What We're Reading ~ 7/2915

Charlie Munger: The Complete Investor [Tren Griffin]

Daniel Kahneman on eliminating overconfidence [Guardian]

The biggest gamble: can Macau beat the odds? [Bloomberg]

Roundtable on the virtues of capital allocation [Barrons]

The drop in commodity prices is destroying Canada's economy [BusinessInsider]

A look at Crossfit's business plan [Quartz]

How Beijing intervened to save China's stocks [Caixin]

Winning in industrial services [Bain]

Frenzy around Jet.com harks back to dot-com boom [WSJ]

A model for investing in enterprise IT [Lenny Pruss]

A quick look at Softbank [Investing Sidekick]

Amazon's Hollywood shopping cart secrets [Hollywood Reporter]

Why walking helps us think [New Yorker]

Lei Zhang's Lecture at Columbia Business School (Hillhouse Capital)

Below are notes from Hillhouse Capital's Lei Zhang's lecture at Columbia Business School courtesy of Zong Z. Peng.


Notes From Lei Zhang's Lecture at Columbia Business School

In the high flying world of investing, Lei Zhang maintains a relatively low profile. Yet since he was seeded by David Swesen of Yale Endowment with $20 million in 2005, he has achieved a ~40% compounded annual return (28x not adjusting for inflation), making him one of the best performing investment managers. To put it into perspective, Warren Buffet has achieved a compounded annual return of ~22%, albeit for the past 50 years!! Today, Lei Zhang’s Hillhouse Capital, named after a street nearby Yale where Lei received his MBA and master’s in public policy, manages ~$18 billion. Thought not just focused on tech, Lei is best known for backing several most successful Chinese internet entrepreneurs and start-ups (e.g. Tencent, JD.com). On April 29th, Lei paid a visit to the “Temple of Value Investing” Columbia Business School to share his investing and life lessons. Below are my synthesis of his wisdom:

For those who crave for brevity, here is the essence of the lessons that Lei Zhang shared:

• Being a long-term investor gives you a big advantage from the starting line.
• Do deep fundamental research, make few bets instead of keeping on chasing ideas. This way you simply your life and your business. 
• Hillhouse invests in changes and strives to help create value through entrepreneur-like thinking and problem solving. “We are entrepreneurs so happen to be investors” 
• Spend quality time with quality people, doing quality things. Hopefully part of the outcome is making money. 
• Stay connected to reality and everyday life, do not become a victim of your own success. 
• Four most important traits in people that Lei looks for: intellectual curiosity, intellectual independence, intellectual honesty, and empathy.

For those who want more details and articulations, read on:

1. Investment Strategy

Flexibility – Lei only had one investor in his fund when starting out Hillhouse – David Swensen from Yale Endowment seeded Hillhouse with $20 million. He could have raised more money with Swensen’s endorsement but did not. He wanted to start with a solid foundation, a strategy that allows him 100% flexibility to invest in whatever he believes in and is passionate about, be it public equity, venture capital, or private equity. In Lei’s words “it’s not about the format but about the essence.” To him the essence is to invest in companies that he thinks make sense, truly believes in, run by people who he respects and are open-minded, and could compound capital over a long stretch of time no matter what stage the company is in. In terms of his investment team, Lei believes in a generalist model and prides himself on being one of the analysts.

Long Term Orientation – Hillhouse is a long-term investor. Lei thinks that when you have a long-term orientation, from day one you have a huge advantage over most people – it’s what he calls free option value of time arbitrage. His view on the Chinese stock market at the time of this speech? “It’s like 1999 all over again, but times three.” The environment is so bubbly that any company that changes its name into something internet related could get an elevated multiple on their valuations. Some say long-term investing does not work in China because everybody trades so much. Speaking at one mutual fund conference, some managers asked Lei “how do you make so much money despite being a long term investor” (everyone in the room laughed really hard on this comment). Some Chinese mutual fund managers complain to regulators, “I know you want long term investors, but we need to make money, we have a fiduciary duty.” The understanding of long-term investing in China is so distorted, people think there is a cost to being a long-term investor.

Note: Lei’s comments on China looks squarely on mark in hindsight, given the on-going chaos in the Chinese A shares market, which just had its biggest single day drop (8.5%) since 2007 at the writing of this post.  

Bias Toward Inaction – But how does Hillhouse find high quality names? The way is to do deep fundamental value research and only research things that could potentially compound value over time. There are many people in China that are successful at trading, but traders have capacity issues because they have to trade all the time. In China, an average portfolio manager has 600% annual turnover, Lei’s public equity portfolio has only 15% turnover and he continues to own his private equity portfolio. Hillhouse does not attempt to constantly chase different horses. In a given year, Hillhouse takes on 2-4 positions at best and sometimes only one. By taking away the action, Lei believes you simplify your life and the investment business, and you let the portfolio compound for you instead of you doing the work. By being patient and not too active, he was able to accumulate a portfolio of high quality names.

Note: All these principles are pretty much the  the bias toward inaction is very similar to another value investing legend Monish Pabrai, whose book “The Dhandho Investor” I highly recommend. 


2. Deviation From Traditional Value Investing Philosophies

Investing in changes – Lei Zhang is a big believer in value investing, but where he deviates from the traditional value investing philosophy is that he likes investing in changes. He believes that it is change that derives value and he would like to invest in people driving them. In particular with China, and globally as well, technology has become a bigger part of the game, either in traditional or new industries. Changes are driving forces for creative destruction and value creation. He spends a lot of time understanding the changes and the people behind them. Lei says that one thing about investing in early stage company is that some companies look distracted on the outside, but if you look at the core they are intensely focused. On the other hand, the traditional sense of value investing represented by Warren Buffet dislikes changes and prefers long-term stable businesses with strong moat, hence why Warren ends up with big positions in names like in Coca Cola, Amex, Wells Fargo, and IBM.

Note: the above differentiation may be an over-simplification as Warren also has a much larger capital base to deploy.  

Example 1: Blue Moon and JD.com. Blue Moon is in a traditional business, liquid laundry detergent. Hillhouse would never have invested in it if everything is done the same way, as there is P&G and Uniliver, which you invest in for their brand value and moat. After investing in Blue Moon, Lei arranged its executives to meet with those from JD, having Blue Moon learning about ecommerce from JD and have JD learning about merchandising from Blue Moon. Subsequently, Blue Moon redesigned its detergent packs so that they could fit into JD’s delivery bins. Leveraging social media and ecommerce, Blue Moon achieved the largest brand build up in years and now is the largest liquid detergent brand in China.


Value Investing Taken to the Next Level – Lei believes his approach is value investing taken to the next Level. In addition to investing in changes and long-term fundamental value, he also wants to compound that value by participating in the value creation process via deep research. The traditional Ben Graham value mismatch alone is not good enough (current price vs. intrinsic value), he wants to grow that value mismatch over time, not just to take advantage of an arbitrage opportunity. To this end, Lei thinks his approach is more like constructive (or suggestive) activism, though Lei rejects the notion that he is an activist. For him, the traditional sense of activism falls into the category of “life is too short” (too much work and headache? Ackman’s battle with Herbalife comes to mind).

Example 2: Strategic partnership between Tencent and JD.com

Lei is an early investor in both companies and brought many senior executives to JD, Tencent was one of one of Hillhouse’s earliest investments and remains in the portfolio. In 2013, Lei saw a new trend – JD had a great retail gene, but was having difficulty confronting mobile commerce on the technology front. On the other hand, Tencent had just acquired an ecommerce business. The core problem is that Pony Ma had never dealt with inventory before and suddenly had lots of physical goods on hand. Lei brought the two companies together, summarizing their problems with one word each, mobile vs. inventory. The solution is for Tencent to hand inventory to JD and JD to hand mobile to Tencent. Pony and Richard hated each other and had been fighting to win the ecommerce war, but the deal just makes all the sense.

Through research, Hillhouse was able to present and close the biggest ecommerce deal at the time. In the process, Hillhouse did get diluted, but got a lot of certainty for both companies out of it. The idea is through research, you could present to founders compelling ideas and add value in the process. Through this example, Lei conveyed that he loves entrepreneurs that are confident, open-minded, and willing to learn from competitors.

Example 3: WeChat moves into Southeast Asia

In Indonesia, for example, Lei helped create a joint venture between Tencent’s WeChat and Global Mediacom, Indonesia’s largest media, television and pay TV conglomerate. At the time, WeChat was behind Facebook Messenger, WhatsApp, and Line in user count, and today has surpassed the first two and is on par with Line. Again, Lei emphasized that he found the opportunity through “research.”

