Second Curve Capital Loads Up on Citizens Republic Bancorp (CRBC)

Thomas Brown's hedge fund firm Second Curve Capital has filed a 13G with the SEC regarding shares of Citizens Republic Bancorp (CRBC). Per trading on June 17th, 2011, Second Curve has disclosed a 5.34% ownership stake in CRBC with 21,236,157 shares.

They've increased their position size by a whopping 312% since the end of the first quarter when they owned only 5,150,000 shares. Since the end of March, shares are down almost 20% and Second Curve has stepped in to buy.

In other activity from the hedge fund, we last covered their sale of CompuCredit shares (CCRT). Before founding Second Curve, Tom Brown headed the financial services group at Julian Robertson's Tiger Management. As such, it should come as no surprise that his fund largely focuses on financials.

Per Google Finance, Citizens Republic Bancorp is "a diversified banking and financial services company that is a bank holding company. Citizens provides a range of banking and financial services to individuals and businesses through its subsidiaries Citizens Bank and F&M Bank, Iowa (F&M)."

For more investment ideas, check out our notes from top hedge fund presentations.

What We're Reading ~ 6/22/11

Howard Marks & Oaktree's IPO: should you buy? [Barbarian Capital]

Bill Ackman considers IPO in quest for permanent capital [AR + Alpha]

SEC to approve hedge fund registration rule today [FINalternatives]

Hedge funds invest in energy newcomer Vallares [Telegraph]

Is it time to talk a Research In Motion (RIMM) takeover? [WSJ]

7 life lessons from the very wealthy [Washington Post]

Bridgewater's Pure Alpha up 11% this year [Institutional Investor]

Profile on Oaktree's Howard Marks [Bloomberg]

Paulson & Co dumps entire Sino-Forest position [Globe & Mail]

Finding investment treasures in international markets [Vitaliy Katsenelson]

Would you buy this company? [Frank Voisin]

Stocks cheapest in 26 years [Bloomberg]

Technical Analysis: The bear is back & this time it will be much worse [Smart Money Tracker]

Get Investment Ideas From Bill Ackman, Jim Chanos & Leon Cooperman at the Value Investing Congress

The upcoming Value Investing Congress in New York City has an all-star line-up as usual. Jim Chanos of hedge fund Kynikos Associates was just announced as the latest speaker for the event on October 17th & 18th, 2011. The manager is famous for his Enron short and you can hear his latest short ideas at the event.

Discount: Market Folly readers can save 47% off admission by clicking here and using discount code: N11MF2.

Here's the list of managers presenting:

- Bill Ackman (Pershing Square Capital)
- Leon Cooperman (Omega Advisors)
- Jim Chanos (Kynikos Associates)
- Joel Greenblatt (Gotham Capital)
- Guy Gottfried (Rational Investment Group)
- Michael Kao (Akanthos Capital)
- Whitney Tilson & Glenn Tongue (T2 Partners)


This is *the* go-to event for the latest investment ideas from top hedge fund managers.

The discount for our readers expires in one week so take advantage ASAP. Click here to receive the discount.

Lone Pine Capital Adds to WABCO Holdings (WBC)

Stephen Mandel's prominent hedge fund Lone Pine Capital has disclosed a 6.0% ownership stake in WABCO Holdings (WBC) with 4,058,927 shares per a 13G just filed with the SEC.

This marks almost a 213% increase in their position size. At the end of the first quarter, they only owned 1,297,495 shares. To see the rest of Lone Pine's investments, head to a free sample of our Hedge Fund Wisdom newsletter.

This year, Mandel graced the esteemed Forbes billionaire list again. Prior to founding Lone Pine, Mandel worked at Julian Robertson's Tiger Management as a managing director and consumer analyst. The hedge fund manager named his fund after a historical 'lone pine' tree at Dartmouth College, his alma mater.

