Dan Loeb's Third Point Outperforming, Reduces Exposure Yet Again

In early August, we noted how Dan Loeb's Third Point reduced equity exposure for the third consecutive month. That decision has certainly paid off as Loeb's fund was only down 2.8% in August compared to the S&P 500 which was down 5.4%. Year-to-date as of the end of August, Third Point is up 3.9% while the S&P is down 1.8%.


Reduced Exposure for Fourth Straight Month

At the end of August, Third Point was only 17.7% net long equities, down even further from their 23.3% net long exposure back in July. Their largest net long exposure comes in technology at 6.5% and basic materials at 3.5%. Third Point is net short industrials (-1.5%) and utilities (-0.6%).

In credit, Loeb's Offshore Fund is 18.5% net long, a slight decrease from last month. They continue to be net short government securities (-10.3%) and have their largest net long exposure in asset backed securities (+17.3%).

Geographically, Third Point is net long the Americas at 50%, net short EMEA at -4% and net short Asia at -2%.


Third Point's Outperformance

So while decreased exposure to risk certainly has helped Loeb outperform in this volatile market, his winners the past month include gold, short A, CVR Energy (CVI), Barrick Gold (ABX), and short B.

It should come as no surprise that their gold related investments have helped them outperform as the precious metal rocketed higher as market volatility increased. Not to mention, gold has been one of Third Point's largest positions for some time now.


Top Positions

- gold
- Delphi
- CIT Group (multiple securities held)
- Technicolor (multiple securities held)
- El Paso (EP)

The most notable change in Third Point's top positions since last month is the absence of Mosaic (MOS). There's no way to know exactly why because they could have reduced their position size, other positions could have appreciated more, or they could have bought more of some of their top holdings.

Third Point originally bought MOS on the secondary when the Cargill family unloaded shares at $65 per share. The hedge fund subsequently 'bought the dip' in MOS when it traded down to around $60. During August, MOS traded as low as $55.70, and currently trades around $69.50.

Either way, Third Point's top holdings have largely been what you see above as they wait for Delphi to go public and El Paso to split up.

Chasing Madoff Trailer: Documentary About Harry Markopolos Exposing Bernie Madoff's Ponzi Scheme

Below is the trailer for the new documentary Chasing Madoff which was released on August 26th, 2011. It details the story of Bernie Madoff's $18 billion ponzi scheme and how Harry Markopolos spent ten years trying to expose the fraud.

Directed by Jeff Prosserman, it seems that the documentary is based on Harry Markopolos' book, No One Would Listen: A True Financial Thriller. You can also read our review of the book here.

The trailer for Chasing Madoff is embedded below (email readers come to the site to watch):



For more financial film trailers, check out the Margin Call movie trailer.

John Thaler's JAT Capital Buys More IMAX Corp (IMAX)

John Thaler's hedge fund JAT Capital just filed a 13G with the SEC regarding shares of IMAX Corp (IMAX). Per portfolio activity on August 22nd, JAT has disclosed a 4.6% ownership stake in IMAX with 2,979,280 shares.

Since the end of the second quarter in June, this marks a 349% increase in their position size as they've gobbled up shares. Since the end of June, shares of IMAX are down 48%.

Some managers have had somewhat of a '3D' pairs trade on by going long IMAX and short RealD (RLD), but we obviously can't see JAT's shorts.

Thaler's Background

Before he founded JAT, Thaler worked at Shumway Capital Partners (which returned capital this year). Chris Shumway himself invested in JAT's launch. Thaler covered technology, media and telecom and managed the internal Omni fund while at Shumway. Before that, he worked at Spectrum Equity Investors in private equity.

Due to his background, you'll see an emphasis on the TMT sectors in his portfolio. Thaler earned his BA in Economics from the University of Chicago. In 2008, JAT returned -5.9% and in 2009 returned 23.2% gross. This isn't the first time we've covered Thaler's fund as we've also detailed JAT's bet on social media via SINA.

Per Google Finance, IMAX is "is an entertainment technology companies, specializing in motion picture technologies and presentations. The Company’s principal business is the design and manufacture of digital theater systems (IMAX theater systems) and the sale or lease of IMAX theater systems."

