Paulson & Co Trims Synergy Pharmaceuticals Position

John Paulson's hedge fund firm Paulson & Co has filed a Form 4 with the SEC regarding its stake in Synergy Pharmaceuticals (SGYP).  Per the filing, Paulson sold over 3.47 million shares in total on September 16th and 19th at prices around $5.61. 

After these transactions, Paulson & Co is left with exposure to SGYP of over 24.28 million shares.

A previously filed Form 3 with the SEC indicates that they had notional principal amount derivative agreements in place as well in the form of cash settled swaps representing share equivalents of 2.21 million shares with strikes ranging from $3.31 to $6.347 and expiration dates ranging from November 4th, 2016 to October 5th, 2017.

You can view other recent portfolio activity from Paulson & Co here.

Per Google Finance, Synergy Pharmaceuticals is "a biopharmaceutical company focused on the development and commercialization of gastrointestinal (GI) therapies. The Company's GI platform includes two lead product candidates: plecanatide and dolcanatide. It is engaged in the discovery, research and development involving uroguanylin analogs for the treatment of functional GI disorders and inflammatory bowel disease. Plecanatide is the Company's uroguanylin analog being evaluated for use as a once-daily tablet for two functional GI disorders, chronic idiopathic constipation (CIC) and irritable bowel syndrome with constipation (IBS-C). Plecanatide is a 16-amino acid peptide that is structurally identical to uroguanylin with the exception of a single amino acid change. Dolcanatide is also its uroguanylin analog being explored for inflammatory bowel disease (IBD). Dolcanatide is designed to be an analog of uroguanylin with resistance to standard digestive breakdown by proteases in the intestine."

Hedge Fund Links ~ 9/23/16

SEC charges Leon Cooperman with insider trading [SEC]

Hedge fund performance fees: the days of 2/20 are over [ValueWalk]

Dan Loeb: BOJ move will be 'positive' for markets [Reuters]

More hedge fund firms seeing a decline in assets [PIonline]

Perry Capital's assets plunge as wagers backfire [Bloomberg] 

The beginning of the end for high hedge fund fees? [Institutional Investor]

Some of the best known hedge funds can't hang on to client capital [Bloomberg] 

Funds across globe cut fees in battle for investors [Reuters]

Mark Okada says surge in passive strategies will be boon [Reuters]

Star names struggle as smaller hedge funds make hay [WSJ]

The guru who only talks to the hedge fund elite [Bloomberg]

Berkshire Hathaway Symposium Panel Videos

The Museum of American Finance has posted videos of the Berkshire Hathaway Symposium Panel.  It features Jason Zweig moderating a discussion between Tom Russo (Gardner Russo Gardner), Paul Lountzis (Lountzis Asset Management), and Whitney Tilson (Kase Capital).

The panel examines topics such as: what's the best advice you received from Warren Buffett?  What are the flaws in the Berkshire model?  Why did you buy Berkshire Hathaway stock? What aspects of Berkshire Hathaway can be emulated?  And then audience Q&A.

Embedded below are the videos from the Berkshire Hathaway Symposium Panel:

What's the best advice you received from Warren Buffett?




What are the flaws in the Berkshire model?




Why did you buy Berkshire Hathaway stock?




What aspects of Berkshire Hathaway can be emulated?




Audience Q&A.

What We're Reading ~ 9/21/16

But What If We're Wrong?: Thinking About the Present As If It Were the Past [Klosterman]

Profile of Alphabet's CFO Ruth Porat [Fortune]

The third transportation revolution [Lyft's CEO]

Electric vehicles: it's not just about the car [Bloomberg New Energy Finance]

US setting federal ground rules for self-driving car push [Forbes]

Profile of Ulta's CEO Mary Dillon [Fortune]

2016 US mobile app report [comscore]

On the inevitability of everything 'in the cloud' [Digits To Dollars]

8 price action signals every trader should know [Tradecity]

A look at Spanish banks [Exane]

Heavy equipment glut weighs on machine makers [WSJ]

Inside the cannibalistic culture of China's Tencent [Bloomberg]

Q&A with Chase Carey [Formula 1]

How Wells Fargo's high pressure sales culture spiraled out of control [WSJ]

A look through the eyes of beer wholesalers [Beverage World]

AT&T wants to blanket the country with gigabit wi-fi from utility poles [Gizmodo]

Capitalize For Kids Conference: Our Readers Save $500 on Tickets

On October 26th and 27th, Capitalize for Kids will present their 3rd annual Investors Conference at Arcadian Court in Toronto, in partnership with the Sohn Conference Foundation.  More than 20 world-renowned money managers will present their highest conviction ideas in front of 400 of the most prominent institutional investors in North America.  All proceeds are allocated to solving the toughest challenges in children's brain and mental health.

Discount for Market Folly readers:  Save $500 on individual tickets by registering here and using promo code: C4K2016MF

Capitalize For Kids Speakers List 2016

- Dan Loeb, Third Point
- Cliff Asness, AQR Capital
- Clint Carlson, Carlson Capital
- Jeff Smith, Starboard Value
- Thomas Russo, Gardner Russo & Gardner
- Ed Garden, Trian Fund Management
- Alexander Roepers, Atlantic Investment Management
- Dan Farb, Highfields Capital
- Aaron Cowen, Suvretta Capital
- Anna Nikolayevsky, Axel Capital
- Brad Dunkley, Waratah Capital
- Satish Rai, OMERS
- Tom Wagner, Knighthead Capital
- Michael Gentile, Formula Growth
- Brian D'Costa, Algonquin Capital
- Miguel Fidalgo, Triarii
- Hon. Michael Wilson, Former Ambassador for Canada to the US
- Aaron Klein, Former Chief Economist of the US Senate Banking, Housing & Urban Affairs Committee

Sessions include best ideas from prominent money managers, fireside chats with investment greats, implications of the US election, and investing in mental health.  Over the course of a day and a half, more than $1.5 million will be raised to help the toughest challenges in children's brain and mental health.

Event Details

When: October 26th & 27th, 2016

Where: Arcadian Court in Toronto, Canada

Registration:  http://www.capitalizeforkids.org/

Embedded below is the conference agenda:





Click here to get tickets and remember our readers save $500 with promo code: C4K2016MF

Carl Icahn Dumps Over Half of Chesapeake Energy Position

Activist investor Carl Icahn has filed an amended 13D with the SEC regarding his position in Chesapeake Energy (CHK).  Per the filing, Icahn now owns 4.55% of the company with 28.27 million CHK shares.

This means he sold over 44.77 million shares since the end of the second quarter as he previously owned over 73 million CHK shares.

Per the filing, he sold the bulk of the position on September 19th at prices of $7.06.

Icahn also issued this statement regarding Chesapeake:  "We believe that over the last few years Doug Lawler and his team have done an admirable job, especially in light of the circumstances. We reduced our position to recognize a capital loss for tax planning purposes."

For more on this investor, we recently posted up Icahn's talk at the Delivering Alpha conference.