WABCO Holdings provides mechanical and electronic products for commercial manufacturers of trucks, trailers, buses and more. For more from this fund, we've also covered some of Lone Pine's other trades this year.

Carlson Capital Goes Activist on Ruby Tuesday (RT)

Clint Carlson's hedge fund firm Carlson Capital filed a 13D with the SEC signifying their activist investment in Ruby Tuesday (RT). Due to trading on June 7th, 2011, Carlson has disclosed a 5% ownership stake in RT with 3,250,000 shares.

This marks over a 10,800% increase in their position size (they only owned 29,800 shares at the end of the first quarter). Carlson's stake in total was purchased with $33.6 million.

Activist Investment

The 13D filing was made in conjunction with Becker Drapkin Management and for activist purposes the two have filed as a "group." Collectively, the group owns 4,143,900 shares of Ruby Tuesday (including 200,000 shares of underlying call options exercisable until October 22nd, 2011). In total, this represents 6.4% of outstanding shares.

While they originally purchased shares because they believed they were undervalued, the "purpose of transaction" section of the regulatory filing outlines that Becker Drapkin is seeking to nominate directors at the company's annual meeting.

Connection With Becker Drapkin Again

The interesting thing here is that this is not the first time that Carlson Capital and Becker Drapkin have filed together. In the past, we covered when the two managers got involved with Hot Topic (HOTT).

That situation seemed to work out well, as shares of HOTT are up over 31% since then and Carlson still held its entire position as of the end of the first quarter. We'll have to see if these two firms can work their magic again.

Per Google Finance, Ruby Tuesday "including its wholly owned subsidiaries (RTI) owns and operates Ruby Tuesday casual dining restaurants."

Lansdowne Partners Buy Mwana Africa (LON:MWA)

UK hedge fund Lansdowne Partners have purchased 11.51% of Mwana Africa's (LON: MWA) outstanding shares. At first glance, it appears as though Lansdowne bought the majority of this stake via the recent placement. This position was revealed by UK regulatory filing.

This company mines various metals, including gold. Equity stakes in gold miners seems to be a popular investment amongst hedge fund managers as we just detailed Baupost Group's miner stake this morning.

In other activity from Lansdowne, we previously detailed the increase in their Gartmore stake. Paul Ruddock and Stephen Heinz head Lansdowne, one of the largest hedge funds in the world.

Per Google Finance - "Mwana Africa PLC (Mwana Africa) is engaged in the exploration, development and production of nickel, gold, copper and diamonds. It has four segments: gold, nickel, diamond and exploration. Mwana Africa has interests in gold, nickel and other base metals, and diamonds in Zimbabwe, the Democratic Republic of Congo and South Africa. Bindura Nickel Corporation (BNC), Zimbabwe, is situated near the town of Bindura, 90 kilometers northeast of Harare."

Baupost Group Shows Position in Gabriel Resources (TSE:GBU)

Seth Klarman's hedge fund Baupost Group has disclosed an 11.37% ownership stake in Gabriel Resources (TSE:GBU) with 39,625,822 shares. This makes them the fourth largest shareholder.

This is an older disclosure as it was revealed on April 8th in a Canadian regulatory filing. Given how investors love to track Klarman, we figured we'd share since we hadn't seen it discussed before.

This position is interesting mainly because it's has exposure to gold mining. This is the second equity investment in a gold miner we've seen from Klarman's fund. As noted in the latest issue of our Hedge Fund Wisdom newsletter, Baupost started a new position in Allied Nevada Gold (ANV) back in the first quarter.

Gold Miners A Play on Inflation?

We'll have to see if building equity stakes in miners becomes a trend for Baupost. The firm could potentially be using these miners as a hedge. After all, we covered how Klarman is worried about inflation.

It's been well documented that John Paulson's gold fund invests in gold miners as a bet against the US dollar (inflation) as well. Paulson & Co also owns 17.62% of Gabriel Resources with 61,420,000 shares. They disclosed this position size in May 2008 and it was later amended to reflect their purchase of securities in a private placement in June 2009. So, two legendary investors own sizable chunks of GBU.

