Contrarian: Documentary About John Templeton

Below is an interesting documentary on well known investor John Templeton.  "Contrarian" follows his life and legacy.  It was directed by Mary Mazzio and underwritten by the John Templeton Foundation.

Embedded below is the documentary, Contrarian:

Warren Buffett's 2013 Annual Letter

It's that time of year again: Warren Buffett this weekend released his 2013 annual letter.  The Berkshire Hathaway man provides an update on operations but also offers pearls of investing wisdom.

One of the more insightful parts of his letter is a story he tells about a farm he bought a long time ago.  He compares owning a farm to the stock market by imagining a scenario where a neighboring farmer comes over everyday and offers him a price for his farm and Buffett's farm.

Buffett basically notes that this is the reality of the stock market: someone's throwing a price in your face every single day.  But with the farm, you aren't tempted with such regularity.  So to stay the course in a long-term investment, you have to tune out the noise.

Embedded below is Warren Buffett's annual letter for 2013:




You can download a .pdf copy here.

For more from the Oracle of Omaha, head to Warren Buffett's recommended reading list as well as Buffett and Munger's secrets to investing success.

Bruce Berkowitz's Letter to Fannie Mae & Freddie Mac

Bruce Berkowitz's investment firm Fairholme Capital today released a letter to Fannie Mae and Freddie Mac requesting corporate governance actions.

Fairholme owns various preferred securities of both Fannie and Freddie and has asked them to basically preserve the companies' assets while working to rebuild capital.  Fairholme also wants the companies to hold annual shareholder meetings and to re-list on the NYSE.

Embedded below is Berkowitz's letter to Fannie and Freddie:




You can download a .pdf copy here.

ValueAct Capital Boosts Dresser-Rand Stake, Files 13D

Jeff Ubben's hedge fund firm ValueAct Capital filed a 13D with the SEC regarding its stake in Dresser-Rand Group (DRC).  Per the filing, ValueAct now owns 6.6% of DRC with over 5 million shares.

This is a sizable increase as they only owned around 650,000 shares at the end of 2013.  The filing was required due to activity on February 18th, but they've been buying throughout January and February, at prices ranging from $53.xx to $57.05.  DRC currently trades around $57.xx.

Though this is an activist 13D filing, they didn't outline any specific plans and the filing contains the standard boilerplate.

Per Google Finance, Dresser-Rand Group is " a global supplier of of custom-engineered rotating equipment solutions for long-life, critical applications in the oil, gas, chemical, petrochemical, process, power generation, military and other industries worldwide. It has two segments: new units and aftermarket parts. New units are predominately engineered solutions to new requests from clients. Aftermarket parts and services consist of support solutions for the existing population of installed equipment and the operation and maintenance of several types of energy plants. Its rotating equipment is also supplied to the environmental solutions market space within energy infrastructure. It designs, manufactures and markets engineered rotating equipment and provide services to the worldwide oil, gas, petrochemical, power generation, environmental solutions and industrial process industries."

What We're Reading ~ Hedge Fund Links 2/28/14

Best ideas from the Harbor Conference: Kingdon, Locust Wood, Blackstone [Street]

New hedge funds move away from monthly liquidity in 2013 [HedgeWeek]

George Soros considers investing in European banks [HedgeWorld]

Ackman talks Herbalife, P&G, Target, and Air Products [CNBC]

Steve Mandel tops best-earning hedge funds for clients in 2013 [Bloomberg]

Hedge funds wrestle with employee personal account trading conflicts [Forbes]

With ban on ads removed, hedge funds test waters [Dealbook]

Funds look to hire PR heads [CNBC]

Investor pushes to block Red Lobster spinoff [Dealbook]

Carl Icahn's various letters to eBay [Shareholders' Square Table]

Why Sam Zell loves Mexico [UTSanDiego]

The hedge fund report card [II Alpha]

Blackstone buys minority stake in hf Senator [Bloomberg]

Third Point Seeks Sotheby's Board Seats

Dan Loeb's hedge fund firm Third Point revealed in an amended 13D filing that they're seeking 3 board seats at Sotheby's (BID).  You'll recall that Third Point initiated an activist stake in BID last year and pushed for corporate change. Third Point now owns over 9.5% of the company with 6.55 million shares.

While they're pleased the company announced it will return $450 million to shareholders via buyback and dividends, Loeb seeks to nominate himself, Harry Wilson, and Olivier Reza to the board.

The company has agreed that Loeb would be an "appropriate member" but Third Point also wants more representation.  Third Point also outlined other thoughts on the company which you can read here.

Other activists have also been involved in this stock, including Mick McGuire's Marcato Capital Management.

If you want to play catch up on the thesis, we analyzed Sotheby's in the Q3 2013 issue of our Hedge Fund Wisdom premium publication (not to mention, a brand new issue was just released).

JANA Partners Files 13D on URS

Barry Rosenstein's hedge fund firm JANA Partners has filed a 13D with the SEC regarding its stake in URS (URS).  Per the filing, JANA now owns 9.7% of URS with 7.28 million shares.

This is a net increase of only 105,300 shares since the end of 2013.  The filing was required due to activity on February 17th.

The main reason they filed the 13D, of course, was to disclose their activist investing intentions.  They have decided to meet with management to talk about the board of directors, capital structure, corporate structure and "other matters impacting shareholder value creation." 

JANA has requested the company delay the deadline to nominate board members.

Per Google Finance, URS is "a provider of engineering, construction and technical services. The Company offers a range of program management, planning, design, engineering, construction and construction management, operations and maintenance, and decommissioning and closure services to public agencies and private sector clients worldwide. It provides its services through four reporting segments: Infrastructure & Environment, Federal Services, Energy & Construction, and Oil & Gas Divisions. URS also is a United States federal government contractor in the areas of systems engineering and technical assistance, operations and maintenance, and information technology (IT) services. It provides services for federal, oil and gas, infrastructure, power, and industrial projects and programs."

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

Senator Investment Group Starts Brookdale Senior Living Position

Alex Klabin and Doug Silverman's hedge fund firm Senator Investment Group has filed a 13G with the SEC on shares of Brookdale Senior Living (BKD). 

This is a newly disclosed equity stake for Senator and they now own 5% of the company with over 6.2 million shares.  The filing was made due to activity on February 24th.

Per Google Finance, Brookdale Senior Living is "an owner and operator of senior living communities throughout the United States."

For more from this hedge fund, we recently posted up Senator's thesis on Air Products & Chemicals (Q4 letter) and detailed some of their other recent portfolio activity here.

Valinor Boosts dELiA's Stake, Nominates Board Member: 13D Filing

David Gallo's hedge fund firm Valinor Management has just revealed an increased stake in dELiA's (DLIA).  Per a Form 3 and a 13D filed with the SEC, Valinor has revealed they own 18.7% of the company with aggregate exposure to over 14.3 million shares.

The Form 3 outlines that they own over 10.7 million shares of common stock.  They also own over 13.1 million shares worth of Series B convertible preferred stock as well.  The filings were made due to activity on February 18th and we flagged Valinor's original purchase of DLIA late last year. 

Valinor has also nominated Seth Cohen to the company's board of directors.  Prior to founding Valinor, Gallo worked at Roberto Mignone's Bridger Capital.

Numerous other hedge fund managers have been involved in this name as Lee Cooperman also reported a DLIA stake in November.  Whitney Tilson's Kase Capital had also previously been a big proponent of shares, but per his recent 13F filing, it looks like he exited the position in the fourth quarter of 2013.

