Hedge Fund Links ~ 5/1/15

Billionaire investors reveal their best ideas at the Milken conference [CNBC]

Lakewood Capital's short thesis on TASER [ValueWalk]

Small funds struggle to find big backers [FT]

Activist hedge funds actually good for investors [South China Morning Post]

Hedge fund patent crusade benefits whom? [Boston Globe]

When hedge funds become family offices [Forbes]

What We're Reading ~ 4/29/15

A book with a really cheesy title that supposedly 3G Capital hands out [Amazon]

More detailed notes from Charlie Munger's annual meeting part 1 & part 2 [Forbes]

A dozen things learned about investing from Peter Lynch [25iq]

The first rule of short selling is: don't talk about short selling [Dead Companies Walking]

Margin debt: a market indicator that predicts nothing [Bloomberg View]

The great bond conundrum [Economist]

Wang Jianlin - a billionaire at the intersection of business and power in China [NYTimes]

On China in Africa [Council on Foreign Relations]

Common biases that affect business decisions [HBR]

Jeff Bezos penned his annual letter [Amazon]

The biggest threat to your portfolio [Reformed Broker]

Examining Einhorn's latest investment: AerCap Holdings [Value and Opportunity]

A look at Windstream [J.Allen Capital]

The cable era is over [Bloomberg View]

A profile of billionaire banker Andy Beal [Bloomberg]

Homeownership rate falls to lowest since 1993 [HousingWire]

The slow death of the University [Chronicle]

Broyhill Asset Management Q1 Letter on Ally Financial & Subprime Auto Lending

Chris Pavese's Broyhill Asset Management is out with its first quarter letter.  In it, they note their interest in the automobile industry.  Having previously invested in General Motors (GM) and CDK Global (CDK), they've recently found another idea that they found intriguing: Ally Financial (ALLY).

Broyhill notes that Ally is trading at 70% of tangible book value and they see book value approaching $40 over the next few years.  If the stock trades back to book value, this would mean a 2x return. They're not alone in their bullishness here, as late last year we detailed how Perry Capital liked ALLY as well.

In addition to looking at Ally Financial specifically, Broyhill also takes a deeper look at the myths and realities surrounding the subprime auto lending industry as a whole in an appendix at the end of the letter.

Embedded below is Broyhill's Q1 letter on Ally Financial and the subprime auto lending industry:

Lee Cooperman Trims Pennymac Financial Stake, Exercises Warrants on Aspen Group

Omega Advisors' Lee Cooperman has made two separate filings with the SEC recently.


Trims Pennymac Financial Services Stake

First, Cooperman has submitted a Form 4 regarding his stake in Pennymac Financial Services (PFSI).  Per the filing, Cooperman was out selling 58,100 shares on April 27th and 28th at prices around $18.34.  After the sales, he still has exposure to over 3.3 million PFSI shares.

Per Google Finance, Pennymac Financial is "a specialty financial services firm with a mortgage platform and integrated business focused on the production and servicing of United States residential mortgage loans and the management of investments related to the United States residential mortgage market.."


Exercises Warrants on Aspen Group

Second, Cooperman filed a 13G with the SEC regarding shares of Aspen Group (ASPU).  Per the filing, Cooperman continues to own 9.9% of the company.  However, on April 23rd he exercised warrants yielding him 4 million more shares.

The filing also notes that, "In connection with the exercise of the warrants, the reporting person and the issuer have agreed to waive the 9.99% Blocker contained in the warrant agreement."

Per Google Finance, Aspen Group "offers relevant online education. The Company derives revenue primarily from tuition and fees derived from courses taught by the Company online, as well as from related educational resources that the Company provides to its students, such as access to its online materials and learning management system. The Company’s subsidiary, Aspen University Inc. (Aspen University), delivers education experiences and has served thousands of students."

We've previously detailed other portfolio activity from Lee Cooperman here.

Pershing Square's Presentation From European Investor Meeting

Bill Ackman's Pershing Square Holdings has just released a presentation on its portfolio from a recent European investor meeting.

In it, the hedge fund outlines their thesis on various portfolio companies and updates regarding those positions.  They also offer a look at their thinking on a recent addition to their portfolio: Valeant Pharmaceuticals (VRX).

Embedded below is Pershing Square's presentation from its recent European investor meeting:



You can download a .pdf copy here.

For more from this hedge fund, check out Pershing Square's annual report here.

Falcon Edge Capital Discloses Jumei International Position

Rich Gerson's hedge fund firm Falcon Edge Capital has filed a 13G with the SEC regarding shares of Jumei International (JMEI).  Per the filing, Falcon Edge now owns 5.9% of the company with over 5 million shares.

This is a newly disclosed equity position for the hedge fund and the filing was made due to activity on April 17th.

For more from this hedge fund, we've previously detailed some of Falcon Edge's portfolio activity here.

Per Google Finance, Jumei International is "an online retailer of beauty products. The Company has sold over 30,000 stock keeping units (SKUs) of beauty products."

Paulson & Co Reveals Synthesis Energy Stake

John Paulson's hedge fund firm Paulson & Co has filed a 13G with the SEC regarding shares of Synthesis Energy (SYMX).  Per the filing, Paulson & Co has disclosed a 11.7% ownership stake in SYMX with over 10 million shares.

This is a newly revealed equity position for the hedge fund and the disclosure was made due to portfolio activity on April 14th. 

On this date, the company announced a direct placement of 12 million shares to accredited investors.  While Paulson was not specifically named, it seems likely that this is where their stake was acquired.

Per Google Finance, Synthesis Energy is "a development-stage global energy and gasification technology company that provides products and solutions to the energy and chemical industries. The Company provides technology, equipment and services to global projects which involve the conversion of low quality coals, coal wastes, municipal wastes, agricultural biomass, and other biomass feed stocks into clean synthesis gas (syngas)."

20th Annual Sohn Investment Conference in New York Next Week: Tepper, Einhorn, Ackman & More

The 20th annual Sohn Investment Conference is right around the corner.  On May 4th, 2015 in New York City (Avery Fisher Hall, Lincoln Center), top hedge fund managers will share their latest investment ideas to benefit charity.

In partnership with Bloomberg, the Sohn Conference Foundation puts on investment conferences in support of pediatric cancer research.   You can find more details about the event, register to attend, and donate here.

As usual, this conference is absolutely loaded with some of the biggest names in the hedge fund industry.  At the event, you'll hear from:

Sohn Conference NYC Speakers List

- David Tepper, Appaloosa Management
- David Einhorn, Greenlight Capital
- Bill Ackman, Pershing Square Capital
- Lee Cooperman, Omega Advisors
- Mala Gaonkar, Lone Pine Capital
- Larry Robbins, Glenview Capital
- Barry Rosenstein, JANA Partners
- Keith Meister, Corvex Management
- Jeff Gundlach, DoubleLine Capital
- Magnus Carlsen, Chess Grandmaster
- Ian Bremmer, Eurasia Group
- Jay Walker, TEDMED


You can register for the Sohn Conference by clicking here.