Gold Vs. Gold Miners

In the past, hedge fund managers have pondered whether gold or gold miners is a better way to play the precious metal, inflation, and uncertainty. So while many invest in gold miners for protection, we assume that Baupost is pursuing the same thesis (but again that's merely speculation on our part).

In other recent activity from the prominent hedge fund, Baupost trimmed its position in Audiovox (VOXX).

Per Google Finance, Gabriel Resources is " is engaged in the exploration and development of mineral properties in Romania. It is developing its 80.46% owned Rosia Montana gold project (the Project). Minvest S.A. (Minvest), a Romanian state-owned mining company, and one other private Romanian company, hold a 19.54% interest in Rosia Montana Gold Corporation (RMGC)."

For more from Klarman, see an excerpt from Baupost's 2010 letter.

What We're Reading ~ 6/16/11

Honored to be included in a list of must-follows on Twitter [Barron's]

And as always, you can follow @MarketFolly on Twitter here

Post re-org equities entering Russell indexes [Distressed Debt Investing]

Daytrading hipster takes on David Tepper [Dealbreaker]

Funny: the real Wall Street dress code [Reformed Broker]

Option traders most bearish since 2009 bottom [Trader's Narrative]

Warren Buffett on how inflation swindles equity investors [Fortune]

Paulson's funds struggle [WSJ]

FPA's Bob Rodriguez sees another crash coming [Fortune]

Debating a tech bubble [Economist]

Profiles on some big mutual fund managers [Bloomberg]

Hedge funds target Yankee stadium parking bonds [Bloomberg]

Online ventures lure Tiger Global back to India [WSJ]

We've covered some of Tiger's past investments here [Market Folly]

Former Third Point PM launches healthcare fund [AR+Alpha]

Hedge funds lured to new source of capital [MarketWatch]

Hedge Fund Compensation Report 2011

Those of you looking to enter the hedge fund industry, switch funds, or get a pay raise will find this hedge fund compensation report very helpful. This report gives you a benchmark to help negotiate your pay package based on industry averages.

It breaks down compensation based on size of the fund, employee title, base package versus bonus, and year over year comparisons.

The report is 47 pages, has over 40 charts and is based on data collected directly from big funds (like Citadel, Lansdowne, etc) and small funds as well. You can get the report by clicking here.

Whether you're an analyst, trader, investor relations professional, or CFO, this is a great way to measure your compensation against the industry and a great tool for negotiating so definitely check it out.

Strategist Saut Thinks Trading Bottom Is Near

Jeff Saut is out with his latest investment strategy comments, emphatically titled, "Ouch." This of course refers to the precipitous decline in markets as of late. He writes, that, "My risk management discipline forced me to raise more cash again on Friday, even though I believe the stock market is in the process of making a significant 'low.' "

We've covered Saut's risk management principles before and while those principles caused him to raise cash levels last week, he's confident that markets are now oversold.

He cites the great folks at Bespoke who said that "61.4% of the SPX's stocks are oversold. The current oversold level is only the 27th time since 1990 that more than 60% of stocks in the index have been [this] oversold."

At this point, Saut believes you should 'keep your head screwed-on straight' and start compiling your buy list. In addition to some of Saut's favorite stocks, he recently added Abbott Labs (ABT), Copa Holdings (CPA), Digital Realty Trust (DLR) and Norfolk Southern (NSC) as solid candidates.

Embedded below is Jeff Saut's latest market commentary where he talks about an impending trading bottom in stocks drawing near:



You can download a .pdf copy here.

GLG Partners Start Ovoca Gold Position

Due to a regulatory filing made on June 7th, UK based hedge fund GLG Partners has disclosed a brand new position in Ovoca Gold (LON: OVG). They own a 5.44% interest in the AIM listed gold mining company.