Bill Ackman's Pershing Square Buys $600 Million of Investments During August Volatility

Bill Ackman's hedge fund Pershing Square Capital utilized the market volatility in early August as an opportunity to buy stocks, according to their recent letter to investors. So what did they buy?

Ackman writes,

"We have often described stock market volatility as an opportunity for Pershing Square. Since the beginning of the month, the market, and to an even greater extent, most of our holdings went on sale. We took advantage of this favorable pricing to invest more than $600 million in existing investments including Fortune Brands, Kraft, Family Dollar, Citigroup, and two new commitments. In each case, the businesses continue to make progress that meets or exceeds our expectations making our additional investments that much more compelling. Unfortunately, for most of our remaining holdings we were restricted in purchasing more by virtue of our insider status, or other regulatory or corporate charter provisions that limit our ability to increase our ownership percentage."

After writing the letter (dated August 17th), Pershing Square received permission to increase its ownership stake in J.C. Penney (JCP) to 26.1% of the company, up from the 18.2% they currently own as well.

Pershing's New Investments

Ackman did not disclose the names of his two new investments, most likely because they were/are still acquiring their position. His letter states that they should be able to share more details about one of the positions in the upcoming months.

It would make sense that he could reveal one of them at the upcoming Value Investing Congress where he will be presenting investment ideas along with many other hedge fund managers (Market Folly readers: today is the LAST day for substantial savings to the event, click here for the discount).

Ackman's investor letter drops a hint that they bought an investment that broadly falls into the category of their old General Growth Properties (GGP) investment: i.e. a situation where they were able to buy GGP for less than a dollar per share and enhanced the probability of recovery for shareholders with their active intervention. Let the guessing games begin.

In early August we detailed how Pershing Square bought more Fortune Brands (FO), but now we know they were buying more than one stock.

For more excerpts from Pershing Square's recent letter to investors, we've outlined why Ackman bought more Citigroup, as well as Pershing's hedging strategy in this crazy market.

Why Bill Ackman Bought More Citigroup (C)

In his recent letter to investors, Pershing Square founder Bill Ackman revealed he bought $600 million worth of investments during the recent market volatility. One stock that garnered such capital was Citigroup (C).

Ackman outlines why the stock has been selling off:

"In the second quarter, the share price of Citi and its peers declined primarily due to three concerns: (1) the requirement that systemically important financial institutions will need to hold additional capital (commonly referred to as the SIFI buffer), (2) concerns about exposure to potential losses resulting from the issues surrounding the troubled Eurozone sovereigns, and (3) worries about weakness in the U.S. economy."

In the brand new issue of our Hedge Fund Wisdom newsletter, we pointed out an interesting dichotomy between shares of two financial giants. While many funds like Paulson & Co and Appaloosa Management were selling shares of Bank of America (BAC) in the second quarter, numerous contrarians stepped up to buy Citigroup as shares tumbled.

Ackman was one of those contrarians, along with Lee Ainslie's Maverick Capital. We've also detailed how Curtis Macnguyen's Ivory Capital owns a sizable C stake. The Pershing Square manager goes on to outline his rationale for why C is a good investment:

"Citi recently provided disclosure about its exposure to the troubled Eurozone sovereigns and the corporations and consumers that are domiciled within those countries. Based on this disclosure, we believe that Citi is adequately capitalized to withstand the losses that may result from adverse outcomes from the Greek and other Eurozone debt crises. On July 15 th , Citi reported its second quarter results which highlighted the growth in its emerging markets franchise, the continued improvement in credit costs, and further strengthening of its capital ratios. At current share price levels, Citi trades at less than five times our estimate of normalized EPS before including any benefit for the present value of excess capital and tax assets, and less than three times normalized EPS after including these benefits."

We originally covered why Ackman bought Citigroup back in April 2010. At the time, they purchased shares at nearly 1.1x tangible book value. Ackman notes that now, "tangible book value has grown by nearly 20%, yet the Company's tangible book value multiple has declined to 0.6 times."

