Happy Holidays From Market Folly!

Happy holidays from us here at Market Folly!

Oh, and Paul Tudor Jones of Tudor Investment Corp wishes you happy holidays as well. Below, courtesy of Greenwich Time, is his grandiose light display consisting of 15,000 lights synchronized to music. Not even joking.




Lastly, the stock market wanted to get in on the action and wish you happy holidays as well:





Merry Christmas, Happy Hanukkah, Happy Kwanzaa, Happy Festivus, Happy Holidays, and any others we may have left out!

What We're Reading (12/24/2008)

- The Federal Reserve's balance sheet (Econbrowser)

- Brazil needs $75 oil to support investment (Bloomberg)

- T2 Partners (Whitney Tilson's hedge fund) says more pain to come (.pdf housing analysis)

- Hedge Fund legend Steinhardt says now's a good time to buy stocks (Reuters)

- Profile on Jim Chanos, notable short-seller & hedge fund manager (NY Mag)

- Videos: Nouriel Roubini's predictions for 2009 (Value Plays)

Barry Rosenstein's Jana Partners: Hedge Fund Tracking - 13 F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Jana Partners. Ran by Barry Rosenstein, Jana was recently ranked 79th in Alpha's Hedge Fund Rankings. Jana was founded in 2001 and typically employs activist, market neutral, and long/short equity strategies in public equity markets. Rosenstein received his BS from Lehigh University and his MBA from the Wharton School of Business at the University of Pennsylvania. Jana has returned 20.9% each year annualized from 2001 til 2007. Rosenstein sees Jana's future in a strategy that uses management adjustments to force change at companies, which in turn can send shares higher. A few months back in our hedge fund performance numbers update, we noted that Jana's piranha fund was -19.2% for October and was -21.7% for the year at that time. Additionally, their Nirvana fund fell 13.2% in October and was down 21.9% ytd at that time. Lastly, the Jana Partners fund had a much better October than their other funds, being down 6.6% for that month, but was still down 20.4% for the year at that time. As you can see, a big chunk of their losses came solely from the month of October. As we posted earlier, Jana has hit a rough patch this year and is on track for its first yearly loss ever. We've also recently covered some of Jana's big moves, including taking a 13.52% ownership stake in Convergys (CVG) and a 5.7% ownership stake in Hayes Lemmerz (HAYZ).

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Aetna (AET)
Wells Fargo (WFC)
Pfizer (PFE)
Marathon Oil (MRO)
Bank of America (BAC)
Ace (ACe)
Regional Bank Holdrs (RKH)
Cigna (CI)
Telephone & Data (TDS)
KBW Regional Banking ETF (KRE)
Select Sector Financial ETF (XLF) Calls
Quanex Building (NX)
Microsoft (MSFT) Calls
Medarex (MEDX)
Teletech Holdings (TTEC)
John Bean Tech (JBT)
T Rowe Price (TROW)
Holly (HOC)
McDonalds (MCD)
JDA Software (JDAS)
X-rite (XRIT)
Lehman Brothers (LEHMQ)


Some Increased Positions (A few positions they already owned but added shares to)
Hanover Insurance (THG): Increased position by 117%
Medicis Pharma (MRX): Increased position by 76%
Invitrogen (IVGN): Increased position by 62%
Williams Companies (WMB): Increased position by 33%
Commscope (CTV): Increased position by 32%
Graphic Packaging (GPK): Increased position by 28%
Convergys (CVG): Increased position by 50%
Health Net (HNT): Increased position by 29%
Corel (CREL): Increased position by 19.5%
Hayes Lemmerz (HAYZ): Increased position by 12%
Agilysys (AGYS): Increased position by 10%
Maximus (MMS): Increased position by 9%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)

Focus Media (FMCN): Reduced position by 73%
KBR (KBR): Reduced position by 68%
AK Steel (AKS): Reduced position by 62%
Shire (SHPGY): Reduced position by 61%
Xerium Tech (XRM): Reduced position by 51%
M&F Worldwide (MFW): Reduced position by 42%
Chubb (CB): Reduced position by 23%
MF Global (MF): Reduced position by 20%
HCC Insurance (HCC): Reduced position by 9%



Removed Positions (Positions they sold out of completely)
Comstock Resources (CRK)
Cisco Systems (CSCO)
Anadarko Petroleum (APC) Calls
Taiwan Semi (TSM)
Conoco Phillips (COP) Puts
United Health (UNH)
Forest Oil (FST)
Nokia (NOK)
Devon Energy (DVN)
Hess (HES) Calls
National Oilwell Varco (NOV)
Equitable Resources (EQT)
First American (FAF)
Genentech (DNA)
Century Aluminum (CENX)
Oracle (ORCL)
Omnicare (OCR)
Sandridge Energy (SD)
Microsoft (MSFT)
Transocean (RIG)
Peabody Energy (BTU)
Consol Energy (CNX)
Anadarko Petroleum (APC)
Commercial Metals (CMC)
Cnet - inactive
Talisman Energy (TLM)
Hess (HES)
Calpine (CPN)
Select Sector Energy (XLE) Puts
iShares Russell 2000 index (IWM) Puts


Top 20 Holdings (by % of portfolio)

1. Copart (CPRT): 12.3% of portfolio
2. Convergys (CVG): 10.8% of portfolio
3. Health net (HNT): 7.5% of portfolio
4. HCC Insurance (HCC): 5.1% of portfolio
5. Invitrogen (IVGN): 4.8% of portfolio
6. Commscope (CTV): 4.6% of portfolio
7. Williams Companies (WMB): 4% of portfolio
8. Aetna (AET): 3.9% of portfolio
9. Chubb (CB): 3% of portfolio
10. Wells Fargo (WFC): 2.8% of portfolio
11. American Italian Pasta (AITP): 2.3% of portfolio
12. Pfizer (PFE): 1.9% of portfolio
13. Ak Steel (AKS): 1.9% of portfolio
14. Marathon Oil (MRO): 1.9% of portfolio
15. Bank of America (BAC): 1.8% of portfolio
16. MF Global (MF): 1.8% of portfolio
17. Ace (ACE): 1.8% of portfolio
18. Regional Bank Holdrs (RKH): 1.8% of portfolio
19. NBTY (NTY): 1.7% of portfolio
20. Maximus (MMS): 1.6% of portfolio