Next Wave Sohn NYC Speakers List

And just like last year, up and coming managers will be speaking at the Next Wave Sohn Conference that is held just before the main Sohn event.  Next Wave Sohn takes place at 9:15 AM at Alice Tully Hall at Lincoln Center on the same day.  Speakers include:

- Snehal Amin, Windacre Partnership
- Didric Cederholm, Lion Point Capital
- Alex Denner, Sarissa Capital
- Daniel Dreyfus, 3G Capital
- David Zorub, BlueMountain

You can learn more about the Next Wave Sohn event here.


As always, this looks to be a fantastic day of top hedge fund managers presenting investment ideas all to benefit pediatric cancer research.  If you can't attend, you can still learn more about the Sohn Conference Foundation's efforts and donate here.

Barry Rosenstein on Wall Street Week Talking Activist Investing

The classic show Wall Street Week has recently been rebooted by Skybridge Capital's Anthony Scaramucci.  The second episode just aired and featured Barry Rosenstein of activist hedge fund JANA Partners.

In it, Rosenstein talked about activist investing and more.  Rosenstein started JANA in 2001 with $17 million and now manages over $10 billion.  He describes his strategy as: "We try to bring out the full value of the company."

On how he identifies candidates, Rosenstein says: "There are still plenty of companies that should be making changes and aren't.  It's not necessarily that management is bad or the board are bad people... We bring attention and a spotlight.  We're looking for companies that have underperformed... both relative and absolute ... We look at these companies and figure out why."


Embedded below is the video of Rosenstein's appearance on Wall Street Week which starts around the 4 minute mark:



For more on this hedge fund manager, head to our recent post on how JANA has gone activist on Qualcomm.

Jeff Gundlach's Appearance on Wall Street Week

The classic show Wall Street Week has recently been rebooted by Skybridge Capital's Anthony Scaramucci.  The first episode recently aired and featured DoubleLine Capital's Jeff Gundlach.

In it, Gundlach talks about his specialty: fixed income markets.  He pointed out that in 2018-2019, there will be tons of bond maturities.

He's also worried about junk bonds:  "One thing that I think is really important that nobody talks about or has been thinking about is the entire life of the junk bond market has been secularly declining interest rates."

On what will happen to the junk bond market when interest rates go up, Gundlach proclaimed: "I think that's the next bond market crisis."

On interest rates, Gundlach said, "I think the probability of a rate hike in June is very, very low." He also thinks it could be possible that the Fed doesn't raise rates at all in 2015.  He emphasized that the Fed is data dependent and so the data will need to give them a reason to act.

Embedded below is the video of Jeff Gundlach's appearance on Wall Street Week, which starts around the 3:30 minute mark:

Corsair Capital's Q1 Letter & Pitch on Orbital ATK

Jay Petschek and Steven Major's hedge fund firm Corsair Capital is out with its first quarter letter to investors.  In it, they talk about the global macro situation as well as their positions in Ryman Hospitality (RHP), Kindred Healthcare (KND), CommScope (COMM), and Republic Airways (RJET).

Sees IAC Interactive Spin-Off Coming

Additionally, they outline their thoughts on IAC Interactive (IACI).  They feel shares are worth over $100 (currently trading around ~ $72) and see revenue growth via their online dating apps (advertising implementation on Tinder and paid subs on Tinder Plus).  Corsair expects chairman Barry Diller to spin-off the online dating segment (Match Group) in order to unlock value.

Pitch on Orbital ATK

The end of their letter includes a pitch on Orbital ATK (OA).  In summary, Orbital merged with Alliant Techsystems and they see various synergies here.  This, plus increased buybacks and dividends lead them to believe multiple expansion will occur, bringing the company more inline with competitors.  They think shares are worth ~$100 and currently trade around $73. See the letter below for the full pitch.

Corsair's Q1 Letter

Embedded below is Corsair Capital's Q1 2015 letter:



For more from this hedge fund, head to Corsair Capital's recent interview with Graham & Doddsville.

Hedge Fund Links ~ 4/24/15

David Einhorn's presentation from the Grant's conference [ValueWalk]

Hedge fund money going to venture-backed startups is skyrocketing [Yahoo]

Funds and the Freedom of Information Act: the power of the request [ii alpha]

IRS weights rules on hedge fund managers' use of reinsurance [Insurance Journal]

A profile of Ivory's Curtis Macnguyen [Bloomberg]

Eric Schmidt (Google) family office acquires minority stake in D.E. Shaw [PRNewswire]

Hedge funds hawk single-bet deals [WSJ]

A look at Eton Park's latest activity [CNBC]

Orange Capital expresses concern at ACAS [BusinessWire]

There are now more hedge funds than ever [CNBC]

Small hedge funds get bigger share of investors' money [WSJ]

The surprising market response to activist hedge funds [WSJ]

Making sure the hedge fund survives disaster when a general partner is disabled or dies [Forbes]

Carlson Capital Goes Activist on Vitamin Shoppe

Clint Carlson's hedge fund firm Carlson Capital has filed a 13D on their position in Vitamin Shoppe (VSI).  Per the filing, Carlson now owns 5.34% of the company with 1.58 million shares.

Their equity exposure to the name has more than doubled since the end of 2014.  The filing details they've been sporadically buying throughout late March and as late as April 20th.

The 13D also notes they've engaged management in discussions about the business, management, and strategic alternatives/direction.

Per Google Finance, Vitamin Shoppe is "a multi-channel specialty retailer of vitamins, minerals, herbs, specialty supplements, sports nutrition and other health and wellness products (VMS). The Company markets over 900 different brands as well as its own brands, including Vitamin Shoppe, BodyTech, True Athlete, Mytrition and PLNT. It offers varieties of products among VMS retailers with approximately 8,000 stock keeping units (SKUs) offered in its store and approximately 18,000 additional SKUs available through its e-commerce and other direct sales channels. Its product offering enables the Company to provide its customers with a selection of products that is not readily available at other specialty retailers or mass merchants, such as discount stores, supermarkets, drugstores and wholesale clubs. The Company sells its products through two segments: retail and direct. In the Company's direct segment, the Company sells its products directly to consumers through the internet."

What We're Reading ~ 4/22/15

The One Hour China Consumer Book [Jeffrey Towson]

A dozen things learned about investing from Lou Simpson [25iq]

3 misconceptions about risk management [Wealth of Common Sense]

15 principles of allocating capital [Beyond Proxy]

Google, Microsoft, stall points and growth [Paul Kedrosky]

Larry Fink's piece "Our Gambling Culture" [McKinsey]

Jeff Gundlach says market hasn't seen full impact of Fed moves [Bloomberg]

Chinese growth is losing altitude, will it be a soft or hard landing? [Economist]

The pricing paradox: when diamonds aren't on tap [Tim Harford]

A look at Sirius XM and the subscription media business [PunchCard]

A pitch on Viacom [BeyondProxy]

Predictions of M&A mania for content companies [Hollywood Reporter]

Time Warner, Viacom back away from Nielsen guarantees for ads [Variety]

The new era of low stock returns [WSJ]

The student loan problem is even worse than figures indicate [WSJ]

Car retailing grabs merger spotlight [WSJ]

Starwood Hotels giving activists reason to check in [Bloomberg]

Greenlight Capital Q1 Letter: David Einhorn Cuts Net Exposure In Half

David Einhorn is out with Greenlight Capital's first quarter letter to investors.  Greenlight finished Q1 -1.7% net of fees.  While many investors will care more about Einhorn's equity picks, we think the more noteworthy takeaway is the fact that the hedge fund has cut net exposure in half from 30% down to 14% net long.

