How To Name Your Hedge Fund: Most Common Firm Names

Let's face it, many hedge funds follow a seemingly standard equation for naming their firm.  As such, we thought it would be fun to create an exercise: how to name your hedge fund.

Naming your hedge fund can be boiled down to a very simple formula:


Step 1.  Based on past precedent, your firm should be named after one of the following:

- Predatory animals. Real world examples: Tiger Management, Lion Fund. Suggested: Honey Badger Partners, because honey badgers don't give a shit.

- A tree (preferably a big one).  Ex: Oaktree, Lone Pine, Sequoia, Fir Tree.  Available: The Entire Rainforest LLC.

- Some type of rock or stone. Ex: BlackRock, BlackStone.  Options: F'n Massive Mountain Management, Tiny Pebble Partners 

- Character or place from books/stories/shows.  Ex. Atticus Capital, Valinor Management.  Suggestions: Cobra Commander Capital, Ninja Turtle Associates.  And for Seinfeld fans: Art Vandelay Capital Partners.

- Geographic Locations/Regions. Ex: Pershing Square Capital, Blue Ridge.  Possibilities: Egyptian Pyramind Scheme Partners, Arctic Circle Capital

- Bodies of water and bridges are also very popular. Ex: Pine River, SkyBridge.  OR you can combine them together for an uber-bonus: Bridgewater.  Unfortunately, WaterBridge is also taken.  Perhaps just combine them all: Stream Creek River Lake Ocean Bridge Associates.

- Historical figures/civilizations.  Ex: Argonaut Capital, Viking Global.  Available: Ming Dynasty Management, Honest Abe Advisors 

- Manager's name/initials.  The obvious: SAC Capital, Soros Management, Tudor Investment.  Possibilities: Stalin Securities, Not That Madoff Capital

- Greek Mythology/Greek Words.  Ex: Cerberus, Kynikos,  Suggested: Beard of Zeus Capital, Toga Partners

- Something that has no relevance to what you're doing (bonus points for words that people struggle to pronounce).  Options: Floccinaucinihilipilification Fund, Onomatopoeia Partners, Jai Alai Holdings

- Some type of castle or fort.  Ex: Citadel, Knight's Bridge.  Available: Hogwarts Holdings


Step 2.  Add one of the following to help describe what the firm does  (because let's face it, the name you just picked above has nothing to do with investing): Capital, Partners, Capital Partners, Advisors, Holdings, Capital Management, Asset Management, Investment Management, Funds, Associates, Securities, Trust, etc.


Step 3.  Tack on either LLC or LP at the end of the name, depending on whether it's the management company or the limited partnership.

And voila, you have a hedge fund name that will blend in seamlessly.   


If you have difficulty coming up with the perfect name, you can always turn to hedgefundnamegenerator.com.  Yes, that's a real thing.  It automatically spits out a random combination using the same formula outlined above.  Here are some of the names it generated for us:

- Solid Road Management: obviously to let investors know there will be NO bumps along the way

- Brown Tree Capital: not redundant at all

- Winter Field: no "Capital" or "Partners" at the end.  Just Winter Field.

- Yellow Brick Road Associates: OK, it actually was just Yellow Road Associates, but given the ridiculousness of some of the other names it generated, it might as well have been Yellow Brick Road.

This post has been all in good fun.  What are some of the ridiculous hedge fund names you've come across?  Let us know in the comments below!

TPG-Axon's Dinakar Singh Likes Sirius XM & Time Warner Cable: Interview

Dinakar Singh, CEO of $4 billion TPG-Axon Capital recently sat down with Bloomberg TV so we wanted to post up some of the highlights of his rare appearance.

It seems as though he is betting against telecom stocks and is also bearish on some financials (in particular US regional banks).  He's bullish on names like Sirius XM (SIRI), Time Warner Cable (TWC), and W.R. Grace (GRA).  He sees growth in the chemical, aerospace, and healthcare industries.

A graphic on screen showed TPG-Axon's key long exposures in tech & media: SIRI, TWC, Viacom (VIA.B), Kabel Deutschland, Equinix (EQIX), Expedia (EXPE), Priceline.com (PCLN), and Yandex (YNDX).