Per Google Finance, Chesapeake Energy is "a producer of natural gas, oil and natural gas liquids (NGL) in the United States. The Company operates in two segments: Exploration and Production, and Marketing, Gathering and Compression. The exploration and production segment is responsible for finding and producing oil, natural gas and NGL. The marketing, gathering and compression segment is responsible for marketing, gathering and compression of oil, natural gas and NGL. It has positions in resource plays of the Eagle Ford Shale in South Texas; the Utica Shale in Ohio and Pennsylvania; the Anadarko Basin in northwestern Oklahoma and the Texas Panhandle, and the Niobrara Shale in the Powder River Basin in Wyoming. Its natural gas resource plays are the Haynesville/Bossier Shales in northwestern Louisiana and East Texas; the Marcellus Shale in the northern Appalachian Basin in Pennsylvania, and the Barnett Shale in the Fort Worth Basin of north-central Texas."

Jeff Saut's Latest Market Commentary

It's been a while since we checked in on Jeff Saut, market strategist at Raymond James.  His latest investment commentary is out.  He writes,

"Speaking to higher interest rates, while a quarter point increase in the Fed Funds rate would likely cause a stutter-step in the equity markets, the impact on the overall economy should be de minimis."

Embedded below is Jeff Saut's latest market commentary entitled "I Should Have!?"



You can download a .pdf copy here.

ValueAct Capital Files 13D's on Trinity Industries, CBRE Group

Jeff Ubben's activist firm ValueAct Capital has filed two amended 13D's with the SEC.

ValueAct Ups Trinity Industries Stake

First, Jeff Ubben's firm has disclosed it now owns 7.9% of Trinity Industries (TRN) with over 12 million shares.  This is up from the 10.39 million shares they owned as of July.

The filing indicates they were buying in mid August and early September at prices of $23.xx.  The 13D also says they intend to meet with management and the board about ways to enhance shareholder value.

For more from this firm, check out some of ValueAct's other recent portfolio activity.

Per Google Finance, Trinity Industries is "a diversified industrial company that owns a range of businesses providing products and services to the energy, transportation, chemical and construction sectors. The Company's products and services include railcars and railcar parts; parts and steel components; the leasing, management and maintenance of railcars; highway products; aggregates; inland barges; structural wind towers; steel utility structures; storage and distribution containers, and trench shields and shoring products. The Company's segments include the Rail Group, Railcar Leasing and Management Services Group, Construction Products Group, Energy Equipment Group, Inland Barge Group and All Other Groups. Its Rail Group is a manufacturer of freight and tank railcars in North America used for transporting a range of liquids, gases and dry cargo, through Trinity Rail Group. The Company's Railcar Leasing and Management Services Group is a provider of rail industry services in North America."


Ubben's Firm Files 13D on CBRE Group

Second, ValueAct Capital has filed a 13D with the SEC on CBRE Group (CBG), which they own 10.3% of with over 34.6 million shares.  This stake remains unchanged from August when we reported that ValueAct added to its CBG position.

The 13D contains the standard boilerplate that they will talk with management and the board about enhancing shareholder value and also highlights that one of their partners, Brandon Boze, is on the board of directors.

Per Google Finance, CBRE Group is "a holding company that conducts all of its operations through its subsidiaries. The Company is a commercial real estate services and investment company. The Company operates through the segments: The Americas; Europe, Middle East and Africa (EMEA); Asia Pacific; Global Investment Management, and Development Services. It offers services to occupiers, owners, lenders and investors in office, retail, industrial, multifamily and other types of commercial real estate. It offers commercial real estate services under the CBRE brand name, investment management services under the CBRE Global Investors brand name and development services under the Trammell Crow Company brand name. It is focused on several competencies, including commercial property, corporate facilities, project and transaction management, tenant/occupier and property/agency leasing, capital markets solutions, real estate investment management, valuation, development services and proprietary research."

Marcato Capital Exercises Call Options on Buffalo Wild Wings

Mick McGuire's activist investment firm Marcato Capital Management has filed an amended 13D with the SEC regarding its stake in Buffalo Wild Wings (BWLD).  Per the filing, Marcato owns 5.2% of the company with 950,000 shares.

Their overall economic stake remains unchanged from when they originally filed their 13D back in August.  But the filing indicates they exercised their call options on September 12th at $114 per share.

Marcato has also put together a slide deck on its thesis on BWLD and you can view it here.

Per Google Finance, Buffalo Wild Wings is "an owner, operator and franchisor of restaurants featuring various menu items. The Company's restaurants feature a bar, which offers a selection of 20 to 30 domestic, imported and craft beers on tap, as well as bottled beers, wine and liquor. The Buffalo Wild Wings restaurants feature various menu items, including its Buffalo, New York-style chicken wings spun in one of its signature sauces from sweet to screamin' hot, which includes Sweet barbeque (BBQ), Teriyaki, Bourbon Honey Mustard, Mild, Parmesan Garlic, Medium, Honey BBQ, Spicy Garlic, Asian Zing, Caribbean Jerk, Thai Curry, Hot BBQ, Hot, Mango Habanero, Wild and Blazin', or signature seasonings, Buffalo, Desert Heat, Chipotle BBQ, Lemon Pepper, and Salt & Vinegar. Its restaurants include a multi-media system, a bar and an open layout. It operates Buffalo Wild Wings, R Taco and PizzaRev restaurants, as well as sells Buffalo Wild Wings and R Taco restaurant franchises."

Delivering Alpha Conference 2016 Speaker Transcripts

Last week we posted up notes from the Delivering Alpha Conference 2016.  It featured numerous prominent hedge fund managers and now CNBC has made transcripts from various talks available.  Click the links below to read each full transcript:


Delivering Alpha Conference 2016 Transcripts

Ray Dalio (Bridgewater) and Tim Geithner (Former Treasury Secretary): Transcript

Paul Singer (Elliott Management):  Transcript

Marc Lasry (Avenue Capital) and Barry Sternlicht (Starwood): Transcript

Carl Icahn (Icahn Enterprises): Transcript

Steve Schwarzman (Blackstone Group): Transcript

Jack Lew (Treasury Secretary): Transcript

David Ganek (Level Global): Transcript 

Joseph Tsai (Alibaba): Transcript

What We're Reading ~ 9/15/16

Pre-Suasion: A Revolutionary Way to Influence and Persuade [Robert Cialdini]

How to overcome the high cost of inconsistent decision making [HBR]

If you're buying, who's selling? [Irrelevant Investor]

On simplifying investment checklists [Base Hit Investing] 

Profile of a short seller [Barrons]

Simple rules of capitalism [Collaborative Fund]

On asking questions to get answers that matter [Medium]

A look at one of the country's biggest franchisees [Forbes]

Why you should hire people toughened by failure [Entrepreneur]

Middle class incomes had fastest growth on record last year [Washington Post]

Gloom descends on luxury goods industry [Bloomberg]

A look at Bank of the Ozarks (OZRK) [MicroCapClub]

Shenzhen is making hardware like Silicon Valley makes apps [Fusion]

Sohn Conference San Francisco 2016 Only A Few Weeks Away

The 7th Annual Sohn Conference San Francisco is coming up in a few weeks.  If you're on the West Coast, this is the premiere event that features prominent investors sharing investment ideas to benefit  various charities.   For more information on the event, head to www.excellencesf.org

The beneficiaries this year include SEO Scholars, First Place for Youth, Alive and Free, Squash Drive and Meritus College Fund.  Also, a portion of the proceeds benefit their partner the Sohn Conference Foundation in their dedicated efforts toward the treatment and cure of pediatric cancer and childhood diseases.