Greenlight writes, "Bottom up: short candidates are easy to find ... the opportunity set on the long side is quite constrained.  Top-down: Valuations are on the high side and earnings are in a precarious spot."

Einhorn then touches on the Federal Reserve, noting that, "How fast it tightens should be less important than the fact that it will tighten."

As far as individual equity moves go, Greenlight made the following adjustments: started new positions in AerCap (AER), Chicago Bridge & Iron (CBI), as well as re-entering General Motors (GM) shares.  They sold Aetna (AET), closed shorts in Safeway (SWY), Freescale Semiconductor (FSL), and Lorillard (LO).  However, they started a new short in Reynolds American (which acquired LO.)

Embedded below is Greenlight Capital's Q1 2015 letter with the thesis on their new investments:

Market Strategist Jeff Saut on Activity Versus Inactivity

It's been a long time since we checked in on well known market strategist Jeff Saut.  His latest piece entitled "Activity Versus Inactivity" is a look at a common dilemma for investors.

In it, Saut takes a look at human nature and writes, "Plainly there are times for investors/traders to be active.  But there are also times for them to be inactive, despite the trait of human nature to be 'active;' and, for the past few months inactivity has been the best overall strategy."

Saut then goes on to talk about some market technicals and the latest market datapoints.  They feel crude oil has bottomed and that the stock market, even if it sells off in the near-term, would be doing so "within the construct of a secular bull market that has eight to nine years left on the upside."

Embedded below is Jeff Saut's latest market commentary:



You can download a .pdf copy here.

Ardsley Partners Starts Position in Bluerock Residential Growth REIT

Phil Hempleman's hedge fund Ardsley Partners has filed a 13G with the SEC regarding shares of Bluerock Residential Growth REIT (BRG).  Per the filing, Ardsley has revealed a 5% ownership stake in the company with 625,900 shares.

This is a newly disclosed equity position for the firm and the filing was made due to activity on April 6th.

You can view more recent portfolio activity from Ardsley Partners here.

Per Google Finance, Bluerock Residential Growth REIT is "a real estate investment trust (REIT). The Company is engaged in acquiring and developing a diversified portfolio of real estate. The Company also intends to acquire residential properties. The Company’s operations are managed by Bluerock Multifamily Advisor, LLC."

Farallon Capital Trims Hudson Pacific Properties Stake

Andrew Spokes' hedge fund firm Farallon Capital has filed an amended 13D with the SEC regarding their stake in Hudson Pacific Properties (HPP).  Per the filing, Farallon now owns 4.1% of the company with over 3.63 million shares.

Their most recent filing was required due to activity on April 10th as Farallon Funds "completed an underwritten public offering of 6,037,500 shares."

Back in January of this year, they had disclosed exposure of over 8.7 million shares, so their net position has decreased by around 5 million shares since then.

Per Google Finance, Hudson Pacific Properties is "a full-service, vertically integrated real estate investment trust (REIT), focused on owning, operating and acquiring high-quality office and media and entertainment properties in select growth markets primarily in Northern and Southern California. Its investment strategy is focused on high barrier-to-entry, in-fill locations with favorable, long-term supply demand characteristics."

For more from this hedge fund, head to other recent portfolio activity from Farallon here.

Viking Global Starts Envision Healthcare Position

Andreas Halvorsen's hedge fund firm Viking Global has just filed a 13G with the SEC regarding shares of Envision Healthcare Holdings (EVHC).  Per the filing, Viking now owns 6.3% of the company with over 11.5 million shares.

This is a newly disclosed equity position for the hedge fund and the filing was made due to activity on April 9th.  Other hedge funds that already held positions as of the end of 2014 include Valinor Management and Bridger Capital, among others.

You can view additional recent portfolio activity from Viking Global here.

Per Google Finance, Envision Healthcare is "a provider of physician-led, outsourced medical services in the United States. The Company conducts its business primarily through two operating subsidiaries, EmCare Holdings, Inc. (EmCare) and American Medical Response, Inc. (AMR). The Company markets its services primarily under the EmCare and AMR brands. EmCare is a provider of integrated facility-based physician services, including emergency, anesthesiology, hospitalist/inpatient care, radiology, tele-radiology and surgery. EmCare also offers physician-led care management solutions outside the hospital. AMR is a provider and manager of community-based medical transportation services, including emergency (911), non-emergency, managed transportation, fixed-wing air ambulance and disaster response. The Company, through VISTA Staffing Solutions Inc, provides physician staffing services.."

Stan Druckenmiller on Oil, China, Interest Rates & More: Bloomberg Interview

Legendary investor Stan Druckenmiller, formerly of Soros Fund and Duquese Capital, recently sat down for a fantastic interview with Bloomberg's Stephanie Ruhle.

We highly recommend watching it in its entirety, but here's a few key takeaways:

On interest rates: "My fear is we’re not going to see anything for a year-and-a-half because they set up metrics eight or nine months ago…I have no confidence whatsoever that you’re going to see rate hikes in September or December or whenever because when they lay out metrics and then they change, and then they change again, and then they change again, who knows where -- when they’re going to go."

On oil: "Well, I'm pretty optimistic on crude prices.  I think they’re going to do better than the forward curve.  Well, because as my protégé, Zach Schreiber, said a year ago, the cure for high prices is high prices.  Well, he would also say now the cure for lower prices -- low prices is low prices."

On China:  "The Chinese stock market is up, I don’t know, 140 percent in six months after being in a downtrend for five to seven years, and it’s doing so on record volume with record breadth.  If it was any other stock market or certainly any developed market, I would tell you, being a market observer, there’s a 98 percent chance China will be in a cyclical boom 6 to 12 months from now.  Because it’s China, and we don’t know the nature of what we’re dealing with here relative to normal mature developed markets, I would downgrade that assessment from 95 percent, but I would still hold it over ... I would point out that the H shares in Hong Kong representing China are 10.1 times earnings"

On European stocks he likes:  BMW, Volkswagen, Airbus, Altice

On potential bubbles:  "I think tech valuations, at least in the private market, are kind of crazy."

On market dynamics:  "My first boss asked me a question when I was 22 years old.  Do you know happens to the money when the stock market goes down?  I said, I don’t know.  It goes into the bond market.  He said, no.  It evaporates.  It evaporates.  You know what happens when stock prices go up?  Wealth goes up.  Confidence goes up.  Economic activity generally goes up, so the more, the merrier."

Embedded below is the video of Stan Druckenmiller's interview with Bloomberg:



For more from this investor, we've also previously posted up past thoughts from Druckenmiller.

Julian Robertson Worried About Bubbles Bursting

Tiger Management's Julian Robertson recently was interviewed by Fox Business and touched on bubbles developing, interest rates, the US Dollar and select US equities.