On the current environment:   “For us, we pick stocks. That is how we make money. More and more, everyone has become more emotional in markets. We get scared by headlines and we all start acting the same way whether you are a CEO or a consumer. Jobs do matter. I think when you look at the U.S. in the last number of months, our view coming in this year is that people got too excited. There was a bounce back from last year and some good weather but it was going to be a slow gradual sloppy messy restructuring without a big recovery. Things have reversed. I think people are getting too pessimistic…I think ultimately consumers and CEOs are reading the same headlines and scared. I think you are seeing a cyclical or temporary step down. We do not think there one should expect a big bounce, but there won’t be much of a plunge either. It feels like the numbers are crummy but they will probably stay this way for a while. The fiscal cliff is a real issue. I think you're seeing an impact right now.”  


On how to play this market:   “People have gotten scared and they’re paying a lot for safety. On the safety side, people like dividends in safe industries. So Verizon is trading 18 times earnings because people want safety and a good dividend. There are companies like Time Warner Cable that we think are just as defensive but they did not happen to pay a dividend, they have even better cash flow, but they traded as a result much less well last year. For us, big opportunity. So media and cable that’s very cash flow rich and where we think management is going to turn that spigot on and turn it into a dividend or buy back machine that makes sense. Sirius, Time Warner Cable, companies like that. On the cyclical side, not everything is terrible. There are some sectors where we think there is good structural growth and balance sheets will be put to work. Some chemical companies are very good restructuring candidates. Aerospace suppliers.  Aerospace is in the middle innings of a very long term upgrade cycle.”


On telecom services:   “In a hedge fund, this is called a funding short. It is not that you think it is terrible and going straight to 0, but it is priced fully and not going up much so not a very good risk reward. Within telecom services there are two categories. There are the Verizons, we get it, they trade here for a reason, but they are pretty fully priced. On the other side, there are other companies that are legacy telecom companies where the dividend is a very high, but business really is eroding. It is priced well today because of a high dividend, but it is not sustainable. When you look around the world, a lot of high dividend stocks in Europe are not trading well because people are looking at them and saying I get it. I have a dividend today but it might not be there tomorrow.”


On China:   “If you look at China specifically, multiples had really collapsed…You have two general types of companies. Big, state-owned companies that people don’t trust and private companies that people really don’t trust. There isn’t a lot that trades at big multiples anymore. I think if you can find cases where there is real growth and they can pay cash back to you, you’ll make money.”


Embedded below is the first part of the interview of Dinakar Singh's interview with Bloomberg TV:



And here's the second part:

What We're Reading ~ 8/8/2012

Best Buy founder looking for graceful, confusing exit [Dealbreaker]

Looks like JAT Capital is going back to its TMT roots [FINalternatives]

Mark Casella on future of the hedge fund industry [AllAboutAlpha]

Yale's David Swensen on asset allocation [Mutual Fund Observer]

Facebook's lock-up release problem [Business Insider]

Why Fidelity dumping Facebook is a bad sign for the market [LeighDrogen]

Joy Global: a misunderstood cyclical? [Rational Walk]

Some smaller hedge funds outshine their bigger rivals [Reuters]

The hot new mutual fund company you've never heard of [Forbes]

Hedge fund marketing implications from new survey [FINalternatives]

Do individual investors learn from their mistakes? [SSRN]

Profile on Five Guys Burgers [Forbes]

America's top colleges [Forbes]

Bill Ackman To Speak at the Value Investing Congress: Discount For Readers

It's just been announced that Pershing Square Capital Management's Bill Ackman will be presenting his next investment idea at the Value Investing Congress in New York City on October 1st and 2nd.  You can register here using MarketFolly's discount.

Ackman joins a list of big speakers including:

- David Einhorn (Greenlight Capital)
- Barry Rosenstein (JANA Partners)
- Alex Roepers (Atlantic Investment Management)
- Guy Gottfried (Rational Investment Group)
- Bob Robotti (Robotti & Co)
- Lloyd Khaner (Khaner Capital)
- Kian Ghazi (Hawkshaw Capital)
... and many more.