Per Google Finance, dELiAs is "a retail company comprised of two lifestyle brands primarily targeting teenage girls and young women. The Company generates revenue by selling predominantly to teenage consumers through direct mail catalogs, Websites and retail stores. It operates in dELiA*s brand. Through its e-commerce Webpages, catalogs and retail stores, dELiA*s (the brand) offers a variety of product categories to teenage girls to cater to an entire lifestyle. Through its catalogs and the e-commerce Webpages, it sells many name brand products along with its own brand products in key teenage spending categories. These products include apparel and accessories. Its mall-based dELiA*s specialty retail stores derive revenue primarily from the sale of apparel and accessories and, to a lesser extent, branded apparel to teenage girls. It operates in two segments: direct marketing and retail stores." 

Berkshire Hathaway Adds to DaVita Stake Again

In what has become a bit of a routine occurrence, Berkshire Hathaway has been out buying even more shares of DaVita (DVA) recently.  Per a Form 4 filed with the SEC, Warren Buffett's company has acquired over 1.1 million shares of DVA.

Berkshire acquired shares at weighted average prices ranging from $66.12 to $68.00 between February 24th and 26th.  After these purchases, Berkshire now owns over 37.6 million shares.

As we've highlighted in our premium publication Hedge Fund Wisdom (new issue just released),  this big stake is most likely attributed to Ted Weschler, one of Berkshire's newer portfolio managers.  DVA was one of Weschler's top holdings at his hedge fund before he joined Buffett's team.

Per Google Finance, DaVita is "a provider of dialysis services in the United States for patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD)." 

If you haven't seen it, be sure to check out Warren Buffett's recommended reading list.

Elliott Management Discloses F&C Asset Management and Alliance Trust Stakes

Paul Singer’s Elliott Capital Advisors activist hedge fund has made two new disclosures in London recently.  


F&C Asset Management Stake

Elliott started a new position in F&C Asset Management (LON:FCAM) with an 11% stake. Half of the holding is held via contract for difference (CFD) / derivatives.  F&C Asset Management has recently received a takeover offer from the Bank of Montreal. 

Per Google Finance “F&C Asset Management plc (F&C) is an asset management company.   The Company operates in three segments: F&C, F&C REIT and Thames River Capital (TRC). The   Company’s clients are insurance companies, institutional, retail and wholesale investors. The   Company manages portfolios across multiple asset classes on behalf of a range of clients including   insurance funds, pension schemes, public authorities and charities as well as private individuals   through savings schemes, investment trusts and mutual funds.”  


Alliance Trust Position

Elliott also added to its stake in London listed Alliance Trust (LON: ATST), taking its holding from 5% of voting rights to 10.02%. 

Per Google Finance – “Alliance Trust PLC is a self-managed investment trust. The Company’s   objective is to be a core investment for investors seeking increasing value over the long-term. The Company pursues its objective by investing in both quoted and unquoted equities in different sectors and industries; investing internationally in fixed income securities; investing in other asset classes and financial instruments, either directly or through investment vehicles, and investing in subsidiaries and associated businesses.”

What We're Reading ~ Analytical Links 2/26/14

Excerpts from Warren Buffett's upcoming annual letter [Fortune]

A look at 2014's best online brokers [Stockbrokers]

On adapting as an investor [ReformedBroker]

Is value investing bred in the bone? [WSJ]

Don't fall in love with your stocks [Marketwatch]

On the MBA vs CFA debate [CNBC]

A pitch on Discovery Communications [SumZero]

American shoppers are making a giant shift to dollar stores [QZ]

Vodafone cable deals interest complicates possibility of AT&T deal [WSJ]

The internet is F'd [The Verge]

Social advertising economics [Morally Bankrupt]

On what Facebook's acquisition of Whatsapp really means [Benedict Evans]

A look at Spirit Airlines [NPR]

A conversation about young Wall Streeters [Dealbook]

Gross vs El-Erian: inside the showdown atop the world's biggest bond firm [WSJ]

Lee Cooperman Ramps Up Chimera Position

Lee Cooperman of Omega Advisors has filed a 13D with the SEC regarding shares of Chimera Investment Corp (CIM).  Per the filing, Cooperman now owns 7.6% of the company with over 77.8 million shares.

This marks a sizable increase of over 62.1 million shares since the end of 2013 when he only owned 15.7 million shares.  The filing was required due to activity on February 24th.

The activist filing indicates Cooperman has met with management and talked with them "regarding the Issuer’s operations, business, strategies and strategic direction. These discussions have reviewed, and may continue to review, options for enhancing shareholder value through various strategic alternatives, improving the Issuer’s operational and financial execution, and general corporate matters."

Per Google Finance, Chimera Investment Corp is "a specialty finance company that invests, either directly or indirectly through its subsidiaries, in residential mortgage-backed securities (RMBS), residential mortgage loans, commercial mortgage loans, real estate-related securities and various other asset classes. The Company is managed by Fixed Income Discount Advisory Company (FIDAC), an investment advisor registered with the Securities and Exchange Commission (SEC)."

For more on this manager, check out some of Lee Cooperman's other recent portfolio activity here.

JANA Partners Updates QEP Resources Stake

Barry Rosenstein's activist hedge fund JANA Partners has filed an amended 13D with the SEC updating their stake in QEP Resources (QEP).  Per the filing, JANA now owns 9.4% of QEP with over 16.875 million shares.

This means they've increased their stake by around 3 million shares in January.  At the same time, they also indicated they trimmed their stake ever-so-slightly more recently (from 16.9 down to 16.8 million shares).  We highlighted when JANA first went activist on QEP back in October of 2013.

JANA also entered an agreement with the company where William Thacker joined the board and will serve until QEP separates its midstream business.

Per Google Finance, QEP Resources is "a holding company. The Company operates in three lines of business: gas and oil exploration and production, midstream field services, and energy marketing. It conducted through three principal subsidiaries: QEP Energy Company (QEP Energy) acquires, explores for, develops and produces natural gas, oil, and natural gas liquids (NGL); QEP Field Services Company (QEP Field Services) provides midstream field services, including natural gas gathering, processing, compression and treating services for affiliates and third parties; andQEP Marketing Company (QEP Marketing) markets affiliate and third-party natural gas and oil, provides risk-management services, and owns and operates an underground gas-storage reservoir."

For more on this hedge fund we've posted up JANA's thesis on Equinix from their Q4 letter.

New Q4 Issue of Hedge Fund Wisdom Now Available

The brand new Q4 issue of our premium publication, Hedge Fund Wisdom, is now available.  Subscribers please login at www.hedgefundwisdom.com to download it.


Inside The New Issue

- Brand new consensus buy/sell section: Top 5 buys, top 5 sells, top 5 additions, top 5 reductions.  Each list shows the most popular stocks among hedgies and provides commentary on the action.

- The latest portfolios of 25 top hedge funds:  See the latest positions from Seth Klarman, David Tepper, John Paulson, Larry Robbins, and many more.

- Expert commentary on each fund's moves:  We put each fund's activity into historical context (after all, we've been tracking these funds for over 6 years)

- Equity analysis of 3 stocks hedgies have been buying:  See the bull and bear case on stocks that hedge funds are betting on

- 1 convenient document:  All the latest hedge fund data aggregated to save you time


Want to see what you've been missing?  Here's a free sample of a full past issue.