 
Speakers List: Sohn Conference San Francisco 2016

This year's event features:

- Mason Morfit (ValueAct Capital)
- Chamath Palihapitiya (Social Capital)
- Carson Block (Muddy Waters Capital)
- Mick McGuire (Marcato Capital)
- Arjun Divecha (Grantham, Mayo, Van Otterloo & Co)
- Joseph Lawler (JFL Capital)
- Christpher Lord (Criterion Capital)
- Jeff Osher (Harvest Capital Strategies)
- Peter Palmedo (Sun Valley Gold)
- Alvin Roth (Stanford University)
- Mihir Worah (PIMCO)


Event Details

When: October 5th, 2016  11:00 AM to 6:00 PM

Where: Hyatt Regency San Francisco

Agenda:  Includes access to the Next Wave Sohn Panel of rising investors, buffet lunch, the main Sohn Conference San Francisco conference, and cocktail reception

Registration:  Click here to register for the conference


Embedded below is the conference flyer:




This is always a fantastic event and it's for great causes.  Head to www.excellencesf.org to find out more about the conference and to get tickets before they're all gone.

Pershing Square Reduces Air Products & Chemicals Stake

Bill Ackman's Pershing Square has been busy in the markets lately.  The latest activity includes selling some shares of his stake in Air Products and Chemicals (APD).  This comes after Pershing recently acquired a new stake in Chipotle (CMG) as well.

Per an amended 13D filed with the SEC, Pershing Square now owns 7.8% of APD with over 16.97 million shares (via 4 million common stock and 12.9 million underlying call options).

This is down from the previous 9.5% of the company they owned (with 20.54 million shares exposure).  The 13D filing notes that on September 12th Pershing sold over 3.5 million shares. 

The rationale for this transaction was: "The three-year commitment period for Pershing Square's co-investment vehicles in the issuer ends on September 30th, 2016.  The Reporting Persons sold the Common Stock to return capital to the PSV Funds co-investors."

Per Google Finance, Air Products & Chemicals is "an industrial gases company. The Company's Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company operates through seven segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, Materials Technologies, Energy-from-Waste, and Corporate and other. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company's Materials Technologies business serves the semiconductor, polyurethanes, cleaning and coatings, and adhesives industries. The Company manufactures and distributes products in two lines of business: Industrial Gases and Materials Technologies."

ValueAct Capital Continues To Reduce MSCI Stake

Jeff Ubben's activist firm ValueAct Capital has been reducing its stake in MSCI (MSCI).  That trend continued with the latest Form 4 they filed with the SEC.

On September 9th, 12th, and 13th, ValueAct sold a combined 225,000 MSCI shares at prices of $85.78, $85.45, and $84.99.  After these sales, Ubben's firm only owned 625,900 shares of MSCI.

In other recent activity from the firm, ValueAct also built up its Seagate (STX) stake.

Per Google Finance, MSCI "offers content, applications and services to support the needs of institutional investors throughout their investment processes. The Company's operating segment includes Index, Analytics and All Other segment. All Other segment comprises ESG and Real Estate segments. The Index operating segment is a provider of investment decision support tools, including equity indexes and equity index benchmarks. The Analytics operating segment consists of products and services used for portfolio construction, risk management and reporting. The ESG operating segment offers products institutional investors use for assessing risks and opportunities arising from environmental, social and governance issues. ESG tools are used to evaluate both individual securities and investment portfolios. The Real Estate operating segment is a provider of real estate performance analysis for funds, investors, managers, lenders and occupiers." 

Carl Icahn Files 13D on Freeport McMoRan (FCX)

Activist investor Carl Icahn has filed an amended 13D with the SEC regarding his stake in Freeport McMoRan (FCX). The filing's main purpose was to send a statement from Icahn:

"This is a classic example of activists working constructively with an existing Board and management.  Since the Company announced the "Review of Strategic Alternatives" for its Oil & Gas business in October 2015 (not coincidentally the date of our arrival on the Board), the analyst community has heavily doubted the Company's ability to execute asset sales in this environment (particularly the Deepwater Gulf of Mexico assets along with all liabilities and potential future bonding obligations).  Yesterday's announcement demonstrates the Company is making good on its stated goal of deleveraging and is on track to cut its net debt by half, from year end 2015 through the end of next year, at current copper prices.  I applaud management and the whole Board of Directors for all steps taken in this regard.     

In light of the Company's recent initiatives, and as a large shareholder with two representatives on the Board of Directors, I completely endorse CEO Richard Adkerson's recent comments that Freeport is "…open for all strategic moves, whether that means selling assets, [or] selling the company" to create value for all shareholders."

For more on this investor, we just highlighted Icahn's talk at the Delivering Alpha conference yesterday.

Per Google Finance, Freeport McMoRan is "a natural resource company with a portfolio of mineral assets, and oil and natural gas resources. The Company's segments include the Morenci, Cerro Verde, Grasberg and Tenke Fungurume copper mines, the Rod & Refining operations and the U.S. Oil & Gas Operations. It has organized its operations into five primary divisions: North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum mines. Its portfolio of assets includes the Grasberg minerals district in Indonesia, mining operations in North and South America, the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa, and oil and natural gas assets in the United States. Its Atlantic Copper smelts and refines copper concentrates, and markets refined copper and precious metals in slimes. It has a smelter at its Miami, Arizona, mining operation, and molybdenum conversion facilities in the United States and Europe."

Delivering Alpha Conference Notes 2016: Singer, Dalio, Chanos, Miller & More

CNBC & Institutional Investor's Delivering Alpha Conference is underway and below are some notes.  This post will be updated throughout the day as the various speakers/panels are ongoing:


Delivering Alpha Conference Notes 2016

Paul Singer (Elliott Associates):  Said that it's a "very dangerous time in global markets" right now.  Argued central bank independence doesn't really exist.  Noted that Bank of Japan is basically a top-10 shareholder of various Japanese corporations but the economy hasn't rebounded.  Called it insane, "It's not working, but they keep going."  Feels that investors are careless about inflation threat.  Says sell long-term bonds.    "There will come a time when inflation, despite growth suppressive policies can blow through targets and surprise everyone."  Says we're basically in the middle of close to a 40 year experiment in how leveraged a system can be, and in how many ways.  Thinks gold as a directional asset is underrepresented in portfolios "as the only money and store of value that has stood the test of time that is, in my view, undervalued and underpriced in today's world and sort of is the opposite of confidence in central banks."


Ray Dalio (Bridgewater Associates):  Discussed ways to spur economic growth with Timothy Geithner.  Dalio says, "We're in a situation where central banks want to drive you out of cash and out of bonds."  Called it a dangerous situation, as central banks run out of assets to buy and push investors into riskier assets.  Dalio thinks raising rates is risky as it's not priced into the yield curve.  "There's only so much you can squeeze out of a debt cycle and we're there, globally."