*** Discount:  As always, Market Folly readers can receive a 32% discount to the event by clicking here and using discount code: N12MF7.  Take advantage, because the offer expires in two weeks! ***

Dan Loeb's Third Point Buys Kraft, Various Healthcare Plays: July Exposure Report

Just yesterday we posted up Dan Loeb & Third Point's Q2 letter and now we have some more portfolio metrics in the form of their latest monthly exposure report.  In July, Third Point Offshore was up 1.6% and is up 5.5% for the year.

Here are a few new takeaways from their latest exposure report:


- Long Kraft (KFT): The biggest news is that Third Point has disclosed a new position in Kraft Foods (KFT) and it is now their fifth largest position.  The company of course will be splitting into two: a North American grocery business and an emerging snacks business.

Although Pershing Square Capital no longer owns KFT shares, you can see Ackman's presentation on Kraft from a few years ago.  Third Point is most likely playing the spin-off, though.  Nelson Peltz's Trian Fund has also been a large owner of KFT.


- Long Healthcare Plays: Loeb's hedge fund also appears to have started new positions in UnitedHealth Group (UNH), Humana (HUM), Wellpoint (WLP), and Cigna (CI).  All of these names were 'top losers' for the fund during the month.  This is worth highlighting because it is the first time these stakes have been disclosed.  We recently flagged why David Einhorn likes Cigna as he recently bought the name as well.


- Third Point is net long the Americas by 70%, but net short EMEA by -4% and net short Asia by -10%.


- In equities, Loeb's firm is 35.4% net long (67.6% long and -32.2% short).  This marks a decent increase from June, where they were net long 27.3%.  Their largest net long sector exposure comes in technology, media & telecom (largely due to sizable Yahoo and Apple stakes).


- Their credit exposure remains somewhat unchanged from last month at 29.3% net long (37.8% long and -8.5% short).  Their largest exposure there continues to be asset backed securities.


Third Point's Top 5 Positions as of the end of July:

1. Yahoo! (YHOO)
2. Gold
3. Apple (AAPL)
4. Delphi (DLPH)
5. Kraft Foods (KFT)


Third Point's just-released Q2 letter details why Dan Loeb still owns Delphi, among other position updates.  We've also flagged how Loeb recently added to his Yahoo stake.

What We're Reading ~ 8/1/12

The Family Office Book [Richard Wilson]

Blue Ridge Capital alum Rick Gerson launches fund [Dealbook]

Poison pen: a look at Dan Loeb's latest chapter [WSJ]

Louis Bacon plans to return $2 billion to investors [Dealbook]

On investing in insurers [Aleph Blog]

Hedge funds build on mortgage gains ]AR+Alpha]

A write-up on Amazon (AMZN) [Bigger Capital]

Another interesting take on Amazon [Kid Dynamite]

Why a fund manager changed his mind on Microsoft [Bronte Capital]

Selling strategy and psychological effects [Old School Value]

Average investors poised to bite into hedge funds [Reuters]

RadioShack as a net-net? [Oddball Stocks]

Explanation of rogue algorithm in trading today [PreMarketInfo]

The Investment Checklist [.PDF]

On lottery arbitrage [Mass.gov]

A beekeeper's perspective on risk [Harvard Biz Review]

Twitter launches clickable stock symbols [Techcrunch]

Manchester United IPO Q&A [ESPN]

Why Dan Loeb Still Owns Delphi: Third Point's Q2 Letter

Dan Loeb's hedge fund firm Third Point is out with its second quarter letter to investors.  In it, they talk about why they still own Delphi (DLPH), as well as touch on numerous other positions.

Loeb writes, "In July, we increased our net equity exposure, initiated several new positions, and added to some existing names."  We revealed that Third Point bought new positions in News Corp and Chesapeake Energy in June.  We also recently highlighted how Loeb has also added to his Yahoo stake.

One of the new names they took a position in is the European IG bond index iTraxx.  The letter also details their position in Progress Energy Resources (PRQ).


Why Third Point Still Owns Delphi (DLPH)

The most interesting part of Third Point's letter is the detail of why they still own Delphi.  They originally purchased the company's DIP loan facility in June 2009 and continue to hold after the company has completed its initial public offering.