See What Hedge Funds Have Been Buying, Subscribe Below


1 Year Subscription (4 issues, save 20% with this option): $299.99 per year

Quarterly Subscription: $89.99 per quarter

Want to pay by check or soft dollar account?  Email us: info@hedgefundwisdom.com

What We're Reading ~ Hedge Fund Links 2/14/14

Hedge fund masters [Ari Kiev]

And the world's most successful hedge fund manager is... [CNBC]

Kynikos suffers 14% drop in 2013 [FINalternatives]

Greenlight sues website over Micron disclosure [ValueWalk]

Who would be on the Mount Rushmore of the hedge fund industry? [Research Puzzle]

Evaluating the dearth of female hedge fund managers [Dealbook]

Brevan Howard said to shut emerging market fund [Dealbook]

Tiger Global raises new VC fund [Fortune]

Blackstone nets $1.4bn for hedge fund stakes [FINalternatives]

What We're Reading ~ Analytical Links 2/12/14

The single best metric: EV/EBITDA [Crossing Wall Street]

Why margin debt matters [Seeking Alpha]

What I learned at the mall about investing [Institutional Investor]

Half of Americans can't raise $2k in 30 days [Time]

Get ready for a long proxy fight over Time Warner Cable [Dealbook]

John Maynard Keynes' own portfolio not too dismal [NYTimes]

Don't believe the tech bubble hype [Andreessen Horowitz]

US switching from credit card signatures to PINs, but banks need to get on board [Verge]

Investor group targets Ocwen's mortgage servicing practices [FT]

Microsoft's mobile muddle [Stratechery]

Two notable mutual fund trends [AAII]

Why ADT is appalling [Herb Greenberg]

How Mulberry got squashed in fashion's squeezed middle [The Guardian]

Coca Cola: glass less than half full [FT]

On an upturn in capital spending [FT]

Lee Ainslie Interview: Columbia Business School's Graham & Doddsville

Columbia Business School is out with the Winter 2014 issue of its Graham & Doddsville investment newsletter.  This time, they feature a rare interview with Maverick Capital's Lee Ainslie.

The hedge fund manager talked about how he's always trying to learn new things and how he's read every investing book he can get his hands on (if you need some ideas, check out all our recommended reading lists in the right-hand column on the site).


Some interesting quotes from the interview:


On portfolio positioning: "In terms of sizing, our average long is roughly twice the size of an average short at Maverick and our long portfolio is more concentrated than our short portfolio.  This construction allows us to maintain net long exposure typically between 30% and 60%.  The greater diversification of our short portfolio reflects the riskier nature of these investments and that these positions turn over more frequently, so having a deeper bench of such investments is helpful."


On valuation:  "So while we place great emphasis on valuation in our investment decisions, valuation alone should never be the driver of either a long or a short investment ... I believe it is important to identify a catalyst that should benefit the valuation ... The most commonly used valuation metric at Maverick is sustainable free cash flow in comparison to enterprise value."


On what he looks for in deep dives: "The most critical factor that we're trying to evaluate is the quality of management - their intelligence, competitiveness and, most importantly, their desire to create shareholder value."


On what he looks for when hiring: "The most important components we gauge include competitiveness, mental flexibility and emotional consistency - that last trait is surprisingly important."  These are pretty similar to what Julian Robertson looked for when he was hiring or seeding funds.



This issue also highlights talks with Jim Grant of Grant's Interest Rate Observer, Dr. Kenneth Shubin Stein of Spencer Capital and Geoffrey Batt of Euphrates Iraq Fund

Embedded below is Columbia Business School's latest Graham & Doddsville newsletter:




You can download a .pdf copy here.

For past great issues of this newsletter, check out their interview with JANA Partners as well as one interviewing Li Lu.

Coatue Management Dumps Longstanding Equinix Position

Philippe Laffont's hedge fund Coatue Management has just filed an amended 13G with the SEC regarding Equinix (EQIX).  The filing indicates that they no longer own a position in the company as of December 31st, 2013.

This is significant news when you consider EQIX had been one of Coatue's top holdings for quite some time.  At the end of the third quarter, they owned a stake worth over $820 million and so they liquidated their stake during the fourth quarter when shares traded between $152 and $185.

Earlier, we also pointed out JANA Partners' thesis on EQIX as they have built up a stake in the company throughout 2013.

JANA Partners' Thesis on Equinix: Q4 Letter

Barry Rosenstein's hedge fund JANA Partners returned 20.4% in 2013 and their Q4 letter details some of their activity before year-end.  They note that they've exited their activist stake in Agrium (AGU) and have started stakes in Equinix (EQIX), Juniper Networks (JNPR), and Airbus Group (AIR FP), among other names.


JANA Partners' Thesis on Equinix (EQIX)

JANA writes in its Q4 letter:

"EQIX is the market leader in low latency, network dense co-location data  centers. We have been following EQIX as a member of our “JANA Universe” for the last couple  of years, and we have waited patiently for an opportunity to buy at an attractive price. We started  building our position late in the second quarter and continued to purchase the shares in the third  and fourth quarters. We believe there is a wide moat around the specialized services that EQIX  provides, even though over-capacity in the lower value added wholesale segment of the data  center market has pressured the revenue growth rate and has completely altered investor  perception of the quality of EQIX’s franchise. We take comfort in the fact that 95% of revenue is  recurring monthly, and churn is less than 10% per year. EQIX has not had a down quarter year  over year in the last seven years in terms of revenue or OIBDA. In fact, both revenue and  OIBDA have grown in excess of 10% every year. Profitability is robust: OIBDA margins are  45% and FCF margins are 25%. Overall returns on invested capital are still low, a result of the  heavy investment in growth; but four wall returns are compelling, we estimate at 25%+ after tax,  and we pencil incremental returns on capital to be greater than 15%. CEO Steve Smith and CFO  Keith Taylor have been together at the company for six years and have managed through a similar  period of a slowdown in growth in the third quarter of 2010. Then, as now, investor confidence  was shattered by the slowdown, and to capitalize on the misplaced pessimism, then as now,  management announced a share repurchase program. In 2010 the repurchase announcement  turned out to be the absolute bottom as the stock went on to triple over the next three years.  While we have great hopes for EQIX, we do not expect a similar outcome this time around, but at  the current valuation of 12x our estimate of FCF (adjusted for growth capex) for 2014, we believe  even a modest acceleration in growth trends will be amplified dramatically in the stock price. We  also expect that EQIX will be granted a PLR by the IRS to convert to a REIT, which will yield  substantial tax savings."

*Update: An earlier version of this article stated that Coatue Management had been a large shareholder as well.  However, they literally just filed an amended 13G with the SEC and have indicated that they no longer own any EQIX shares as of the end of 2013.

Other hedge funds that have held positions in EQIX recently include Lone Pine, Paulson & Co, Senator, and Hoplite, among others.

EQIX shares sold off heavily during 2013, trading around $231 in Q2 and trading as low as $152 in Q4 and obviously JANA has taken advantage of the sell-off to build a position.  EQIX has rallied off the lows and now trades at $190, a level it was trading at in Q2 of 2013.

Check out past activity from JANA Partners here.

Pershing Square Sells General Growth Properties Stake to Company

Bill Ackman's hedge fund Pershing Square Capital Management has finally sold the rest of its longstanding position in General Growth Properties (GGP). 

The company has announced that it acquired the shares from Pershing for around $556 million (around 27.6 million shares at a price of $20.12).

As detailed in our Hedge Fund Wisdom newsletter last year, Pershing Square had already sold almost half of its GGP stake in the third quarter.  And now the fund is completely out of the position as they've also sold their warrants in the company to Brookfield Asset Management, the company's largest shareholder.

This has been one of Ackman's most successful investments ever, as he purchased shares below $1 a share.

Per Google Finance, General Growth Properties is "a real estate investment trust (REIT). The Company owns or with joint venture partners 144 regional malls (126 domestic and 18 in Brazil) consists of approximately 135 million square feet. The Company is engaged in ownership, operation, management and selective re-development of its Consolidated Properties and Unconsolidated Properties, which are primarily regional malls."

For more on Pershing, we've also highlighted that they recently trimmed their Beam position and have disclosed a Platform Specialty Products stake.

Lee Cooperman Adds to New Residential Investment Corp Stake

Lee Cooperman's Omega Advisors has filed a 13G with the SEC regarding a 6% ownership stake in New Residential Investment (NRZ) with over 15.2 million shares. 