Overall, the hedge fund thinks the bank has enough liquidity to weather the current economic environment. Ackman believes that C will command a higher multiple once market uncertainty declines.

For more from Pershing Square, check out Ackman's purchase of $600 million worth of investments during August's volatility, as well as Ackman's hedging strategy.

Bill Ackman & Pershing Square's Hedging Strategy

While many of the hedge funds we track on Market Folly employ a long/short equity strategy, Bill Ackman's Pershing Square Capital takes a slightly different approach, typically preferring credit default swaps (CDS) to shorting equities.

In fact, Ackman's approach is more akin to Seth Klarman's approach at Baupost Group. Klarman typically hedges against outlier events such as hyperinflation. These hedges typically cost very little and often expire worthless, but if the outlier event does occur, they can payout over 50x.

In fact, we've detailed Ackman's strategy briefly before in our profile of Ackman & Pershing Square. Given the recent market volatility, Ackman took this opportunity to outline his hedging strategy in his recent letter to investors to remind them that they don't attempt to manage short-term volatility.

Ackman purchased $600 million worth of investments recently and so let's take a look at the other side of the coin: hedging. Ackman writes,

"Unlike as we did in the past, we don’t own investment grade CDS because we believe these credits are mispriced. Rather, we continue to own approximately $7 billion of index CDS which serves as a form of disaster protection, but one that is unlikely to pay off in a material way unless and until there is another major systemic crisis.

We own almost no single-name CDS other than to hedge a modest amount of uncollateralized exposure we have to financial institution counterparties. We have been unable to identify large single-name, standalone CDS investments since 2009. This is largely due to the rapid improvement in corporate creditworthiness over the last two years."

And then turning back to Ackman's tail-risk protection, he goes on to note that the hedge fund has committed capital to asymmetric payoffs that won't protect the fund unless there is a very large market decline. He writes,

"Since the inception of the funds, we also have purchased options which offer asymmetric payoffs in the event of the occurrence of low-probability catastrophic or otherwise unanticipated negative events. These events could include large movements in interest rates, currencies, or other asset prices that we believe may occur during periods of market stress."

As such, it sounds like Pershing will underperform in times of mild market stress (like recently) but is more-so hedged against extreme outlier events. According to their investor letter, Pershing was up 1.7% for the year at the end of the second quarter. However, HSBC Private Bank data says that Pershing is now -10.5% through mid-August.

For more from the hedge fund, head to our post on why Ackman bought more Citigroup.

Lone Pine Capital Nearly Doubles SolarWinds (SWI) Stake

Stephen Mandel's hedge fund Lone Pine Capital filed a 13G with the SEC regarding shares of SolarWinds (SWI). Due to portfolio activity on August 19th, Lone Pine now shows a 5.2% ownership stake in the company with 3,766,081 shares.

This is an increase in their position size of 97.5% as they've almost doubled their stake since the end of the second quarter on June 30th.

Mandel's hedge fund has been busy buying lately and we've detailed how Lone Pine likes information technology plays and their SWI purchase falls right under that theme.

Per Google Finance, SolarWinds "designs, develops, markets, sells and supports enterprise information technology (IT) infrastructure management software to IT professionals in organizations of all sizes. The Company’s offerings ranges from individual software tools to software products, which solve problems faced every day by IT professionals and help to enable management of networks and IT environments."

New Issue of Our Hedge Fund Wisdom Newsletter Now Available!

The brand new Q2 2011 issue of Market Folly's premium newsletter is now available. Current subscribers please login at hedgefundwisdom.com to download it.

