Greenlight Capital Q2 Letter: Einhorn Reveals Lam Research Stake

David Einhorn's hedge fund Greenlight Capital was up 7.9% net in the second quarter and is up 6.4% for the year.  In their Q2 letter, Greenlight reveals a new position in Lam Research (LRCX).

They see the company as a beneficiary as the process of converting semiconductor designs into chips becomes harder to do.

Greenlight also bought a stake in Mallinckrodt (MNK) but reversed course and sold the stake due to their negative stance on Questcor (QCOR), a company MNK has agreed to purchase.  Greenlight thinks the combined company "is setting itself up to be a very attractive short sale candidate if the merger is completed."  The letter notes that Greenlight was short QCOR.

During the quarter, the hedge fund also sold out of its longs in Aspen Insurance (AHL) and Rite Aid (RAD) at nice gains.

At the end of Q2, Greenlight's largest positions (in alphabetical order) were: Apple (AAPL), gold, Marvell Technology (MRVL), Micron Technology (MU), Resona Holdings (TYO:8308) and SunEdison (SUNE).

Embedded below is Greenlight's Q2 letter with commentary on more of their positions:

What We're Reading ~ Hedge Fund Links 7/25/14

Glenview keeps the gains going [II Alpha]

Tales of the death of hedge funds have been greatly exaggerated [Ritholtz]

JANA takes new position in Apache [ValueWalk]

Hedge funds, Google and the "right to be forgotten" [HF Intelligence]

The big money still loves hedge funds [CNBC]

Elliott pushes EMC to split off VMware [WSJ]

The solution to the Senate's report on hedge funds tax dodging [Forbes]

Citadel Discloses New Stake in Blackhawk Network

Ken Griffin's Citadel has filed a 13G with the SEC regarding shares of Blackhawk Network (HAWK).  Per the filing, Citadel now owns 5.2% of the company with 653,618 shares. 

This is a brand new position for them and the filing was made due to activity on July 22nd.  HAWK completed its spinoff from Safeway (SWY) earlier this year.

You can view more recent portfolio activity from Citadel here.

Per Google Finance, Blackhawk Network is "a prepaid payment network utilizing technology to offer a range of gift cards, other prepaid products and payment services in the United States and 18 other countries. Its product offerings include gift cards, prepaid telecom products and prepaid financial services products (including general purpose reloadable (GPR), cards and its reload network). In addition, it sells physical and electronic gift cards to consumers through both online distributors and its Website, GiftCardMall.com. It offers gift cards from consumer brands, such as Amazon.com, Applebee’s, iTunes, Lowe’s, Macy’s and Starbucks and from payment networks, such as American Express, MasterCard and Visa."

Odey Reveals Tungsten Corporation Stake

Crispin Odey's Odey Asset Management has disclosed a new position in London listed Tungsten Corporation (LON: TUNG).  Due to trading on July 21st, Odey hold 5.21% of Tungsten's voting rights.

Other large investors in Tungsten include Wellington Management with 5% and GLG Partners with 3.63%.  Tungsten is a relatively young business which floated on AIM back in October 2013.

Per Google Finance, Tungsten "is the holding company of OB10 Limited and its subsidiaries. The Company together with its subsidiaries is engaged in the provision of electronic invoice delivery (e-invoicing) to suppliers and buyers. OB10 Limited provides services, such as e-invoicing, where suppliers can send electronic invoices to their customers, eliminating the need for paper documentation; purchase order services, where buyers can send purchase orders to their suppliers; invoice status services, where suppliers can establish the approval and payment status of the invoices they have sent to their customers, and payment services, which includes solutions to enable supply chain financing. The Company operates in European Union, America and Asia."

What We're Reading ~ Analytical Links 7/23/14

In the Plex: How Google Thinks, Works & Shapes Our Lives [Steven Levy]

Importance of ROIC: compounding and reinvestment [Base Hit Investing]

Some thoughts on Twitter [Dan Benton]

LUMA Partners on the future of TV [BusinessInsider]

An old interview with Peter Lynch [PBS]

On the boom in subprime used auto lending [Dealbook]

It's time to split up Microsoft [Stratechery]

Why HBO is such an attractive asset [Quartz]

Sprint planning for lengthy review of T-Mobile deal [Bloomberg]

GMO Q2 Letter: Jeremy Grantham Says Bigger M&A Frenzy Coming

Jeremy Grantham is out with GMO's Q2 letter.  In it, Grantham talks about how he sees a frenzy in mergers and acquisitions coming (on top of the already large number we've seen).