The thing he said he's worried about most are bubbles developing: specifically, the bubble in bonds created by the Federal Reserve's actions.  He notes it's a hard market to save in and an easy market to borrow in, and those things aren't conducive to long-term prosperity.

Robertson thinks the equity rally will be stalled by an increase in interest rates.  He expects a rate increase this year (warranted by the economy).  "I don't think it's at all ridiculous to think an '08 size (decline)."

Tiger Management's founder also sees the US Dollar strength continuing.

As to what stocks Robertson likes, Gilead Sciences (GILD) was mentioned.  He said he likes growth companies and notes that these types of plays (like Apple, Google, Facebook) used to trade for such high multiples back in the day, but nowadays are trading for cheap.

Lastly, he singled out Amazon (AMZN) as a company he finds fascinating because it doesn't have considerable cashflow and it's "wild that it gets this kind of multiple."  He acknowledges it's done well, but he's short, saying AMZN "don't care" about profitability.

Embedded below are the videos of Robertson's appearance on Fox Business:

Video 1


Video 2

JANA Partners Goes Activist on Qualcomm

Barry Rosenstein's hedge fund firm JANA Partners has gone activist on Qualcomm (QCOM).  They're looking for the company to spin off its chip unit from the patent licensing division and for the company to accelerate share repurchases.

Rosenstein was recently interviewed by David Faber at CNBC and said that, "What we think they ought to do is a transparent review of the client businesses, and determine whether or not it makes sense to do either a partial or full split.  So we are not definitely saying that they should split it up."

JANA now owns around $2 billion worth of Qualcomm shares

Embedded below is the video of Rosenstein's interview with CNBC:



For more from this hedge fund, we've highlighted other recent portfolio activity from JANA.

Balyasny Discloses New Stakes in Basic Energy Services & Tetra Technologies

Dmitry Balyasny's investment firm Balyasny Asset Management has filed two separate 13G's with the SEC.

New Stake in Basic Energy Services

First, Balyasny has revealed a brand new equity stake in Basic Energy Services (BAS).  Per their SEC filing, they now own 5.39% of the company with over 2.25 million shares.  The filing was made due to activity on March 18th.

Per Google Finance, Basic Energy Services is "provides a range of well site services to oil and natural gas drilling and producing companies, including completion and remedial services, fluid services, well servicing and contract drilling. The Company’s operations are managed regionally and are concentrated in the United States onshore oil and natural gas producing regions located in Texas, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana, Wyoming, North Dakota, Colorado, Utah, Montana, West Virginia, Kentucky, Ohio and Pennsylvania. Its operations are focused on liquid rich basins that exhibit drilling and production economics as well as natural gas-focused shale plays characterized by prolific reserves and attractive economics."


New Position in Tetra Technologies

Second, the hedge fund firm has disclosed a new equity position in Tetra Technologies (TTI).  This 13G filing indicates they own 5.39% of the company with over 4.29 million shares of the company.   This was due to portfolio activity on March 18th.

Per Google Finance, Tetra Technologies is "is oil and gas services company, focused on completion fluids and other products, production testing, wellhead compression, and selected offshore services including well plugging and abandonment, decommissioning, and diving. The Company also has limited domestic oil and gas production business. The Company operates under five reporting segments organized into three divisions: Fluids, Production Enhancement, and Offshore. The Fluids Division manufactures and markets clear brine fluids, additives, and associated products and services to the oil and gas industry. The Production Enhancement Division consists of two operating segments: Production Testing and Compressor. The Production Testing segment provides after-frac flow back, production well testing, offshore rig cooling, and other associated services.."


You can view additional recent portfolio activity from Balyasny here.

Corvex Management Adds To Signet Jewelers Stake

Keith Meister's activist hedge fund Corvex Management has filed an amended 13D with the SEC regarding its position in Signet Jewelers (SIG).  Per the filing, Corvex now owns 7.2% of SIG with over 5.74 million shares.

They've increased their position size by 235,000 shares.  They were buying sporadically in January, February and early March at prices between $117.40 and $121.68.

Corvex's filing says they commend Signet "for its new capital allocation policy and look forward to continuing to engage in constructive and collaborative conversations."

You can view additional portfolio activity from Corvex here.

Per Google Finance, Signet Jewelers is "a Bermuda-based specialty retail jeweler by sales in the United States and United Kingdom. The Company also has stores in the Republic of Ireland and Channel Islands. It 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."

Hedge Fund Links ~ 3/27/15

How the smart money is set up for a Fed rate hike [CNBC]

New funds blast off with best year since 2004 [HF Intelligence]

Omega Advisors receives federal subpoena [CNBC]

Hedge fund manager: it's a 'truly scary time' [CNBC]

Here are the billionaire hedge fund babies of 2014 [CNBC]

Startups are not hot in the rich hedge fund industry [Forbes]

TigerShark to close down [Bloomberg]

For the Clintons, a hedge fund in the family [NYTimes]

Paul Tudor Jones at TED [TED]

Showtime orders new series 'Billions' about a hedge fund manager [CBS]

Notes From Charlie Munger's Daily Journal Meeting 2015

Charlie Munger's Daily Journal (DJCO) 2015 meeting recently took place.  Alex Rubalcava (@AlexRubalcava) attended and we've aggregated/posted his notes below with permission.


Notes From Charlie Munger's Daily Journal (DJCO) Meeting 2015

Munger on venture capital versus what he does for a living: "It's a really difficult honest way to make a living.  It's not like shooting fish in a barrel, which is how I've made my living."

Software is now a bigger revenue line for DJCO than print and Munger "thinks of it like Jeff Bezos" with its operating losses as it grows.

On the switch from pompous boards to activist investors: "I like the new system even less ... Carl Icahn is a very able man but that doesn't mean he should be running the world."

"I did not succeed in life by intelligence.  I succeeded because I have a long attention span."

"I think that someone my age has lived through the best and easiest period in the history of the world."

Munger referenced The Better Angels of Our Nature by Steven Pinker

"When things are damn near impossible, maybe you should stop trying."

Munger sang the praises of Posco at the meeting and also said that he thinks the moat of American Express (AXP) is less than it once was.

"I think it's very difficult to be a value investor with $200B AUM."

"Other people are trying to act smarter.  I'm just trying to be non-idiotic."

"If the incentives are wrong, the behavior will be wrong.  I guarantee it."

On 3G Capital: "They're teaching us something about reality."

"I don't spend too much time thinking about what is almost certain never to happen."

"The finance industry is 5% rational people and 95% shamans and faith healers."

"A lot of our respected financial institutions are just casinos in drag."

"I don't think anything that any average person can do easily is likely to be worthwhile."

"Before marriage, keep your eyes wide open.  After marriage, keep them half shut."

On how to compete in a service oriented biz: identify things that annoy customers and go down the list and get rid of them

Question about if there are parallels between what's happening in TV with what's happened with newspapers: "I've been a little surprised at how well television has survived, but I'm a little suspicious about the local incumbents."

Munger talked about the Chinese air pollution documentary, "Under the Dome."  He says the ability of P2P communication like that documentary is a cautionary tale for old media.

"Nobody survives open heart surgery better than the guy who didn't need the procedure in the first place."

