism]

Wharton offers free online courses copying 1st year MBA study [Bloomberg]