Jim Chanos (Kynikos Associates):  Still short Alibaba (BABA), says they're "buying anything that's for sale, just burning cash."  He's also still short Tesla (TSLA) and SolarCity (SCTY).  Says the two companies combining basically puts TSLA on a path to potential bankruptcy.


Carl Icahn (Icahn Capital): Said he's requesting from the FTC the right to own up to 50% of Herbalife's (HLF) outstanding shares.  Currently has the right to around 35% of the company.  Re: the market, "I think it's very dangerous in the market right now.  If they don't raise rates, I think we're in a major bubble."  There's a problem either way with a dilemma if you raise rates or if you don't.  Says the economy is messed up because of people like Janet McCabe at the EPA.  Also: "I hate to be immodest but I've returned 28% annualized since inception."


Marc Lasry (Avenue Capital):  Said that you can "make a lot of money on direct lending," stepping in for reluctant banks.  On investing - find people who are talented / engaged / who care and invest with and then don't worry about daily/monthly liquidity.


Bill Miller (Legg Mason):  Likes Amazon (AMZN) or Facebook (FB) compared to Alphabet (GOOG/L) due to the growth rates and margins.  Thinks AMZN doubles in 3 years.  Also likes Valeant Pharmaceuticals (VRX) long, one of his larger positions.  His main trade idea was long S&P 500, short 10-year Treasury (dividend yield on S&P is higher).


Robert Bishop (Impala Asset Management):  Best idea was Teck Resources (TCK): improving China demand, management has cut costs, end of metals 5-year downtrend.  Says Freeport McMoran (FCX) still has a worrisome debt picture.


Barry Sternlicht (Starwood):  Real estate in New York City is "a disaster" with rents at the high-end down 15%.  Noted the problem many investors face: "you have to invest in something, you can't just sit in cash."  On Tesla, says he loves the car but would probably be short the company.  Questioned Pinterest's valuation, arguing it seemed like a lot of money for a bulletin board.  Said Doppler Labs could be like the next Oculus Rift.


Mary Erdoes (JPMorgan):  "They're called crowded trades when they don't work and momentum trades when they do work."  Says it's time to weed out the stock pickers who aren't the best. 


Dawn Fitzpatrick (UBS):  Likes merger-arbitrage, argues that bank prop trading desks exiting keeps spreads attractive and wide on bigger deals.  Said short-term alpha is harder and that investors need to be more patient.  Says women are less emotional investors and better at cutting losers.

Passport Capital Ups Habit Restaurants Stake

John Burbank's hedge fund firm Passport Capital has filed a 13G with the SEC regarding shares of Habit Restaurants (HABT).  Per the filing, Passport now owns 5.6% of HABT with 1 million shares.

This is up from the 429,257 shares they owned at the end of the second quarter.  The filing was made due to activity on August 22nd.

For more from this manager, we've previously posted up notes from Burbank's talk at the SALT Conference.

Per Google Finance, The Habit Restaurant is "a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers salads, sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. The Company's Char burgers menu includes Double Char burger, Mushroom Char, Teriyaki Char burger, BBQ Bacon Char Burger and Santa Barbara Style. Its Sandwich menu includes Chicken, Tri-tip, Albacore Tuna, Veggie burger, Chicken club and Pastrami. The Company operates at over 140 locations in over 10 markets in approximately nine states. It operates a variety of restaurant formats, including end-cap, free-standing, inline and drive-in, primarily within suburban shopping centers and retail settings."

Bow Street Increases Adamas Pharmaceuticals Position

Akiva Katz and Howard Shainker's hedge fund Bow Street has filed a 13G with the SEC regarding its position in Adamas Pharmaceuticals (ADMS).  Per the filing, Bow Street now owns 5.3% of Adamas with over 1.15 million shares.

This is up from the 486,747 shares they owned at the end of the second quarter.  The filing was made due to activity on September 2nd.


About Bow Street

Prior to founding Bow Street, Katz worked Brahman Capital and Shainker worked at Third Point.  Bow Street was originally seeded by Blackstone Group.


About Adamas Pharmaceuticals

Per Google Finance, Adamas Pharmaceuticals is "a pharmaceutical company. The Company is focused on the development and commercialization of therapeutics targeting chronic disorders of the central nervous systems (CNS). Its segment focuses on the development and commercialization of therapeutics targeting chronic disorders of the central nervous system. Its ADS-5102 is an extended-release version of amantadine that is intended for once daily administration at bedtime. It is developing ADS-8704, which is a fixed-dose combination of its controlled release version of memantine and donepezil for the treatment of moderate to severe dementia related to Alzheimer's disease. Its ADS 8902, a triple combination antiviral drug therapy for influenza. It also offers Namzaric (memantine hydrochloride extended-release and donepezil hydrochloride) capsules (formerly MDX-8704) and Namenda XR (memantine hydrochloride) extended release capsules."

Baupost Group Adds To PBF Energy, Trims SunEdison Semiconductor & Innoviva

Seth Klarman's investment firm Baupost Group has filed three 13G's with the SEC recently.  Here's the summary:

Baupost Group Adds To PBF Energy Stake

First, Seth Klarman's firm has filed with the SEC indicating they now own 16.07% of PBF Energy (PBF) with over 15.72 million shares.

This is an increase of over 5 million shares as they previously owned 8.37 million shares at the end of the second quarter.  The filing was made due to activity on August 31st.

To see the rest of Baupost's equity portfolio, check out the brand new issue of our newsletter.

Per Google Finance, PBF Energy is " is an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The Company operates through two segments: Refining and Logistics. The Refining segment produces a range of products at each of its refineries, including gasoline, ultra-low-sulfur diesel (ULSD), heating oil, jet fuel, lubricants, petrochemicals and asphalt. The Logistics segment includes PBF Logistics LP (PBFX), which engages in the receiving, handling and transferring of crude oil and the receipt, storage and delivery of crude oil, refined products and intermediates. It sells its products throughout the Northeast, Midwest and Gulf Coast of the United States, as well as in other regions of the United States and Canada, and ships products to other international destinations."


Trims SunEdison Semiconductor Stake

Second, Baupost Group has also disclosed a reduction in its SunEdison Semiconductor (SEMI) stake.  They now own 5.6% of the company with over 2.37 million shares

This is a decrease of 6 million shares as they previously owned 8.37 million shares at the end of the second quarter.  The filing was made due to activity on August 31st.

Per Google Finance, SunEdison Semiconductor is "engaged in the development, manufacture and sale of silicon wafers to the semiconductor industry. The Company also develops advanced substrates, such as epitaxial (EPI) wafers and wafers for the silicon-on-insulator (SOI) market, which enable computing and communications applications. Its products include polished wafers, EPI wafers and SOI wafers. The Company sells its products to the semiconductor manufacturers around the world, including integrated device manufacturers, pure-play semiconductor foundries and companies that specialize in wafer customization. It operates facilities in semiconductor manufacturing regions throughout the world, including Taiwan, Malaysia, South Korea, Italy, Japan, and the United States. Its wafers are used as the base substrate for the manufacture of various types of semiconductor devices, including microprocessors, memory, analog, mixed-signal and radio frequency (RF) integrated circuits, discrete and image sensors."