He writes,

"If I were a potential deal maker I would be licking my lips at an economy that seems to have enough slack to keep going for a few years.  Also, individuals and institutions did feel chastened by the crash of 2009 and many are just now picking up their courage.  And as they look around they see dismayingly little in the way of attractive investments or yields.  So, the returns promised from deal making are likely to appear, relatively at least, exceptional.  I think it is likely (better than 50/50) that all previous deal records will be broken in the next year or two.  This of course will help push the market up to true bubble levels, where it will once again become very dangerous indeed."

Grantham feels the M&A boom will continue mainly due to low interest rates, but also because the economy has the 'early-cycle look' that could see a few more years of recovery.  Profit margins are higher this time around and there is room for increased capital spending as well.

All of these things combined create the perfect storm for "a veritable explosion, to levels never seen before."

Embedded below is GMO's Q2 letter:

Maverick Capital Starts Countrywide Plc Stake

Lee Ainslie's hedge fund firm Maverick Capital has disclosed a new position in London listed residential estate agent, Countrywide Plc (LON:CWD).  Due to trading on July 14th, Maverick now hold the equivalent of 3.04% of Countrywide's voting rights, all via total return swap.

Countrywide Plc is the UK's largest estate agency group.  In 2007, the company was taken private by Apollo Management.  In March 2013, it was re-listed on the London Stock Exchange.  Currently, the largest shareholder is Howard Marks' Oaktree Capital with 27.59% of the voting rights.

For more on Maverick, check out an in-depth interview with Lee Ainslie here.

Per Google Finance, Countrywide Plc is "an integrated residential estate agency and property services group in the United Kingdom. The Company offers estate agency and lettings services, together with a range of complementary services. The Company operates in five businesses: residential property sales; residential property lettings and property management; arranging mortgages, insurance and related financial products (provided by third parties) for participants in residential property transactions; surveying and valuation services for mortgage lenders and prospective homebuyers, and residential property conveyance services. Countrywide Holdings, Ltd. is the holding company of the Company."

Alpha Hedge West Conference: 10% Discount

Information Management Network (IMN) is proud to announce that the 20th annual Alpha Hedge West Conference will take place September 21-23, 2014 in San Francisco, California.  The event covers a wide variety of investment management topics and is much broader than other events as it includes speakers from top hedge funds, private equity firms, family offices, capital allocators and more.

Market Folly readers can receive 10% off admission by registering via this link and using the discount code: Folly10


Speakers List

John Burbank, Passport Capital
Ronnie Jaber, Carlyle Group
Kurt Billick, Bocage Capital
Gareth Henry, Fortress Investment Group
John Rohal, Man Group
Christopher Cole, Artemis Capital Management
Brian McQuade, CALPERS Investments
Justin Sheperd, Aurora Investment Management
Rajesh Agarwal, Napier Park Global Capital
Christopher Teets, Red Mountain Capital
Matthew Hepler, Relational Investors
Ken Shubin Stein, Spencer Capital
...and a ton of other speakers too (full list here)


Panel Topics

- State of the Hedge Fund Union
- Adding Value as a Fund of Hedge Funds
- Due Diligence and Monitoring of Hedge Fund Service Providers
- How Are Institutions Using 40 Act as Part of Their Portfolio?
- How To Invest in a Rising Interest Rate Environment
- Activist Strategies
- Under the Radar: Incubators and Investing in Emerging Managers
- Examining the Convergence of the Private Equity and Hedge Fund Business
... and many more (full schedule here)


Discount Code

Remember, to receive 10% off, be sure to click here to register and enter the discount code: Folly10

It should be a fantastic event covering a myriad of topics across the capital allocation spectrum.

Third Point's Q2 Letter on Royal DSM & International Holdings

Dan Loeb's hedge fund Third Point is out with its Q2 letter which focuses on some of their international positions.

They continue to feel that change is coming in Japan and are finding compelling individual investments there (especially with event-driven components).

The letter also details Third Point's investment in Kroton Educacional SA in Brazil, Fibra Uno in Mexico, and Argentinian oil company YPF.

Dan Loeb's fund also writes an in-depth thesis on Royal DSM, a global health company.

Embedded below is Third Point's Q2 letter:


You can download a .pdf copy here.