This marks an increase in their position size of over 9.5 million shares since the end of the third quarter.  The filing was required due to activity on January 30th.

NRZ was spun off from Newcastle Investment Corp (NCT), a position Cooperman also owns, back in May of 2013.

Per Google Finance, New Residential Investment Corp is "incorporated on September 26, 2013, is a real estate investment trust. The Company focuses on investing in, and actively managing, investments related to residential real estate. The Company is managed by an affiliate of Fortress Investment Group LLC, a global investment management. The Company primarily target investments in excess mortgage servicing rights, residential mortgage backed securities, residential mortgage loans and other related investments."

You can view other portfolio activity from Lee Cooperman here.

Joel Ramin's 12 West Capital Starts Zulily Position

Joel Ramin's hedge fund 12 West Capital has disclosed a new position in Zulily (ZU) per a 13G filed with the SEC.  The hedge fund now owns 5.6% of ZU with 735,804 shares.  The filing was made due to activity on January 31st.

12 West isn't the only hedge fund involved here as we've detailed how Blue Ridge Capital reported a Zulily stake as well.

Per Google Finance, Zulily is "an e-commerce company. The Company, through its desktop and mobile Websites and mobile applications, which it refers to as its sites, helps its customers discover new and unique products. The Company provides moms with a selection of over 4,500 product styles offered on a typical day through various flash sales events, which are limited-time curated online sales of selected products launched each day on its sites. The Company offers merchandise primarily targeted at moms purchasing for their children, themselves and their homes. Its merchandise includes children’s apparel, women’s apparel, and other product categories, such as toys, infant gear, kitchen accessories and home decor The Company sources its merchandise from thousands of vendors, including emerging brands and smaller boutique vendors, as well as larger national brands.The Company offers merchandise primarily targeted at moms purchasing for their children, themselves and their homes."

You can view past portfolio activity from 12 West Capital here.

Jeff Saut on Richard Russell's "Rich Man, Poor Man"

Market strategist Jeff Saut has published his weekly market commentary and this time around he recites the "Rich Man, Poor Man" story from Richard Russell about how making simple decisions is the path to prosperity.

Saut himself adds,

"In the world we live in, few look at risk.  Most only look at reward.  The few who do look at risk (the educated, the street savvy) make their money at the expense of the great unwashed majority who swallow the noise nonsense about getting rich quick.  Investing is a get rich slowly process.  You have to put your money at risk in the face of uncertainty.  Emotions run rampant before the uncertainty of floating, fluctuating, often violent and volatile markets."

Embedded below is Jeff Saut's weekly market commentary: "Rich Man, Poor Man!"




You can download a .pdf copy here.

For more from Saut, head to 6 themes for investing in a slow growth environment.

Lone Pine Capital Starts Position In LPL Financial Holdings

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC disclosing a new position in LPL Financial Holdings (LPLA).  Per the filing, Lone Pine now owns 6.4% of the company with over 6.5 million shares.  The filing was required due to activity on January 28th.

Per Google Finance, LPL Financial Holdings is "formerly LPL Investment Holdings Inc., is a holding company. The Company provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions (collectively advisors) in the United States of America. Through its custody and clearing platform, the Company provides access to diversified financial products and services enabling its advisors to offer independent financial advice and brokerage services to retail investors (clients)."

View additional recent portfolio activity from Lone Pine Capital here.

Oaktree Capital Updates Stakes in Masonite, NewPage Holdings & Capital Product Partners

Howard Marks' investment firm Oaktree Capital has filed a slew of amended 13G's with the SEC detailing some of their recent portfolio changes.


Masonite (DOOR)

Their first 13G discloses a 17.9% ownership stake in Masonite (DOOR) with over 5.35 million shares.  This is an increase of over half a million shares since their last disclosure at the end of the third quarter.  The filing was required due to activity on December 31st.

Per Google Finance, Masonite is "designer and manufacturer of interior and exterior doors for the residential new construction; the residential repair, renovation and remodeling, and the non-residential building construction markets. The Company principally operates in North America; Europe, Asia and Latin America, and Africa. The Company markets and sells its products to remodeling contractors, builders, homeowners, retailers, dealers, lumberyards, commercial and general contractors and architects through wholesale and retail distribution channels. Its portfolio of brands includes Masonite, Marshfield, Premdor, Mohawk, Megantic, Algoma, Baillargeon, Birchwood Best and Lemieux."


Capital Product Partners (CPLP)

Oaktree's second filing shows their ownership stake in Capital Products Partners (CPLP) is now 6.9% with over 5 million shares.  This is an increase of over 4.1 million shares since their last disclosure at the end of the third quarter.  The filing notes the activity was on December 31st.

Per Google Finance, Capital Product Partners is "an international tanker company. The Company is engaged the seaborne transportation services of crude oil and refined petroleum products, edible oils and soft chemicals, by chartering its vessels under medium to long-term time and bareboat charters."


NewPage Holdings

Last, the firm also disclosed a 19.4% ownership stake in NewPage with over 1.3 million shares.  The filing was made due to activity on December 31st.  We highlighted Oaktree's original NewPage disclosure back in October.

Per Google Finance, NewPage Group is: "After struggling through several financially challenging years for the coated paper making industry, NewPage would like to do just that, turn over a new page. Through subsidiary NewPage Corp., the company is one of the largest makers of coated and specialty paper in North America. From mills in the Eastern and Midwestern US, NewPage churns out about 3.5 million tons of paper annually. Its papers are often used to produce annual reports, magazines, and catalogs. Customers include xpedx, Advance Magazine Publishers (dba Condé Nast), McGraw-Hill, Time Inc., and Avery Dennison. NewPage Corp. filed for Chapter 11 bankruptcy in late 2011." 

For more from this investment firm, head to Howard Marks' letter on the role of luck in investing.

What We're Reading ~ Hedge Fund Links 2/7/14

Robert Karr's Joho Capital shuts down [II Alpha]

Klarman holding 50% cash amid scarce value [ValueWalk]

Scout Capital closing as co-founders views differ on future [WSJ]

Top hedge fund bets on Danish debt crisis [Independent]

Activist investor takes aim at Helen of Troy [Dealbook]

Ackman still bearish on Herbalife as analyst leaves [Dealbook]

Baupost Group had best year since 2009 [Boston]

How exactly should we benchmark hedge funds? [FT]

Hedge fund's bet on Alibaba values company at up to $200bn [CNBC]

Elliott Management: RMBS & CRE up, gold & volatility plays down [HF Intelligence]

Meet Jesse Cohn, the hedge fund investor laying siege to Silicon Valley [Forbes]

Jim Chanos: "we're still short Caterpillar" [WSJ]

2013 periodic table of hedge fund returns [ai-cio]

Tiger Global to invest up to $500 million in Brazil online retailer [HedgeWorld]

Succession exposes risks for hedge funds [FT]

Hedge funds managers are roiling the clubby art market [WSJ]

John Thaler's JAT Capital Starts Angie's List Stake

John Thaler's hedge fund JAT Capital has disclosed a new stake in Angie's List (ANGI), per a 13G filed with the SEC.  JAT has revealed they own 5.5% of ANGI with over 3.1 million shares.  The filing was required due to activity on February 3rd.

Angie's List has been a popular short target among other hedge funds, so it seems they've taken a variant viewpoint.  JAT's primary focus has always been on the TMT sectors and Thaler launched his fund after previously working at Shumway Capital.

Per Google Finance, Angie's List is "operates a consumer-driven service for members to research, hire, rate and review local professionals for critical needs, such as home, health care and automotive services."