Also Reduces Innoviva Position

Lastly, Baupost Group has also disclosed a reduction in their Innoviva (INVA) position.  They now own 15.29% of the company with 17.37 million shares.

This is down from the 17.61 million shares they previously owned at the end of the second quarter.  The filing was made due to activity on August 31st.

Per Google Finance, Innoviva "focuses on bringing new medicines to patients in areas of unmet need. The Company is engaged in the development, commercialization and financial management of bio-pharmaceuticals. Its portfolio focuses on the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate/vilanterol (FF/VI)) and ANORO ELLIPTA (umeclidinium bromide/vilanterol (UMEC/VI)). It operates in providing capital return to stockholders by maximizing the potential value of its respiratory assets partnered with GSK segment. RELVAR/BREO is a once-a-day combination inhaled respiratory medicine consisting of VI, a LABA and FF, an inhaled corticosteroid (FF/VI) delivered via the ELLIPTA dry powder inhaler. ANORO ELLIPTA is a dual bronchodilator consisting of UMEC, a long-acting muscarinic antagonist (LAMA) and VI, a LABA for the treatment of chronic obstructive pulmonary diseases (COPD)."

ValueAct Capital Builds Seagate Stake, Sells More MSCI

Per a Seagate Technology (STX) press release, Jeff Ubben's ValueAct Capital has become one of the company's largest shareholders.  They now own 9.5 million STX shares, up from the 3 million shares they owned at the end of the second quarter.

ValueAct participated in a secondary transaction and has also been invited to join as an observer on Seagate's board.

Partner Mason Morfit said that, "Seagate has a strong storage technology portfolio and is well positioned to benefit from attractive long-term secular trends.  We are excited about the opportunity to work with the Seagate team, at both the Board and management level, to help increase long-term value for all shareholders."

The brand new issue of our Hedge Fund Wisdom newsletter recently analyzed Seagate's main competitor, Western Digital.

Per Google Finance, Seagate is "a provider of electronic data storage technology and solutions. The Company's principal products are hard disk drives (HDDs). In addition to HDDs, it produces a range of electronic data storage products, including solid state hybrid drives, solid state drives, peripheral component interconnect express (PCIe) cards and serial advanced technology architecture (SATA) controllers. Its storage technology portfolio also includes storage subsystems and high performance computing solutions. Its products are designed for applications in enterprise servers and storage systems, client compute applications and client non-compute applications. It designs, fabricates and assembles various components found in its disk drives, including read/write heads and recording media. Its design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications and markets."


ValueAct Sells More MSCI

Also, per a Form 4 filed with the SEC,  ValueAct has sold some more shares of MSCI (MSCI).  They sold 450,000 shares in total on September 6th-8th at prices of $88.4, $88.5, and $87.6.

After these transactions, Jeff Ubben's firm now only owns 850,900 shares of MSCI.

Per Google Finance, MSCI "offers content, applications and services to support the needs of institutional investors throughout their investment processes. The Company's operating segment includes Index, Analytics and All Other segment. All Other segment comprises ESG and Real Estate segments. The Index operating segment is a provider of investment decision support tools, including equity indexes and equity index benchmarks. The Analytics operating segment consists of products and services used for portfolio construction, risk management and reporting. The ESG operating segment offers products institutional investors use for assessing risks and opportunities arising from environmental, social and governance issues. ESG tools are used to evaluate both individual securities and investment portfolios. The Real Estate operating segment is a provider of real estate performance analysis for funds, investors, managers, lenders and occupiers."

Hedge Fund Links ~ 9/9/16

Survivorship bias explained [A Wealth of Common Sense]

The hedge fund trader who beat the feds [Fortune]

David Tepper is 'on guard' [CNBC]

Hedge funds suffer biggest redemptions since 2009 [Bloomberg]

Tiny satellites: the latest innovation hf's are using to get a leg up [WSJ]

The hedge fund industry is shrinking [TIME]

Smaller reigns supreme in hedge funds [NYPost]

Brevan Howard & Tudor battle losses [WSJ]

How this hedge fund robot outsmarted its human master [Bloomberg]

The hedge fund industry has a problem [Business Insider]

Hedge fund managers are waiting for the world to change [Yahoo Finance]

Lessons from a trading great: Bruce Kovner [Deflation.Market]

Paulson & Co exec to launch own firm [Reuters]

Warren Buffett Continues Buying Phillips 66

As we've detailed previously, Warren Buffett's Berkshire Hathaway has been continuously buying Phillips 66 (PSX) shares.  They've filed yet another Form 4 with the SEC indicating they've purchased even more PSX.

The latest filing shows Berkshire purchased 82,361 shares at a weighted average price of $77.8617 on September 1st.

After this round of buying, Berkshire now owns over 79.65 million shares of PSX.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment includes its equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstream and NGL. The Midstream segment also transports crude oil and other feedstocks to refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Chemical segment manufactures and markets petrochemicals and plastics. The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products. The M&S segment purchases for resale and markets refined petroleum products."

What We're Reading ~ 9/8/16

In-depth pitch on Liberty Global Latin America (LILA/K) [Find Me Value]

A second look at Amerco (UHAL) [Punch Card Research]

WD-40 (WDFC): a case study of the bubble in 'safe' stocks [Intrinsic Investing]

Analysis of Dell Technologies new VMWare tracking stock [Clark Street Value]

Morris Mark on four stocks he likes [Barrons]

Uber: from zero to seventy billion [Economist]

Google, Uber and the evolution of transportation [Stratechery]

Why electric cars will be here sooner than you think [WSJ]

How Apple's car could crack the automotive industry [Autocar]

Old article on capital allocator Henry Singleton [BrianLangis]

A look at the online travel industry [Phocuswright]

Why walking helps us think [New Yorker]

Inside Dyson's reinvention factory [Forbes]

Will Amazon kill FedEx and UPS? [Bloomberg]

On subscription retail [The Robin Report]

Theranos: how Elizabeth Holmes's house of cards fell [Vanity Fair]

Pershing Square Builds Chipotle Stake

Bill Ackman's activist firm Pershing Square has filed a 13D with the SEC regarding Chipotle (CMG).  They've disclosed a new position in the company and now own 9.9% of CMG with over 2.88 million shares.

We've highlighted recently how Ackman has been selling various stakes and raising cash and now we know where some of that cash was allocated to.

Chipotle has slowly been trying to recover from a series of food poisonings that severely affected the company's results.  As shares have fallen, some value investors have started to poke around and Ackman has joined the cause as an activist voice.  The 13D notes he'll meet with management.

To build the stake, Pershing bought and sold various options and you can view the full list of transactions here.

While some people have given Ackman grief for the saga with Valeant Pharmaceuticals (VRX), the quick service restaurant space is something he absolutely has experience with.  It will be interesting to see how he tries to help them recover from their troubles given he feels the company has an excellent brand.

Per Google Finance, Chipotle is "together with its subsidiaries operates Chipotle Mexican Grill restaurants. The Company's Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. The Company operates approximately 1,970 Chipotle restaurants throughout the United States, over 10 in Canada, seven in England, four in France and one in Germany. The Company's restaurants include over 10 ShopHouse Southeast Asian Kitchen restaurants, serving Asian-inspired cuisine. The Company owned and operated approximately three Pizzeria Locale restaurants, a fast casual pizza concept, resulting in a totaling of approximately 2,010 restaurants. The Company sells gift cards which do not have an expiration date.."