Third Point writes,

"In our view, Delphi is a best-in-class supplier which still trades at the valuation of more commoditized and disadvantaged comparable companies.  Delphi has premium business lines, an excellent geographic customer base, no need for further deleveraging, virtually no North American unionized labor, and significantly smaller pension liabilities than almost all of its peers.  Using multiples closer to the upper quartile of suppliers - where we feel Delphi belongs and is headed - Delphi's stock should be worth between $35-$40 per share, or a 30-40% upside from current levels."

The list of large owners of Delphi stock is littered with prominent hedge funds (as of the end of the first quarter): Paulson & Co, Elliott Management, SIlver Point Capital, Oaktree Capital, Centerbridge Partners, Greenlight Capital, Perry Capital, Senator Investment Group, Owl Creek Asset Management, Monarch Alternative Capital, and many more.

Third Point highlights this ownership base in their letter and identifies it as one of the "biggest concern(s)" for Delphi owners.  They foresee a diversification of a currently concentrated shareholder base which will reduced volatility.

Also worth highlighting is the fact that numerous directors of Delphi have sold shares recently, combining for over $5.46 million in sales.

Third Point continues, saying:

"We expect Delphi to expedite its multiple expansion by returning a significant portion of its free cash flow - about 25% of the current market cap by year end 2013 - to shareholders through continued share repurchases and the initiation of a quarterly dividend."


Embedded below is Third Point's Q2 letter to investors:




For more on this hedge fund's portfolio, head to Third Point's latest exposure report.

And to read more hedge fund letters, check out the latest from David Einhorn's Greenlight Capital.

Bill Gross on the Death of Equities: PIMCO Investment Outlook

PIMCO's Bill Gross is out with his latest market commentary entitled "Cult Figures" where he essentially claims stocks are dead:  "The cult of equity is dying."

Before reading his latest missive, it's worth noting his inherent conflict of interest: he's at one of the largest fixed income managers out there (of course he would love it if equities were dead and billions in AUM flowed to fixed income managers).

While some may argue his call as a contrarian signal to buy equities, you have to consider that such a call would be a clearer signal if an *equity* investor was staking such a claim.  Capitulation, a shangri-la for contrarians, can't truly come to fruition until the most ardent defenders throw in the towel.

However, one other conclusion from his note is evident regarding inflation.  He writes, "Unfair though it may be, an investor should continue to expect an attempted inflationary solution in almost all developed countries over the next few years and even decades." 

Obviously, he argues investors need to prepare for such an environment and we've posted up the best investments for inflation before (as well as the best investments for deflation for those in the other camp).

At any rate, you can read Bill Gross' latest market commentary embedded below (and download a .pdf here):





For more commentary from the PIMCO man, check out his piece on how to generate returns in a low yield environment.

Chase Coleman's Tiger Global Sells Some LinkedIn (LNKD)

Chase Coleman's tech-oriented hedge fund Tiger Global Management has filed an amended 13D with the SEC regarding its stake in LinkedIn (LNKD).  Per the filing, Tiger Global has reported a 3.3% ownership stake in LNKD with 2,421,981 shares.

This marks a decrease in their position size and the footnotes reveal that Tiger disposed beneficial ownership of 1,620,947 class A shares.

Tiger sold shares on June 18th & 19th, as well as on various dates between July 20th and 27th.  The bulk of their sale came in blocks at $108.67 and $106.57, though they also sold shares as low as $100.99 (shares now trade around $104).

We previously detailed when Coleman's fund took a 1% stake in LinkedIn back in 2010 for $20 million (a $2 billion valuation).  Nowadays, LNKD trades at a $10.7 billion market cap.

The remaining reported shares are mainly held in their "Private Investment Partners" vehicle.  In the past, we've highlighted how Tiger has allocated capital to private investments in the tech sector and have done extremely well there.  LinkedIn completed its initial public offering a year ago.

Chase Coleman was named one of the top 25 highest earning hedge fund managers of 2011.