Assets from the collective holdings were $5.89 billion last quarter and were $2.14 billion this quarter. So, they definitely decreased their long US equity exposure by a good amount, like many other hedge funds we've covered. And, for the most part, they were selling entire positions rather than partial positions. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management
• Chase Coleman's Tiger Global
• Stephen Mandel's Lone Pine Capital
• Lee Ainslie's Maverick Capital
• John Griffin's Blue Ridge Capital
• Andreas Halvorsen's Viking Global
• Chris Shumway's Shumway Capital Partners
• Touradji Capital (Paul Touradji)
• Eric Mindich's Eton Park Capital
  

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on Rosenstein / Jana Partners:
- Jana has hit a rough patch this year
- Jana takes 13.52% ownership stake in Convergys (CVG)
- Jana discloses 5.7% ownership stake in Hayes Lemmerz (HAYZ)
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers

Interview With Seth Klarman of Baupost Group

Special thanks to Todd Sullivan over at Value Plays for finding and posting this great interview. Seth Klarman of hedge fund Baupost Group sits down to talk with Harvard Business School:

"While other money managers scrambled to survive the financial market meltdown, value investor extraordinaire Seth Klarman (MBA ’82), president of The Baupost Group in Boston, cautiously pursued buying opportunities. After sitting patiently on the sidelines with a mountain of cash — 40 to 50 percent of Baupost’s $14 billion–plus in assets — for several years, the firm’s recent investments have cut its cash stash in half. Distress selling, it seems, breeds the kind of bargains Klarman lives for.

Fresh out of HBS, Klarman didn’t hesitate when Adjunct Professor Bill Poorvu recruited him to help manage a $27 million pool of capital in the newly formed Baupost. While the starting salary was an underwhelming $35K, it turned out to be the opportunity of a lifetime. In 26 years, Baupost has racked up an enviable 20 percent annual compound rate of return, earning Klarman entry into the Alpha magazine Hedge Fund Hall of Fame. The firm has grown from 3 to 100 employees.

A consummate team player, Klarman rarely uses his private office, choosing instead to sit at the trading desk where he works closely with analysts on investment decisions. But work isn’t all-consuming. He makes time for family and outside pursuits. As his three children grew, he coached his daughters’ soccer teams and attended his son’s recitals. And he is deeply committed to a number of philanthropic causes. Klarman recently took time to discuss investing, the credit crisis, and his approach to philanthropy.

When you started with Baupost at age 25, did you already consider yourself a value investor?
Yes. After my junior year in college and right after graduating, I worked for Mutual Shares Corporation, which was run by a wonderful gentleman named Max Heine. I learned a huge amount about value investing. It turns out that value investing is something that is in your blood. There are people who just don’t have the patience and discipline to do it, and there are people who do. So it leads me to think it’s genetic.

Did you ever waver in your investment style?
Never once.

What gave you the resolve to say no to all the other investment approaches?
There are several answers. First, value investing is intellectually elegant. You’re basically buying bargains. It also appeals because all the studies demonstrate that it works. People who chase growth, who chase highfliers, inevitably lose because they paid a premium price. They lose to the people who have more patience and more discipline. Third, it’s easy to talk in the abstract, but in real life you see situations that are just plain mispriced, where an ignored, neglected, or abhorred company may be just as attractive as others in the same industry. In time, the discount will be corrected, and you will have the wind at your back as a holder of the stock.

Do you set an annual return target?
We think it’s madness to target a return. Return lies in some relationship to risk, albeit there are moments when it’s out of whack, when you can make a high return with very limited risk. My view is that you can target risk versus return. So you can say, I’ll take the very safe 6 percent, I’ll take the somewhat risky 12, or I’ll take the enormously risky 20, knowing that 20 might actually be minus 20 by the time the actual results are known. We just don’t think targeting a return is smart.

You are lead editor of the new edition of Security Analysis, the bible of value investing by Benjamin Graham and David Dodd, first published in 1934. Is their advice still relevant 75 years later?
At no time since 1934 has it been so relevant given the financial turmoil and distress in the world and the possibility that we could be reliving some sort of serious economic downturn. What’s wonderful about Graham and Dodd is that their advice is timeless. And it is not just about investing; it’s also about thinking about investing. It basically teaches you the questions that you should ask, and it makes endless references to the foibles of human nature in the markets.

Given the recent credit market meltdown, have we made much progress in figuring out how to avoid the pitfalls pointed out by Graham and Dodd?
No. What happens is that people always want to believe that this time is different, that there’s something new under the sun, and that through their own ingenuity they can wish away risk. The idea that risk premiums would go to zero, that we’re somehow overcoming human nature, is absurd. The whole reason that our capitalist system works the way it does is because there are cycles, and the cycles self-correct. With too much excess, eventually you get a downturn.

So the explosion in securitized assets was a ticking time bomb?
It’s not amazing that securitized products were created. There are huge financial incentives for the people involved. What’s amazing is that anybody actually bought them. That’s because they’re created with a one-dimensional idea of what the economy and the world are going to do. If you have nothing but good times, then securitization makes tremendous sense. But securitization, for all of the commingling and diversification it gives you, also gives you a lack of transparency. So if you have an environment like the one we have now, the assets that have been securitized actually make you worse off than if they were just held as whole loans.

The unanswered question is how did the smartest people in the world who run the major Wall Street firms not understand that these products were toxic and end up getting caught with them on their books?

As Fed chairman, did Alan Greenspan have a hand in creating the current credit market crisis?
Until recently, Greenspan seemed unaware of his role in influencing markets. As Fed chairman, when he advised people not very many years ago to take out variable rate mortgages, he aided and abetted the housing market excesses. When he said there was irrational exuberance in the market [in 1996], he was basically right. But then he didn’t act even though he had plenty of levers he could have pulled that didn’t have to do with changing interest rates. He could have raised margin requirements, for example. But instead, he came up with the ridiculously lame idea that bubbles need to be allowed to run and that the Fed can clean up the mess afterward, which only had the effect of inflating subsequent bubbles, most notably the housing bubble that came as a result of the easy money. So he’s just been unaware of the impact of his encouragement, and his inaction got us into the terrible mess we’re in today. It’s not all his fault, but I hold him largely responsible for it.