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Glenview Capital Boosts Computer Sciences Stake

Larry Robbins' hedge fund firm Glenview Capital has filed a 13G with the SEC regarding its position in Computer Sciences Corp (CSC).  Per the filing, Glenview now owns 5.26% of the company with over 7.38 million shares.

This is an increase over the 6.87 million shares they owned at the end of the second quarter.  The filing was made due to activity on August 23rd.

You can see the rest of Glenview's portfolio in the brand new issue of our newsletter.

Per Google Finance, Computer Sciences Corp is "a global provider of information technology (IT) and professional services and solutions. The Company operates through two segments: Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment provides various technology solutions, including consulting, applications services and software. GBS has three primary growth engines: end-to-end applications services, consulting services, big data services and industry-aligned software and solutions. The GIS segment provides managed and virtual desktop solutions, unified communications and collaboration services, data center management, cyber security, compute and managed storage solutions to commercial clients across the globe. GIS also delivers CSC's various cloud offerings, including Infrastructure as a Service (IaaS), private cloud solutions, CloudMail and Storage as a Service (SaaS). The Company has operations throughout North America, Europe, Asia and Australia."

Kingstown Capital Sells Some Ocwen Financial Equity, Buys Senior Notes

Michael Blitzer hedge fund firm Kingstown Capital Management has filed an amended 13D with the SEC regarding its position in Ocwen Financial (OCN).  Per the filing, Kingstown now owns 7.66% of the company with 9.5 million shares.

This is a decrease in their common stock position compared to the 11.35 million shares they owned at the end of the second quarter.  The filing was made due to activity on August 31st. 

It also indicates they purchased 6.625% Senior Notes due 2019.

Per Google Finance, Ocwen Financial is "a financial services holding company. The Company, through its subsidiaries, operates as a mortgage company. The Company's segments include Servicing, Lending, and Corporate Items and Other. The Company's Servicing segment consists of its core residential servicing business. The Company's Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans. The Company's Corporate Items and Other segment includes business activities that include providing secured floor plan lending to used car dealerships through its Automotive Capital Services (ACS) venture and providing financing to investors to purchase single-family homes and apartments for lease through its Liberty Rental Finance venture. The Corporate Items and Other segment also includes the diversified fee-based businesses, which provide property valuation, real estate owned (REO) management, title and closing services."

Three Bays Capital Trims Cypress Semiconductor Holdings

Matthew Sidman's hedge fund Three Bays Capital has filed an amended 13D regarding its position in Cypress Semiconductor (CY).  Per the filing, Three Bays owns 7% of the company with 22.53 million shares.  This includes 7 million shares underlying call options.

This is a slight decrease compared to the net position they owned at the end of the second quarter.  The 13D disclosed their most recent transactions where they bought 168,373 shares on July 11th but then sold shares on July 19th and August 30th (500,000 total shares at prices of $11.34 and $11.71).

Prior to founding Three Bays in 2013, Sidman worked at Highfields Capital.

Per Google Finance, Cypress Semiconductor is "delivers solutions from automotive, industrial and networking platforms to interactive consumer and mobile devices. The Company's segments include 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 portfolio of high-performance memories for embedded systems. The Data Communications Division focuses on solutions for industrial, handset and consumer applications. The Emerging Technologies Division consists of its subsidiaries, AgigA Tech, Inc. and Deca Technologies, Inc. Its product portfolio includes NOR flash memories, Traveo microcontrollers, programmable system-on-chip solutions, CapSense capacitive touch-sensing controllers, and Wireless Bluetooth Low-Energy and universal serial bus (USB) connectivity solutions."

What We're Reading ~ 8/31/16

Jesse Livermore: The man who sold America short in 1929 [Tom Rubython]

50 of the best investing blogs [Acquirers Multiple]

Why value investors are different [Seth Klarman]

Paul Tudor Jones and the nature of the beast [A Wealth of Common Sense]

Be mindful of rich valuations in low volatility stocks [Morningstar]

What are interest rates forecasting for stocks? [Cordant]

Are you smarter than an algorithm? [Financialist]

A new payoff to risky decisions [Psychology Today]

Don't let what you cannot do interfere with what you can [Tony Isola]

German savers lose faith in banks, stash cash [WSJ]

Coach's brand transformation fake-out [Glenn Chan]

Can TripAdvisor turn things around? [Skift]

Dollar Stores' startling admission: half of US consumers are in dire straits [Zero Hedge]

Tencent: WeChat's world [Economist]

The twilight of China's online consumer paradise [Bloomberg]

Why Amazon is suddenly swimming in cash [Internet Retailer]

The war on cash [The Long and Short]

Ruane Cunniff (Sequoia Fund) Investor Day Transcript 2016: Rolls Royce, Valeant & More

Ruane Cunniff Goldfarb, managers of the Sequoia Fund, recently released the transcript from its investor day.  In it, they talk about many of their investments.

Their top ten holdings as of the end of the second quarter were:  Berkshire Hathaway (BRK.A/B), TJX Companies (TJX), MasterCard (MA), Alphabet (GOOG/L), O'Reilly Auto (ORLY), Mohawk Industries (MHK), Fastenal (FAST), Rolls Royce (RR.L), Constellation Software (CSU.T), and Dentsply Sirona (XRAY).

They outline their thinking on Rolls Royce and also address the Valeant Pharmaceuticals (VRX) saga, which they no longer own.

Embedded below is the transcript of Ruane Cunniff's 2016 Investor Day:



You can download a .pdf copy here.

Hound Partners Boosts Media General Stake

Jonathan Auerbach's hedge fund firm Hound Partners has filed a 13G with the SEC regarding its position in Media General (MEG).  Per the filing, Hound now owns 5.63% of MEG with over 7.28 million shares.

This is an increase of over 5.14 million shares since the end of the second quarter when they owned 2.13 million shares.  The filing was made due to activity on August 18th.

You can view the rest of Hound Partners' portfolio in the brand new issue of our newsletter.

Per Google Finance, Media General is "is a connected-screen multimedia company. The Company provides news, information and entertainment. The Company's operating segments include Broadcast and Digital. Its Broadcast segment includes over 70 television stations that are either owned, operated or serviced by the Company in approximately 48 United States markets, all of which are engaged principally in the sale of television advertising. The Company's Digital segment includes the operating results of the Company's digital businesses, as well as the business operations related to the television station companion Websites. Digital segment includes LIN Digital, LIN Mobile, LLC (LIN Mobile), HYFN, Inc. (HYFN), Dedicated Media, Inc. (Dedicated Media), BiteSize TV and Federated Media, as well as the business operations related to the television station companion Websites. LIN Digital provides display and video advertising on LIN Digital's advertising network."

Warren Buffett Files Another Form 4 on Phillips 66

Warren Buffett last week indicated he had bought more Phillips 66 (PSX) for Berkshire Hathaway.  That trend continued with the filing of yet another Form 4 with the SEC.