Free Sample: If you haven't had a chance to check out our newsletter, you can download a full past issue by clicking here (.pdf)


Included in our brand new 83-page issue:

- Equity analysis: Written by hedge fund analysts, this issue details the investment thesis summaries on American International Group (AIG), Sensata Technologies (ST) and First Solar (FSLR) ~ all stocks that saw intriguing buying during the quarter

- Consensus List of the top buys and sells from hedge funds

- Updated Portfolios of 25 prominent hedge fund managers
(see the full list of managers here)

- Expert Commentary and analysis of each fund's moves


Subscribe (Published Four Times a Year):

1-Year Subscription (Save 20% with this option): $299.99 / year

Quarterly Subscription: $89.99 / quarter

If you would like to pay via check, please email us: info@hedgefundwisdom.com

What We're Reading ~ 8/26/11

Our guest post: takeaways from recent hedge fund activity [BigPicture]

Paulson, Tepper, Loeb & other hedgies all bought this stock [Forbes]

Icahn makes $120 million on falling S&P [FINalternatives]

Jeff Ubben buys big during the chaos [Institutional Investor]

Bernanke's speech from today [The Big Picture]

Gold at $1800 is a fool's bet [AR + Alpha]

On getting long Bank of America (BAC) [Bronte Capital]

Interview with George Soros [Der Spiegel]

BlackRock's Fink says buy dividend stocks instead of treasuries [Barron's]

Interview with 105 year old banker Irving Kahn [Daily Beast]

Hedge funds most bearish since 2009 [Bloomberg]

Tudor's new fee structures [WSJ]

Buffett has been buying during downturn [LATimes]

Michael Lewis' latest article [Vanity Fair]

Morning with Charlie Munger transcript [My Investing Notebook]

JANA Partners' Presentation on McGraw-Hill (MHP): Reasons to Split Up the Company

Earlier today we posted up about hedge fund JANA Partners' activist push against McGraw-Hill (MHP). Barry Rosenstein's hedge fund (along with the Ontario Teachers' Pension Plan) owns 5.6% of the company and is pushing for MHP to split up into four separate entities.

JANA just met with the company on Monday (August 22nd) to present their case. Here's the hedge fund's rationale for splitting up MHP:

"
- MHP's conglomerate structure acts as a significant constraint on each of its businesses, hampering operational performance, strategic flexibility in allocating capital and share price valuation

- MHP has much more meaningful and beneficial opportunities to improve operating performance and clarify the underlying value of its assets than the actions taken to date (such as seeking to sell broadcasting, which accounts for only ~2% of total EBIT)

- A wide ranging, transformative and comprehensive resolution of the corporate structure and cost structure is essential for MHP to improve operating performance and shareholder return

- Separating MH Education, Information & Media and the S&P Index business would position these businesses to improve performance and participate in consolidation, thus unlocking value

- Collapsing MHP's corporate cost structure and eliminating duplicative overhead costs would enhance this value creation

- Accelerated share buybacks would multiply the value creation impact of these changes

- Bolstering S&P Ratings with an independent oversight figure would help the business navigate an increasingly complex global regulatory environment and heightened public focus

- The real question is why would MHP not promptly take these steps to improve operating performance and unlock shareholder value?
"

JANA's recent slideshow presentation to the company is embedded below (email readers need to come to the site to view it):



In response to JANA's presentation, McGraw-Hill issued a statement that their review of the company's options for splitting up is "well advanced and expected to result in significant actions in the next few months to accelerate global growth, align appropriate cost structures and build shareholder value."

The question is whether McGraw-Hill opts for the more aggressive four-pronged break-up or if they are eyeing the smaller split up as they are said to be considering.

Roberto Mignone's Bridger Management Buys More United Rentals (URI)

In a 13G filed with the SEC, Roberto Mignone's hedge fund Bridger Management has disclosed a 5.2% ownership stake in United Rentals (URI) with 3,241,704 shares.

This marks a 60% increase in their position size since the end of the second quarter. Bridger Management now owns just over 3.2 million shares of URI due to portfolio activity on August 8th.

Per Google Finance, United Rentals "is an equipment rental company and its network consists of 531 rental locations in the United States and Canada. United Rentals offers approximately 2,900 classes of equipment for rent to customers that include construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities."

To see the rest of this hedge fund's investments, head to the brand new issue of our premium newsletter.

JANA Partners Pushes For McGraw-Hill (MHP) Split Up

Ah, the smell of activist investors in the morning. Barry Rosenstein's hedge fund JANA Partners recently filed an amended 13D with the SEC in conjunction with the Ontario Teachers' Pension Plan regarding shares of McGraw-Hill (MHP). The activist investment disclosure revealed that they now own 5.6% of the company.