Note: In this sense, I think Lei’s approach is not just deep research, it is thinking as entrepreneurs. Focus the research on seeking truth, finding solutions to cracking business problems, and analyzing how value could be created instead of focusing on coverage and fishing for the next stock picking idea. In his own words, “we are entrepreneurs happen to be investors.”


3. What Hillhouse Looks For in Entrepreneurs and People?

Lei finds the most impressive people are the people who have deep passion and execute that passion with discipline, instead of people who exhibit habitual behavior. Specifically Lei looks for four qualities:

- Intellectual curiosity - driver of passion.  Have seen really smart people who are No. 1 in whatever they do, but in the end do not necessarily have the capacity to realize their full potential.  The reason is that they are No. 1 not because they want to understand how things work, it's because they are in the habit of being No. 1.  This makes life miserable.  If there is no passion in what you do, you will get burned out early on or reach a plateau soon.

- Intellectual independence - this allows a person to grow over long-period of time (I say this is the compounding value of knowledge and wisdom)

- Intellectual honesty - being authentic and intellectually honest is so important.  Lei also does not like people who are overly promotional and who are focused on organizing bureaucracy.  At Hillhouse, the team does not do 150-page presentations and sell internally.  Repeat your lies 100 times you believe in it yourself.

- Empathy not sympathy - the most powerful tool to be a successful entrepreneur or investor is to understand the pain points of consumers, employees, analysts, and entrepreneurs.

If you have the above qualities and a long-term oriented mentality, the rest of it is luck and law of large numbers, do what you are passionate about over and over again, and enjoy doing it over and over again, success will follow in time.

Note: I would like to put my own spin on the above comment, "even if you do not achieve exceptional success in the end, I bet you will have a heck of a lot of fun along the way."


4. Other Lessons From Lei

- Don't say I am going to work for this firm or that firm, don’t get into the argument with yourself. Just ask the simple question, are they the quality people you want to spend time with, who are you working with, working for, what kind of people are they, are they the kind of people who give “positive energy.”

- The world has already evolved way beyond the traditional employment relationship but to a more partnership model. It’s all about in what capacity and in what environment you could bring the best of yourself.

- Don’t wait for the opportunity to analyze your mistakes, spend 10x more effort trying to analyze your mistakes than success.


Thanks again to Zong Z. Peng for the notes.

Carlyle Group's David Rubenstein on Wall Street Week

Anthony Scaramucci's rebooted Wall Street Week this time around interviewed Carlyle Group's co-founder David Rubenstein. 


Embedded below is Wall Street Week's interview with David Rubenstein:



Be sure to also check out Wall Street Week's interview with Steve Einhorn, who recently said there's 'more years' left in the current bull market.  We've also posted up Byron Wien's interview as well.

Top Hedge Funds Short Neopost

Last week we highlighted 2 stocks that prominent hedge funds were short.  And this week we have another: Neopost (NEO.PA).  Per regulatory filings in France, the following hedge funds have short positions in the company.


Hedge Funds Short Neopost

Pennant Capital: Net short 1.55% of Neopost's shares as of July 1st.  This is slightly down from the 1.63% they were short back on April 1st.

Och-Ziff Management Europe: Short 0.7% of shares as of July 20th.  This is up from 0.61% on June 23rd and 0.5% on June 19th.

GLG Partners:  Net short position of 0.59% of Neopost shares as of July 9th.  This position has slightly fluctuated from 0.62% of shares on April 14th and 0.52% of shares on March 18th.

Tiger Legatus: Short 0.58% of shares as of June 29th, down slightly from the 0.61% of shares they were short on June 26th.


The company is "engaged in producing and selling mailroom equipment" per Google Finance.  This has been a popular short among hedge funds and we even highlighted hedge fund short positions in Neopost back in 2012.  Pennant Capital had a short on at that time as well.

While this could be a hedge to some of their long positions, it seems more plausible that this is an alpha short given that Neopost is considered a secular decline story.  As the world transitions from paper/print to digital/online, the thesis is that pages/documents will be printed and mailed, instead being stored and transmitted digitally.  Neopost shares are down around 29% over the past year.

A US-traded company, Pitney Bowes (PBI), is involved in the same industry.  While we've heard some hedge funds were short in prior years, there's no way to know for sure who's short (if any) these days since there's no rule of public disclosure of short positions in the US.  Not to mention, the company has shifted its focus to include digital offerings as well.

You can view more of the latest hedge fund short positions here (scroll through).

Lone Pine Capital Starts Horizon Pharma Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding shares of Horizon Pharma (HZNP).

Per the filing, Lone Pine now owns 5.4% of Horizon Pharma with over 8.35 million shares.  This is a newly disclosed equity position for the hedge fund as they previously didn't report ownership as of the end of the first quarter.  The filing was made due to activity on July 17th.

For more from this hedge fund, we recently posted about one of Lone Pine's short positions.


Per Google Finance, Horizon Pharma is "formerly Vidara Therapeutics International Public Limited Company, is a specialty biopharmaceutical company focused on identifying, developing, acquiring or in-licensing and commercializing differentiated products that address unmet medical needs. The Company markets a portfolio of products in arthritis, inflammation and orphan diseases. The Company's the United States marketed products are ACTIMMUNE (interferon gamma-1b), DUEXIS (ibuprofen/famotidine), PENNSAID (diclofenac sodium topical solution) 2% w/w (PENNSAID 2%), RAYOS (prednisone) delayed-release tablets and VIMOVO (naproxen/esomeprazole magnesium). The Company developed DUEXIS and RAYOS/LODOTRA, has the United States rights to VIMOVO, has the United States rights to ACTIMMUNE and has the United States rights to PENNSAID 2%."

Eton Park Capital Short Burberry Group and J Sainsbury

Eric Mindich's hedge fund firm Eton Park Capital has recently disclosed updated short positions in Burberry Group (LON:BRBY) and J Sainsbury (LON:SBRY).


Eton Park Short Burberry Group

Per regulatory filings in the UK, Eton Park has disclosed it is net short 0.7% of Burberry's shares as of July 13th.  This is up from a 0.62% net short position back on May 11th.

Institutions are required to publicly disclose when they build a short position above the 0.5% of shares threshold.  Keep in mind that this could either be an alpha short or a hedge to one of their long positions.

Last week we also highlighted 2 stocks that prominent hedge funds are short.

Per Google Finance, Burberry Group is "a United Kingdom-based manufacturer, wholesaler and retailer of luxury goods. The Company designs, produces and sells products under the Burberry brand. The Company’s product categories include women’s and men’s apparel and accessories and beauty. The Company owns distribution network consisting of: 497 directly operated stores and concessions, offline and burberry.com, a digital platform active in 11 languages, online. The Company’s Licensing revenues are generated through the receipt of royalties from the Group’s partners in Japan and global licensees of fragrances, eyewear, timepieces and European children wear. The Company’s retail/wholesale engages in the sale of luxury goods through Burberry mainline stores, concessions, outlets and digital commerce as well as Burberry franchisees, prestige department stores globally and multi-brand specialty accounts. The Company has subsidiaries in Europe, Middle East, India, Africa, United States and Asia Pacific region."


Eton Park Also Short J Sainsbury

Per a separate regulatory filing in the UK, Eton Park has disclosed a net short position in 0.69% of J Sainsbury's shares as of June 29th.

Per Google Finance, J Sainsbury is "engaged in supermarkets and convenience stores, and an online grocery and general merchandise operation. The Company also has two property joint ventures with Land Securities Group Plc and The British Land Company Plc. Sainsbury’s Bank provides a range of banking and insurance products."

Prominent Hedge Funds Short Deutsche Lufthansa and Air France KLM

Various short sale disclosures in European Union markets reveal that numerous prominent hedge funds are short shares of two European airlines: Deutsche Lufthansa AG (LHA.F) and Air France-KLM (AF).

Regulatory rules require funds to publicly disclose when they have a net short position of 0.5% of shares or greater.


Hedge Funds Short Deutsche Lufthansa AG

Senator Investment Group: Net short 0.72% of shares as of July 16th.  This is up from a 0.64% position on July 15th and a 0.54% position on June 8th.

Marshall Wace: Net short 0.7% of shares as of July 22nd, 2015.  This is up from a 0.64% position on July 10th and a 0.55% position on June 19th.