The latest filing notes he purchased another 83,466 shares at a weighted average price of $78.2878 on August 25th.  This brings his total PSX ownership up to over 79.56 million shares.

You can view the rest of Buffett's latest investment activity in the brand new issue of our newsletter.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment includes its equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstream and NGL. The Midstream segment also transports crude oil and other feedstocks to refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Chemical segment manufactures and markets petrochemicals and plastics. The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products. The M&S segment purchases for resale and markets refined petroleum products." 

Warren Buffett Buys More Phillips 66

Warren Buffett's Berkshire Hathaway has filed a Form 4 with the SEC regarding his stake in Phillips 66 (PSX).  Per the filing, Buffett acquired more shares on August 22nd, 23rd, and 24th.

In total, he purchased 704,181 shares at weighted average prices of around $77.04 - $78.15.  After these transactions, Berkshire now owns 79.48 million shares of PSX.

We've highlighted in the past how Buffett has been acquiring PSX shares in recent months.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment includes its equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstream and NGL. The Midstream segment also transports crude oil and other feedstocks to refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Chemical segment manufactures and markets petrochemicals and plastics. The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products. The M&S segment purchases for resale and markets refined petroleum products.."

ValueAct Capital Adds to Alliance Data Systems, 21st Century Fox Stakes

Jeff Ubben's activist firm ValueAct Capital has submitted a few filings to the SEC recently regarding his positions.

ValueAct Adds To Alliance Data Systems

First, Ubben's firm has filed an amended 13D regarding their newer position in Alliance Data Systems (ADS).  Per the filing, ValueAct now owns 8.5% of the company with 5 million shares.

This is an increase over the 3.28 million shares they owned at the end of the second quarter.  They've been buying as recently as late August at prices of $199.13 - $204.07.

The 13D also notes that ValueAct intends to have conversations with management and the board on ways to enhance shareholder value.

We recently detailed the rest of ValueAct's portfolio (and 24 other hedge funds) in the brand new issue of our newsletter.

Per Google Finance, Alliance Data Systems is "is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company's Canadian AIR MILES Reward Program and BrandLoyalty; Epsilon, which provides end-to-end, integrated marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company's private label and co-brand retail credit card programs."


Jeff Ubben Buys More 21st Century Fox

Second, ValueAct Capital has filed a Form 4 with the SEC regarding its stake in 21st Century Fox (FOX / FOXA).  Per the filing, ValueAct was out buying FOX shares on August 16th - 18th.

Ubben purchased 3 million shares in total at prices ranging from $25.86 - $26.13.  After these buys, they now own over $47.3 million shares.  Ubben is on FOX's board and it seems they want the company to go more direct to consumer with their media offerings.

You can view the rest of Jeff Ubben's portfolio here.

Per Google Finance, 21st Century Fox is "a media and entertainment company. The Company operates through segments: Cable Network Programming, Television, Filmed Entertainment, and Other, Corporate and Eliminations. The Company produces and licenses news, business news, sports, general entertainment, factual entertainment and movie programming for distribution primarily through cable television systems, direct broadcast satellite operators, telecommunications companies and online video distributors in the United States and internationally. The Company is engaged in the operation of broadcast television stations and the broadcasting of network programming in the United States. The Company is engaged in the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media, and the production and licensing of television programming around the world."

Howard Marks' New Memo "Political Reality"

Oaktree Capital's Chairman Howard Marks has been busy writing memos these days.  We posted his most recent note, Economic Reality recently.  Now he's released another missive, entitled "Political Reality."

As the title implies, this one is less investing related and more about the political and economic environment.  

Embedded below is Howard Marks' memo:



You can download a .pdf copy here.

For more from Marks, be sure to also check out his highly praised book on investing, The Most Important Thing.

What Stocks Have Top Hedge Funds Been Buying & Selling?

Want to know what stocks hedge funds have been buying & selling?  Our 82-page quarterly newsletter summarizes the latest 13F filings of 25 top funds.  The brand new Q2 issue of Hedge Fund Wisdom is now available.  Subscribers please go to www.hedgefundwisdom.com and login to download.

Inside The New Issue

- Investment thesis summaries on ServiceMaster (SERV) and Western Digital (WDC).  Catch up quickly on why hedge funds have been active in these stocks.

Last quarter's issue featured write-ups on Yelp (YELP) and AmerisourceBergen (ABC) which are up 53% and 18.75% respectively since then (versus 6.4% for the S&P 500).  When you sign up below, you'll also get immediate access to the full archive of issues too.

- New consensus buy/sell lists: see what the most popular trades are

- Updated portfolio sheets of 25 top hedge funds including Baupost Group, Appaloosa, Viking, Lone Pine, Third Point, ValueAct, Farallon and other big names

- Commentary on each fund's moves including short sale positions in European markets when applicable

- New fund added this quarter: the newsletter now also tracks Glenn Greenberg's Brave Warrior Advisors


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So You Want To Start A Hedge Fund By Ted Seides Book Review

Ted Seides has written an instrumental book that assuredly is applicable to a large portion of our readers: So You Want To Start A Hedge Fund: Lessons For Managers and Allocators.

Seides is the former President and co-CIO of Protégé Partners, which specialized in seeding and investing in hedge funds.  Prior to that, he worked under David Swensen in the Yale University Investment Office.   

The book greets potential fund managers with an assault of reality, but also a roadmap to success.  True investors love to learn from the mistakes of others, and that's where this book excels.

Seides profiles various funds but instead of doing a deep dive on the manager, he isolates which factors contributed to either the success or failure of the fund and outlines them as lessons for both a prospective manager and prospective allocator.  This dual-viewpoint focus allows the reader to learn from the perspective of differing lenses, offering a glimpse inside the thought process of those sitting opposite them at the sales table.

At the end of each chapter, there's a brief summary of "Lessons For Managers" as well as "Lessons For Allocators" directly targeted at each audience, which are incredibly useful.  People short on time could merely skip to the end of each chapter to quickly digest the lesson.  But pay heed: the context provided in each chapter paints a picture as to *why* that lesson was learned, which is the crux of learning from successes / mistakes of others to begin with.  

While the vast majority of chapters are aimed at the manager crowd, there's also a separate chapter dedicated to investing in start-up hedge funds.  Allocators get a lucid look at how to spot potential developing red flags as well as a tidy list comprised of traits and intricacies that can lead to manager success.

The book highlights lessons learned from funds such as:  Eton Park Capital, Senator Investment Group, Tourbillon Capital, Whitebox Advisors, Scion Capital, Brenner West Partners, Sabretooth Capital, and Signpost Capital.  Many other funds are also featured under pseudonyms, but the lessons remain the same.


Examples Of Lessons Learned In The Book 

Here's a brief sample: one manager left a pedigree fund and launched his own firm.  His stock picks performed well and assets under management rose.  The manager tried to establish a positive, collaborative culture.  He allowed analysts to source and research ideas.  While he ultimately made the buy/sell decisions, the performance of analyst picks lagged the manager's considerably.

Seides' lesson for managers?  "Put your destiny in your own hands."  The manager had good intentions of building a collaborative environment, but performance suffered because of it.  He then let analysts go and added more hierarchy to the investment process.  In an industry where performance is constantly under a microscope, one mistake can cost a fund its entire existence.