How have Ben Bernanke and Henry Paulson (MBA ’70) done in managing the financial crisis?
They have been dealt an unimaginably bad hand. If any of us were in their shoes, we would be doing similar things, although it is reasonable to assume that part of the problem we are facing today is a result of previous government actions, and today’s government actions will give rise to future problems as well.

The lesson should be that we need to get to a point where we don’t need to intervene in the future, because we realize that intervention also delivers incredibly dangerous messages and creates a giant moral hazard. Bernanke and Paulson have to realize that if we’re going to intervene when things are bad, we’re also going to intervene when things are good and take away the punch bowl before the party gets too far along. One-sided intervention is even more dangerous. It will create an ever bigger bunch of excesses that will require an even bigger bailout next time.

Was the $700 billion federal rescue package, sold as a plan to buy toxic mortgage-backed securities from banks, the right way to go?
Defining the problem you are trying to solve is critical in knowing whether this plan will solve it. The bailout does almost nothing to solve the specific problem of declining housing prices. If the government really wants to tackle that problem, making capital available so that banks can make safe loans is crucial. Injecting $250 billion into the nation’s banks is a big step in that direction.

How do you approach philanthropy?
I’m a big believer in giving back. We all have an obligation to leave things better than where we found them.

I have more than I’ll ever need, and more than my family will ever need. I’m only working now for philanthropy. So everything I do is about giving back. In fact, one of the things we did at Baupost when we recently took on some additional clients was to accept only educational endowments and foundations. We figured we would further benefit the world by helping these organizations rather than individuals. That decision was very important for me and for all the firm’s partners.

Also, given the extremely difficult financial environment we are in, I expect charities will be greatly affected. That’s why it’s incumbent on those who can to step up and help fill the void."

Eton Park Capital (Eric Mindich): Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Eric Mindich's Eton Park Capital, who was ranked 53rd in Alpha's hedge fund rankings. Mindich received an Economics degree from Harvard and then worked at Goldman Sachs' risk-arbitrage desk. After becoming the youngest partner in the history of Goldman Sachs at the age of 27, it was clear he had a bright future. In 2004, he started his hedge fund Eton Park Capital with a record $3 billion in assets and a $5 million minimum investment required of investors. Today, Mindich manages over $6 billion. Typically, Eton Park invests in long/short equity and convertible arbitrage strategies. Additionally, as much as 30% of the fund can be invested in private investments. Back in September, Eton Park was only -1% for the year, as noted in our hedge fund performance numbers compilation. Recently, Mindich said he sees opportunity in the current markets in an excerpt from a recent investor letter.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Spdr Gold Trust (GLD) Calls
Genentech (DNA)
Comcast (CMCSK) Calls
Potash (POT) Puts
Barr Pharma (BRL)
Alpha Natural Resources (ANR)
Alpharma (ALO)
UST (UST) Calls
Ikon Office (IKN)
Vale (RIO) Calls
Mobile Telesystems (MBT)
Deere (DE) Puts
VimpelComm (VIP)
Cisco (CSCO) Calls
AK Steel (AKS)
Newmont Mining (NEM)
News Corp (NWS)
Kinross Gold (KGC)
Ralcorp (RAH)


Some Increased Positions (A few positions they already owned but added shares to)
Comcast (CMCSA): Increased position by 131%
Wells Fargo (WFC) Puts: Increased position by 117%
Qualcomm (QCOM) Calls: Increased position by 100%
Merrill Lynch (MER): Increased position by 94%
Ishares Emerging Markets (EEM) Puts: Increased position by 75%
Qualcomm (QCOM): Increased position by 70%
Walter Industries (WLT): Increased position by 64%
Verisign (VRSN): Increased position by 48%
Ebay (EBAY): Increased position by 46%
Lorillard (LO): Increased position by 40%
Starbucks (SBUX): Increased position by 38%
News Corp (NWS-A): Increased position by 35%
Gold Fields (GFI): Increased position by 28%
Hansen Natural (HANS): Increased position by 26%
Beckman Coulter (BEC): Increased position by 23%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Lamar Advertising (LAMR): Reduced position by 34%
Cemex (CX) Puts: Reduced position by 29%
Kraft Foods (KFT): Reduced position by 8%
Goodyear Tire (GT): Reduced position by 6%


Removed Positions (Positions they sold out of completely)
Turkcell (TKC)
Bank of America (BAC)
Republic Services (RSG)
Weyerhauser (WY)
Yahoo (YHOO) Calls
BB&T (BBT) Puts
Ford (F)
America Movil (AMX) Puts
Wachovia (WB) Calls
Grey Wolf (GW)
Ebay (EBAY) Calls
Liberty Media (LCAPA)
Yahoo (YHOO)
American Express (AXP)
Encore Acquisition (EAC)
American Express (AXP) Calls
Harris (HRS)
WH Energy (WHQA) - inactive
Philip Morris International (PM)
DRS Technologies (DRS)
Mastercard (MA) Puts
Anheuser Busch (BUD)
Anheuser Busch (BUD) Calls


Top 20 Holdings (by % of portfolio)

1. Spdr Gold Trust (GLD) Calls: 14% of portfolio
2. Ishares Emerging Markets (EEM) Puts: 7.9% of portfolio
3. Merrill Lynch (MER): 7.2% of portfolio
4. Wells Fargo (WFC) Puts: 5.4% of portfolio
5. Verisign (VRSN): 4.1% of portfolio
6. Spdr Gold Trust (GLD): 3.7% of portfolio
7. Qualcomm (QCOM): 3.6% of portfolio
8. Genentech (DNA): 3.3% of portfolio
9. Goodyear Tire (GT): 3.1% of portfolio
10. Comcast (CMCSK) Calls: 2.9% of portfolio
11. Hansen Natural (HANS): 2.8% of portfolio
12. Hospira (HSP): 2.7% of portfolio
13. Potash (POT) Puts: 2.6% of portfolio
14. Cemex (CX) Puts: 2.1% of portfolio
15. SLM (SLM): 1.7% of portfolio
16. Barr Pharma (BRL): 1.7% of portfolio
17. Ebay (EBAY): 1.5% of portfolio
18. Qualcomm (QCOM) Calls: 1.4% of portfolio
19. Alpha Natural Resources (ANR): 1.3% of portfolio
20. Alpharma (ALO): 1.2% of portfolio