They originally disclosed the stake earlier this month and have since bought over 1 million more shares. While JANA also focuses on event-driven investments, they're well known for making activist pushes to generate change in companies they invest in.

JANA's Split Up Plan

The hedge fund wants McGraw-Hill to split up into four entities: Standard & Poor's ratings agency, the indexing business of S&P, the information & media business, and the education unit.

It seems that this is a much more detailed and ambitious plan compared to what MHP was considering. The company was looking into divesting its educational publishing business and its broadcasting unit.

So why is JANA interested in MHP in the first place? In their filing, they write, "(MHP) has consistently underperformed its potential and traded at a sizable discount." So as always, the hedge fund wants to make money on their investment and think a split-up/spin-off is the ideal way to generate shareholder value.

The only potential 'hurdle' going forward (if you want to call it that), is that McGraw-Hill is largely a family business, though Mr. McGraw owns only around 4% of the company. It will be interesting to follow the activist saga unfold.

In recent portfolio disclosures, JANA has 24% of its reported US equity long investments allocated to one stock. Find out which one it is and see the rest of 25 hedge fund portfolios in the brand new issue of our premium newsletter.

Update: We've also posted JANA's presentation on McGraw-Hill.

Stephen Mandel's Lone Pine Capital Buys the Dip in VanceInfo Technologies (VIT)

Stephen Mandel's hedge fund firm Lone Pine Capital has been busy buying lately. In an amended 13G just now filed with the SEC, Lone PIne has disclosed a whopping 17.6% ownership stake in VanceInfo Technologies (VIT) with 7,862,536 shares.

Per portfolio activity on August 19th, Mandel's hedge fund has ramped up its position size by buying an additional 7.5% of the company. We recently covered how Lone Pine bought VIT in late July and back in late 2010 as well.

Lone Pine Likes Information Technology

Since Lone Pine's additional buy just three trading days ago, shares of VIT are down a little lower around $11.84. VIT operates in the information technology sector and some investors seem to think that the company's underlying business could be slowing down at a rapid rate, given that more than half their business is in China.

Lone Pine also has a large position in another information technology company. The hedge fund has long held a stake in Cognizant Technology Solutions (CTSH) and it's their second largest US equity long position as detailed in our brand new issue of Hedge Fund Wisdom.

A solid portion of Lone Pine's position in VIT is in its Lone Dragon Pine fund, which focuses on emerging markets. For other buys from this hedge fund, yesterday we posted up their position in Michael Page International.

Per Google Finance, VanceInfo "is an information technology (IT) service provider and an offshore software development company in China. The Company’s range of IT services includes research and development services, enterprise solutions, application development and maintenance (ADM), testing, as well as globalization and localization."

Last Chance For Substantial Discount to the Value Investing Congress

The Value Investing Congress is coming up quickly on October 17th & 18th in New York City. This is your last chance to benefit from substantial savings. Market Folly readers can save $1,700 with discount code: N11MF5. Register in the next seven days before the price increases by $400. Click here to receive the discount.

Alexander Roepers of Atlantic Investment Management just committed to speak at the event. He manages a $1.5 billion global equity hedge fund.

He joins an all-star hedge fund line-up of speakers including Pershing Square's Bill Ackman, Kynikos Associates' Jim Chanos, Scout Capital's Adam Weiss & James Crichton, Gotham Capital's Joel Greenblatt, and many more.

The price increases in seven days, so this is your last chance for substantial savings: receive your discount to the Value Investing Congress.

Why Strategist Jeff Saut Thinks There Isn't a Recession

Market strategist Jeff Saut recently said to buy select stocks even though that Dow Theory registered a sell signal. He's received lots of questions as to why he did so and addressed this in his recent market commentary.

Mainly, his bullish stance (at least in the short-term), stems from massively oversold levels in the markets. He also bases this on the backdrop that the economy is not headed to a recession. He writes,

"My controversial non-recession 'call' is driven by the fact that industry analysts are still bullish on earnings with the S&P 500's consensus estimate approaching $114 for 2012. Corporate insiders are clearly bullish as they have been buying their own company's shares at the highest rate since the bottom in March 2009. Layoffs have slowed and while the economy is certainly slowing, metrics like L.A. seaport traffic, railcar loadings, etc. are not falling off a click like they did prior to the 2008 recession."