York Capital Reduces Gilat Satellite Networks Position

Jamie Dinan's hedge fund firm York Capital has filed an amended 13D with the SEC regarding their position in Gilat Satellite Networks (GILT).  Per the filing, York has disclosed a 14.3% ownership stake in the company with just over 6 million shares of GILT.

This means they've reduced their position size by over 2.1 million shares since the end of the third quarter.  The filing was required due to activity on February 3rd. 

The reason for the transaction is that York entered into an agreement with FIMI Opportunity Fund to sell them over 2.1 million shares for over $10.5 million.

York has been a longtime holder of Gilat, previously owning debt that they converted into stock.

Per Google Finance, Gilat Satellite Networks is "a provider of Internet protocol (IP)-based digital satellite communication and networking products and services. Gilat designs, produces and markets very small aperture terminals (VSATs) and related network equipment, such as power amplifiers and antennas. The Company operates in three businesses: Gilat Worldwide, which consists of Gilat International and Gilat Peru & Colombia; Spacenet Inc. (Spacenet), and Wavestream Corporation (Wavestream)."

For more on this hedge fund, we posted up a rare interview with Jamie Dinan where he talked about York's positions.

London Value Investor Conference: Discount Code For Our Readers

Market Folly has secured a limited number of discounted tickets to the forthcoming London Value Investor Conference 2014, which will be supporting School Aid. 

This Conference is the largest gathering of Value Investors in Europe and has some of the world's leading investors speaking, including such well-known names as Mason Hawkins, Jonathan Ruffer, Donald Yacktman, Mason Morfit and Jon Moulton.  It is also a showcase for less well known and smaller firms.

£100 discount code: MARKETFOLLY22MAY

Click here to register


Event Details

When: Thursday, 22nd of May 2014
Where: Queen Elizabeth II Conference Centre


Speakers

- Mason Hawkins, Southeastern Asset Management
- Jonathan Ruffer, Ruffer LLP
- Donald Yacktman, Yacktman Asset Management
- Mason Morfit, ValueAct Capital
- Jon Moulton, Better Capital
- David Samra, Artisan Partners
- Aled Smith, M&G Global Leaders Fund
- Richard Rooney, Burgundy Asset Management
- Charles Heenan, Kennox Asset Management
- Philip Best and Marc Saint John Webb, Argos Investment Manager
- Andrew Hollingworth, Holland Advisors


The speakers will provide valuable insights into the methods and approaches that have made them successful, comment on the current investment climate and offer specific investment ideas.  A key feature of the conference is the 10-15 minutes dedicated to audience Q&A for each speaker, led by Richard Oldfield and David Shapiro.

Here's a quick video overview of last year's conference if you missed it:




In order to claim your special £100 discount on this conference, please use the code MARKETFOLLY22MAY when signing up here.

Senator Investment Group's Thesis on Air Products & Chemicals (Q4 Letter)

Alex Klabin and Doug Silverman's hedge fund Senator Investment Group has built a sizable position in Air Products & Chemicals (APD) in the fourth quarter, according to their Q4 letter.

We've previously highlighted how Bill Ackman's Pershing Square is long APD and now Senator has bought a stake as well.


Senator's Air Products & Chemicals Thesis

The hedge fund likes that the company is involved in an attractive business with significant barriers to entry and oligopoly-like qualities.  There's 5 suppliers of industrial gasses: APD, Praxair, Linde and Air Liquide, and Airgas.  

Senator writes,

"Air Products trades at 18.1x 2014 earnings, but only 12.7x recurring free cash flow, a more relevant metric given the stable, cash generative nature of the business.  Moreover, for the last few years, Air Products' earnings and cash flow potential have been depressed by large investments in growth projects that have yet to impact financial results."

They like that industrial gas businesses see the majority of their revenues linked to long-term contracts.

Senator notes Pershing's involvement as a positive as the company has ousted the CEO and added new directors to the board.  Senator thinks a new CEO could potentially be announced during the first quarter and will put in place a restructuring plan. 

They feel the company's cost cutting opportunity to be around $400 million or so ("5% of its cost base and 27% of trailing EBIT of $1.5 billion") and point to how competitor Praxair went through something similar in 2000.  The hedge fund's base case for Air Products assumes that a new CEO can capture half of that opportunity.

Senator believes the company could also reap the benefits of the capital investments they made in the past few years as plants come online.  They see $175 million of incremental EBIT from this by 2016, as well as $450 million of increment EBIT opportunity from 'unutilized' merchant gas sales.  Senator estimates earnings growth of 20% in both 2015/16.

Senator concludes,

"A new CEO, a focused board and a large, constructive shareholder will very likely bring about other value maximizing moves, such as the sale, spin or MLP conversion of Air Products' hydrogen pipelines and additional cash returns to shareholders through issuances of project-level debt. In terms of downside, we think the 2014 guidance from the current management is reasonable and translates into $8.70 of free cash flow per share.  In our view, it's hard to envision the shares trading for less than 11x FCF (or 10% downside from current levels) given the defensive characteristics of the business and the imminent announcement of a new CEO.  Over the next two years, we believe Air Products' shares could trade to 15x our $12 free cash flow estimate or $180 per share, implying close to 70% upside in a large cap, high-quality business."

For more on this hedge fund, we've posted some of Senator's other recent portfolio activity here.

Tybourne Capital Raises Mulberry Group Stake

Eashwar Krishnan’s hedge fund Tybourne Capital Management has disclosed a position in London listed Mulberry Group (LON: MUL).  Due to trading on January 29th, Tybourne now hold 4.3% of Mulberry’s voting rights. 

Mulberry Group is not a new position, as Tybourne appeared on Mulberry Group’s list of large shareholders with a 1.08% stake back in November of 2013.  Tybourne have clearly been out buying more shares since then. 


About Tybourne Capital

Eashwar Krishnan spent 12 years as a Managing Director and Senior Analyst at Lone Pine Capital. In 2007, he moved to Hong Kong to set up and manage Lone Pine’s operation in Asia.

He set up his own fund, Tybourne Capital, in 2012. Tybourne focuses mostly on equities in the consumer, financial and TMT sectors in Asia. Tybourne’s flagship fund returned 16.04% in 2013, its first full year of operation.

For more on Tybourne, we've previously posted up Krishnan's investment ideas from the Sohn London Conference.


About Mulberry Group

Per Google Finance, Mulberry Group is "a United Kingdom-based holding company. The Company is engaged in the design and manufacture or sourcing of luxury accessories, clothing and footwear and their subsequent sale through wholesale channels or its own stores and concessions in home and export markets. It operates in two segments: the Retail business and Design business. The Retail segment is engaged in the sale of Mulberry branded fashion accessories, clothing and footwear through a number of shops and department store concessions. The design segment includes brand management, marketing, product design, manufacture, sourcing and wholesale distribution for the Mulberry brand. It invests in design and development in order to develop and market accessory, clothing and footwear collections for Spring/Summer and Autumn/Winter each year."

What We're Reading ~ Analytical Links 2/5/13

M&A world: stacks of corporate cash looking for deals [All About Alpha]

Taking money off the table to diversify emotionally [Abnormal Returns]

Looking at annual trends in shareholder activism [Activist Insight]

Observations of individual stock returns 1983-2006 [Longboard]

Time Warner breaks out HBO results [Barrons]

Will Valeant overdose on acquisitions? [Herb Greenberg]

FCC chief tells Sprint chair he is skeptical of T-Mobile deal [Reuters]

Cable TV mogul looks to add Formula 1 to sports bag [NYPost]

Taking a look at Kinder Morgan [Glenn Chan]

Did Google really lose on its original Motorola deal? [Dealbook]

Nestle looking at selling even more assets? [Reuters]

Top destinations for foreign investment dollars [Business Insider]

Corvex & Soroban Expect to Increase Williams Companies Stake (13D Filing)

Keith Meister's activist hedge fund firm Corvex Management and Eric Mandelblatt's Soroban Capital have jointly filed an amended 13D with the SEC regarding their position in Williams Companies (WMB). 