Per Google Finance, LinkedIn is "a professional network on the Internet with more than 90 million members in over 200 countries and territories. Through the Company’s platform, members are able to create, manage and share their professional identity online, build and engage with their professional network, access shared knowledge and insights, and find business opportunities. Its platform provides members with solutions, including applications and tools, to search, connect and communicate with business contacts, learn about career opportunities, join industry groups, research organizations and share information."

For more on this hedge fund, head to Tiger Global's Burger King stake.

David Einhorn Boosts Marvell Technology Position

David Einhorn's hedge fund Greenlight Capital filed a 13G with the SEC regarding its position in Marvell Technology (MRVL).  Per the filing, Einhorn has revealed a 5.3% ownership stake in the company with 29,595,179 shares.

This means he's boosted his holdings by 61% since the end of the first quarter.  The filing was made due to portfolio activity on July 16th.  Einhorn talked about his stake in MRVL in Greenlight's Q2 letter.

He likes that the company only trades at "roughly 5x next year's earnings net of the cash on the balance sheet."  Einhorn hopes the company's latest repurchase program will be aggressive and he used weakness in shares to add to his position.  Over the past three months, shares are down 24%.

Per Google Finance, Marvell Technology is "a fabless semiconductor provider of application-specific standard products.The Company develops complex System-on-a-Chip (SoC) devices. Its product portfolio includes devices for data storage, enterprise-class Ethernet data switching, Ethernet physical-layer transceivers (PHY), mobile handsets and other consumer electronics, wireless networking, personal area networking, Ethernet-based personal computer (PC) connectivity, control plane communications controllers, video-image processing and power management solutions. Its products serve diverse applications used in carrier, metropolitan, enterprise and PC-client data communications and storage systems."

For the latest on this hedgie, head to Einhorn on Apple, Green Mountain Coffee and Amazon (interview).

Larry Robbins' Glenview Capital Adds to Rovi Stake

Larry Robbins' hedge fund firm Glenview Capital just filed a 13G with the SEC regarding its position in Rovi Corp (ROVI).  Per the filing, Glenview has revealed a 7.09% ownership stake in Rovi with 7,866,100 shares.

This means they've increased their share count by over 1000% since the end of the first quarter.  Robbins' firm initiated a new position in the first quarter of this year, but only owned 711,000 shares at that time.

Glenview's original purchase in Q1 could have ranged from $25 to $37.  But the bulk of their stake seems to have been bought anywhere between $10 and $30.

However, given the drop in shares the past few weeks (from $18 down to $9), and the timing of this filing, they certainly took advantage of the recent volatility.  The 13G was required due to activity on July 18th.

Per Google Finance, Rovi is "focused on powering the discovery and enjoyment of digital entertainment by providing a set of integrated solutions that are embedded in its customers’ products and services and used by end consumers to simplify and guide their interaction with digital entertainment. The Company’s offerings include content discovery, video delivery and advertising."

For more on this hedge fund, we've posted Larry Robbins' Ira Sohn presentation on THC, HMA, HCA, LPNT and ITC.  We've also highlighted why Larry Robbins likes Life Technologies as well.

What We're Reading ~ 7/25/12

On hedge fund managers and publicity [Reformed Broker]

Dark pools and broken markets [Abnormal Returns]

Are investors just waiting for QE3? [Pragmatic Capitalism]

Profile of Seth Klarman, the oracle of Boston [Economist]

First year analyst dress codes [FINS]

Can John Paulson bounce back? [Pensions & Investments]

Why your brain is killing your portfolio [WSJ]

Is Johnson & Johnson cheap enough? [ValuePlays]

The book Hedge Fund Market Wizards: 19 notable quotes [Ivanoff] 

What were the 10 best & worst times to invest in equities [World Beta]

JANA shifts co-founder to advisory role [AR+Alpha]

Ackman's protege leaves to start fund [BusinessWeek]

Earnings surprises, price reaction & value [Aswath Damodaran]

Focusing on emerging hedge fund managers [FINalternatives]

Decline of Google (and the internet's) ad business [AtlanticWire]

Dan Loeb Adds to Yahoo! Stake

Dan Loeb's Third Point LLC filed a Form 4 with the SEC late yesterday indicating they'd increased their stake by 2.5 million shares.  Third Point bought 1.696 million shares at a weighted average price of $15.82 on July 20th and 804,000 shares at a weighted average of $15.67 on July 23rd.