We pointed out massive insider buying two weeks ago as well. More than anything, Saut is convinced that a confluence of indicators reinforce his belief that select stocks are cheap. You can view Saut's favorite stocks here.

Embedded below is Saut's recent investment strategy where he outlines how the current market action is somewhat parallel to that of October 1978 and 1979:



You can download a .pdf copy here.

Lone Pine Capital Discloses Michael Page International Position

Stephen Mandel's hedge fund Lone Pine Capital has just disclosed a potentially new (more on that below) position in Michael Page International (LON: MPI).

Due to trading on July 16th, Lone Pine breached the UK regulatory disclosure threshold with a 3.21% ownership stake. You can view Lone Pine's latest US equity holdings in the brand new issue of our Hedge Fund Wisdom newsletter.

Lone Pine has actually owned Michael Page stock before. Back during the tumultuous credit crisis, they increased their stake all the way up to 6.37% of outstanding shares.

However, when the panic was seemingly at its height during March 2009, Lone Pine reduced its stake below the 3% threshold ~ perhaps a reminder that even the best hedge funds were forced into uncharacteristic maneuvers during the crisis.

UK Disclosure Rules

The UK's disclosure rules only require funds to disclose when they go above or below a 3% ownership stake in a company (think of it as a line in the sand.) While we get to see more positions this way (compared to a 5% threshold in the US), the downside is we don't really ever know when a fund completely sells out of a position.

In Lone Pine's case in particular, they could have held a small stake in the company all this time only to recently start buying enough to trigger the filing. Or, they could have exited the name back in 2009 and are starting a new position now. There's no way to tell.

But what we do know is that Lone Pine now has a 3.21% ownership stake in the company.

Company Background

Per Google Finance, Michael Page International plc is a specialist recruitment consultancy. The Company operates in Continental Europe, Middle East and Africa (EMEA), and the United Kingdom. Clients ranging from global multi-nationals to small and medium enterprises (SMEs) source permanent, contract, temp and interim talent in accounting, tax and treasury; actuarial, consultancy, strategy and change; design, education, engineering and manufacturing, financial services and banking, health and social care, hospitality and leisure, human resources, information technology, legal, marketing, policy, procurement and supply chain, property and construction, retail, sales and secretarial."

View the rest of Lone Pine's portfolio.

Insider Buying: CEO's Buying Stock En Masse

There has been an increased amount of insider buying over the past few days. But what caught our eye in particular was the vast amount of CEO's that were buying.

To pull all this data, we used Insider Trade Reports who says that "over four decades of academic research has shown that by following in the footsteps of company insiders and buying the stocks that they are buying, you can outperform the market by 6% to 10.2% per year."

As CEO's bought into the recent market sell-off, it's clear they believe the market was undervaluing their companies.

List of Recent CEO Insider Buying

- Six Flags Entertainment (SIX) CEO buys $2,499,189 worth

- Morgan Stanley (MS) CEO buys $2,062,070 worth

- Fifth Street Finance (FSC) CEO buys $2,014,323 worth

- Huntsman (HUN) CEO buys $1,137,270 worth

- WMS Industries (WMS) CEO buys $1,000,224 worth

- General Growth Properties (GGP) CEO buys $856,489 worth

- Kinder Morgan (KMI) CEO buys $679,621 worth

- First Industrial Realty Trust (FR) CEO buys $642,000 worth

- Winthrop Realty Trust (FUR) CEO buys $589,550 worth

- Tupperware Brands (TUP) CEO buys $507,045 worth

- Life Technologies (LIFE) CEO buys $420,000 worth

- Greenbrier Companies (GBX) CEO buys $268,705 worth

- Kansas City Southern (KSU) CEO buys $253,050 worth

- AK Steel (AKS) CEO buys $199,030 worth


We're proud to announce that Market Folly readers receive a special 33% discount on Insider Trade Reports' annual subscriptions and a 25% discount on monthly & quarterly subscriptions.