"Index funds will be permanent owners who can never sell.  That will give them power they are not likely to use well."

If you put a gun to his head and told him he had to buy a tech stock, Munger would pick Google (GOOG)

"Valeant (VRX) is like ITT and Harold Geneen come back to life, only the guy is worse this time."

Munger talked about how Singleton was born smarter than Buffett but Buffett worked harder to learn about investing.

"The way to get rich is to keep $10 million in your checking account in case a good deal comes along."


If you missed it, you can also check out notes from Charlie Munger's Daily Journal meeting last year as well for more wisdom.  Be sure to also read Charlie's letter in the most recent Berkshire Hathaway annual report.

Howard Marks' New Memo on Liquidity

Oaktree Capital's Chairman Howard Marks is out with his latest memo entitled "Liquidity."

Marks outlines the definition of liquidity as the ability to sell something at a price equal or close to the last price.  He also argues that an asset's liquidity can come and go with what's going on in the market. 

He profoundly writes, "In other words, the liquidity of an asset depends on which way you want to go ... and which way everyone else wants to go."

Oaktree's Chairman goes on to write, "The bottom line is unambiguous.  Liquidity can be transient and paradoxical.  It's plentiful when you don't care about it and scarce when you need it most.  Given the way it waxes and wanes, it's dangerous to assume the liquidity that's available in good times will be there when the tide goes out."

Marks also opines about exchange traded funds (ETFs) and liquid alternatives, in an interesting take on how they should be viewed.

Embedded below is Howard Marks' memo on Liquidity:



You can download a .pdf copy here.

If you haven't already, be sure to check out Marks' acclaimed book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor.

Bill Ackman's Pershing Square Annual Report 2014

Bill Ackman's Pershing Square Holdings has released its annual report for 2014.  In it, Ackman highlights how his firm has evolved.  Additionally, he pulls anecdotes from past Pershing Square letters (from inception to the present) to outline their business model, investment strategy, approach to risk management and more.

Embedded below is Pershing Square's 2014 annual report:



You can download a .pdf copy here.

For more on this hedge fund, we posted up some recent portfolio activity from Pershing Square here.

Tiger Global Reduces Bitauto Stake

Chase Coleman and Feroz Dewan's Tiger Global filed an amended 13G with the SEC regarding its position in Bitauto (BITA).  Per the filing, Tiger Global now owns 9.6% of the company with around 6 million shares.

They've reduced their stake by 479,978 shares since the end of the first quarter.  The filing was made due to activity on March 23rd.

Per Google Finance, Bitauto is "a China-based provider of Internet content and marketing services. The Company also distributes its dealer customers’ automobile pricing and promotional information through approximately 600 Internet service provider partners, including Tencent, Netease and Qihoo 360. It operates in four segments bitauto.com advertising business, which offers automakers and dealers a range of advertising services through its Website, and mobile applications; EP platform business, which provides Web-based and mobile-based digital marketing and sales assistant solutions and customer relationship management applications to new automobile dealers in China; taoche.com business, whichprovides listing services to used automobile dealers which display used automobile inventory information on the Website, mobile applications and digital marketing solutions business, which provides automakers with digital marketing solutions."

You can view other portfolio activity from Tiger Global here.

What We're Reading ~ 3/25/15

The psychology of sitting in cash [Wealth of Common Sense]

Problems with "the long-term" [Pragmatic Capitalism]

Discounted cashflow valuations: academic exercise, sales pitch or investor tool? [AD]

25 things learned from Joel Greenblatt about investing [25iq]

The changing and unchanging structure of TV [Stratechery]

Peak cable [Asymco]

The March Madness theory of investing [Bloomberg View]

The world reshaped [The Economist]

Household debt service ratio near record low [Calculated Risk]

The changing state of American fast food [Quartz]

Inside Pinterest, the coming ad colossus that could dwarf Facebook & Twitter [Forbes]

Why this tech bubble is worse than the tech bubble of 2000 [Mark Cuban]

Glenview Capital Q4 Letter on McDonald's, T-Mobile, Auto Dealers & More

Larry Robbins' hedge fund firm, Glenview Capital, is out with its fourth quarter letter to investors. Glenview's Opportunity Fund returned 25.25% net in 2014. 

In the letter, Robbins outlines his thesis on auto dealers (Group 1 Automotive ~ GPI), Flextronics (FLEX), McDonald's (MCD), PHH (PHH), T-Mobile (TMUS), and pharma roll-up plays like Actavis (ACT) and Endo (ENDP).


Glenview's Q4 Letter Takeaways

On McDonald's (MCD):  This is a new stake for Glenview and they feel there's basically 5 ways to make a 'happy meal' to help the company: operational turnaround, SGA rationalization, refranchising, additional leverage, and real estate.  They feel this could trade as high as $169 (currently trades around $99.)

On MCD, Robbins writes, "Fundamentally, McDonald’s has a number of characteristics that we look for in good businesses. Approximately 75% of EBITDA is driven by royalties and rent, which is a secure, stable earnings stream free of operating leverage. Food, in general, is a defensive end market, and McDonald’s positioning at the value end of the spectrum provides further insulation from material cyclicality as evidenced by positive same store sales in the U.S. and positive consolidated EPS growth in every year throughout the last recession."


On T-Mobile (TMUS): Glenview has owned this company since 2013 but bought more shares in December 2014.  They feel the company has a few positive things going for it to continue its growth: aggressively going after new subscribers, deploying spectrum to address new customers, and seeing positive FCF generation this year. 

They also like that the company is a "key strategic asset" and that their parent company Deutsche Telekom is looking to sell.  Glenview feels TMUS could either: try to tie-up with Dish Network and their spectrum, seek a sale to a foreign buyer, or again try to merge with Sprint once a new political administration takes office in 2016.


Embedded below is Glenview's Q4 letter:



For more from this hedge fund, yesterday we posted up some more of Glenview's recent portfolio activity.

Pershing Square Reveals Size of Valeant Investment

Bill Ackman's hedge fund firm Pershing Square Capital Management has filed a 13D with the SEC regarding shares of Valeant Pharmaceuticals (VRX).  Per the filing, Pershing now owns 5.7% of the company with over 19.47 million shares.  The position was assembled via buying common stock and selling put options between February 9th and March 17th.

This is a brand new position for the hedge fund and the filing was made due to activity on March 17th.  We highlighted yesterday how Pershing Square would be participating in VRX's latest offering.  Their ownership percentage above is based on the post-offering amount of shares outstanding.  You can view all of Pershing's recent VRX-related trading activity here.

Based on the number of shares owned, Pershing would be the second largest holder of VRX, behind Ruane Cunniff & Goldfarb (Sequoia Fund) and would hold just slightly more shares than Jeff Ubben's ValueAct Capital.