After these purchases, Third Point now owns 73 million shares of YHOO.  Yahoo just recently named top Google executive Marissa Mayer as its new CEO in a move largely applauded by investors.  As we detailed in Third Point's latest exposure report, YHOO is their top holding.

And back in May, YHOO also made Goldman Sachs' VIP list of most important stocks to hedge funds.  While Loeb's activist campaign is moving along nicely, the core Yahoo business still faces one obstacle: getting more people to come back and use their services daily like most people use Google.

Corsair Capital's Investment Thesis on DigitalGlobe: Q2 Letter

Jay Petschek and Steve Major's Corsair Capital is out with its Q2 2012 investor letter.  In it, they outline their investment thesis on a core position: DigitalGlobe (DGI).  Additionally, they provide updates on Six Flags (SIX), Innophos (IPHS), Aperam (APAM), and TNS (TNS).

Corsair's DigitalGlobe Thesis

Note: the below was written before the announcement that Digital Globe would be merging with GeoEye (GEOY).  Under the terms, GeoEye shareholders will elect either 1.137 shares of DigitalGlobe and $4.10 per share in cash, or 100% of the consideration in cash ($20.27), or 100% of the consideration in stock (1.425 shares of DGI for each share of GEOY owned).  The transaction marks a 34% premium to to GEOY's previous closing price.

For those interested, here's Corsair's original DGI thesis:

One of the hedge fund's core positions is US satellite imaging company, DigitalGlobe (DGI), which provides real-time and archived images from 3 satellites.  DGI co-developed Google Earth as well as Apple's new Maps product.  The company received a takeover offer from competitor GeoEye (GEOY) for $17 per share but DGI rejected it.

Corsair sees strong leadership and expects the company to create value via dividends, share repurchases and "disciplined M&A."  The government effectively represents 50% of their revenue, so that is certainly a risk and is why the stock sold off so hard in February (government spending cuts).  Corsair's view was that the stock already reflected a worst-case scenario and 2012 is a transformational year.  You can read their full case in the letter below. 


Unrelated, but also worth highlighting from the letter: they cite Jim Grant of Grant's Interest Rate Observer, pointing out a potential contrarian signal for equities, noting that "this is the first time in 12 years that pension managers are putting more money into fixed income securities than equities, whereas, just a few years ago they were putting twice as much into equities than in bonds."

Embedded below is Corsair Capital's full Q2 letter:




For more on this hedge fund, head to Corsair's thesis on SunCoke Energy.

Ken Griffin's Citadel Reveals New Marriott Vacations Position

Ken Griffin's Citadel has started a brand new stake in Marriott Vacations (VAC).  Due to a 13G just filed with the SEC, Citadel has revealed a 5% ownership stake in VAC with 1,714,349 shares. 

The filing was made due to portfolio activity on July 18th.  We highlighted back in March how Steve Cohen's SAC Capital was buying VAC.  However, since they move in and out of positions faster than most of the other funds we track, it's hard to say if they still own a stake (and we won't know until mid-August when the latest 13F disclosures are released).  But for now, Citadel has started a new stake in the name.

Per Google Finance, Marriott Vacations is the worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. The Company is also the global developer, marketer and seller of vacation ownership and related products under the Ritz-Carlton Destination Club brand, and it has the right to develop, market and sell whole ownership residential products under the Ritz-Carlton Residences brand."