Ovoca Gold is also listed on the ESM market of the Irish Stock Exchange (OVX). The company's principal activity is gold exploration in the Magadan Region of the Russian Federation. Previously, Ovoca acquired, developed and sold the Goltsovoye silver project to JSC Polymetal. You can view other hedge fund positions in UK markets here (scroll through).

Last year, we posted up GLG's research on the effect of analyst recommendations which was intriguing and worth checking out if you missed it as well.

Bill Ackman's Presentation on Family Dollar (FDO)

At the recent Ira Sohn Conference, Pershing Square Capital's Bill Ackman presented Family Dollar (FDO) as his investment idea under the notion that it is a prime target for a leveraged buyout (LBO).

While we've presented notes from the hedge fund conference, today we present Ackman's actual presentation (powerpoint slides) from the event.

His presentation highlighted that the dollar store chain is like Walmart (WMT), but with more room to grow. Ackman points to the company's return on capital as attractive.

The hedge fund manager believes that FDO can benefit operationally by being taken private, citing KKR's past acquisition of Dollar General (DG) as a successful LBO in the space.

Since the presentation on May 25th, Ackman has doubled his position in FDO and now owns 8.9% of the company. Embedded below is the full presentation Ackman gave on why Family Dollar (FDO) is a compelling investment:



To see what else Ackman has invested in, sign-up for our Hedge Fund Wisdom newsletter.

Valinor Management Boosts Swift Transportation (SWFT) Stake

David Gallo's hedge fund Valinor Management just filed an amended 13G with the SEC regarding Swift Transportation (SWFT). Due to trading on June 2nd, Valinor now owns 8.8% of SWFT with 7,023,271 shares.

This marks a 47% increase in their position size as they owned only 4,767,170 shares at the end of the first quarter (March 31st). We covered when Valinor originally started their stake in SWFT back in December as the company went public.

Over the past few months we've also detailed activity from Gallo's hedge fund in Clearwater Paper (CLW) as well as Cott (COT).

We're always curious as to how hedge funds got their name, so it's interesting that Gallo's firm is named after lands inhabited by immortal souls from the books of J.R.R. Tolkien. Before founding Valinor, Gallo earned his MBA from Harvard Business School and worked at Roberto Mignone's Bridger Management.

Per Google Finance, Swift Transportation "formerly Swift Holdings Corp., is a transportation services company and a truckload carrier in North America. As of September 30, 2010, the Company operated a tractor fleet of approximately 16,200 units comprised of 12,300 tractors driven by company drivers and 3,900 owner-operator tractors, a fleet of 48,600 trailers, and 4,500 intermodal containers from 35 terminals positioned near major freight centers and traffic lanes in the United States and Mexico."

Philippe Laffont's Coatue Management Buys More Sina (SINA)

In a 13G filed with the SEC due to trading on June 1st, Philippe Laffont's hedge fund Coatue Management has increased its position in Sina (SINA). They now own 5.16% of the company with 3,187,477 shares.

Laffont's hedge fund focuses on technology, media, & telecom and you can view the rest of Coatue Management's portfolio in the new issue of our Hedge Fund Wisdom newsletter.

This is almost a 10% increase in their position size since March 31st when they owned 2,907,894 shares. Coatue isn't the only major hedge fund to have purchased shares of SINA recently either. John Thaler's JAT Capital acquired a massive SINA position as well.

Sina is a social media company based in China and needless to say is one of the hot investing trends right now. However, shares have seen heightened volatility as they've declined from a high of $147 in April to $86 per share currently.

Given the volatility in the past two weeks, it's tough to be entirely sure as to who which funds still hold a position. This stock is the definition of a 'momentum' name and it will be interesting to see who emerges as a true investor once the sell-off abates.

Seth Klarman's Baupost Trims Audiovox (VOXX) Stake

Due to trading on May 31st, Seth Klarman's Baupost Group has filed an amended 13G with the SEC. Per the filing, Baupost now shows a 4.12% ownership stake in Audiovox (VOXX) with 857,402 shares.