Pershing's 13D filing also contained the following statement under 'purpose of transaction':

"The Reporting Persons think highly of the Issuer’s management team, strategy, and track record. While the Reporting Persons hold their stake for investment purposes, representatives of the Reporting Persons may continue to conduct discussions from time to time with management of the Issuer, and may conduct discussions with other stockholders of the Issuer or other relevant parties, in each case, relating to matters that may include the strategic plans, strategy, assets, business, financial condition, operations, and capital structure of the Issuer. The Reporting Persons may engage the Issuer, other stockholders of the Issuer or other relevant parties in discussions that may include one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. In addition to the foregoing, the Reporting Persons expect to conduct discussions with the Issuer and other relevant parties regarding strategic acquisitions by or joint ventures with the Issuer, or other similar arrangements. These discussions would be exploratory in nature and there is no assurance that they would lead to a definitive transaction."

Per Google Finance, Valeant Pharmaceuticals is "a multinational, specialty pharmaceutical company that develops, manufactures and markets a range of pharmaceutical products."

Farallon Capital Discloses Sky Solar Stake, Adds Board Members At Town Sports

Andrew Spokes' hedge fund firm Farallon Capital has submitted two filings with the SEC recently.

Discloses Sky Solar Stake

First, Farallon filed a 13G regarding shares of Sky Solar (SKYS).  Per the filing, Farallon has disclosed a 7.7% ownership stake in SKYS with 30 million shares.

This is a newly disclosed equity position for the firm and the filing was made due to activity on March 13th.  Sky Solar went public in November 2014.

Per Google Finance, Sky Solar is "independent power producer (IPP) that develops owns and operates solar parks around the world. The Company focuses on the downstream photovoltaic segment of the market."


Adds Board Members At Town Sports International Holdings

Second, Farallon filed an amended 13D with the SEC regarding its stake in Town Sports International Holdings (CLUB).  Per the filing, Farallon now has 2 of the 8 board seats at the company.  Farallon's ownership stake remains unchanged at 16.7% of the company with over 4 million shares.

Per Google Finance, Town Sports is "an owner and operator of fitness clubs in the Northeast and Mid-Atlantic regions of the United States and a fitness club owner and operator in the United States in each case based on the number of clubs. The Company operates 162 fitness clubs under its four regional brand names; New York Sports Clubs (NYSC), Boston Sports Clubs (BSC), Philadelphia Sports Clubs (PSC) and Washington Sports Clubs (WSC)."

Glenview Capital Starts Manitowoc Position, Adds To Brookdale Senior Living

Larry Robbins' hedge fund firm Glenview Capital has filed two separate 13G's with the SEC recently:


Starts New Manitowoc Position

First, Glenview has revealed a 6.34% ownership stake in Manitowoc (MTW) with over 8.6 million shares.  This is a brand new position for the firm and the filing was made due to activity on March 11th.

Readers will recall that activist investor Carl Icahn has pushed Manitowoc to split up.

Per Google Finance, Manitowoc is "a multi-industry, capital goods manufacturer. MTW operates in two markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice). Crane is a provider of engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. Foodservice is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications. Its Crane products are marketed under the Manitowoc, Grove, Potain, National, Shuttlelift, Dongyue, and Crane Care brand names."


Adds To Brookdale Senior Living Stake

Second, Robbins' firm has disclosed a 6.32% ownership stake in Brookdale Senior Living (BKD).  Per the SEC filing, Glenview now owns over 11.59 million shares.

This marks an increase in their position size of over 2.83 million shares since the end of the first quarter.  This filing was made due to portfolio activity on March 12th.

You can view some of Glenview's other recent portfolio activity here.

Per Google Finance, Brookdale Senior Living is "an owner and operator of senior living communities throughout the United States. The Company owns, leases and operates retirement centers, assisted living and dementia-care communities and continuing care retirement centers (CCRCs). The Company has six reportable segments: retirement centers; assisted living; CCRCs – rental; CCRCs – entry fee; Brookdale Ancillary Services; and management services."

Carl Icahn Increases Chesapeake Energy Stake

Activist Investor Carl Icahn has filed an amended 13D with the SEC regarding his stake in Chesapeake Energy (CHK).  Per the filing, Icahn now owns 10.98% of the company with over 73 million shares.

He's increased his position size by 6.6 million shares since the end of the first quarter.  The filing indicates that Icahn was out buying on March 11th at a price of $14.15.

Per Google Finance, Chesapeake Energy is "a producer of natural gas and liquids. The Company’s exploration and production segment is responsible for finding and producing natural gas, oil and natural gas liquids (NGL). The marketing, gathering and compression segment is responsible for marketing, gathering and compression of natural gas, oil and NGL."

You can view some of Icahn's prior portfolio activity here.

Maverick Capital & Odey Out Buying AO World Shares

Lee Ainslie's hedge fund firm, Maverick Capital, has disclosed a holding in London listed online retailer AO World (LON:AO).  Due to trading on March 16th, Maverick hold the equivalent of 3.31% of AO's voting rights via a total return swap.

AO World recently traded around 330p / share and now trades at 182p.  Maverick first disclosed an interest in AO in November 2014 but sold enough shares to go below the 3% disclosure threshold a few weeks later.  You can view other past portfolio activity from Maverick here.

Crispin Odey's firm Odey Asset Management have held AO stock for over a year but due to trading on March 13th, 2015 increased their stake substantially from 5.03% to 10.09%.  About 40% of Odey's holding is held via derivatives.

Per Google Finance, AO World is "an online retailer of domestic appliances. The Company sources, sells and delivers domestic appliances, including washing machines, washer dryers, tumble dryers, dishwashers, refrigerators, freezers, ovens, range cookers and microwaves, as well as a range of small domestic appliances, including vacuums, floor cleaners, coffee machines, mixers and food processors. The Company’s sales activities are focused primarily on sales of appliances through the Company’s branded Websites, principally AO.com. The Company also offers ancillary services to its AO Website and third-party branded Website customers, including delivery, installation, removal and recycling services and sales of third-party product protection plans."

Bill Ackman Set To Increase Valeant Pharmaceuticals Position

Bill Ackman's hedge fund firm Pershing Square took a passive 4.9% stake in Valeant Pharmaceuticals (VRX) according to a statement on March 9th.  And in more recent news, it looks like Ackman is set to increase that stake further.

Valeant recently announced it would sell around $1.45 billion in new shares to fund its takeover of Salix Pharmaceuticals (SLXP).  On the heels of that news, the Wall Street Journal reported the following: 

"Pershing Square Capital Management LP is buying 3 million shares in the offering worth about $600 million, according to a person familiar with the matter.  That would boost Pershing Square's stake in Valeant to above 5%."

Ackman previously worked with VRX to try and takeover Allergan (AGN).  That bid ultimately failed, and Actavis (ACT) scooped up AGN instead. 

In his effort to combine VRX and AGN, Ackman expressed that Pershing was looking to convert its AGN stake into VRX shares if that acquisition happened.  Since it didn't, Ackman simply went out and bought VRX shares instead, as he clearly likes their roll-up business model.

Pershing Square now joins a long list of other hedge funds as large holders of VRX.  As of the end of 2014, top VRX holders included: Ruane Cunniff & Goldfarb (Sequoia Fund), ValueAct Capital, Viking Global, Lone Pine Capital, Brave Warrior, JANA Partners, Maverick Capital, and Hound Partners, among many others.

Eminence Capital Increases GNC Holdings Position

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding its stake in GNC Holdings (GNC).  Per the filing, Eminence now owns 5.2% of the company with over 4.6 million shares.