Assets from the collective holdings were $6.08 billion last quarter and were $6.04 billion this quarter. In contrast to numerous other hedge funds who were decreasing long US equity exposure across the board, Eton Park was pretty much flat in terms of exposure. In terms of positions they sold out of, Eton Park barely sold out of partial positions. Instead, they had a tendency to remove positions entirely. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management
• Chase Coleman's Tiger Global
• Stephen Mandel's Lone Pine Capital
• Lee Ainslie's Maverick Capital
• John Griffin's Blue Ridge Capital
• Andreas Halvorsen's Viking Global
• Chris Shumway's Shumway Capital Partners
• Touradji Capital (Paul Touradji)

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on the Eton Park:
- Eric Mindich sees opportunity (excerpt from investor letter)
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers

Put/Call Ratio, Volatility Index (VIX), and 50 Day Moving Average

Over on his blog, Stewie has pointed out that the put/call ratio has leveled off and implies a level of comfort from the bulls.

(click to enlarge)

But, we are also seeing a decline in volatility (VIX). Typically, such a move triggers a rise in stocks. But, instead, you have a market which is basically churning sideways.

(click to enlarge)

So, the combination of a declining put/call ratio, a declining VIX, and sideways market action could actually be a bad sign for the bulls. Not to mention, you've got the end of a year, the holidays, and typically light volume in the markets. Lastly, don't forget that we're also trading right around an area of resistance as many stocks and indexes run right into their 50 day moving averages.

(click to enlarge)

We've noted that as everything trades up into their 50 day moving averages and overall levels of technical resistance, we think it sets the market up for another leg down. And, as always, we would love to be proved wrong by some catalyst or spike above resistance with volume. But, until we see that, we will continue to await the next drop. Overall, we think this is a very key point in the markets. We are in an overall downtrend, and have seen a counter-trend rally up into resistance. If the market can break through, it could really change the game up. We are weighted slightly to the short-side as it is our inclination that resistance will hold. We would normally be more heavily weighted to the short side here, but we don't feel comfortable "anticipating" a move due to the circumstances (holidays, light volume, new administration, & crazy market in general). Instead, we'll wait for miss market to tip her hand, and then play in that direction.

Thank You to Our Readers

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Tiger Global (Chase Coleman) Hedge Fund Tracking: 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Chase Coleman's Tiger Global. Chase Coleman is yet another 'Tiger Cub,' or manager who learned their trade under the watch of Julian Robertson while at Tiger Management. We've already covered many of the 'Tiger Cub' funds' portfolios including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Andreas Halvorsen's Viking Global, Chris Shumway's Shumway Capital Partners, and Touradji Capital (Paul Touradji). And, recently, many of these managers gathered at a 'Tiger Cub' hedge fund manager panel, where they laid out investment theses for the future.

Chase Coleman attended Williams College and started Tiger Global with the blessing of Julian Robertson after learning the ways of success at Tiger Management. His focus has always been on smaller cap names and on technology. Although, he has since expanded his horizons with time. In 2007, Tiger Global returned 70%, and from 2001-2007, Coleman bolstered an average return of 47%. In terms of recent performance, they were down 14.3% in the month of September and were down 13.7% for the year at that time.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Zions Bancorp (ZION)
Gushan (GU)
Huntington Bancshares (HBAN)
Marshall & Isley (MI)
Data Domain (DDUP)
Synaptics (SYNA)
Service Corp (SCI)
True Religion (TRLG)
Cavium Networks (CAVM)
Regions Financial (RF)
LDK Solar (LDK)
Comerica (CMA)
Under Armour (UA)
Istar Financial (SFI)
Vocus (VOCS)
Washington Mutual (WAMUQ)
Graco (GGG)
Beazer Homes (BZH)


Some Increased Positions (A few positions they already owned but added shares to)
Longtop Fin (LFT): Increased position by 3,438%
Apple (AAPL): Increased position by 426%
Visa (V): Increased position by 201%
Coach (COH): Increased position by 139%
General Motors (GM): Increased position by 105%
First Horizon (FHN): Increased position by 98%
Discovery Holding Class A (DISCA): Increased position by 66%
Lorillard (LO): Increased position by 51%
Mastercard (MA): Increased position by 22%
CSX (CSX): Increased position by 20%
American Tower (AMT): Increased position by 14%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
China Security (CSR): Reduced position by 55%
America Movil (AMX): Reduced position by 51%
Fifth Street Finance (FSC): Reduced position by 48%
Ambac Financial (ABK): Reduced position by 44%
Hovnanian (HOV): Reduced position by 36%
SBA Comm (SBAC): Reduced position by 30%
A-Power Energy (APWR): Reduced position by 23%
Transdigm (TDG): Reduced position by 13%
Sina Corp (SINA): Reduced position by 8%
Emcore (EMKR): Reduced position by 8%
Qualcomm (QCOM): Reduced position by 7%


Removed Positions (Positions they sold out of completely)
Ctrip (CTRP)
Luminex (LMNX)
Fairpoint Comm (FRP)
Omnivision (OVTI)
ETrade (ETFC)
Conceptus (CPTS)
Utstarcom (UTSI)
Nalco Holding (NLC)
Popular (BPOP)
First Bancorp (FBP)
Sierra Wireless (SWIR)
Stec (STEC)
Greenhill (GHL)
China Finance (JRJC)
China Nepstar (NPD)
Agfeed (FEED)
Google (GOOG)
Baidu (BIDU)
Priceline (PCLN)
New Oriental Educ (EDU)
Level 3 Communications (LVLT)
Research in Motion (RIMM)
Mentor Corp (MNT)
Trustmark Corp (TRMK)
Starent Networks (STAR)
Polaris (PII)
Pachex (PAYX)
American Superconductor (AMSC)
Middleby Corp (MIDD)
Watts Water (WTS)