This marks a 19% reduction in the hedge fund's position since March 31st. Back then, they owned 1,060,576 shares. To see the rest of Klarman's equity investments, head to our newsletter.

Per Google Finance, Audiovox is "an international distributor in the accessory, mobile and consumer electronics industries. Audiovox markets the products under the Audiovox brand name, other brand names and licensed brands, such as Acoustic Research, Advent, Ambico, Car Link, Chapman, Code-Alarm, Discwasher, Energizer, Heco, Incaar, Invision, Jensen, Mac Audio, Magnat, Movies2Go, Oehlbach, Phase Linear, Prestige, Pursuit, RCA, RCA Accessories, Recoton, Road Gear, Schwaiger, Spikemaster and Terk, as well as private labels through domestic and international distribution network."

And for more resources from this prestigious hedge fund, head to a collection of Baupost Group letters.

Bill Ackman Buys More Family Dollar (FDO) & Fortune Brands (FO)

Bill Ackman's hedge fund Pershing Square Capital Management has been on a buying spree this week.


Fortune Brands (FO)

First, they scooped up shares of Fortune Brands (FO) on June 6th and 7th (and last week as well). In total, Pershing purchased 501,397 shares of FO at prices of $62.87 and $63 per share.

After said purchases, the hedge fund now owns 17,170,033 shares of Fortune Brands. This is an activist position for Ackman and we covered his initial 13D filing last year.

The thesis here centers on breaking up the company's collection of brands. Wheels are already in motion in this regard as FO seeks to become a pure-play on the spirits business and will spin off its other divisions.



Family Dollar (FDO)

Second, Ackman was also out buying even more Family Dollar (FDO). As we covered recently, Pershing initially bought FDO in the first quarter but as of June 9th now has a 8.9% ownership stake in FDO with 10,871,793 shares, almost doubling his position in recent weeks.

At the recent Ira Sohn Conference, Ackman laid out his FDO thesis and it is largely based on FDO being an attractive leveraged buyout candidate. As we've already detailed, Family Dollar actually received a bid to go private from its second largest shareholder, Nelson Peltz's Trian Fund. While they essentially offered between $55 and $60, shares currently trade around $52.75.

You can view the rest of Bill Ackman's portfolio by subscribing to our Hedge Fund Wisdom newsletter.

What We're Reading ~ 6/10/11

John Paulson loses half a billion in 24 hours [ZeroHedge]

RenTec and Tudor performance numbers [Dealbreaker]

How to spot a bubble in real time [The Big Picture]

Youku (YOKU): the good, the bad, and the very ugly [Stone Street Advisors]

Liberty Global (LBTYA) break-up value [Cautious Bull]

Bulls attempt goal line stand [Humble Student of the Markets]

Steve Eisman to leave FrontPoint Partners [Absolute Return + Alpha]

The irresistible nature of trading [Forbes]

The search for Einhorn's gold [Reuters]

UK's Lansdowne Partners faces testing times [FT]

Profile on Phil Falcone [Vanity Fair]

Hedge funds post May losses from choppy markets [WSJ]

Hedge funds running farms [NY Observer]

The SEC's new guns [Absolute Return + Alpha]

GMCR: From small beans big trouble one day brews [Financial Investigator]

LinkedIn shares were a bubble: academic model [Reuters]

How Facebook can put Google out of business [TechCrunch]

Funny: homeowner forecloses on Bank of America [Digtriad]

Dan Loeb's Third Point Reduces Equity Exposure

Dan Loeb's Third Point Offshore Fund finished May -0.4% and year-to-date is up 9.7%. Managing around $4 billion, the hedge fund is closed to new investors and has seen 18.8% annualized returns.