Blue Ridge Capital: Net short 1.02% of shares as of June 18th, 2015.

AKO Capital: Net short 0.69% of shares as of June 29th, 2015.

Discovery Capital: Net short 0.61% as of July 1st.

Lone Pine Capital: Last reported a 0.94% net short position on April 30th, 2015.


Hedge Funds Short Air France-KLM

Blue Ridge Capital: Net short 0.92% of shares as of June 23rd, 2015, an increase from the 0.73% they were short just a day earlier.

Discovery Capital: Net short 0.77% of shares as of July 2nd, 2015.  Up from a 0.63% position on July 1st.

Tyrian Investments: Net short 0.42% of shares on July 1th, down from a net short position of 0.54% on March 5th, 2015.

Odey Asset Management: Net short 0.26% of shares as of July 17th.  This is a decrease from the 0.58% position they had on April 21st and the 1.32% stake they had on February 19th so they've definitely taken down exposure to the name.

AKO Capital: Their last disclosure was a net short of 0.7% of shares back on February 2nd, 2015.

Marshall Wace:  Their net short position size has fluctuated a lot over the past four months.  Their latest disclosure shows a net short of 3.11% as of July 7th.  Their short disclosures in the name go back to April 29th when they were short 2.65%.



You'll notice some overlap in funds on both airline shorts.  You'll also notice another commonality: a lot of 'Tiger Cub' hedge funds, or managers with ties to Tiger Management.

While these positions could either be hedges or alpha shorts, it's still interesting to get a look at the side of the portfolio that's normally quite secretive.

Stay tuned as we reveal more short positions next week.  We've already posted that Lone Pine is short Rolls Royce and Viking Global is short Peugeot. Also, Greenlight Capital is short ARM Holdings.

Greenlight Capital Short ARM Holdings

David Einhorn's hedge fund Greenlight Capital is short shares of ARM Holdings traded in the UK.  Per short selling disclosure rules, funds must publicly disclose when they are net short 0.5% of a company's shares or greater.

As of July 21st, Greenlight was net short 1.36% of ARM Holdings shares.  This is up from a 1.23% position on July 10th and a 1.11% net short position on July 8th, 2015.

Per Google Finance, ARM Holdings is "a United Kingdom-based company engaged in designing of microprocessors, physical intellectual property (IP) and related technology and software, and sale of development tools. The Company's offers products, such as 16/32/64-bit RISC microprocessors, data engines, graphics processors, digital libraries, embedded memories, peripherals, software and development tools, as well as analog functions and high-speed connectivity products. The Company's product offering includes microprocessor Cores, physical IP, development tools and support and maintenance services. ARM licenses and sells its technology and products to international electronics companies, which in turn manufacture, market and sell microprocessors, application-specific integrated circuits (ASICs), application-specific standard processors (ASSPs) and microcontrollers (MCUs) based on ARM's technology to systems companies for incorporation into a variety of end products."

While this could be an alpha short, it could also potentially be a hedge to Greenlight's tech exposure, as they've been long names like Applied Materials (AMAT), Micron (MU), Apple (AAPL), ON Semiconductor (ON), and SunEdison (SUNE).

For more from this hedge fund, we've posted Greenlight's Q2 letter here and just yesterday highlighted a stock Greenlight's been buying recently.

To see other hedge fund short positions, click that link to scroll through the recent updates.

Hedge Fund Links ~ 7/24/15

Bridgewater flips view on China [WSJ]

Hedge funds gear up for another big short [WSJ]

Glenview's gamble on health law pays off big [WSJ]

A look at Lone Pine's recent performance [ii alpha]

Omega sees stocks rallying despite Fed [Reuters]

Lackluster Q2 cools off Eton Park [ii alpha]

Carl Icahn fuels criticism of bond ETFs [WSJ]

Women of The Street: Why Female Money Managers Generate Higher Returns [Jones]

Small is beautiful for hedge funds in a crisis, study finds [Bloomberg]

Blackstone champions hedge funds for the little guy [Reuters]

Lone Pine Capital Short Rolls Royce

Steve Mandel's hedge fund firm Lone Pine Capital has filed a regulatory disclosure in the UK regarding shares of Rolls Royce (RR.L), indicating they have a net short position. 


Lone Pine Short Rolls Royce

Lone Pine has disclosed they have a net short position to the tune of 0.59% of Rolls Royce shares.  This is a newly disclosed short position and the disclosure was triggered on July 10th, 2015.  Previously, they were short 0.35% of shares due to a filing on July 8th.

This comes only a few days after new CEO Warren East issued a profit warning, cut guidance, and noted that next year's results would also be weaker than expected.  Prior to joining Rolls, East was the CEO at ARM Holdings.  This is the fourth time Rolls has issued a warning since last early year.  The company also canceled its existing share buyback.

The company's marine division has been impacted by lower oil prices.  Additionally, Rolls Royce said its main segment, civil aerospace, would be impacted next year due to lower orders for its Trent 700 engines.

While it's harder to discern if this is an alpha short or a hedge to one of their longs, it still seems Lone Pine is looking for near-term pain to continue for the company.

On the other side of the trade, Ruane Cunniff (Sequoia Fund) has been long shares and in its year-end 2014 letter they bemoaned the company's move into marine engine and power generation.  They believe that "Rolls' wounds are self-inflicted and reversible" and love the company's "world class business making engines for wide body jets" as it enjoys a duopoly with General Electric with high barriers to entry. 


Short Selling Disclosure Rules in the UK

In 2012, the UK's Financial Services Authority (FSA) began requiring institutional investors to
to privately notify the FSA when their net short position eclipses 0.2% of the issued share capital of a company.  Notification is also required again at each 0.1% increment after that.  This applies to both increases and decreases in the position.  The Financial Conduct Authority (FCA) now monitors short sales.

Public disclosure of the short (as is the case above), is required when net short positions reach 0.5% of issued share capital.  Additionally, disclosure is required when the position subsequently falls below 0.5%.


Stay tuned this week and next as we'll be updating other short positions from prominent hedge funds.  Today we also posted about how Viking Global is short Peugeot.

For more from this hedge fund, we posted that Lone Pine almost doubled its stake in Charter Communications recently.

Viking Global Short Peugeot S.A.

Andreas Halvorsen's hedge fund firm Viking Global has filed a regulatory short position disclosure in France and indicated they have a net short position in shares of Peugeot S.A.

Per the disclosure, Viking Global has a net short position totaling 0.55% of Peugeot's shares as of July 17th, 2015. 

While it's hard to determine whether this is an alpha short or merely a hedge to one of their long positions, the EU's short selling disclosure requirements provide a glimpse into the side of a hedge fund's portfolio that's often not seen.

Short selling disclosures in various European Union countries require institutional investors to publicly disclose a net short position after it reaches 0.5% of the issued share capital of the company and again with each 0.1% increment in the position (either positive or negative).

Stay tuned this week and next as we'll be posting a comprehensive update of short positions at prominent hedge funds.  We also just posted about how Lone Pine is short Rolls Royce.

Per Google Finance, Peugeot is "a holding company passenger cars and light commercial vehicles business. The Company operates in three segments: the Automotive Division, covering the design, manufacture and sale of passenger cars and light commercial vehicles under the Peugeot, Citroen and DS brands; the Automotive Equipment Division, corresponding to the Faurecia Group consisting of interior systems, automotive seating, automotive exteriors and emissions control technologies, and the Finance Division, corresponding to the Banque PSA Finance Group, which provides retail financing to customers of the Peugeot, Citroen and DS brands, and wholesale financing to the two brands' dealer networks. Banque PSA Finance (BPF) is a financial institution. BPF also provides wholesale financing, and insurance and services."

Greenlight Capital Increases CONSOL Energy Stake

David Einhorn's hedge fund firm Greenlight Capital has filed an amended 13D with the SEC regarding its position in CONSOL Energy (CNX).  Per the filing, Greenlight now owns 12.9% of the company with over 29.6 million shares.

This is up from the 20.5 million shares Greenlight owned at the end of the first quarter. 

An additional Form 4 filed with the SEC by Greenlight indicates that they were buying CNX shares on July 20th, 21st, and 22nd at weighted average prices ranging between $16.3908 to $17.27.

Einhorn isn't the only activist involved in CNX shares, either.  Southeastern Asset Management recently increased its stake to around 21% of the company.  Mason Hawkins' firm would like the company to monetize its E&P portfolio.