They've increased their position size by 880,848 shares since the end of the first quarter.  The filing was made due to activity on March 10th.

Per Google Finance, GNC Holdings is "a global specialty retailer of health and wellness products. The Company has three segments: Retail, Franchise and Manufacturing/Wholesale."

You can view previous Eminence portfolio activity here.

Soros Fund Discloses Exa Corp Stake

George Soros' family office Soros Fund Management has filed a 13G regarding shares of Exa Corp (EXA).  Per the filing, Soros now owns 9.15% of the company with over 1.266 million shares.

This is a newly disclosed equity position for the firm and the filing was required due to portfolio activity on March 9th.

Per Google Finance, Exa Corp is "engaged in developing, selling and supporting simulation software and services that vehicle manufacturer’s use. The Company is primarily focused on the ground transportation market, but is also beginning to focus in the aerospace, oil and gas production, chemical processing, architecture, engineering and construction, power generation, biomedical and electronics industries. The Company’s product suite includes desktop-based simulation preparation products, server-based simulation products and desktop-based simulation analysis products."

Hedge Fund Links ~ 3/20/15

Why hedge funds still make sense for pension funds [NYTimes]

Ray Dalio on the power of not knowing [Institutional Investor]

A mystery in hedge fund investing [NYTimes]

Newcomers jump into activist investing, eying returns and capital [Reuters]

Activist investors can lose even when they get their way [Yahoo Finance]

The smart money's take on a potential Fed hike [CNBC]

Hedge fund investments are getting bigger, weirder, and more creative [IBTimes]

Tiger Consumer to shut down [Bloomberg]

Firm buys stake in JANA Partners [NYTimes]

The impact of the cloud on the hedge fund industry [HedgeWeek]

This is how billionaires enjoy super-low tax rates [CNBC]

Sequoia Fund's 2014 Year-End Letter

Ruane Cunniff & Goldfarb is out with its 2014 year-end letter for its Sequoia Fund.  They returned 7.56% for the year and run a pretty concentrated portfolio of large bets.  At the end of the year, their largest holdings were: Valeant Pharmaceuticals, Berkshire Hathaway, TJX, Fastenal, O'Reilly Automotive, Mastercard, and Idexx Labs.

Their letter also outlines their latest thinking on the above companies, as well as some of their new positions like Richemont, Cabela's, and Constellation Software.

Embedded below is Sequoia Fund's 2014 annual report:



You can download a .pdf copy here.

Lee Cooperman Trims Altisource Portfolio Solutions Stake

Omega Advisors' Lee Cooperman has filed a Form 4 with the SEC regarding his position in Altisource Portfolio Solutions (ASPS).  Per the filing, Cooperman has sold around 262,000 shares.

He was selling on March 16th and 17th at weighted average prices of $16.33 and $15.57.  ASPS has since continued to slide lower and currently trades around $12.73.  We've outlined the ASPS situation here previously.

Per Google Finance, Altisource Portfolio Solutions is "a provider of marketplace and transaction solutions for the real estate, mortgage and consumer debt industries. The Company operates through three business segments: Mortgage Services, Financial Services and Technology Services. The Company offers mortgage services, such as Asset management, Insurance services, Residential property valuation, Default management services and Origination management services. Financial Services provide collection and customer relationship management services to debt originators, servicers and the utility and insurance industries. Technology Services provides software applications and technologies that manage the end-to-end lifecycle for residential and commercial mortgage loan servicing, including the automated management and payment of a distributed network of vendors."

We've detailed other recent portfolio activity from Cooperman here.

Marcato Capital Exits Life Time Fitness

Mick McGuire's hedge fund firm, Marcato Capital Management, has filed an amended 13D with the SEC regarding its stake in Life Time Fitness (LTM).  Per the filing, Marcato no longer holds shares in the company (they previously owned over 3.11 million shares).

The filing was made due to activity on March 16th.  Life Time Fitness recently agreed to a buyout from Leonard Green and TPG in a $4 billion deal.  As such, LTM stock has traded as a risk arbitrage name.  If we were to speculate, Marcato probably saw more attractive uses for their capital, rather than waiting around to capture the deal spread.

For more from this hedge fund, we also recently posted Marcato's presentation on Bank of New York Mellon.

Per Google Finance, Life Time Fitness is "engaged in designing, building, and operating multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment, principally in residential locations of major metropolitan areas in the United States and Canada."

What We're Reading ~ 3/18/15

The Checklist Manifesto: How to Get Things Right [Atul Gawande]

Ray Dalio warns of 1937-style rate risk [FT]

A dozen things learned from David Tepper about investing [25iq]

Interview with short-seller Marc Cohodes [First Adopter]

In praise of short sellers [New Yorker]

Lumber Liquidators' campaign of distraction and deception [Seeking Alpha]

Crispin Odey says following China could lead to recession [Sydney Morning Herald]

Why the smart money is betting on WWE [First Adopter]

A pitch on Interactive Brokers [Value Venture]

Live Nation Entertainment: an unregulated monopoly? [PunchCardBlog]

A look at Softbank [Institutional Investor]

With the benefit of hindsight [Morgan Housel]

Stock performance before, during, and after recessions [Wealth of Common Sense]

The majority of people are struggling to save for retirement [Wealth of Common Sense]

The future of the four horsemen: Amazon, Apple, Facebook & Google [YouTube]

Consumer behavior across pay-TV, VOD, and OTT [Digitalsmiths]

Zillow, the industry, and reading the tea leaves [Notorious Rob]

MarketFolly's 6th Annual Free March Madness Bracket Contest

College basketball's championship tournament, "March Madness," is finally here.  For the 6th year in a row, Market Folly will be hosting its annual free bracket contest for fellow college basketball fans.  Entry is completely free!


Join Market Folly Madness

To join the free contest, please click this link:
http://marketfolly.mayhem.cbssports.com/e?ttag=BPM15_paste_cbsinv

(If you don't have a CBS Sports account, simply sign up for free)

The password to join the group is: folly


Contest Prizes

1st place: A 1-year subscription to our Hedge Fund Wisdom premium newsletter ($300 value)

2nd place:  A copy of Michael Lewis' most recent book on Wall Street: Flash Boys 

3rd place: A copy of Howard Marks' popular book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor


To be entered into the contest, you must fill out your bracket picks before the main games start this Thursday (March 19th).  Only 1 entry per person allowed.  Good luck!

Children's Investment Fund Boosts Time Warner Cable Stake

Chris Hohn's hedge fund firm, Children's Investment Fund, has filed a 13G with the SEC regarding its stake in Time Warner Cable (TWC).  Per the filing, Children's now owns 5% of the company with over 14.1 million shares.

This means Hohn has increased his position size by over 4.23 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 6th.

TWC is set to be taken over by Comcast (CMCSA), pending regulatory review.  Hohn must be pretty confident that this deal goes through, though there's no way to know if/how he's hedged out this position.  Even if this deal does fall through, TWC shares likely have a 'floor' as it's been reported that Charter Communications (CHTR) would then be interested in acquiring TWC (something they tried to do previously).