Corvex/Soroban To Increase Williams Companies Stake

The filing details that the Hart Scott Rodino waiting period has expired and as such, "Corvex intend to promptly exercise their deeply in-the-money physically settled call options and Corvex and Soroban also expect to acquire additional shares, further increasing their beneficial ownership stake."

Per the 13D, the hedge funds have disclosed a 7.14% ownership stake in WMB with exposure to over 48.8 million shares.

That figure doesn't include their cash-settled swaps and options regarding an additional 19.2 million shares, so their aggregate exposure to the name can rise as high as 9.96% (with 68 million shares). And now we get word that they're likely to buy more.


Seeking Board Seats As Well

The filing indicates that the hedge funds want Mandelblatt and Meister to join the company's board, but they haven't been able to come to an agreement with the company.

We've previously posted about their Williams Companies stake earlier this year.

Per Google Finance, Williams Companies is "an energy infrastructure company focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGLs), and olefins. Its operations span from the deepwater Gulf of Mexico to the Canadian oil sands. It operates in three segments: Williams Partners, Midstream Canada & Olefins and Other. Its interstate gas pipeline and domestic midstream interests are held through its investment in Williams Partners L.P. (WPZ). It owns the general-partner interest and a 70% limited-partner interest in WPZ. Williams also owns a Canadian midstream and domestic olefins production business, which processes oil sands off-gas and produces olefins for petrochemical feedstocks." 

For more additional recent portfolio activity from Corvex, click here.

Baupost Group Increases Idenix Pharmaceuticals Stake

Seth Klarman's hedge fund firm Baupost Group has increased its stake in Idenix Pharmaceuticals (IDIX) per an amended 13D and Form 4 filed with the SEC.

Per the filings, Baupost has disclosed a 35.38% ownership stake in IDIX with over 53.3 million shares.  This means they've added to their position size by more than 16.4 million shares since November when they also added to their Idenix stake.

The Form 4 details that Baupost acquired those shares at a price of $6.5 on January 31st.  This was part of a registered direct offering from the company that Baupost took part in.  They are the company's largest shareholder.

Per Google Finance, Idenix Pharmaceuticals is "a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases with operations in the United States and France."

You can view other recent portfolio activity from Baupost here.

Odey Adds to Epistem Holdings Position

James Hanbury's Odey Absolute Return hedge fund has more than doubled its stake in London listed Biotechnology support company, Epistem Holdings (LON:EHP).

Due to trading on January 31st, Hanbury's fund increased their holding from 6.46% to 15.51%.  The Odey group of funds often share positions but in this case it looks as though Hanbury's fund is the sole owner.

Hanbury's fund also disclosed a new position in Wolfson Microelectronics last week.

Per Google Finance, Epistem Holdings is "a holding company. The Company is engaged in  provision of services to the biotechnology and pharmaceutical industries, covering pre-clinical   testing and gene biomarker and diagnostic services and the development of novel therapeutics for   partner companies. The trading activity of the Company is principally undertaken in the subsidiary   undertaking, Epistem Limited. The Company operates in three segments: Contract Research   Services, Personalized Medicine and Novel Therapies. Contract Research Services provides pre- clinical testing services. Personalized Medicine specializes in molecular measures of biological effect   and point of care molecular diagnostic testing. Novel Therapies is discovering key regulators of   epithelial stem cells.”

Lone Pine and SAC Capital Disclose Lumber Liquidators Stakes

Steve Mandel's hedge fund firm Lone Pine Capital and Steve Cohen's hedge fund turned family office SAC Capital have both filed 13G's with the SEC regarding Lumber Liquidators (LL).

Lone Pine has revealed a 7.9% ownership stake in LL with over 2.18 million shares.  The filing was required due to activity on January 23rd and is a brand new position for the hedge fund firm.

SAC Capital has revealed a 5% ownership stake in Lumber Liquidators with over 1.39 shares.  They previously owned a very small stake and they've boosted their holdings by over 1.3 million shares since the end of the third quarter. 

Per Google Finance, Lumber Liquidators is "retailer of hardwood flooring, and hardwood flooring enhancements and accessories. The Company offers an assortment of wood flooring, which includes prefinished domestic and exotic hardwoods, engineered hardwoods, unfinished hardwoods, bamboo, cork and laminates, as well as resilient flooring. Its flooring enhancements and accessories include moldings, noise-reducing underlay and adhesives. Lumber Liquidators and Bellawood are it brands. Its hardwood flooring products are available in various widths and lengths. It offers approximately 350 different flooring product stock-keeping units."

You can view additional portfolio activity from Lone Pine Capital here.

Bill Ackman's Pershing Square Trims Beam Position

Bill Ackman's hedge fund firm Pershing Square Capital Management has filed an amended 13D and a Form 4 with the SEC regarding their stake in Beam Inc (BEAM).

Per the 13D, Pershing Square has trimmed its position in BEAM by 7.3 million shares.  After the sale, they're still left with a stake of over 13.5 million shares, or 8.3% of the company.

The Form 4 indicates they sold 6 million shares on January 30th at a price of $83.28 and then they sold 1.3 million more shares on January 31st at a price of $83.36.

Beam Inc has received a $16 billion takeover offer from Suntory, or $83.50 in cash.  Perhaps Ackman is raising some cash to potentially deploy elsewhere since BEAM shares are now effectively a merger-arb play trading with a thin spread.

You can view more recent portfolio activity from Bill Ackman here.

Blue Ridge Capital Discloses Platform Specialty Products Position

John Griffin's hedge fund firm Blue Ridge Capital has filed a 13G with the SEC and disclosed a position in Platform Specialty Products (PAH).  Per the filing, Blue Ridge now owns 7.72% of the company with 8 million shares.

As we detailed previously, Bill Ackman also owns a PAH stake.  The company was formed to acquire companies and their first deal was MacDermid, a specialty chemicals manufacturer.  Shares of PAH are newly listed on the NYSE. 

It's unclear if Blue Ridge owned a stake in Platform Specialty Products before they listed on the NYSE like Ackman did.

You can view other recent portfolio activity from Blue Ridge Capital here.

Bridger Capital Boosts TG Therapeutics Stake

Roberto Mignone's hedge fund firm Bridger Capital has filed a 13G with the SEC regarding shares of TG Therapeutics (TGTX).  Per the filing, Bridger has disclosed a 7.1% ownership stake in TGTX with over 2.39 million shares.

This marks an increase of 894,132 shares since the end of the third quarter.  The filing was required due to activity on January 21st.

Per Yahoo Finance, TG Therapeutics is "a clinical-stage biopharmaceutical company, focuses on the acquisition, development, and commercialization of innovative and medically important pharmaceutical products for the treatment of cancer and other underserved therapeutic needs.."

Hound Partners Increases Carter's Position

Johnathan Auerbach's hedge fund Hound Partners has filed a 13G with the SEC regarding Carter's (CRI).  Per the filing, Hound has disclosed a 5.01% ownership stake in CRI with over 2.73 million shares.

This means they've added to their position by 289,815 shares since the end of the third quarter.  The filing was required due to activity on January 8th.

Hound is a 'Tiger Seed' as they were seeded by Tiger Management's Julian Robertson.  Fellow Tiger Seed hedge fund, Tiger Global, also added to their CRI stake a few months ago.

Per Google Finance, Carter's is "a branded marketer of apparel for babies and young children in the United States. The Company owns two brand names in the children’s apparel industry, Carter’s and OshKosh. Its Carter’s brand provides apparel for children sizes ranging from newborn to seven. OshKosh brand provides its line of apparel for children sizes newborn to 12. Its Carter’s, OshKosh, and related brands are sold to national department stores, chain and specialty stores and discount retailers."