In addition to its position in CNX, recently Greenlight also revealed a stake in CNX Coal Resources.

For more from this hedge fund, we recently posted Greenlight's Q2 letter.

What We're Reading ~ 7/22/15

The Emotionally Intelligent Investor [Ravee Mehta]

The smartest man is wild about innovation [Byron Wien]

Decisions under uncertainty [Farnam Street]

What's the biggest risk right now? [A Wealth of Common Sense]

A breakdown of John Malone's empire [Jnvestor]

Video on aluminum and aerospace industry outlook [YouTube]

The supply of equities may soon stop shrinking [Economist]

For eBay, a new chapter begins [Fortune]

A look at Vitec Software Group [Frenzel & Herzing]

Deep analysis on Deere & Co [HVST]

Montier goes to highest cash level since 2008 [FINalternatives]

Are GMOs safe? Yes. The case against them is full of lies [Slate]

Jet.com launches new e-commerce model [USAToday]

Bidding wars return to home market [WSJ]

Capitalist soul rises in Ho Chi Minh City [NYTimes]

On Google's return of Omid Kordestani [Recode]

27 Reasons Why the Smart Money is in Midtown NYC in 3 Weeks

Family office chief investment officers manage the assets for some of the wealthiest and most successful families in the world.  Our friends from the Family Office Club are hosting the Family Office CIO Summit on August 6th in midtown where CIOs at family offices and institutional investors discuss how they devise allocation strategies, manage risk, and evaluate fund managers.  Register today before the early-bird window closes on 7/24: http://FamilyOffices.com/CIO  

Here are 27 reasons why you need to be at this event:  

1. Candice Beaumont, L Investments (Single Family Office)
2. William Braman, Ballentine Partners (Top-50 Family Office)
3. Carol Pepper, Pepper International (Family Office)
4. Henley Smith, Oppenheimer & Co. ($25B Asset Manager)
5. Jonathan Bergman, TAG Associates (Top-50 Family Office)
6. Michael Sury, INDORUS Holdings (Single Family Office)
7. Robert Russell, Avenue Capital Group ($12B+ Investment Firm)
8. Neil Wolfson, SF Capital (Single Family Office)
9. Mark Berman, MB Family Advisors (Family Office)
10. John Jonson, Lyrical Partners ($1B+ Family Office)
11. Sergio Pedro, Jones Family Office (Single Family Office)
12. Douglas Getty, Abbot Downing (Top-50 Family Office)
13. Peter J. Pell, CSM Capital Corp. ($1B+ Family Office)
14. Irina Tanenbaum, The Juilliard School (Endowment Fund)
15. Ben Parr, DominateFund (Author and Venture Capitalist)
16. Leah Zveglich, Aster Family Advisors (Family Office)
17. Christina Conners, Greenway Family Office (Family Office)
18. Ted Seides, Protégé Partners ($2B+ Asset Manager)
19. Thaddeus R. Shelly III, Tiedemann Wealth Management (Top-50 Family Office)
20. Avi Gelboim, Scher Capital Management (Family Office)
21. Richard C. Wilson, Billionaire Family Office 
22. David Paige, Legal Fee Advisors 
23. Amish Jani, FirstMark Capital (Venture Capital Investor)
24. Matt Cohen, City Light Capital (Venture Capital Investor)
25. David Smith, Smith & Associates
26. Stewart Massey, Massey Quick (Family Office)
27. Alex Smith-Ryland, HedgeCoVest & CS Wilton Group (Hedge Fund Platform & Family Office)

To view the full agenda visit: http://WilsonConferences.com/CIO-Brochure.pdf   

Bonus: If you would like to attend the Real Estate Allocator Summit (Aug. 7th), also hosted by the Family Office Club, you can attend both events for only $1,395 – a savings of nearly $600. http://FamilyOffices.com/Real  

Early bird pricing ends Friday, 7/24 so register now to save before prices for this summit go up. If you have any questions give Douglas at the Family Office Club a call at (212) 729-5067 or sign up at http://FamilyOffices.com/CIO

Bridger Capital Discloses SeaSpine Stake After Spin-Off

Roberto Mignone's hedge fund firm Bridger Capital has filed a 13G with the SEC regarding shares of SeaSpine Holdings (SPNE).  Per the filing, Bridger now owns 5.6% of the company with 618,684 shares.

This is a newly disclosed position for the hedge fund. The company recently started trading as it was spun off from Integra LifeSciences (IART).  Holders of IART received 1 share of SPNE for every 3 shares of IART owned as of June 19th.

Bridger did not show a position in IART as of the end of the first quarter.  It's possible that they purchased shares in Q2 and then still received shares in the spin-off.  Alternatively, they could have just purchased SPNE shares once they started trading in the open market. 

Per Google Finance, SeaSpine Holdings is " a medical technology company. The Company is focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. The Company has a portfolio of orthobiologics and spinal fusion hardware solutions for neurosurgeons and orthopedic spine surgeons, which can be used to perform fusion procedures in the lumbar, thoracic and cervical spine. The Company's orthobiologics products consist of a range of bone graft substitutes that are designed to improve bone fusion rates following surgery. The Company's spinal fusion hardware portfolio consists of a line of products for minimally invasive surgery (MIS), complex spine, deformity and degenerative procedures. The Company's products include Accell Evo3, OsteoSparx, Accell Connexus, Zuma-C Anterior Cervical Fixation System, Zuma IBD, OsSatura TCP and Coral MIS, among others."

You can view previous Bridger Capital portfolio moves here.

Kyle Bass's Hayman Capital Shows Eco-Stim Solutions Stake

Kyle Bass' hedge fund firm Hayman Capital has filed both a 13G and Form 3 with the SEC regarding shares of Eco-Stim Energy Solutions (ESES).  Per the filings, Hayman now owns 17.1% of the company with over 2.1 million shares.

This is a newly disclosed position for the hedge fund.  The filing was made due to activity on July 10th.

For more from this investor, head to Kyle Bass' thoughts at the SALT conference.

Per Google Finance, Eco-Stim is "an early stage technology-driven independent oilfield services company. The Company provides well stimulation, coiled tubing and field management services to the upstream oil and gas industry. The Company is focusing on the active shale resource basins outside of the United States using its technology to differentiate its service offerings. The Company’s operation is in Argentina, a shale resource basin as measured by technically recoverable reserves. The Company may also explore opportunistic acquisitions or joint ventures with established companies in target markets. EcoStim expects to provide well stimulation services based on contractual arrangements. The Company plans to generate revenues from chemicals and proppants that are consumed while performing well stimulation services. The Company expects to provide coiled tubing and other well stimulation services. EcoStim enters into arrangements to provide field management services."

Marcato Capital Increases Avis Budget Stake

Mick McGuire's activist investment firm Marcato Capital Management has filed a 13G regarding shares of Avis Budget (CAR).  Per the filing, Marcato now owns 5.4% of the company with over 5.71 million shares.

This is up from the 3.34 million shares that Marcato owned at the end of the first quarter.  The filing was made due to activity on July 9th.  CAR traded at $65 to start the year, but has since slowly declined down to current levels of around $42 and Marcato has used the weakness to boost its exposure to the name.

The thesis here has largely been based on the industry consolidating down from a lot of companies into a few major ones, creating an oligopoly.  The thought is that they could act rationally together, raise prices, and profit.  Thus far, that road has been a little bumpier than expected for bulls.

While Marcato primarily takes activist stakes in companies, this looks to be a passive investment, at least for now.  Prior to founding Marcato, McGuire worked at Bill Ackman's Pershing Square.

We've highlighted previous Marcato portfolio activity here.

Per Google Finance, Avis Budget is "a provider of vehicle rental and car sharing services. The Company operates three brands, which include Avis, Budget and Zipcar. Avis is a rental car supplier and Budget is a rental vehicle supplier. The Company also own Payless, a car rental brand and Apex, which is a car rental brand in New Zealand and Australia. The Company operates in three segments: North America, International and Truck Rental. North America segment provides car rentals in the United States and vehicle rentals in Canada, as well as ancillary products and services. International segment provides and licenses the Company’s brands to third parties for vehicle rentals and ancillary products in Europe, the Middle East, Africa, Asia, South America, Central America, the Caribbean, Australia and New Zealand. Truck Rental segment provides truck rentals and ancillary products and services to consumers and commercial users in the United States.."