Top 20 Holdings (by % of portfolio)

1. American Tower (AMT): 12% of portfolio
2. CSX (CSX): 11.9% of portfolio
3. Mastercard (MA): 10.2% of portfolio
4. Lorillard (LO): 8.7% of portfolio
5. Visa (V): 6.9% of portfolio
6. Qualcomm (QCOM): 5.2% of portfolio
7. Longtop Finl (LFT): 4.2% of portfolio
8. Transdigm (TDG): 4% of portfolio
9. Apple (AAPL): 3.7% of portfolio
10. America Movil (AMX): 3.6% of portfolio
11. SBA Comm (SBAC): 2.9% of portfolio
12. Mercadolibre (MELI): 2.6% of portfolio
13. Coach (COH): 2.5% of portfolio
14. Sina Corp (SINA): 2.5% of portfolio
15. Zions Bancshares (ZION): 1.9% of portfolio
16. General Motors (GM): 1.3% of portfolio
17. Gushan (GU): 1.2% of portfolio
18. Huntington Bancshares (HBAN): 1.1% of portfolio
19. Marshall & Isley (MI): 1.1% of portfolio
20. First Horizon National (FHN): 1.1% of portfolio

Assets from the collective holdings were $4.4 billion last quarter and were $3.3 billion this quarter. Its interesting to note that numerous other 'Tiger Cubs' have similar top positions including Lorillard (LO), Mastercard (MA), Visa (V), Apple (AAPL), and America Movil (AMX). Julian Robertson himself was even out buying some of those names as well. You can definitely see similarities in the investment process between these funds. Although Tiger Global decreased overall long equity exposure last quarter, they did so in a less severe manner than many of the other funds we've tracked. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on the 'Tiger Cubs':
- 'Tiger Cub' biographies
- Hedge fund manager panel (Tiger Cubs)
- November hedge fund performance numbers
- Julian Robertson's recent buys
- October hedge fund performance numbers
- Hedge Fund Rankings

Videos of Peter Thiel's Latest Comments (Clarium Capital)

Peter Thiel of hedge fund Clarium Capital recently spoke about numerous topics in videos linked below:

Video 1: On whether the US is the next Japan.

Video 2: Four theories on the bubble and bust economy

Video 3: What the decline of hedge funds means for main street

Video 4: On the history of economic bubbles

And don't forget to check out Clarium Capital's latest equity portfolio holdings changes, which we recently detailed here.

Touradji Capital (Paul Touradji) Hedge Fund Tracking: 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.


Next up is Touradji Capital ran by Paul Touradji. Touradji is one of many well-known 'Tiger Cubs' who started their own firms after leaving Julian Robertson's Tiger Management. We've already covered many of the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Andreas Halvorsen's Viking Global, and Chris Shumway's Shumway Capital Partners. Taken from our post on 'Tiger Cub' biographies, "Paul Touradji is the President and Chief Investment Officer of Touradji Capital Management LP, a New York-based hedge fund specializing in fundamental research and active investment in commodities and related assets. The firm manages approximately $3.5 billion and invests in both the public and private markets. Mr. Touradji has well over a decade of experience investing in the commodity, equity, and macro markets. Mr. Touradji began his commodities career at Tiger Management in the mid '90s, where he managed the commodities team; it was at Tiger that he developed his fundamental approach to analysis and investment in commodities. Prior to Tiger, Mr. Touradji’s specialty was quantitative arbitrage, principally with O’Connor Partners. Mr. Touradji is a 1993 graduate of the McIntire School of Commerce at the University of Virginia and a Certified Financial Analyst." Recently, at a 'Tiger Cub' hedge fund manager panel, Touradji advocated shorting Copper as the world deleverages and the velocity of money drops.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Hess (HES)
McDermott (MDR)
Transocean (RIG)
Whiting Petroleum (WLL)
XTO Energy (XTO)
Range Resources (RRC)
Terra Industries (TRA)
Apache (APA)
Talisman Energy (TLM)
Anadarko Petroleum (APC)
Encana (ECA)
Nucor (NUE)
Noble Energy (NBL)
Nexen (NXY)
Steel Dynamics (STLD)
Continental Resources (CLR)
FMC Tech (FTI)
Tesoro (TSO)
Frontier Oil (FTO)
S&P 500 (SPY)


Some Increased Positions (A few positions they already owned but added shares to)
Baker Hughes (BHI): Increased position by 504%
Delta Petroleum (DPTR): Increased position by 38%
Chesapeake Energy (CHK): Increased position by 2.3%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Hornbeck Offshore (HOS): Reduced position by 98%
Oil States Intl (OIS): Reduced position by 94%
Comstock Resources (CRK): Reduced position by 83%
Encore Acquisition (EAC): Reduced position by 74%
BMB Munai (KAZ): Reduced position by 72%
Mosaic (MOS): Reduced position by 66%
Petrohawk Energy (HK): Reduced position by 62%
Cano Petroleum (CFW): Reduced position by 62%
Devon Energy (DVN): Reduced position by 52%
CVR Energy (CVI): Reduced position by 49%
Sandridge Energy (SD): Reduced position by 38.5%
Storm Cat Energy (SCU): Reduced position by 30%


Removed Positions (Positions they sold out of completely)
Alpha Natural Resources (ANR)
BP (BP)
Gasco (GSX)
Thompson Creek Metals (TC)
Cano Petroleum (CFW)
National Oilwell Varco (NOV)
McMoran Exploration (MMR)
Helix (HLX)
Select Sector Technology (XLK) Puts
Patriot Coal (PCX)
BJ Service (BJ)
Exco Resources (XCO)
St Mary Land & Exploration (SM)
Helmerich & Payne (HP)
Cabot Oil & Gas (COG)
Nabors (NBR)
GMX Resources (GMXR)
Chicago Bridge & Iron (CBI)
US Steel (X)
Hercules Offshore (HERO)
Walter Industries (WLT)
Potash (POT)
UNIT (UNT)
Petroquest (PQ)
Goodrich Petroleum (GDP)