Soros Fund Starts Polycom Stake

George Soros' hedge fund turned family office, Soros Fund Management, has filed a 13G with the SEC regarding Polycom (PLCM).  Per the filing, Soros now owns 6.95% of the company with over 9.4 million shares.

This is a brand new position for the firm and the filing was required due to portfolio activity on January 24th.

Per Google Finance, Polycom is "a provider of unified communications (UC) solutions and a provider of telepresence, video, voice and infrastructure solutions based on open standards. With Polycom RealPresence video and voice solutions, from infrastructure to endpoints, people all over the world can collaborate face-to-face without being in the same physical location. The Company has three operating segments: Americas, which consist of North, Central and Latin Americas; Europe, Middle East and Africa, and Asia Pacific. The products and solutions include Network Infrastructure, UC Group Systems and UC Personal Devices, which includes desktop video devices and wireless local area network products."

For more from Soros himself, head to George Soros' best investment advice.

2013 Hedge Fund Performance Numbers

Now that 2013 is over, we thought we'd aggregate how prominent hedge funds performed.  While some funds turned in solid numbers (Glenview & Appaloosa), others put in more marginal performances.

Some media members have bashed hedge fund performance, but it is worth noting that at least in the long/short equity segment this year, many of these funds captured 2/3rd's of the market upside while only being 30-40% net long.

After all, a true hedge fund is just that, hedged.  There's no question that short selling was tough in 2013 and by definition, many L/S hedge funds won't capture all the upside in big up years (like 2013).

As always, it's worth examining the entire picture (risk, exposure levels, etc) and the entire spectrum of returns.  Undoubtedly, there will be outperformers and underperformers.

Not to mention, it's probably more prudent to fixate on 3-year, 5-year, or even 10-year numbers anyways.  But in the short-term focused world, the 1-year performance number reigns.

The S&P 500 was up 29.6% in 2013.  Here's how prominent hedgies fared.


2013 Hedge Fund Performance Numbers


Glenview Capital Opportunity Fund: 84% (through end of Oct)

Appaloosa Palomino Fund: 42.1%

Bridgewater All Weather: -4%

Bridgewater Pure Alpha: 5.25%

Paulson Recovery: 63.18%

Paulson Advantage: 26.05%

Paulson Advantage Plus: 27.22%

Perry Partners: 20.25%

Pershing Square: 9.29%

Trian Partners: 40.06%

Owl Creek: 48%

Millennium: 13.07%

Visium Global: 16.93%

Eton Park: 22.3%

Children's Investment Fund: 47%

Theleme Partners: 19.41%

Whitebox MultiStrat: 18.09%

Lone Pine Cascade: 30.3%

Lone Pine Cypress: 18%

Lone Pine Dragon: 9.8%

Conatus Capital: 23.6%

Farallon: 15.3%

Matrix Capital: 56%

Elliott International: 11.6%

Discovery Global Opportunity: 27.5%

Marcato International: 26.16%

Luxor Capital: 17.6%

York Investment: 18.27%

Joho Capital: 29.46%

Lansdowne European Equity: 21.51%

Odey European: 25.78%

Kingdon Offshore: 23.69%

Passport Global: 18.98%

Passport LongShort: 19.89%

Passport Special Opportunities: 45.5%

Cobalt Offshore: 8.84%

Elm Ridge Capital: 22.28%

Eminence Capital: 14.64%

Highbridge LongShort: 15.34%

Ivory Capital: 17.07%

Ivory Enhanced Fund: 28.31%

Omega Advisors: 30.02%

Zweig-DiMenna: 17.33%

Greenlight Capital: 18.7%

Tosca Opportunity: 56%

JAT Capital: 30.6%

Tiger Global: 14%

Maverick Fund: 16.3%

Maverick Long: 32%

Hound Partners: 16%

Coatue Management: 20%

Viking Global Equities: 22.6%

Viking Long: 38.4%

Valinor Management: 23.4%

Glade Brook Capital: 19.76%

Falcon Edge Capital: 28%

Glenhill: 28.7%

Highfields Capital: 27.3%

Bridger Capital's Swiftcurrent Fund: 20.6%

White Elm Capital: 23.6%

MFP: 31.5%

Tybourne Capital: 16.04%

Fairholme: 33%

Jericho Capital: 33% (through end of Nov)

Beacon Light: 21.13%



2013 Credit Hedge Fund Performance

BlueCrest MultiStrat: 8.98%

BlueMountain LongShort Credit: 7.57%

Brevan Howard Credit Catalysts: 12.21%

Ellington Credit Opportunities: 15.55%

Kingdon Credit: 14.58%

Pine River Credit: 13.09%

Saba Capital: -3.61%

Canyon Value: 14.71%

Davidson Kempner: 19.98%

King Street: 11.43%

Monarch Debt Recovery: 16.12%

Paulson Credit Opportunities: 21.8%

Silver Point Capital Offshore: 15.88%



2013 Macro Hedge Fund Performance

Tudor BVI Global: 13.98%

Moore Global: 16.99%

Rubicon Global: 18.25%

Trend Macro: 11.88%





Sources: hedge fund performance reports, HSBC, II Alpha, WSJ, Bloomberg, NYMag

East Coast's Q4 Letter: Understanding the Mispricing of an Investment

Chris Begg's East Coast Asset Management is out with its 2013 year-end letter.  The Q4 missive walks further down their investment checklist.  Last quarter, we highlighted their letter on competitive advantage and this time they focus on understanding the mispricing of an investment

Through use of checklists, they categorize investment opportunities and identify the bull/bear cases, potential catalysts, long-term fundamentals, various sentiments, and more in order to understand what exactly is driving the mispricing.

This ties in with their concept of 'investment longitude' in that they want to understand the critical data points that truly drive the business (and the stock).  The letter below walks you through how to do so.

In terms of how East Coast has been positioning themselves, they've been shifting more of their portfolio toward 'transformation' plays, or companies benefiting from secular tailwinds.  Begg's letter also details how they purchased a European cable business in Q4.  While they don't specifically identify the position, it certainly sounds like John Malone's Liberty Global (LBTYA/LBTYK).

Embedded below is East Coast's Q4 letter: Navigating Beyond the Pillars:



For more on their investment checklists, head to East Coast's letter on competitive advantage.

Glenview Capital Updates Community Health Systems Stake

Larry Robbins' hedge fund Glenview Capital has filed an amended 13G and 13D with the SEC regarding their positions in Community Health Systems (CYH) and Health Management Associates (former ticker HMA).

On January 27th, CYH announced it had completed its acquisition of HMA.  As such, Glenview received over 2.6 million shares of CYH in exchange for its 37.7 million shares of HMA at an exchange rate of 0.06942 CYH shares per each share of HMA owned (and adjusted for cash received in lieu of the fractional shares).

As a result of this transaction, Glenview now owns over 12 million shares of CYH, or 10.67% of the company.

Glenview has bet big on hospitals and profited handsomely from their wagers as a whole.  For more portfolio activity from this hedge fund, click here.

What We're Reading ~ Analytical Links 1/29/13

On position sizing in long/short equity hedge funds [Aleph Blog]

Report on measuring a company's moat [Credit Suisse]

How to read a 10-K like Warren Buffett [CNBC]

The myth of maximizing shareholder value [Naked Capitalism]

The second most expensive stock market in the world [John Mauldin]

A look at Post Holdings [Brooklyn Investor]

Dow Chemical is no bargain [Capital Observer]

A long pitch on SSD makers [Minyanville]

Sprint met with US government re: possible T-Mobile deal, Justice Dept skeptical [WSJ]

How Vietnam became a coffee giant [BBC]

5 takeaways from the emerging markets rout of 2014 [WSJ]

Visa Europe says end of physical currency a 'reality' [Telegraph]

Apple making a move into mobile payments? [WSJ]

Google and Samsung reach global patent license deal [GigaOm]

Odey Starts Wolfson Microelectronics Stake

Crispin Odey's firm Odey Asset Management has disclosed a new position in London listed Wolfson Microelectronics (LON:WLF).