Steve Einhorn on Wall Street Week: "More Years" Left In Bull Market

Anthony Scaramucci and Gary Kaminsky's Wall Street Week this time around featured Steve Einhorn of Omega Advisors.  While many people will be more familiar with Omega's founder Lee Cooperman due to his numerous public appearances, Einhorn is an integral part of the team as well.

In his interview, Einhorn commented that Omega feels that there's still "quite a while to go" in this bull market.  While many investors anticipate markets to get choppy once rates start rising, Omega has taken a different stance.

He thinks that the situation in Greece and the timing of the rate rise aren't that important in the grand scheme of things.  He notes, "the fundamentals that largely determine how the stock market does are quite good, and partly overlooked by investors."

Embedded below is the video of Steve Einhorn's appearance on Wall Street Week (his portion starts at 18:34):



For more from Omega Advisors, we recently highlighted Lee Cooperman's latest interview.

For more from the show, be sure to check out Byron Wien's Wall Street Week interview as well.

Viking Global Files 13G's on Ctrip.com, Qunar

Andreas Halvorsen's hedge fund firm Viking Global has filed two separate 13G's on Ctrip.com (CTRP) and Qunar (QUNR).  While they are separate companies, they are essentially the same bet: Chinese travel.  Viking already owned stakes in both companies and originally disclosed investments in the fourth quarter of 2014.


Viking Files 13G on Ctrip

First, Viking Global shows a 5.2% ownership stake in Ctrip (CTRP) with over 1.68 million shares.  The filing was made due to activity on July 7th.

We've previously highlighted the investment thesis on CTRP shares from an investment conference.

Per Google Finance, Ctrip is "a travel service provider for hotel accommodations, transportation ticketing services, packaged tours and corporate travel management in China. The Company aggregates hotel and flight information to enable business and leisure travelers to make informed bookings. The Company also helps customers book tour packages and guided tours. In addition, its corporate travel management services help corporate clients manage their travel requirements. The Company also offers Internet-related advertising and other related services. The Company enables its customers to choose and reserve hotel rooms in cities throughout China and abroad; book and purchase transportation tickets for domestic and international flights and trains, and choose and reserve packaged tours that include transportation and accommodations, as well as guided tours and other value-added services in some instances."


Viking's Qunar Filing

Second, Viking now shows a 6.5% ownership stake in Qunar (QUNR) with over 10.15 million shares.  The filing was made due to activity on July 7th.

Per Google Finance, Qunar is "engaged in offering mobile and online commerce platform for travel in China. The Company offers a range of travel products, including flights, hotels, vacations packages, attraction tickets and other travel related offerings. The Company has developed Qunar Travel, its mobile application, which enables its users to search for and purchase travel products. The Company's Software as a service (SaaS) system provides an online presence for over 240,000 travel service providers. Its search engine provides real-time travel products information directly sourced from travel service providers and through its SaaS platform. The Company's main lines of business include flight tickets, hotels, vacation packages and attraction tickets. The Company also offers display advertising, train tickets, car services, smart lodging and other services."

You can also view another stock Viking recently bought here.

ValueAct Capital Trims Adobe Systems Stake Again

Jeff Ubben's activist investment firm ValueAct Capital has filed a Form 4 with the SEC regarding its position in Adobe Systems (ADBE).  Per the filing, ValueAct trimmed its ADBE position on July 14th-16th.

In total, ValueAct sold 1.693 million shares at prices of $82.11, $82.06, and $82.45.  After these sales, ValueAct still owns just over 14 million shares of Adobe. 

This is the second time ValueAct has trimmed its Adobe stake in recent months.  In fact, they've been cutting their exposure to the name gradually since 2013 when they owned as much as 25 million shares.

Per Google Finance, Adobe Systems is "a software company. The Company offers products and services for professionals, marketers, application developers, enterprises and consumers for creating, managing, delivering, optimizing and engaging with content. Adobe markets and licenses its products and services through app stores and its Website www.adobe.com. The Company's operates in three segments: Digital Marketing, Digital Media, and Print and Publishing. In Digital Media, the Company is engaged in providing tools, services and solutions that enable to create, publish and promote their content. In Digital Marketing, the Company is engaged in providing solutions and services for creating, managing, executing, measuring and optimizing digital advertising and marketing campaigns. Adobe's Print and Publishing segment addresses various market opportunities, including eLearning solutions, technical document publishing, Web application development and high-end printing.."

You can view additional recent portfolio activity from ValueAct here.

Fairholme Capital Shows Seritage Growth Properties Position

Bruce Berkowitz's investment firm Fairholme Capital has filed a 13G with the SEC regarding shares of Seritage Growth Properties (SRG).  Per the filing, Fairholme now owns 13.2% of Seritage with over 3.25 million shares.

This is a newly disclosed position for Berkowitz as Sears (SHLD), one of his top holdings, recently formed a REIT (Seritage) to hold 254 stores.  The filing was made due to activity on July 6th.  Seritage recently announced expiration and oversubscription of its rights offering.

Hedge Fund Links ~ 7/17/15

Alpha or Beta in the eye of the beholder: what drives hedge fund flows [SSRN]

Hedge funds reassess China after market free fall [NYTimes]

Marketing your hedge fund: change or die [HF Intelligence]

Investors focus on activism [Global Investor Magazine]

Lone Pine Capital Almost Doubles Charter Communications Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding its position in Charter Communications (CHTR).  Per the filing, Lone Pine now owns 5.7% of the company with over 6.33 million shares.

This is a sizable increase from the around 3.3 million CHTR shares they owned at the end of Q1.  The filing was made due to activity on July 6th.

Charter has announced a takeover of Time Warner Cable (TWC) and Bright House.  They swooped in for the assets once it became clear that Comcast's (CMCSA) previous bid for TWC wasn't going to be approved by regulators and was called off.  Many investors seem to think, however, that CHTR's deal will go through.

As such, arbitrageurs have been going long TWC and shorting the corresponding amount of CHTR, driving down the price.  The deal spread on this was around 9% at one point but recently is closer to 6-7%.  Lone Pine saw this as an opportunity and almost doubled its stake. This stock been a consensus buy among hedge funds we track in our Hedge Fund Wisdom newsletter and has been flagged numerous times in past issues.

Per Google Finance, Charter Communications is "a provider of cable services in the United States, offering a variety of entertainment, information and communications solutions to residential and commercial customers. The Company sells its video, Internet and voice services primarily on a subscription basis, often in a bundle of two or more services. The Company provides broadband communications solutions to business and carrier organizations, such as video entertainment services, Internet access, business telephone services, data networking and fiber connectivity to cellular towers and office buildings. Through its hybrid fiber and coaxial cable network, the Company offers its customers traditional cable video services, as well as advanced video services, Internet services and voice services. The Company’s voice services are primarily provided using voice over Internet protocol (VoIP) technology, to transmit digital voice signals over the Company’s systems."

Delivering Alpha Conference Notes: Richard Perry, Eric Mindich, Bill Ackman, Nelson Peltz, Jeff Smith & More

The 2015 Delivering Alpha Conference hosted by Institutional Investor and CNBC is currently taking place and we wanted to highlight some of the thoughts from top investment managers on the best ideas panel and other panels.  Here's a brief summary of what each manager said:


Delivering Alpha Conference 2015 Notes

Richard Perry (Perry Capital): He feels Puerto Rico could possibly be the 51st state and thinks it's an interesting place to invest; he said GO bonds are safe and will trade at par. Perry argued that Greek bonds trading at 50 cents on the dollar could eventually return to par as there's a 'meaningful possibility' that a Greek bailout would actually be followed through.


Eric Mindich (Eton Park Capital):  He said that it's mostly individual investors in the turbulent Chinese A shares market.  He called the H shares more interesting.  He's a bit troubled by the future of the euro due to the situation in Greece.


Nelson Peltz (Trian Fund):  Peltz talked about his activist investment in DuPont (DD) and noted that he'd "rather be rich than right."  He continues to like PepsiCo (PEP) and thinks the company can deliver earnings growth each quarter but could do better.  Commenting on McDonald's (MCD), he said that the culture needs to be flipped on its head and it could take years.  Peltz feels Pentair (PNR) has the potential to become a platform company.  He said he has two new positions, one industrial and one he's not naming which account for 1/3 of his capital.  We recently highlighted some of Trian Fund's portfolio activity here.