Equity Exposure

The month of May was a volatile one for the markets in general and hedge funds were no exception. Third Point ratcheted down exposure to equities as they were 42.6% net long at the end of the month (60.3% long and -17.7% short). The month prior, the hedge fund was 46.8% net long equities, marking a 4.2% decrease in exposure from April to May.

Third Point's largest exposure this time around continued to be the consumer sector at 9.5% net long and basic materials at 8.2% net long.

Credit Exposure

In credit, Third Point was 34.4% long, -7.7% short, leaving them 26.7% net long. This is down from 29.4% net long the month prior. Their largest exposure in this segment continues to be asset backed securities.

Top Positions

Third Point's top holdings at the end of May were:

1. Gold
2. Delphi
3. El Paso (EP)
4. Technicolor (Multiple Securities owned)
5. CVR Energy (CVI)

Earlier today we posted up that David Tepper's Appaloosa Management recently bought more CVR Energy. Also, we highlighted how Delphi will be going public and there are numerous hedge funds involved in that name as well.

In the month of May, Third Point's top winners included: Delphi, El Paso, Short A, Short B, and Aveta.

The hedge fund's top losing positions for the month included: NXP Semiconductor (NXPI), NewPage, Williams Companies (WMB), Big Lots (BIG), and gold.

For rationale behind some of their investments, check out Third Point's investor letter.

Tepper's Appaloosa Boosts CVR Energy (CVI) Position

David Tepper's hedge fund Appaloosa Management recently disclosed an updated position in CVR Energy (CVI). Due to a 13G filed with the SEC, Appaloosa now shows a 8.26% ownership stake in CVI with 7,141,434 shares. This latest disclosure reflects trading as of May 23rd, 2011.

This marks an increase in their position size to the tune of almost 360% as they owned only 1,556,374 shares at the end of the first quarter. Interestingly enough, a selling stockholder affiliated with Kelso & Company LP shed 7,988,179 shares of CVI to Goldman Sachs on May 23rd.

Spin-Out of Fertilizer Business

The company had a secondary offering in February and numerous hedge funds were involved. Dan Loeb's Third Point, in particular, bought CVI under the spin-out thesis.

CVR Energy filed an IPO for its fertilizer business and will pursue an MLP structure for this offering. Hedge funds invested in the stock believe this new offering will garner a high valuation due to high demand for yield in the current low interest rate environment. You can see the full rationale for buying CVR Energy here.

Per Google Finance, CVR Energy is "an independent petroleum refiner and marketer of transportation fuels. In addition, the Company owns all of the interests (other than the managing general partner interest and associated incentive distribution rights (the IDRs)) in CVR Partners, LP (the Partnership), a limited partnership which produces nitrogen fertilizers in the form of ammonia, and a solution of urea and ammonium nitrate in water used as a fertilizer (UAN)."

To see the rest of David Tepper's investments, head to the brand new issue of our Hedge Fund Wisdom newsletter.

Steven Cohen's SAC Capital Builds OCZ Technology (OCZ) Stake

In a 13G filed with the SEC, Steven Cohen's prominent hedge fund SAC Capital disclosed an updated position in OCZ Technology Group, Inc (OCZ). Due to trading on May 26th, 2011, SAC has revealed a 5.1% ownership position in OCZ with 2,623,346 shares.

This is a massive increase in the hedge fund's position size as they only owned a measly 9,784 shares at the end of the first quarter.

Stock Down 30% Past 1.5 Months

OCZ traded down over 8% yesterday. Since the middle of April, shares are down over 30%. This is at least partially attributable to a negative research report published by Copperfield Research on April 20th, 2011. Also worth noting: over 24% of the float is short.

Our pal & trader @firstadopter on Twitter has been all over this saga. He rebutted the Copperfield report and then laid out why OCZ could be worth $28 per share based on rival Fusio-io's impending IPO. OCZ provides solid state drives (SSDs) and memory modules for computers and other systems.

Shares of OCZ have seen heightened volatility as of late, so it will be interesting to see how it trades after receiving a vote of confidence from SAC Capital.