Due to trading on January 28th, Odey own the equivalent of 5.95% of Wolfson's voting rights.  The whole position is held via CFDs/derivatives.

James Hanbury's Odey Absolute Return hedge fund appears to be the main holder.

Per Google Finance, Wolfson Microelectronics is "a semiconductor company.  Wolfson is principally engaged in the design, manufacture and supply of high performance mixed- signal integrated circuits for the consumer electronics market. It segments include Audio Hubs and   Discrete and Power Products. Audio Hubs includes the supply and sale of Wolfson’s Audio Hubs   high performance audio integrated circuit solutions. Discrete and Power Products includes the   supply and sale of integrated circuits, which are discrete components, such as Analogue-to-Digital   Converters; Digital-to-Analogue Converters, This segment also includes those components which   are power management integrated circuits and the silicon microphone devices based on Micro- Electro-Mechanical Systems (MEMS) technology. The Company focuses on high definition (HD) audio   systems-on-chip (SoC), and noise reduction and sound enhancement software. During the fiscal year   ended January 1, 2012 (fiscal 2012), it acquired Dynamic Hearing Pty Ltd.”

You can view other recent portfolio activity from Odey here.

Marcato Capital Management Adds to Lear Position

Mick McGuire's activist hedge fund Marcato Capital Management has filed an amended 13D with the SEC regarding their stake in Lear (LEA).

Per the filing, Marcato now owns 7.9% of the company with over 6.4 million shares.  This means they've boosted their notional exposure by 750,000 shares since the end of the third quarter.

The fine print indicates they own call options representing 7.6 million shares at prices ranging from $40 to $90 per share and expiration dates ranging from June 2014 to August 2014.  They've also sold puts representing 7.6 million shares with exercise prices ranging from $40 to $65 and the same expiration dates.

The filing was required due to activity on January 23rd.  You can view the exact details of their recent trades here.

We previously highlighted how Marcato disclosed a Lear stake just slightly over a year ago.

Per Google Finance, Lear is "a tier 1 supplier to the global automotive industry. The Company supplies its products to automotive manufacturers with automotive seat systems and related components, as well as electrical distribution systems and related components. The Company has two segments: seating and electrical power management systems (EPMS). The seating segment includes seat systems and related components, such as seat frames, recliner mechanisms, seat tracks, seat trim covers, headrests and seat foam." 

MHR Fund Management Files 13D on Titan International

Mark Rachesky's hedge fund MHR Fund Management has filed a 13D with the SEC regarding Titan International (TWI).  Per the filing, MHR now owns 10.9% of the company with 5.84 million shares.

This is a newly disclosed position and the filing was made due to activity on January 9th.  The position is comprised of both common stock as well as $8.1225 July 2014 call options.

The 13D filing contains the standard boilerplate that MHR intends to seek discussions with management concerning the business and operations of the company.


About MHR Fund Management

If you're unfamiliar with this name, here's what you need to know:  prior to founding MHR Fund Management, Rachesky previously worked as a senior investment officer and managing director to Carl Icahn.  

Rachesky received his B.S. in molecular aspects of cancer from the University of Pennsylvania and an M.D. from Stanford University School of Medicine. Additionally, he also holds an MBA from the Stanford Graduate School of Business.



About Titan International

Per Google Finance, Titan International "through its subsidiaries, is engaged in the manufacturing of wheels and tires. The Company operates in three segments: agricultural, earthmoving/construction and consumer. Titan produces a range of specialty products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving/construction and consumer markets. Titan’s earthmoving/ construction market includes wheels and tires supplied to the mining industry, while the consumer market includes products for all-terrain vehicles (ATVs) and recreational/utility trailers. The Company’s customers include AGCO Corporation, CNH Global N.V., Deere & Company and Kubota Corporation."

Corvex Management Starts Activist Signet Jewelers Position

Keith Meister's activist firm Corvex Management has filed a 13D with the SEC regarding Signet Jewlers (SIG).  Per the filing, Corvex now owns 7.8% of the company with over 6.2 million shares. 

This is a newly revealed stake and the filing was required due to activity on January 14th.  As has been customary with Corvex's other recent positions, they've bought both common stock and call options, as well as sold puts. 

It looks like they were buying November 2014 $53 calls and February 2015 $51 calls as well as selling November 2014 $53 puts and February 2015 $51 puts.


Activist Talks

The filing indicates Corvex has already talked with management and found talks to be "constructive." 

Corvex has approached Signet about "options for enhancing shareholder value through various strategic alternatives including, but not limited to, leveraging the Issuer's credit receivables, optimizing capital structure, accelerating M&A and/or return of capital to shareholders, utilizing the Issuer's offshore corporate structure, and general corporate matters."


About Signet Jewelers

Per Google Finance, Signet Jewelers is "a specialty retail jeweler by sales in the United States and United Kingdom, and also has stores in the Republic of Ireland and Channel Islands. The Company is engaged in the retailing of jewelry, watches and associated services. The business is managed as two geographical operating divisions: the US division and the UK division. Its stores trade nationally in malls and off-mall locations as Kay Jewelers (Kay), and regionally under a number of mall-based brands. Destination superstores trade nationwide as Jared The Galleria Of Jewelry (Jared)."

You can view more of Corvex's recent portfolio activity here.

Pershing Square Discloses Platform Specialty Products Stake

In a 13G filed with the SEC, Bill Ackman's hedge fund Pershing Square Capital Management has disclosed a 30.9% ownership position in Platform Specialty Products (PAH) with 33,333,332 shares. 

Ackman's position is broken down into over 28.1 million shares and over 4.1 million shares via October 2016 Warrants.  Pershing owns around 12.5 million warrants and every three warrants gives them the right to buy 1 share of common stock for $11.50.

Longtime followers of Pershing Square will know that this is not a new stake for the hedge fund, but they've disclosed it because PAH is newly listed on the NYSE.  The filing was made due to activity on January 23rd.

Platform was formed with the intent to acquire companies and their first deal was MacDermid, a specialty chemicals manufacturer for $1.8 billion.  Martin Franklin of Jarden (JAH), Nicolas Berggruen of Berggruen Holdings and Ackman's Pershing all own significant Platform stakes.

This isn't the first time Berggruen and Ackman have worked together, either.  While the Platform deal is a bit different, Ackman and Berggruen teamed up on Justice Holdings.  Justice then bought Burger King and relisted the stock, a position Ackman still held at the end of Q3.

Click here for more recent activity from Bill Ackman's fund.

What We're Reading ~ Hedge Fund Links 1/24/14

Where were the best performing hedge funds in 2013? [ai-cio]

JANA Partners targets Juniper, plans to close Nirvana Fund [II Alpha]

Tiger Global snaps up Alibaba shares at lofty valuation [USA Today]

A look at Joshua Resnick's Jericho Capital [II Alpha]

The world's biggest hedge fund had a pretty bad year [NYMag]

Michael Steinhardt is back and he's re-inventing investing again [Forbes]

A look at how Bruce Berkowitz's new hedge fund is doing [CNBC]

Why Bill Fleckenstein is (almost) ready to short stocks [Bloomberg]

For the love of the money [NYTimes]

The 13F spotlight: revealing and concealing hedge fund trades [FINalternatives]