Bill Ackman (Pershing Square): Ackman likes businesses that will withstand the test of time and he avoids tech since it's 'too dynamic.'  He mentioned that a lot of people haven't been talking about one of his newest investments: Fannie Mae and Freddie Mac and he really likes these.  Peltz chimed in that he doesn't know anything about the company but thinks Fannie is his favorite of Ackman's investments.  While some investors like Bruce Berkowitz (Fairholme Fund) have played the preferred shares, Ackman has a large position in common stock.  He says it offers the most upside but also conceded that it has the most downside too.  Ackman also voiced concerns on China, citing leverage and lack of transparency.  He says that almost every company he owns today is some sort of 'platform company' and we've highlighted this concept via Ackman's presentation at the Sohn Investment Conference.


Jamie Dinan (York Capital):  He keeps a lower media profile so it's always good to get his thoughts.  He avoids leverage since he lost a lot on margin in 1987 which was a very valuable lesson for him.  His keys to success?  Go where the action is and respect risk parameters.  Dinan notes that if you're in a position and the rules change, that's when bad trades happen.  York has more than half its base in illiquid credit.  He likes Japan, noting that "The Bank of Japan is your friend" and valuations are good with possible corporate governance changes coming.  He compared Japan now to the US in the 1980s in an economic sense.  He noted they've invested $700 million in Indiana toll roads.  Dinan also said he likes Puerto Rico but not the GO bonds.  He prefers complex infrastructure plays.


Jeff Smith (Starboard Value):  He mentioned a new idea of his, Macy's (M).  He thinks you get the company 'for free' when you take out the EV of its real estate.  He values the real estate at around $21 billion and hopes to work with management as he thinks M is worth $125 per share.


Bill Miller (Legg Mason):  He continues to like airlines stocks, saying they're in a long-term uptrend.  He likes Delta (DAL).  Commenting on bonds, he said that there's a benign bond market.  He also loves Amazon.com (AMZN) which is his biggest position at 6%.  He also likes builders and they're a big part of his portfolio as well, as he thinks they'll earn around 20% a year.


Jeff Gundlach (DoubleLine Capital):  He doesn't think the Fed will raise rates in 2015.  He said he's fond of emerging market debt (dollar denominated) and some high yield bonds (a shorter-term view on the latter).  He thinks high yield bonds will be a 'debacle' in 3-4 years.  Regarding bond rates, he notes they're rising secularly and went on to say that this is a good thing which most people don't realize.  Bond portfolios want rates to rise since you can reinvest at higher rates.  Looking extremely long term, he thinks India is a great place to put cash for the next 50 years.  Lastly, he also mentioned that he's allergic to companies that don't make money (AMZN).  He mentioned he bought Annaly Capital (NLY) recently and is out of his Apple (AAPL) position.  You can hear more from Gundlach in his recent Wall Street Week interview.


Keith Meister (Corvex Capital): He pitched American Realty Capital Properties (ARCP), a name he's presented at previous conferences as well (he owns 8% of the company).  He thinks you're taking 'bond like' risk for 'equity like' returns with this one and that the stock will pop once they reinstate the dividend and sees 25-50% upside.  Our Hedge Fund Wisdom newsletter analyzed the company if you want to play catch up quickly.


Tom Sandell (Sandell Asset Management):  His best idea was Ethan Allen (ETH), a furniture retailer.  He notes the company has practically zero debt and could be an ideal private equity candidate for a takeover.


Paul Singer (Elliott Management):  He likened the situation in China to potentially worse than the subprime crisis.  He thinks that perception of securities there has been impaired and it's just 'wild.'  Authorities there are trying to sustain the market with all kinds of moves but confidence is damaged by some of these rules.  He said the 70% haircut that Argentina forced on bondholders was the most severe he's seen in a large economy.  Singer said his firm essentially manages risk by putting in a lot of effort, a hands-on approach (basically activism).

...

Check back for more updates later.

What We're Reading ~ 7/15/15

The Devil's Financial Dictionary [Jason Zweig]

Discovery Communications and the uncertain future of pay TV [Punch Card]

Charlie Munger's favorite life hack [Business Insider]

Profile of Pat Dorsey [Barrons]

The single most important element to successful investing [The Felder Report]

Single sentence investing philosophies [Morgan Housel]

In defense of corn, the world's most important crop [Washington Post]

A pitch on Cimpress (CMPR) [ValueConferences]

Decoding China's swoon and its impacts [Going Long]

Little known French billionaire circles US cable market [WSJ]

Drahi's American cable dream faces harsh reality [WSJ]

Netflix and the conservation of attractive profits [Stratechery]

Aldi and Lidl are ready to invade the US, beware Walmart & Target [Forbes]

Leon Black's sell-everything call has been heard by his rivals [Bloomberg]

Lee Cooperman's Masters In Business Interview

Barry Ritholtz's podcast on Bloomberg Radio called Masters in Business recently featured an interview with Omega Advisors' Lee Cooperman.

You can listen to the full interview here but we wanted to offer a few quick takeaways:

- He attributes his success to a combination of hard work, education, and luck.

- The only place he feels is a bubble currently is fixed income and interest rates are going higher

- Ritholtz mentioned research he's done on stock market returns when rates are rising. He noted that the only time stocks didn't do so well was when you're raising rates from already high levels and with inflation.  He says that when you're starting from a low base (like we are now), that returns tend to be favorable and Cooperman agreed.

- Cooperman looks at a top down macro level to survey the land and then drills down to specific companies.  He looks for "more growth at a lower multiple."

- He loves what he does and consumes content all the time.  He's always reading about companies, industries, macro stats, and meeting with other investors or companies trying to get a feel for how things are going and what will happen going forward.

- Cooperman is long Japan via the indexes rather than individual stocks because he doesn't have individual expertise there, but he has a macro view on the country and has expressed it as such.

- When a stock moves against him, sometimes he doubles down, sometimes he sits tight, and sometimes he sells.  It really depends on the specific situation.  If something has tangibly changed, you've got to make a different decision. 

-  "What is your sell discipline?"  1.  If it hits our price objective, even without circumstances changing, they sell.  2.  Not everything unfolds the way you anticipated, so get out.  3.  If you find a better idea, switch the capital there.  4.  If they change their view on the market and want to reduce exposure.

- On hedging: "We tend to be long-oriented.  Our short positions tend to be 5-15% of the fund.  We don't run a big gross book and a small net book, I find that very difficult."

- Average holding period:  Half our asset base is taxable, so we try to focus long-term.  75% of our investments have a horizon of over a year.

- For people looking into the business, his advice:  get a good education, don't go into a field just for the money, go to work for someone you respect and admire to build a good foundation.

- On what he knows today that he wished he knew when he first started: He wish he would have started his hedge fund earlier.


We've highlighted some of Cooperman's recent portfolio activity here.

Greenlight Capital Q2 Letter: New Positions in Applied Materials, Bank of New York Mellon

David Einhorn's hedge fund Greenlight Capital is out with its second quarter letter.  Greenlight returned (1.5)% in Q2 and year-to-date is (3.3)%.  Their average exposure was 103% long and 86% short, leaving them net long only 17%.  The letter details numerous recent portfolio moves:

New long positions: Applied Materials (AMAT), Bank of New York Mellon (BK), CNX Coal Resources (CNXC)

Sold long positions: Altice (AMS:ATC), Conn's (CONN), EMC (EMC), Marvell Technology (MRVL), Nokia (NOK), Playtech (LON:PTEC)

Covered shorts: Intuitive Surgical (ISRG), Vale (VALE)

Einhorn talks about all of the positions in the letter and also gives commentary on Micron (MU), one of his biggest positions that has sold-off recently.

At the end of Q2, Greenlight's largest positions in alphabetical order were: Apple (AAPL), CONSOL Energy (CNX), General Motors (GM), gold, Micron Technology (MU), and SunEdison (SUNE).

Embedded below is Greenlight's Q2 letter:

   Greenlight Q2 15

ValueWalk first posted the letter.

Viking Global Starts Whiting Petroleum Stake

Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding shares of Whiting Petroleum (WLL).  Per the filing, Viking now owns 5% of Whiting with over 10.26 million shares.

This is a new equity position for Viking as they did not show a stake as of the end of the first quarter.  The filing was made due to portfolio activity on July 2nd.

After shares plummeted from $90 down to $25 in 2014, shares of WLL have largely traded sideways throughout 2015.

We've also highlighted other recent portfolio activity from Viking Global here.