For more on this hedge fund, you can also view Third Point's Q1 letter.

What We're Reading ~ Hedge Fund Links 7/18/14

Profile of Lee Cooperman [CNBC]

Excerpts from Paulson & Co's latest letter [ValueWalk]

Investors increasingly looking to make hedge fund allocations [COO Connect]

Viking Global preps illiquid investments fund [CNBC]

The top hedge fund in a post financial crisis world is... [II Alpha]

Profile of RenTec's Jim Simons [NYTimes]

KKR doubles down on hedge funds [WSJ]

Tiger Global Exits Tuniu (TOUR) Position

Chase Coleman and Feroz Dewan's hedge fund Tiger Global has filed an amended 13G with the SEC regarding shares of Tuniu (TOUR).  Per the filing, Tiger Global no longer owns an equity stake in the company.

The filing was made due to activity on July 15th.  We previously disclosed Tiger Global's new Tuniu stake back in May as the company completed its IPO then.  But now they've exited that position.

For more recent activity from this hedge fund, check out Tiger Global's moves here.

Per Google Finance, Tuniu is "an online leisure travel company. The Company offers a selection of packaged tours, including organized tours and self-guided tours, as well as travel-related services for leisure travelers. It offers packaged tours sourced from over 3,000 travel suppliers, covering over 70 countries, as well as all popular tourist attractions in China. The Company’s product portfolio consists of over 100,000 stock-keeping units (SKUs) of organized tours, over 100,000 SKUs of self-guided tours, and tickets for over 1,000 domestic and overseas tourist attractions. Its online platform, which consists of its tuniu.com Website and mobile platform, provides comprehensive product and travel information through user-friendly interfaces to enable leisure travelers to plan their travels and search for itineraries. Its online platform contains photos, information and recommendations for all destinations it covers."

What We're Reading ~ Analytical Links 7/17/14

Serengeti Asset Management's thesis on Energy XXI [Harvest]

Investing Psychology: The Effects of Behavioral Finance on Investment Choice [Tim Richards]

Analyzing the impact of Fed rate hikes on markets & economy [Advisor Perspectives]

More notes from the Delivering Alpha conference: Paulson, Peltz & Icahn [Reformed Broker]

HBO said valued at $20 billion by Fox seeking Netflix killer [Bloomberg]

Most important investing trait? Patience [Alpha Baskets]

US stands to lose billions from corporate tax inversions [WSJ]

Glenview Capital Boosts Carter's Position

Larry Robbins' hedge fund firm Glenview Capital has filed a 13G with the SEC regarding shares of Carter's (CRI).  Per the filing, Glenview now owns 6.84% of the company with over 3.67 million shares.

This marks an increase of over 2.1 million shares in their position size since the end of the first quarter.  The filing was made due to activity on July 10th.

Glenview isn't the only hedge fund that's been out buying CRI shares, either.  We recently highlighted that Hound Partners added to their Carter's stake too.

Per Google Finance, Carter's is "a branded marketer of apparel for babies and young children in the United States. The Company owns two brand names in the children’s apparel industry, Carter’s and OshKosh. Its Carter’s brand provides apparel for children sizes ranging from newborn to seven. OshKosh brand provides its line of apparel for children sizes newborn to 12. Its Carter’s, OshKosh, and related brands are sold to national department stores, chain and specialty stores and discount retailers."

Stan Druckenmiller's Thoughts at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, legendary investor Stan Druckenmiller shared his latest thoughts.

At the event, Druckenmiller said he can't bet as big as he used to these days.  He also noted that other investors like David Tepper and George Soros have the biggest (you know what) on Wall Street these days.

Also, he knocked IBM as a company that's spending all of its money on share buybacks instead of on innovating and this could come back to haunt them as they get passed by modern technology companies.

Regarding the latest slew of IPO's, Druckenmiller pointed out that 80% of those companies don't really have earnings.

Turning to the Fed, he also argued that the consequences of monetary policy will be a lot worse than they think and said their policy is baffling.

He thinks we have to keep dancing until the music stops, but the problem is most people won't be able to exit fast enough once it happens.

Lee Cooperman's Favorite Stock Picks at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, Omega Advisors' Lee Cooperman shared his favorite stock picks.

He likes Actavis (ACT), a tax inversion play, Citigroup (C), a good buy he says because the economy is healing with loan demand and one that could narrow the discount to book value over time, as well as Gaming and Leisure Properties (GLPI) and Nordic American Offshore (NAO).