US cable stocks in general also have rallied sharply over the past month on the news that while the FCC has imposed net neutrality, the operators won't be regulated on pricing.  One of the key tenets of the cable investment thesis is that these companies are oligopolies and could have pricing power for their broadband products.  Even if these companies lose video subscribers as customers shift to over-the-top (OTT)/streaming content products, people will still need a (fast) internet connection to receive this content.  

Per Google Finance, Time Warner Cable is "a provider of video, high-speed data and voice services in the United States with clustered cable systems located in five geographic areas including New York State, the Carolinas, the Midwest, Southern California and Texas."

Plymouth Lane Capital Increases Scientific Games Position

Jonathan Salinas' hedge fund firm, Plymouth Lane Capital, has filed a 13G with the SEC regarding its position in Scientific Games Corp (SGMS).  Per the filing, Plymouth Lane now owns 5.5% of the company with over 4.62 million shares.

This means their position size has increased by over 3.66 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 9th.


About Plymouth Lane Capital

This is the first time this hedge fund has been covered on the site.  Plymouth Lane primarily operates an equity strategy and was launched in April 2013.  Prior to founding Plymouth Lane, Jon Salinas worked at Marble Arch Investments and earned his MBA from Columbia Business School.

At a prior Columbia Business School conference, Salinas noted that you have to focus on the margin of safety if it's an event-driven idea.  But if it's a compounder-type business, he said you have to have high confidence that earnings will compound at the rate expected.  He also mentioned that if you're taking concentrated positions, it's detrimental to let thesis creep go unnoticed.  If evidence contrary to your thesis pops up, you have to be able to recognize it and act.


About Scientific Games Corp

Per Google Finance, Scientific Games is "a developer of technology-based products, services and is a supplier of solutions to lottery and gaming organizations across the world. The Company’s products and services include instant lottery games, lottery gaming systems, terminals and services, and Internet applications, as well as server-based interactive gaming machines and associated gaming control systems. The Company provides products and services, such as instant and draw-based lottery games, electronic gaming machines and game content, server-based lottery and gaming systems, sports betting technology, loyalty and rewards programs, and social, mobile and interactive content and services. The Company operates in three segments: Instant Products, Lottery Systems, and Gaming."

Marcato Capital's Presentation on Bank of New York Mellon

Mick McGuire's hedge fund firm, Marcato Capital Management, has released a letter and presentation to shareholders of Bank of New York Mellon (BK) outlining their thoughts on the company and why they feel a leadership change is in order.

Embedded below is Marcato's letter to BK shareholders:



You can download a .pdf copy of the letter here.


And also embedded below is Marcato's presentation on Bank of New York Mellon:



You can download a .pdf copy of the presentation here.


McGuire is known for taking an activist approach in his investments and this case is no different.  Prior to founding Marcato, he worked at Bill Ackman's Pershing Square, another well known activist investment firm.

Lee Cooperman Increases New Senior Investment Group Stake

Lee Cooperman of Omega Advisors has filed a 13G with the SEC regarding his position in New Senior Investment Group (SNR).  Per the filing, Cooperman now owns 5.13% of the company with over 3.4 million shares.

He's increased his holdings by 803,327 shares since the end of the first quarter.  The filing was required due to activity on March 5th.

We've detailed other recent portfolio activity from Cooperman here.

Per Google Finance, New Senior Investment Group is "a real estate investment trust (REIT) with a portfolio of senior housing properties across the United States. The Company’s portfolio is categorized into two segments: Managed Properties, which are operated by property managers as property management agreements and Triple Net Lease Properties, which the Company lease to tenants. The Company’s managed portfolio includes 42 assisted living, memory care and independent living properties and its triple net lease portfolio includes 57 assisted living, memory care, independent living and continuing care retirement communities."

What We're Reading ~ Hedge Fund Links 3/6/15

Baupost Group on risk management and hedging [ValueWalk]

Hedge funds failing to meet investor expectations, report finds [WSJ]

Which hedge funds investors love - and hate [CNBC]

With correlations so high, why are hedge funds underperforming? [ValueWalk]

Hurdle rate should apply to hedge fund industry as it does in private equity [FT]

Activist investors' success owes much to wider bull run [FT]

Biggest hedge fund run by a woman emerges after Braga spinoff [SwissInfo]

Latest hedge fund strategy to seek higher returns has hit speed bumps [NYTimes]

Hedge funds betting billions on corporate marriages [Forbes]

The strange death of fund of hedge funds [Citywire]

Dan Loeb bets on future Geico of Greece [CNBC]

Loeb sees disappointment for funds seeking energy distress [Bloomberg]

Some stock picks from Locust Wood's Errico [Bloomberg]

Following your boss to his new hedge fund? Think twice [eFinancialCareers]

Hedge funds monetizing by selling stakes to institutional investors [ValueWalk]

Marriage hurts a hedge fund manager more than divorce [CNNMoney]

What We're Reading ~ Analytical Links 3/4/15

12 things learned about investing from Howard Marks [25iq]

Feeling certain and other mistakes that trip up investors [WSJ]

What mistakes investors make and what they learned from it [EndlessriseInvestor]

Why don't we make good investment decisions? [Irrelevant Investor]

Warren Buffett on his early mistakes [Business Insider]

A look at Constellation Software [Value Venture]

A pitch on Cable and Wireless Communications [Scribd]

When will the US have its next recession? [Wealth of Common Sense]

Yahoo's incredible shrinking profitability in its core business [Forbes]

Altice's savvy playbook fuels rapid growth [FT]

Netflix and Google's plan to break out of Equinix's gilded cages [Data Center Knowledge]

Viewers don't add up to profit for YouTube [WSJ]

Is innovation more about people or process? [HBR]

Discount to the London Value Investor Conference 2015

£120 discount code: MARKETFOLLY-MARCH-DISCOUNT

Market Folly has secured a limited number of discounted tickets to the forthcoming London Value Investor Conference 2015, which takes place on 20th May.  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 Neil Woodford, Charles Brandes, Jonathan Ruffer, and Dato' Cheah Cheng Hye.  It is also a showcase for less well known and smaller firms.

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.

As part of their presentation, the speakers will give a current investment idea.

In order to claim your special £120 discount on this conference, please use the code "MARKETFOLLY-MARCH-DISCOUNT"

Offer expires March 31st, 2015

Lessons From a Dozen Years of Short Selling

Many investors have called short selling one of the most difficult things to do in finance.  There's potential for unlimited losses, the position sizes get smaller if you're right, and you're constantly going against the crowd and battling waves of optimism.

Kase Capital's Whitney Tilson has put together a presentation entitled, "Lessons From a Dozen Years of Short Selling" that he delivered at Columbia Business School.

In it, he presents both sides of the argument, listing 12 reasons not to short and then 10 reasons to short.

In a recent interview, Tiger Management's Julian Robertson said that it's hard to run a hedged portfolio in a market that seemingly only wants to go up.  But even in an ever-rising market, there will always be frauds and fads, and more often than not, that's what short sellers target.

Embedded below is the full presentation on shorting.



You can download a .pdf copy here. 

For more on the subject, we've also posted up another hedge fund manager's take on short selling.