One other quick example from the book: a manager started a fund and instead of getting invested in a rising market, tried to wait and time the market for better value.  His performance lagged initially, investors never really took an interest, and eventually the fund closed down.

Seides articulated the lesson as follows: "When getting started, don't let perfect be the enemy of good."  He adds, "Even if a new fund starts slowly and preserves capital better than others in a tough tape, it must demonstrate the ability to then turn and make money for its clients before prospects will get interested.  Getting one market call correct is difficult enough; getting two right consecutively requires twice as much luck." 

While we highlighted two mistakes as examples, the book also offers a myriad of success stories that outline how various funds attracted capital, built their brand, refined their strategy, and more.

While some might say that the title is perhaps slightly corny, consider this:  So You Want To Start A Hedge Fund has already been endorsed by numerous prominent hedge fund managers themselves.  Bill Ackman (Pershing Square), Scott Bessent (Key Square Group, ex-Soros Fund), Jason Karp (Tourbillon), and Jonathan Auerbach (Hound Partners) all praise the book.   

It also includes a Foreword by Steve Galbraith (ex-Maverick Capital, Herring Creek Capital).


Who should read this book?  

There are two types of people especially who will benefit from reading: those that have even the slightest desire to manage their own fund (obviously) and allocators who invest (or are looking to start investing) in hedge funds.  There are hardly any books on the topic of how to select hedge funds and what to look for, so anyone even remotely interested in that subject would benefit immensely (high net worth investors, nascent family offices, financial advisors, aspiring fund-of-funds, etc).


How long is the book?  

This is a perfect fit for those who believe that time is our most valuable asset.  It's an incredibly swift read at only 195 pages (with pages that are much smaller than normal).  You can easily finish it in 2-3 hours or one sitting.  This is a huge asset when you consider just how much practical advice is distilled.  In other words, it gets straight to the point.


What this book is not

It's not a step-by-step list of how to setup a fund.  So if you're expecting that, you'll be disappointed (there's plenty of other resources out there on that subject).  This is not a guide on legal structures, service providers, prime brokers, infrastructure, etc. 


Final Word

Simply put, So You Want To Start A Hedge Fund offers a very high insights-gleaned to time-spent ratio.  If you have any desire whatsoever to start your own fund, read this book.  If you have any desire to invest in hedge funds whatsoever, read this book.  Given the high stakes involved in the industry, it's probably not hyperbolic to say that the lessons learned could potentially help make (or save) millions.
 

What We're Reading ~ 8/10/16

When you don't know what you don't know [Medium]

The mirage of relative performance [ai-cio]

On investing and getting comfortable with being uncomfortable [Cordant Wealth]

Jim Grant: negative interest rates will end badly [CFA Institute]

Mark Hart bets China's currency will collapse [Bloomberg]

Interview with Daniel Kahneman [The Big Picture]

Daniel Dennett's most useful critical thinking tools [Farnam Street]

A look at Jefferies [Dealbook]

Coho Capital's pitch on Amazon [ValueWalk]

Think Amazon's drone delivery is a gimmick? Think again [NYTimes]

An e-commerce business' experience with the Amazon behemoth [Medium]

What happens to tons of jobs with autonomous vehicle disruption? [NPR] 

Why we pine for manufacturing [New Yorker]

Mark Zuckerberg on the next 10 years [The Verge]

Playing the long game inside Tim Cook's Apple [FastCompany]

Google and Facebook killed free media [Bloomberg]

What disruption really means [Hardbound]

ValueAct Capital Buys More CBRE Group Shares

Last week, we highlighted how Jeff Ubben's activist firm ValueAct Capital added to its CBRE Group position.  They've filed another Form 4 indicating they acquired some more shares recently.

The filing notes ValueAct bought 182,060 CBG shares on August 4th at a price of $28.50.  This brings their total ownership up to over 34.62 million shares.

Per Google Finance, CBRE Group is "a holding company that conducts all of its operations through its subsidiaries. The Company is a commercial real estate services and investment company. The Company operates through the segments: The Americas; Europe, Middle East and Africa (EMEA); Asia Pacific; Global Investment Management, and Development Services. It offers services to occupiers, owners, lenders and investors in office, retail, industrial, multifamily and other types of commercial real estate. It offers commercial real estate services under the CBRE brand name, investment management services under the CBRE Global Investors brand name and development services under the Trammell Crow Company brand name. It is focused on several competencies, including commercial property, corporate facilities, project and transaction management, tenant/occupier and property/agency leasing, capital markets solutions, real estate investment management, valuation, development services and proprietary research." 

Tybourne Capital Ups Boston Beer Stake

Eashwar Krishnan's hedge fund firm Tybourne Capital has filed a 13G with the SEC regarding shares of Boston Beer (SAM).  Per the filing, Tybourne now owns 10.1% of SAM with 911,613 shares.

This is an increase of 152,202 shares since the end of the first quarter.  The filing was made due to activity on July 31st.  This is the second time Tybourne has upped its SAM stake in recent months.

Prior to founding Tybourne, Krishnan worked at Lone Pine Capital.

Per Google Finance, Boston Beer is "a craft brewer in the United States. The Company is engaged in the business of producing and selling alcohol beverages primarily in the domestic market and in international markets. The Company operates through two segments: Boston Beer Company segment and A&S Brewing Collaborative segment. The Boston Beer Company operating segment comprises of the Company's Samuel Adams, Twisted Tea and Angry Orchard brands. The A&S Brewing Collaborative operating segment comprises of The Traveler Beer Company, Coney Island Brewing Company, Angel City Brewing Company and Concrete Beach Brewing Company. It sells over 60 beers under the Samuel Adams and the Sam Adams brand names, over 10 flavored malt beverages under the Twisted Tea brand name, over 10 hard cider beverages under the Angry Orchard brand name and approximately 40 beers under over four of the brand names of its subsidiary, A&S Brewing Collaborative LLC, under its trade name Alchemy & Science."

Ten Attributes of Great Investors By Michael Mauboussin

Michael Mauboussin and Credit Suisse have put out a piece entitled "Reflections on the Ten Attributes of Great Investors."  It's basically a clinic on being an investor, it's fantastic.

There are so many quotable passages that you really should just read the whole document.  Each underlying attribute has multiple paragraphs of rationale behind it.  But here's a quick summary:

Mauboussin's 10 Attributes of Great Investors

1.  Be numerate (and understand accounting).

2.  Understand value (the present value of free cash flow).

3.  Properly assess strategy (or how a business makes money).

4.  Compare effectively (expectations versus fundamentals).

5.  Think probabilistically (there are few sure things).

6.  Update your views effectively (beliefs are hypotheses to be tested, not treasures to be protected).

7.  Beware of behavioral biases (minimizing constraints to good thinking).

8.  Know the difference between information and influence.

9.  Position sizing (maximizing the payoff from edge).

10.  Read (and keep an open mind).     


Embedded below is Mauboussin's 10 Attributes of Great Investors:





Mauboussin is an excellent resource for investors looking to refine their approach and process.  We highly recommend his books such as, The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing as well as Think Twice: Harnessing the Power of Countertuition.