Top 20 Holdings (by % of portfolio)

1. Petrohawk (HK): 19% of portfolio
2. Baker Hughes (BHI): 12% of portfolio
3. Delta Petroleum (DPTR): 10.6%
4. Hess (HES): 5.8% of portfolio
5. McDermott (MDR): 5.4% of portfolio
6. Chesapeake Energy (CHK): 5.2% of portfolio
7. Comstock Resources (CRK): 4.1% of portfolio
8. Transocean (RIG): 3.4% of portfolio
9. Sandridge Energy (SD): 3.1% of portfolio
10. Whiting Petroleum (WLL): 2.9% of portfolio
11. XTO Energy (XTO): 2.2% of portfolio
12. CVR Energy (CVI): 2.1% of portfolio
13. Encore Acquisition (EAC): 2.1% of portfolio
14. Range Resources (RRC): 1.9% of portfolio
15. Terra Industries (TRA): 1.7% of portfolio
16. Devon Energy (DVN): 1.7% of portfolio
17. Apache (APA): 1.6% of portfolio
18. Talisman Energy (TLM): 1.5% of portfolio
19. Anadarko Petroleum (APC): 1.5% of portfolio
20. Hornbeck Offshore (HOS): 1.4% of portfolio

Assets from the collective holdings were $749 million last quarter and were $139 million this quarter. Keep in mind that since Touradji's background is in commodities, the vast majority of his holdings will be in markets other than equities. But, seeing as he has hundreds of millions in equity markets, we think it makes sense to track him to try and pick up on any macro themes. Like many other hedge funds we've seen thus far, Touradji was out decreasing equity exposure across the board last quarter. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.


More on Touradji:
- 'Tiger Cub' biographies
- Hedge fund manager panel (Tiger Cubs)
- November hedge fund performance numbers
- Julian Robertson's recent buys
- October hedge fund performance numbers
- Hedge Fund Rankings

Cheap Oil

In one of Gregor's latest posts, he lays out a simple premise that cheap oil is incompatible with growth. He writes,

"...The price signal given to the world from oil since 2002, in a context of flat global oil production, more than strongly indicates that oil at 45.00 dollars a barrel is not even remotely close to a sustainable price–unless a collapse in global industrialism maintains for some time to come. Thus we arrive pretty easily at a conclusion many now suspect: growth and cheap oil are incompatible..."

(click to enlarge)

So, if the price of oil is dependent on supply and demand, then you have an increasingly difficult time arguing against cheap oil prices for the future. On the demand side, it would seemingly take a prolonged global recession/depression to keep demand down. On the supply side, it would mean that somewhere in the world there would need to be a discovery large enough that it could fend off demand for years to come. While this potentially could happen, the outlook for this scenario is still bleak. Just look at the chart above. While there have been some bountiful discoveries every 10 or 20 years, each subsequent discovery has provided less production than the last.

Then there is the wrench that is alternative energy. Throw that into the mix and you could potentially see it affect oil. But, the main caveat with that argument is scale. Alternative energy would take years to truly bring to scale. And, we would argue that for it to be implemented en masse, it would require high oil prices in the first place. After all, now that we're seeing relatively 'cheap oil' again these days, the alternative energy buzz has noticeably dropped off. Sure, many (us included) still advocate pushing for green energy, but the catalyst for such an event is more than simply buzz or increased awareness. It is expensive oil. Only when the masses are emptying out their pocket books for gas (as they were this past summer) does the spark ignite the fuse.

Shumway Capital Partners (Chris Shumway): Hedge Fund Tracking 13F Filing - Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management
  

Next up is Shumway Capital Partners run by Chris Shumway. Shumway started his own fund after leaving well-known Julian Robertson's Tiger Management. And thus, as a progeny of Robertson, he is a part of what people call the 'Tiger Cubs' (people who have started their own firms after succeeding at Tiger). We've already covered many of the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Taken from our post on 'Tiger Cub' biographies, "Chris Shumway is the Founding Partner of Shumway Capital Partners (“SCP”), an investment management firm founded in 2001. SCP, which manages a multibillion dollar group of private investment funds, uses a private equity-like research model for public market investment on a global basis. Prior to forming SCP, Mr. Shumway was a Senior Managing Director at Tiger Management (1992-1999), an Analyst at Brentwood Associates (1990-1991), and an Analyst at Morgan Stanley & Co. (1988-1990). He received an M.B.A. from Harvard Business School (1993) and a B.S. from the McIntire School of Commerce at the University of Virginia (1988)." Shumway's Ocean Fund was up 0.85% for the month of October but was -8.24% for the year at that time, as we noted in our October hedge fund performance update (see also our recent November update). Lastly, at a recent 'Tiger Cub' hedge fund manager panel, Shumway suggested that buying stocks that were down largely due to hedge fund liquidations would be a winning strategy longer-term.

The following were Shumway's long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
CVS Caremark (CVS)
Medco Health (MHS)
Focus Media (FMCN)
Wyeth (WYE)
News Corp (NWS-A)
Hansen Natural (HANS)
Mercadolibre (MELI)


Some Increased Positions (A few positions they already owned but added shares to)
SBA Comm (SBAC): Increased position by 20%
Qualcomm (QCOM) Calls: Increased position by 1.6%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Cisco Systems (CSCO): Reduced position by 86%
Google (GOOG): Reduced position by 84%
Teva Pharma (TEVA): Reduced position by 74.5%
Qualcomm (QCOM): Reduced position by 72%
Potash (POT): Reduced position by 68%
Chipotle (CMG-B) B Shares: Reduced position by 55%
Waters (WAT): Reduced position by 49%
Sirius Satellite (SIRI) Notes: Reduced position by 37%
Mastercard (MA): Reduced position by 35%
Zimmer Holdings (ZMH): Reduced position by 34%
NII Holdings (NIHD): Reduced position by 29%