David Einhorn Sells Best Buy & Dell, Buys Cigna & Coventry Health: Q2 Letter

David Einhorn's Greenlight Capital is out with their Q2 2012 investor letter and Dealbreaker has it posted.  In it, they reveal that they no longer own Best Buy (BBY) or Dell (DELL).  Additionally, they started new stakes in Cigna (CI) and Coventry Health Care (CVH), playing the managed care sector.  Here are some excerpts from the letter:

On Best Buy:  "We thought that the core debate was whether or  not the company could compete with Amazon.  The answer at this point is that maybe it can and maybe it can’t.  (Despite the consensus view, our store surveys have repeatedly shown  that there is no price benefit for consumers to browse at BBY and then purchase at Amazon.)   There has been some deterioration in BBY’s domestic performance, which we attribute to a  lack of a “must have” consumer electronics  product, rather than  an erosion of BBY’s  competitive position.  While we held the shares, three unexpected problems emerged:  First,  BBY depleted $1.3 billion of its cash resources by paying a double-digit multiple for  Carphone Warehouse’s share of the Best Buy Mobile profit stream.  The market promptly revalued those earnings to BBY’s mid-single digit multiple.  Second, in the most recent quarter,  BBY’s international profits collapsed.  In particular, comparable sales in its Chinese business  fell 28% as the Chinese economy appears to have hit a wall.  Finally, the company dismissed  its CEO over his personal conduct, and also removed the Chairman for failing to respond  properly to the CEO’s misbehavior.  As a result, the company has an interim CEO and is  trying to come up with a strategy.  We worried  that this could lead to additional business  disruption so we exited with a loss."


On Dell:  "We had thought that the growth in the non-PC business would be enough to
offset the deterioration in the PC business.  The non-PC growth was smaller than we’d hoped
and the PC deterioration was worse than we’d anticipated.  While DELL has a good balance
sheet, it appears likely that management will try to use much of the cash to try to buy its way
into better businesses.  At a minimum, this will erode some of the value cushion that the cash
balance creates."


On Cigna:  "CI is a managed care company with three primary divisions:  Cigna HealthCare, Cigna Group  Disability and Life, and Cigna International.  Cigna HealthCare, which comprises about 70%  of CI’s profits, offers medium and large companies traditional risk-based insurance, in  addition to administering plans for those that prefer to self-insure.  Cigna HealthCare recently  bought HealthSpring to enter the fast-growing Medicare Advantage market.  Cigna Group  Disability and Life is a low-growth, stable  business. Cigna International, which provides  insurance policies for individuals, as well as insurance and administrative services for multinational companies and governments, is growing at more than 20% per year.  We believe that  CI deserves a higher multiple because the plan administration business is a service business  that doesn’t take risk, and the other divisions do not warrant discounted values.  Our purchase  price of $45.42 per share valued CI at less than 8x estimated 2012 EPS and approximately 6x  our forecast of post Obamacare 2014 EPS.  CI shares closed the quarter at $44.00 each."  Note: CI has since fallen further and you can currently buy it at cheaper prices than Greenlight.


On Coventry:  "CVH is a regional managed care company with operations in the mid-Atlantic, Midwest and  parts of the South.  The company offers commercial risk-based insurance and has an  expanding business in the government-sponsored Medicaid and Medicare programs.   Problems with a recently-acquired three-year contract to provide managed care services to the  Medicaid population in Kentucky caused the company to  significantly reduce earnings  guidance for 2012.  This led to a large drop in the stock price.  We believe the issues related  to the Kentucky contract are manageable and finite, and CVH will return to breakeven or a  profit on this contract in 2013 from a loss this year.  Our average purchase price of $31.22  represents 8x our forecast  for 2014 earnings net of $6 per share of cash and reflects our  estimate of the negative impact of Obamacare.  CVH closed the quarter at $31.79 per share."

We've also recently highlighted some of Einhorn's thoughts on Apple, Green Mountain and Amazon.

Einhorn's top five largest long positions at the end of the quarter (in alphabetical position) were: Apple (AAPL), General Motors (GM), gold, Marvell Technology (MRVL), and Seagate Technology (STX).  We highlighted how Greenlight was adding to their STX position last month.

Instead of waiting for a copy of the letter, we'll send you over to Dealbreaker who already has it posted here.

Howard Marks on His Current Favorite Idea & Investment Strategy

We've long posted commentary from Oaktree Capital's Howard Marks (see his recent letter here) due to the amount of wisdom he often shares.  Warren Buffett has even said Marks' letters are the first thing he reads when they come in.  So today we wanted to highlight a longer conversation with Marks on Bloomberg recently.