Other plays he likes include: QEP Resources (QEP), Supervalu (SVU), Louis XIII (577 HK), and Monitise (MONI.LN), the mobile payments play he's pitched before.

Lastly, he also mentioned Thermo Fisher Scientific (TMO), KKR (KKR) and Sandridge Energy (SD).

Cooperman also noted that the last time the Fed raised rates was in 2006 and around 25% of fund managers weren't really around to experience that.

He also joked that the last time he was bearish was during his Bar Mitzvah.

One quote that stood out from him was that, "if you buy something that's out of favor, things seem to happen to make you right."


Lee Cooperman will be presenting new investment ideas at the upcoming Value Investing Congress in a few months and readers can receive a discount to the event by registering here and using discount code: MARKETFOLLY

Larry Robbins' 6 Best Ideas at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, Glenview Capital's Larry Robbins highlighted his six best ideas.

His stock picks were: Thermo Fisher Scientific (TMO) which has been his largest holding, Monsanto (MON) which he previously pitched here, as well as HCA (HCA), Hertz (HTZ), National Oilwell Varco (NOV) and Flextronics (FLEX), a position he added to in May.

He likes that all of these can raise money on the cheap and then buyback shares.  So basically, his favorite investment idea is a theme of companies levering up.

Also, today we highlighted that Robbins has been buying Carter's (CRI) shares recently too.

Lone Pine Capital Starts Spirit Airlines Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC on shares of Spirit Airlines (SAVE).  Per the filing, Lone Pine now owns 6% of the company with over 4.3 million shares.

This is a brand new position for the hedge fund as they did not own any shares at the end of Q1.  The filing was made due to activity on July 2nd.

You can view additional portfolio activity from Lone Pine here.

Citadel Ups Position in PHH Corp

Ken Griffin's Citadel has filed an amended 13G with the SEC regarding shares of PHH (PHH).  Per the filing, Citadel now owns 9.6% of the company with over 5.5 million shares.

This marks an increase of over 3.9 million shares in their position size since the end of the first quarter.  The filing was made due to activity on July 8th.  PHH recently said they would repurchase around 35% of shares.

Per Google Finance, PHH is "an outsource provider of mortgage and fleet management services. PHH operates in three segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company provides mortgage banking services to a range of clients, including financial institutions and real estate brokers, throughout the United States. The Company’s mortgage banking activities include originating, purchasing, selling and servicing mortgage loans through its wholly owned subsidiary, PHH Mortgage Corporation and its subsidiaries (collectively PHH Mortgage). It provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary. In July 2014, PHH sold its Fleet Management Services business, doing business as PHH Arval, to Element Financial Corporation."

Paulson & Co Updates CNO Financial Group Position

John Paulson's hedge fund firm Paulson & Co has filed an amended 13D with the SEC regarding shares of CNO Financial Group (CNO).  Per the filing, Paulson now owns 4.7% of the company with just over 10.55 million shares.

This marks a slight decrease of 1.9 million shares in their aggregate common stock exposure since the end of the first quarter.  The filing was made due to activity on June 26th.  Their position includes 5 million shares issuable upon exercise of Warrants.

We covered Paulson's original 13D on CNO in 2009.

Per Google Finance, CNO Financial Group is "a holding company for a group of insurance companies operating throughout the United States, which develops, markets and administers health insurance, annuity, individual life insurance and other insurance products. The Company sells its products through three distribution channels: career agents, independent producers (some of whom sell one or more of its product lines exclusively) and direct marketing. The Company’s operating segments include Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, and corporate operations, consisted of holding company activities and noninsurance company businesses."

You can view additional recent portfolio activity from Paulson here.

What We're Reading ~ Hedge Fund Links 7/11/14

Baupost takes stake in Banco Espirito [ValueWalk]

Carl Icahn says time to be cautious about US markets [CNBC]

Steve Eisman shuts Emrys Partners, says fundamental analysis no longer viable [FINalt]

Paul Singer stands to make over 1,600% return [Here in the City]

Blackstone readies big bet hedge fund [WSJ]

Paulson credit fund gains from Lehman, Rescap and Dex Media [ValueWalk]

Viking Global reshuffles top ranks [HedgeWorld]

Update on Bridgewater's performance [Bloomberg]

Why some family offices are deciding to become hedge funds [GuruFocus]

How to successfully start a hedge fund [eFinancialNews]