Removed Positions (Positions they sold out of completely)
Union Pacific (UNP)
XTO Energy (XTO)
Burlington Northern (BNI)
Apple (AAPL)
St Jude (STJ)
Research in Motion (RIMM)
American Tower (AMT)
Visa (V)
Crown Castle (CCI)
Colgate Palmolive (CL)
Occidental Petroleum (OXY)
EMC Corp (EMC)
Baidu (BIDU)
Monsanto (MON)
SLM (SLM)
Chipotle (CMG)
Staples (SPLS)
Mosaic (MOS)
Liberty Global (LBTYK) Series C Common
Liberty Global (LBTYA)


Top 20 Holdings (by % of portfolio)

1. Qualcomm (QCOM) Calls: 11.9% of portfolio
2. Mastercard (MA): 11.8% of portfolio
3. NII Holdings (NIHD): 9.4% of portfolio
4. Qualcomm (QCOM): 8.8% of portfolio
5. SBA Comm (SBAC): 8.6% of portfolio
6. CVS Caremark (CVS): 8.3% of portfolio
7. Waters (WAT): 7.3% of portfolio
8. Teva Pharma (TEVA): 5.9% of portfolio
9. Zimmer Holdings (ZMH): 5.6% of portfolio
10. Medco Health (MHS): 4.1% of portfolio
11. Potash (POT): 3.8% of portfolio
12. Cisco Systems (CSCO): 3.2% of portfolio
13. Focus Media (FMCN): 2.2% of portfolio
14. Wyeth (WYE): 2% of portfolio
15. Google (GOOG): 1.6% of portfolio
16. Sirius (SIRI) Notes: 1.4% of portfolio
17. News Corp (NWS-A): 1.1% of portfolio
18. Chipotle (CMG-B) B shares: 1.1% of portfolio
19. Sirius (SIRI) Notes2: 1.1% of portfolio
20. Hansen Natural (HANS): 0.4% of portfolio

Assets from the collective holdings were $7.88 billion last quarter and were $1.78 billion this quarter. As you can easily tell from the raw figures, Shumway was making a large move out of equity markets over the last quarter. And, they were largely scaling out of natural resource and commodity related names that have seen extreme selling pressure the past few months. Please note that we have not detailed every single change to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, Bruce Kovner's Caxton Associates, and Soros Fund Management (George Soros). Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Shumway:
- 'Tiger Cub' biographies
- Hedge fund manager panel (Tiger Cubs)
- November hedge fund performance numbers
- Julian Robertson's recent buys
- October hedge fund performance numbers
- Hedge Fund Rankings

What We're Reading

- Hedge fund industry imprisons its clients (The Economist)

- Toscafund Asset Management's November letter to investors in .pdf format (Dealbreaker)

- Marc Faber thinks 2009 will be a total disaster (CommodityBullMarket)

- Funny: How corporate logos look after the crisis (BusinessPundit)

- The Problem with deleveraging (Big Picture)

Stock Market Collapse: Simply a Reversion to the Mean

Doug Short has shown us that we are merely reverting to the mean...

(click to enlarge)

Hedge Fund Tracking: George Soros (Soros Fund Management) - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
  

Next up is Soros Fund Management ran by George Soros. Soros is famous for his stellar returns with partner Jim Rogers when they ran their Quantum fund. Soros' fund is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Soros is more of a global macro player, seeking investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.

Soros is great to track because of his excellent macro sense and formidable track record as an investor. His thoughts on the current financial landscape are detailed in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. Soros sees a vast consolidation in the hedge fund space in the near future, as we noted when we recently checked in on Jim Rogers & George Soros. As such, he testified before Congress recently regarding the hedge fund industry, which you can see via video here. If you want to hear some more insightful thoughts from George Soros himself, head over to our post on Hedge Fund manager interviews or check out his recent interview with Fareed Zakaria to discuss the current crisis. If you want to get a better sense as to how Soros' mind works, we highly recommend reading his first book, The Alchemy of Finance.

Before beginning, you might be interested in checking out Soros' portfolio holdings from Q2 2008. The following were Soros' long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Research in Motion (RIMM)
Arch Coal (ACI)
Ishares Real Estate (IYR)
Powershares QQQ (QQQQ)
Petroleo Brasileiro (PBR) Calls
Whiting Petroleum (WLL)
Global Ship Lease (GSL)
Suncor (SU)
Chesapeake (CHK)
RedHat (RHT) Notes
Best Buy (BBY)
Buffalo Wild Wings (BWLD)
Lattice Semiconductor (LSCC)
Anheuser Busch (BUD)
Frontline (FRO)
Vale (RIO) Calls
Unibanco (UBB)
Bank of America (BAC)
Collective Brands (PSS)
Companhia Siderurgica (SID)
Fidelity National Info (FIS)
Dr Pepper Snapple (DPS)
Entergy (ETR)
Suntrust (STI)
Global Ship Lease (GSL-WS)
Nasdaq (NDAQ)
General Growth Properties (GGP)
Teradata (TDC)


Some Increased Positions (A few positions they already owned but added shares to)
Walmart (WMT): Increased position by 519%
Consol Energy (CNX): Increased position by 428%
Schlumberger (SLB): Increased position by 400%
Emulex (ELX): Increased position by 279%
Hess (HES): Increased position by 277%
Potash (POT): Increased position by 91%
RF Micro (RFMDL): Increased position by 88%
Petroleo Brasileiro (PBR): Increased position by 84%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
JetBlue Airways (JBLU): Reduced position by 51%
Wind River (WIND): Reduced position by 46%
Symmetricom (SYMM): Reduced position by 40%
Auxilium Pharma (AUXL): Reduced position by 14%


Removed Positions (Positions they sold out of completely)
iShares Emerging Markets (EEM) Puts
Lehman Brothers (LEHMQ)
S&P500 (SPY) Puts
Talisman Energy (TLM)
Mosaic (MOS)
Energy Solutions (ES)
Monsanto (MON)
Halliburton (HAL)
BPZ Resources (BPZ)
Freeport McMoran (FCX)
Sandridge Energy (SD)
Bucyrus (BUCY)
Joy Global (JOYG)
Century Aluminum (CENX)
Weatherford (WFT)
Kroger (KR)
Tibco Software (TIBX)
National Oilwell Varco (NOV)
Patterson UTI Energy (PTEN)
Union Pacific (UNP)
McDermott (MDR)
Powershares QQQ (QQQQ) Puts
Costco (COST)
Intrepid Potash (IPI)
Net Servicos Comunicacao (NETC)