His Current Favorite Idea: "We think the current combination of good opportunities and good quantity of dealflow is in real estate and real estate related debt"  (both in the US and abroad, but but the US looks a bit better currently).

He thinks there's more of an aversion to real estate today than other areas.  Marks has bet on single family rental properties, believing that there will be a comeback in housing.  The key is to have patient capital, he says.  Numerous other prominent investors also liked this idea at this week's Delivering Alpha conference real estate panel.


On Investment Strategy:  "In order to get above average results, you have to think different and better.  It doesn't always work to do the opposite of what the herd is doing.  You have to know what they're doing, know why they're doing it, know what's wrong with it, and then do the opposite."

He says that everyone is looking at the macro and it's very hard to make calls like that.  He points to great investors like Warren Buffett not making macro calls and instead focusing on specific company fundamentals.


On Opportunities:  He says opportunities usually exist because the sellers are making a mistake (because they're forced to sell, or panicking or they get a margin call).  He penned his entire last memo on mistakes.


On Europe:  "It's a complex area, very murky, very uncertain."

Embedded below is the video of Marks' appearance on Bloomberg:



For more from the Oaktree manager, we've posted an excerpt from his book on contrarianism.

What We're Reading ~ 7/20/12

Muddy Waters negative report on New Oriental Education [Muddy Waters]

Great drought driving food prices higher [Big Picture]

Conversation on potential secular themes [Reddit]

Longleaf Partners Q2 shareholder letter [Longleaf]

The wisdom of crowds in financial markets [Resource Investor]

Tail risk and hedge fund returns [SSRN]

Tech debate between Peter Thiel and Eric Schmidt [Fortune]

A look at the company Square's future [NYTimes]

Profile of Yahoo's new CEO, Marissa Mayer [Spectrum]

Marissa Mayer is in over her head [Slate]

Tons of other great reads from this week [Abnormal Returns]

Whitney Tilson Becomes Sole Manager of T2 Partners, Glenn Tongue Starts Deerhaven Capital

Whitney Tilson recently sent out a letter detailing that his hedge fund T2 Partners will be losing its dual-portfolio manager structure.  Tilson will continue to manage the fund as its sole manager.  Glenn Tongue, the former co-manager, will takeover the former T2 SPAC Fund and rename it Deerhaven Fund, to be managed by his new firm, Deerhaven Capital Management.

As we tweeted out earlier today, in the letter Tilson says "I will adopt a much lower public profile and let my investment returns speak for themselves."  He will also be adopting a much more concentrated portfolio approach, targeting 15 longs and 25 (smaller) shorts.

Also worth noting is the fact that he sold all of T2's positions and will be re-building the portfolio (but will still buy old holdings like BRK).  Certainly there will be tax consequences for this decision.

Tongue, with his new firm, will be focusing on high quality businesses, special situations (mergers, workouts, SPACs), and mispriced options.  He'll also run a concentrated long book and diversified short book.

Embedded below is the T2 Partners letter detailing the changes:





It remains to be seen whether or not T2 will invest in AIG again, but we'd assume so given that they gave a presentation on AIG only two months ago.

Notes From Delivering Alpha Conference

Here's an index of notes from the various panels at CNBC & Institutional Investor's Delivering Alpha Conference:


- Best Ideas Panel featuring Omega's Leon Cooperman, Kynikos' Jim Chanos, BlueMountain's Andrew Feldstein, BlackRock's Robert Kapito, and Queen Anne's Gate Capital's Kathleen Kelley.

- Global Opportunities Panel featuring Richard Perry (Perry Capital), Fortress' Peter Briger, Harvard Management's Jane Mendillo, and JPMorgan's Mary Callahan Erdoes

- Less Than Zero Panel featuring Avenue's Marc Lasry, Marathon's Bruce Richards & Morgan Stanley's Gregory Fleming

- Real Estate Panel featuring Pershing Square's Bill Ackman, Starwood's Barry Sternlicht, and Blackstone's Johnathan Gray

- Commodities Panel featuring Ospraie's Dwight Anderson, Arbalet's Jennifer Fan, and Taylor Woods Capital's Beau Taylor