You can choose how often you receive insider buying/selling alerts (daily, weekly, high conviction reports) which is a great feature. They also have a proprietary scale that measures the significance of each transaction with commentary to provide context.

We've been using Insider Trade Reports for months now and it's a very useful resource for investors so take advantage of the discount.

Bill Ackman's Pershing Square Buys More Fortune Brands (FO)

Bill Ackman's hedge fund firm Pershing Square Capital has taken advantage of the recent market sell-off to add to their position in Fortune Brands (FO).

Per a Form 4 filed with the SEC, Pershing acquired 3,648,512 additional shares at prices ranging from $52.67 to $54.47 on August 5th, 8th, and 9th.

After this series of buys, Pershing Square now owns 20,818,545 shares of Fortune Brands. The majority of their purchase came at $52.67 and $52.78 and FO now trades around $53.95. This is the second time Ackman has purchased FO in the past three months.

This is an activist investment for Pershing as they've pushed for Fortune to break-up its three distinct businesses: spirits/liquor, home finishes, and they've already sold their golf segment.

For more from Ackman, head to notes from the leaders in investing summit. Ackman will also be presenting his latest investment ideas at the upcoming Value Investing Congress in New York on October 17th & 18th along with many other hedge fund managers. Be sure to sign-up here.

Seth Klarman's Baupost Group Adds to PDL BioPharma Stake

Seth Klarman's hedge fund Baupost Group has acquired more shares of PDL BioPharma (PDLI) per a 13G just filed with the SEC.

Due to portfolio activity on July 31st, Baupost has disclosed a 10.53% ownership stake in PDLI with 14,718,814 shares. This marks a 40% increase in their position size as they only owned 10,495,225 shares at the end of the first quarter.

Notorious for holding large cash positions when he doesn't see opportunity, Klarman has used the recent market decline to deploy some of that cash into one of his very few equity positions. Last month, we detailed other activity from the fund as Baupost doubled its Syneron Medical stake.

To see the rest of Baupost's updated equity investments, we'll have a brand new issue of our Hedge Fund Wisdom newsletter out in a week and a half.

Per Google Finance, PDL BioPharma is "engaged in the management of its antibody humanization patents and royalty assets, which consist of its Queen et al. patents and license agreements with pharmaceutical and biotechnology companies. The Company receives royalties based on these license agreements on sales of a number of humanized antibody products marketed and also may receive royalty payments on additional humanized antibody products launched before final patent expiry in December 2014."

David Tepper's Appaloosa Sells Bank of America (BAC) and Wells Fargo (WFC)?

David Tepper's hedge fund Appaloosa Management filed their 13F early with the SEC and in it are some noteworthy moves. The filing reflects portfolio activity as of June 30th, but it does give us a glimpse as to what he was up to in the second quarter.

The big talking point here is that in the second quarter, Tepper sold 41% of his position in Bank of America (BAC), selling over 7.2 million shares. He also sold 5% of his position in Wells Fargo (WFC) and 6% of his position in Citigroup (C), his top equity holding at the end of Q2.

However, David Faber at CNBC is hearing that Tepper has since sold completely out of BAC and WFC in recent weeks. He also apparently sold a chunk of his stake in C too. Tepper has not confirmed this though.

Turning back to the factual information from the 13F we do have though, Tepper also sold 54% of his stake in Hewlett Packard (HPQ).

In terms of new positions, Appaloosa started new stakes in Mosaic (MOS), Western Refining (WNR) and Google (GOOG). It's likely that Appaloosa took advantage of the MOS secondary as Dan Loeb's Third Point also bought MOS. Tepper also bought more CVR Energy (CVI) which we already highlighted back in June.

On the long side, refining seems to be a big theme for Appaloosa as they ramped up their stake in Valero (VLO) by 202% in the second quarter in addition to starting their stake in WNR. To see what other top hedge funds have been buying & selling, subscribe to our Hedge Fund Wisdom newsletter as a new issue is due out in just a week and a half.