Per Google Finance, Whiting Petroleum is "an independent oil and gas company. The Company is engaged in exploration, development, acquisition and production of crude oil, NGLs and natural gas in the Rocky Mountains and Permian Basin regions of the United States. The Company's Rocky Mountains operations include assets in the states of Colorado, Montana, North Dakota, Utah and Wyoming. The Company's Permian Basin operations include assets in Texas and New Mexico. The Company's other operations primarily include its assets in Arkansas, Michigan, Oklahoma and Texas."

Balyasny Shows Stake in Green Plains Partners; Adds To ChemoCentryx

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

Discloses New Stake in Green Plains Partners

First, Balyasny now owns 6.29% of Green Plains Partners (GPP) with 1 million shares. 

This is a newly disclosed position as Green Plains Partners shares recently started trading at the end of June.  GPP was spun-off from Green Plains (GPRE).

Balyasny previously owned a stake in parent company GPRE but their Q1 13F filing indicates that they exited that position in Q1.

Per Google Finance, Green Plains Partners "owns, operates, develops and acquires ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. The Company operates through four segments: production of ethanol and distillers grains (ethanol production); corn oil production; grain handling and storage and cattle feedlot operations (agribusiness), and marketing, merchant trading and logistics services for self-produced and third-party ethanol, distillers grains, corn oil and other commodities (marketing and distribution). The Company's parent company is Green Plains Inc. The Company owns and operates approximately 27 ethanol storage tanks. Its ethanol storage assets are engaged in storing and loading the ethanol that its parent produces at its ethanol production plants. It provides terminal services and logistics solutions through its fuel terminal facilities. Its transportation assets include a leased railcar fleet of approximately 2,200 railcars."


Balyasny Adds To ChemoCentryx Stake

Second, Balyasny indicates that they own 5.02% of ChemoCentryx (CCXI) with over 2.19 million shares.

This is an increase from the 1.86 million shares they owned at the end of Q1.  The latest filing was made due to activity on June 24th.

Per Google Finance, ChemoCentryx is "a biopharmaceutical company. The Company is focused on discovering, developing and commercializing orally-administered therapeutics to treat autoimmune diseases, inflammatory disorders and cancer. It targets the chemoattractant system, which is a network of molecules, including chemokine ligands and their associated receptors, as well as related chemoattractant receptors. Each of its drug candidates is a small molecule designed to target a specific chemokine or chemoattractant receptor, thereby blocking the inflammatory response driven by that particular chemokine while leaving the rest of the immune system unaffected. The Company's product portfolio includes CCX140, CCX872, CCX168, Vercirnon (Traficet-EN or CCX282) and CCX507."

Byron Wien's Interview on Wall Street Week

Anthony Scaramucci and Gary Kaminsky this week interviewed Wall Street legend Byron Wien on their rebooted Wall Street Week.

We've also previously highlighted Byron Wien's 20 lessons learned throughout his investing career.

Embedded below is the video of Byron Wien on Wall Street Week:



If you missed it, be sure to check out Bruce Richards' Wall Street Week interview.

Carl Icahn Files 13D's on Tegna, Gannett After Split

Activist investor Carl Icahn has filed a 13D on Gannett (GCI) as well as Tegna (TGNA).  The company recently split into two, with the publishing assets becoming Gannett and the rest of the company listing as Tegna.


Per Google Finance, Tegna is "a media and marketing solutions company. The Company is engaged in providing local content on a range of platforms in the United States. The Company operates through business segments: Broadcasting and Digital. It also provides digital marketing services and Internet-based human resource solutions. Its digital media products and services include search, social media and Website development, among others. The Company offers its services in a range of geographies, demographics and content areas. It provides consumers with the information and entertainment, and connects them to their communities through the platforms, including television stations, desktop, smartphone and tablet products. Its Broadcasting segment includes an independent station group of network affiliates. The Company's Digital business segment includes Cars.com, CareerBuilder, PointRoll and Shoplocal."

Per his 13D filing, Icahn shows a 6.51% ownership stake in Gannett (GCI) with 7,483,683 shares.  Icahn acquired additional shares in connection with the separation.

You can view additional recent portfolio activity from Icahn here.

Pleasant Lake Partners' Presentation on Magnachip; Discloses Del Taco Stake

Jonathan Lennon's hedge fund firm Pleasant Lake Partners has filed an amended 13D with the SEC regarding its stake in Magnachip (MX).  Per the filing, Pleasant Lake owns 9.95% of the company and is one of the largest shareholders.  This is an increase from the 7.7% they owned when we highlighted their original 13D filing on Magnachip.

Pleasant Lake's Presentation on Magnachip

Included in its filing is a letter to Magnachip's chairman, as well as a presentation with their thoughts on the company.

Embedded below is Pleasant Lake's slideshow presentation on Magnachip:




Discloses Del Taco (TACO) Stake

Second, Pleasant Lake Partners has filed a 13G with the SEC regarding shares of Del Taco Restaurants (TACO).  Per the filing, Pleasant Lake now owns 11.5% of the company with over 4.46 million shares.

This is a newly disclosed position as they did not report ownership at the end of Q1.  The filing was made due to activity on June 30th.

Per Google Finance, Del Taco is "a food service company. The Company operates quick service restaurant (QSR) chain under Del Taco in the United States. The Company offers Mexican- cuisine and American classics menu. Its menu includes various categories, such as tacos, burritos, Fresca bowls, American grill, quesadillas and nachos, desserts and shakes, sides and salads, combos and fiesta pack, kid's meals, drinks, breakfast, and Buck & Under. In addition, its menu includes Double Beef Classic Taco, Del Combo Burrito, Del Beef Burrito, MACHO Combo Burrito, Double Del Cheeseburger, Bacon Double Del Cheeseburger, Deluxe Chili Cheddar Fries, MACHO Nachos, Caramel Cheesecake Bites, Chocolate Chip Cookies, CrunchTada Tostada and Turkey CrunchTada Tostada, among others. The Company and its franchisees operate approximately 550 restaurants in 16 states."

Baupost Group Discloses Biotie Therapies Stake

Seth Klarman's investment firm Baupost Group has filed a 13G with the SEC regarding shares of Biotie Therapies (BITI).  Per the filing, Baupost now owns 12.92% of the company with over 130.68 million shares.

This is a newly disclosed position for the firm as they did not show a stake at the end of the first quarter.  The filing was made due to activity on June 30th.

We've highlighted some other portfolio activity from Baupost Group here.

Per Google Finance, Biotie Therapies is "a Finland-based biopharmaceutical company, which specializes in the field of neurodegenerative and psychiatric disorders. Its product portfolio comprises six drugs: Selincro (nalmefene), an orally administered opioid receptor ligand applied in the alcohol dependence therapy; Tozadenant (SYN115), a is an oral, potent and selective adenosine 2a (A2a) receptor antagonist for the Parkinson’s disease treatment; NRL-1, a intranasal formulation of diazepam for patients with epilepsy; Nepicastat (SYN117), an orally administered, potent and selective inhibitor of dopamine beta hydroxylase (DBH) for the cocaine dependence treatment; BTT-1023, a monoclonal antibody targeting Vascular Adhesion Protein 1 (VAP-1) used in inflammation and fibrosis treatment; and SYN120, an oral, potent and dual antagonist of the 5-HT6 and 5HT2a receptors used in Alzheimer’s disease and other cognitive disorders, such as schizophrenia. It is a parent of Biotie Therapies GmbH, among others."

Soros Fund Boosts Cypress Semiconductor Position

George Soros' family office Soros Fund Management has filed a 13G with the SEC regarding shares of Cypress Semiconductor (CY).  Per the filing, Soros now owns 5.32% of the company with over 17.66 million shares.

This is an increase in their position size as they previously owned 13.2 million shares at the end of the first quarter.  The filing was made due to activity on June 29th.

We recently detailed other portfolio activity from Soros Fund here as well.

Per Google Finance, Cypress Semi is "a provider of mixed-signal programmable solutions. The Company's offerings include PSoC 1, PSoC 3, PSoC 4 and PSoC 5LP programmable system-on-chip families. It caters to markets, including industrial, mobile handsets, consumer, computation, data communications, automotive and military. The Company operates in four segments: Programmable Systems Division, Memory Products Division, Data Communications Division and Emerging Technologies Division. The Programmable Solutions Division designs and develops solutions for end-product manufacturers. The Memory Products Division designs and manufactures SRAM products and non-volatile RAMs (random access memories). The Data Communications Division focuses on solutions for industrial, handset and consumer applications. The Emerging Technologies Division consists of the Company's subsidiaries, AgigA Tech, Inc. and Deca Technologies, Inc."