Top 20 Holdings (by % of portfolio)

1. Petroleo Brasileiro (PBR): 24.3% of portfolio
2. Potash (POT): 11.5% of portfolio
3. Walmart (WMT): 6% of portfolio
4. Hess (HES): 4.5% of portfolio
5. Conoco Phillips (COP): 3.3% of portfolio
6. RF Micro (RFMDL) 1st batch of Notes: 3.2% of portfolio
7. Mercury Computer (MRCY) Notes: 3% of portfolio
8. Audiocodes (AUDC) Notes: 2.9% of portfolio
9. Research in Motion (RIMM): 2.9% of portfolio
10. LSI Corp (LSI) Notes: 2.5% of portfolio
11. RF Micro (RFMDL) 2nd batch of Notes: 2.5% of portfolio
12. Arch Coal (ACI): 2.5% of portfolio
13. Ishares Real Estate (IYR): 2.1% of portfolio
14. Agere Systems (inactive) Notes - 2.1% of portfolio
15. Powershares QQQ (QQQQ): 2% of portfolio
16. Novell (NOVL) Notes: 2% of portfolio
17. Mcdata (inactive) Notes: 1.9% of portfolio
18. Red Hat (RHT) Notes: 1.4% of portfolio
19. Schlumberger (SLB): 1.1% of portfolio
20. MAP Pharma (MAPP): 1.1% of portfolio

Assets from the collective holdings were $3.6 billion last quarter and were $3.8 billion this quarter. Soros definitely has a lot of Note holdings, opting to take positions in those rather than common stock. Please note that we have not detailed every single change to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, Timothy Barakett's Atticus Capital, John Griffin's Blue Ridge Capital, Bret Barakett's Tremblant Capital, Andreas Halvorsen's Viking Global, John Paulson's Paulson & Co, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and Bruce Kovner's Caxton Associates. Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Soros:
- Soros' books: The Alchemy of Finance / The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means
- Checking in on George Soros & Jim Rogers
- Soros interview with Fareed Zakaria
- November hedge fund performance numbers
- Soros testimony before Congress
- Soros Q2 holdings
- October hedge fund performance numbers
- Hedge Fund Rankings

Global Macro Hedge Funds Returning to Their Roots

If someone was asked to name a fund in the global macro game, undoubtedly Tudor Investment Corp or Moore Capital Management would be some of the most frequent responses. The global macro strategy has fared well in the world of hedge funds. Paul Tudor Jones' Tudor Investment Corp has earned an annualized return of greater than 20% over the span of two decades. Louis Bacon's of Moore Capital Management shares the same accolade. And, while they are both down this year, they have fared much better relative to many of their peers and the market indexes in general. Tudor's flagship fund finds itself -5% for the year, while Moore was -2.9% year-to-date through November as we noted in our November hedge fund performance update. But, in a never-ending quest for outperformance, Tudor and Bacon want more. And, in order to accomplish that, they see it fit to return to their roots.

Taken from Moore Capital Management's latest letter to investors, Bacon wrote,

"...We had become disheartened by the complexity of our portfolio given our results and took decisive steps to change our format....
...The combination of a streamlined and liquid portfolio, high cash balances and mostly macro-oriented managers has allowed us to focus on the opportunities in a macro period that is going to continue to be of historic proportions..."

Moore's funds saw requests for redemptions to the tune of 8% of the fund's assets. Bacon seemed worried that his firm had become almost 'too diversified' and had become overstretched, trying to hit every idea. Bacon noted that he will cease private equity investments and will allocate more money to his global macro traders and equity investment team. This decision comes as a polar opposite to what we've recently seen in Moore's portfolio. Their equity holdings decreased from $4.45 billion two quarters prior to only $1.36 billion this past quarter. So, as Bacon has noted, we should see a change there in the coming months and year.

Paul Tudor Jones shares similar thoughts to his global macro colleague. Recently, Tudor halted withdrawals from its Global BVI Fund, in an effort to separate illiquid from liquid assets. Much like Moore Capital Management, Tudor was out decreasing equity exposure across the board last quarter, as we noted in our latest update of Tudor's portfolio.

In his letter to investors, Tudor talked about returning to the global macro roots he built his firm upon, writing,

"Those of you who have visited recently have heard me refer to this return to our roots as back to the future."

Overall, global macro funds have weathered the storm relatively well this year. In part, this is due to their ability to maneuver between multiple markets, wherever they see opportunity. And, unless equity indexes can ramp up and lend a hand to value oriented players, we think macro funds will continue to be poised to outperform relative to their peers and the markets in general; especially as they cease to outstretch themselves and return to their roots.



Source: Bloomberg

Top 10 Worst Recessions

Blain over at StockTradingToGo has a nice post up comparing the longevity of past recessions to the one we find ourselves in currently.

1. 1929-1933, 43 months in duration (Great depression).
2. 1981-1982, 16 months in duration.
3. 1973-1975, 16 months in duration.
4. 1937-1938, 13 months in duration.
5. 1926-1927, 13 months in duration.
6. 2007-2008, 12 months in duration.*
7. 1970, 11 months in duration.
8. 1948-1949, 11 months in duration.
9. 1960-1961, 10 months in duration.
10. 1953-1954, 10 months in duration.

Now, the question ultimately becomes: how long does the current recession last? Well, for one thing, this recession only needs to last 4 more months to become the second longest recession. With the current auto bailout nonsense still going on, and no real relief for consumers coming anytime soon, we could easily see this recession moving up into 2nd place. We've got real issues to deal with here and these are certainly unprecedented times.

We recently wrote about how the consumer savings will have to rise in order for things to stabilize. Such a deteriorating consumer environment will definitely play a large part in the longevity of the current recession. The destruction of wealth that many "main street" Americans have and will experience should reach astounding levels and will impact many psychologically. An overleveraged American consumer was the backbone of the American for quite some time. But, times change.

See also Paul Kedrosky's recent Economic predictions, as well as a comparison between the current crisis, the Nordic crisis, and the Great Depression.