Hedge Fund Links ~ 7/10/15

Tactical Portfolios: Strategies and Tactics for Investing in Hedge Funds [Bailey McCann]

A deep dive into the universe of women-run hedge funds [HVST]

A special report on Asia's hedge funds [Bloomberg Brief]

Hedgie shrewdly pulled assets from Greece ahead of crisis [NYPost]

Julian Robertson shrugs as world churns [Bloomberg]

Perspective on working in the hedge fund industry [ShortSighted Capital]

Best 100 hedge funds [Barrons]

Bravado and high returns from Italian fund manager [NYTimes]

Hedge fund bet hits pensions [WSJ]

Capitalize For Kids Investment Contest

Capitalize for Kids, in partnership with FactSet, has launched their investment challenge.  The winner of the contest receives a one-year complimentary subscription to the FactSet Workstation, access to GLG for further investment due diligence, and a ticket to the Sohn Canada Conference later this year.

For full details on prizes, judges, and the rules, head to www.capitalizeforkids.org/challenge.php

The deadline to submit your investment ideas is Midnight on August 21st, 2015.

The goal of this challenge is to identify a security that will return 20x in 20 years (16.2% compounded).  The ideas from the Capitalize For Kids Challenge will make meaningful contributions to children's brain and mental health by supporting high-quality ideas for the C4K Endowment.

Click here to learn more about the contest.

Embedded below is the flyer for the contest:


 

What We're Reading ~ 6/8/15

The Great Minds of Investing [William Green]

A moat of kisses and peanut butter cups ~ Hershey [Scuttlebutt Investor]

Why eBay looks enticing after the PayPal spinoff [MicroFundy]

Byron Wien's life lessons: formative experiences shape risk tolerance [Wall Street Week]

Byron Wien's chat with the 'smartest man in Europe' [Barrons]

US economy is still the promised land [Yardeni Research]

In defense of stock buybacks [Boston Globe]

A graphic of the top languages spoken across the globe [SCMP]

Billionaire Rales brothers ready for a new act in split of Danaher [Washington Post]

Male investors vs female investors [WSJ]

Viacom is having a midlife crisis [Bloomberg]

Activist investors love spin-offs, here's why you should too [Fortune]

Banks and exchanges turn to blockchain [FT]

Future returns on wealth will be lower [Economist]

The inside story of how iPhone crippled BlackBerry [WSJ]

Greenlight Capital Discloses CNX Coal Resources Stake

David Einhorn's hedge fund firm Greenlight Capital has filed a 13D with the SEC regarding shares of CNX Coal Resources (CNXC).  Per the filing, Einhorn now owns 47.3% of the company with over 5.48 million shares.

The company recently IPO'd and is a master limited partnership (MLP) formed by CONSOL Energy (CNX).  Einhorn's firm owns a sizable stake in the latter as well.

Greenlight bought CNXS shares in the private placement at $15 and also in the open market at $15.05.

We've highlighted other recent portfolio activity from Greenlight here.

Per Google Finance, CNX Coal Resources is "a producer of thermal coal. The Company is formed by CONSOL Energy Inc. (CONSOL Energy) to manage and develop all of its thermal coal operations in Pennsylvania. Its initial assets include around 20% undivided interest in and operational control over, CONSOL Energy's Pennsylvania mining complex, which consists of around three underground mines and related infrastructure that produce bituminous thermal coal that is sold primarily to electric utilities in the eastern United States. Its Pennsylvania mining complex, which includes the Bailey mine, the Enlow Fork mine and the Harvey mine, has coal reserves. The Company mines its reserves from the Pittsburgh No. 8 Coal Seam, which is a contiguous formation of uniform, thermal coal. The Pennsylvania mining complex includes around 785.6 million tons of coal reserves with an average gross heat content of approximately 13,000 British thermal units per pound and an average sulfur content of around 2.38%."

Showtime's Hedge Fund Show 'Billions' Video Trailer

Showtime is releasing a new show entitled 'Billions' next year.  The show's description is as follows:

"BILLIONS is a bold, contemporary drama that melds the worlds of ultra-wealth, influence and corruption as personified in two highly ambitious opposing figures: hard-charging, blue-blooded, politically connected U.S. Attorney Chuck Rhoades (Emmy and Golden Globe winner Paul Giamatti) and brilliant, calculating, blue-collar billionaire hedge fund king, Bobby "Axe" Axelrod (Emmy and Golden Globe winner Damian Lewis). Set amongst the Machiavellian machinations of New York City power politics and finance, BILLIONS weaves a complex, intricate narrative featuring a high-stakes game of predator-versus-prey."

The series is written by Brian Koppelman, David Levien, and Andrew Ross Sorkin.

Embedded below is the video preview of the Showtime's upcoming show Billions:

SRS Investment Management Discloses eHi Car Services Stake

Karthik Sarma's hedge fund firm SRS Investment Management has filed a 13G on shares of eHi Car Services (EHIC).  Per the filing, SRS now owns 15.3% of the company with over 8.33 million shares (inclusive of 333,334 class A shares held via 166,667 ADSs).

This is a newly disclosed position as it didn't show up in their last 13F as of the end of Q1.  The filing was made due to activity on June 30th.  As of the end of Q1, SRS had a lot of exposure to other car rental/transportation plays such as Avis Budget (CAR ~ their largest US long worth over $590 million at Q1's end) and Hertz (HTZ ~ their fifth largest US long).

Just recently, we've highlighted how Tiger Global has also increased its stake in eHi Car Services.

About SRS Investment Management

Prior to founding SRS, Karthik Sarma worked at Tiger Global.  He started SRS in 2007 and has a large focus on international markets (particularly in India, China, etc) and typically invests in technology, media and other high-growth industries.  SRS's latest 13F filing indicates they manage in excess of $2.5 billion and that doesn't include their foreign positions.

About eHi Car Services

Per Google Finance, eHi is "a China-based holding company, which provides car rentals and car services to both individual customers and corporate clients. The Company utilizes mobile and Internet platforms to provide online to offline (O2O) mobility solutions. The Company operates its car rentals business primarily through its People's Republic of China (PRC) subsidiaries, Shanghai eHi Car Rental Co., Ltd. (eHi Rental) and eHi Auto Services (Jiangsu) Co., Ltd. (eHi Jiangsu), and their subsidiaries and branches."

12 West Capital Increases Position in Diana Containerships

Joel Ramin's hedge fund firm 12 West Capital has filed an amended 13D with the SEC regarding its position in Diana Containerships (DCIX).  Per the filing, 12 West now owns 26.1% of the company with over 19.28 million shares.  This is up from the 18.85 million shares they owned at the end of the first quarter.

The filing indicates that Ramin's hedge fund purchased DCIX shares throughout June, with most of the recent buying coming at the end of the month at prices between $2.2040 and $2.4181.

Shares of Diana Containerships have continued to fall and currently trade around $1.91.

Per Google Finance, Diana Containerships is "a global provider of shipping transportation services through its ownership of containerships. The Company's vessels are employed primarily on time charters with liner companies that are carrying containerized cargo along shipping routes. Each of the Company's vessels is owned by its separate wholly owned subsidiaries. The commercial and technical management of its fleet, as well as providing administrative services relating to the fleet's operations, are carried out, by its wholly owned subsidiary, Unitized Ocean Transport Limited (UOT). The Company's fleet consists of approximately seven panamax and four post-panamax containerships with a combined carrying capacity of 52,359 twenty-foot equivalent units and a weighted average age of 11.2 years. The Company's vessels include Sagitta, Centaurus, Santa Pamina, Cap Domingo, Puelo, Pucon and Cap Doukato, among others.." 

Warren Buffett Files Form 3 on Kraft Heinz (KHC)

Berkshire Hathaway's Warren Buffett has filed a Form 3 with the SEC regarding his position in Kraft Heinz (KHC).  Per the filing, Buffett's entities have disclosed ownership of 325,634,818 shares of common stock and 80,000 shares of 9.00% cumulative compounding preferred stock series A.

H.J. Heinz (former ticker HNZ) and Kraft Foods (former ticker KRFT) completed their merger recently and shares just began trading as a merged company under symbol KHC.  It's up 2% on its first day of trading.