Friday, November 15, 2013

Top Funds Activity During Q3 2013

Katya Wachtel of Reuters reports, Hedge funds tune into Pandora, discard Apple in third-quarter:
Hedge funds took a liking to online music company Pandora Media Inc (P) in the third quarter but soured on Apple Inc (AAPL), according to regulatory filings published Thursday.

Hedge funds including Philippe Laffont's Coatue Management and Patrick McCormack's Tiger Consumer Management both opened stakes in Pandora of about 1.1 million and 2.9 million shares, respectively, U.S. Securities and Exchange Commission filings showed.

The quarterly disclosures of stock holdings are intriguing for investors trying to get a glimpse into what savvy traders are buying and selling. However, the disclosures are backward looking and come out 45 days after the end of each quarter, and do not disclose short positions - bets that a stock will fall in price.

Nonetheless, the filings are a rare window into the secretive hedge fund industry and the minds of its top managers.

While Tiger Consumer dissolved its Facebook Inc (FB) holdings in the third quarter, Coatue opened a large new stake in the social networking site, buying up to 9.2 million shares.

Andreas Halvorsen's Viking Global Investors also opened a new 4.4 million share stake in Facebook. All three managers are part of the crew of so-called Tiger Cubs - hedge funds launched with seed money by Julian Robertson of Tiger Management.

Both Coatue and Viking Global cut their shares in Apple Inc (AAPL), joining a plethora of other well-known managers that turned on the iPod maker in the third quarter.

Leon Cooperman's Omega Advisors, David Tepper's Appaloosa Management, Lee Ainslie's Maverick Capital and Manish Chopra's Tiger Veda Management all either completely cut or reduced their Apple holdings.

Long one of the hedge fund industry's favorite bets, managers abandoned Apple with vigor earlier in the year as the stock price plummeted.

Cooperman's Omega and Tiger Veda liquidated their holdings of Google Inc (GOOG) in the third quarter, the filings showed, but another internet search engine site attracted buyers over the same period.

Tiger Global Management's hedge fund, co-managed by Chase Coleman and Feroz Dewan, opened a new stake in Yahoo Inc (YHOO), as did Viking Global, buying up to 9 million shares. But San Francisco based-hedge fund Farallon Capital Management dramatically reduced its Yahoo stake from 11.275 million shares to about 1.8 million.
Svea Herbst-Bayliss also reports, Big hedge funds shopped at J.C. Penney in third quarter:
Retailer J.C. Penney drew three prominent new institutional shoppers during the third quarter, while a fourth investor significantly increased its stake, even as an ambitious overhaul fizzled and its stock price dropped.

Hedge funds Highfields Capital, Jana Partners and Farallon Capital Management Group took positions in the ailing department store operator, and Glenview Capital, already a big owner, added to its holdings.

Jonathon Jacobson's Highfields Capital bought 3.2 million shares, and Barry Rosenstein's Jana Partners and Farallon, founded by Tom Steyer, each bought 500,000 shares in the Plano, Texas-based company during the quarter, regulatory filings made with the Securities and Exchange Commission on Thursday show. Larry Robbins' Glenview bought 3.9 million shares to own 12.4 million at the end of the quarter.

George Soros, whose investment decisions have long been followed closely, kept his holdings unchanged at 19.98 million shares.

Two one-time backers of the company had second thoughts, however. Richard Perry's Perry Capital sold 2 million shares, leaving him with 10 million shares at the end of the quarter. And Tiger Consumer Management liquidated its entire position, 5.43 million shares.

Additionally Fidelity Investments said its funds sold 3 million shares, cutting the firm's stake in J.C. Penney by 66 percent. The company does not break out which funds own the stakes but said it still had 1.5 million shares at the end of the quarter.

In April, the company in April parted ways with Chief Executive Ron Johnson, who after 17 months on the job failed to win over shoppers and investors with his everyday-low-price strategy, and rehired former CEO Mike Ullman to revive the company. Johnson was known for his previous success as chief of Apple Inc's retail unit.

While Jana Partners' and Farallon's stakes make up only a small amount of the total holdings at each fund - 0.05 percent at Jana Partners and 0.09 percent at Farallon - the news is being widely followed because J.C. Penney, more than many other stocks, had become a battle ground for the world's biggest hedge funds.

William Ackman's Pershing Square Capital Management waged a long but largely unsuccessful campaign to revive the retailer and had expected its share price to go up. But plenty of other hedge funds were betting against a turnaround and shorting the stock for months.

The battle over the retailer came to a head in August and September when Ackman, J.C. Penney's biggest shareholder, stepped off the company's board and in one fell swoop sold his entire 17.78 percent stake of 39 million shares at the end of August, incurring a loss of roughly $500 million.

Then the company said it would raise fresh capital, an about-face after Ullman said he didn't see the need for fresh money for the rest of the year, further shaking sentiment. During the third quarter the share price plunged 48 percent.

The regulatory filings, which are required of money managers whose investment firms oversee more than $100 million in assets, do not say when Highfields, Jana or Farallon bought the shares, stating only that they held them on September 30. The filings are required to made 45 days after the end of the quarter.

The retailer's shares closed at $8.69 on Thursday afternoon, roughly flat from the end of the quarter, falling in early October and then recovering in subsequent weeks.

J.C. Penney found freshly committed backers in late August when Ackman cashed out.

Perry's Perry Capital and Soros' Soros Fund Management were among the investors purchasing shares that Ackman sold, sources familiar with the trades said.
You can read more Reuters articles on what hedge funds and top funds bought and sold during the third quarter here. Eton Park Capital Management and Ellington Management Group took new positions in Sotheby's (BID) during the third quarter.  

Warren Buffett's Berkshire Hathaway Inc. disclosed a new $3.45 billion stake in Exxon Mobil Corp (XOM), after buying 40.1 million shares in the world's largest publicly traded oil company. Billionaire investors George Soros and John Paulson joined Daniel Loeb’s Third Point LLC in taking stakes last quarter in FedEx Corp.(FDX), operator of the world’s largest cargo airline.

And according to the Financial Times, a group of hedge funds and private equity companies is preparing a proposal to take over large parts of Fannie Mae (FNMA) and Freddie Mac (FMCC), in an attempt to end a bitter dispute with the Treasury, which has controlled the US housing finance agencies for five years.

It's that time of the quarter again when everyone gets all excited looking into what the big hedge funds are buying and selling. My advice is to take all these articles with a shaker of salt and completely avoid buying or selling anything based on what these well-known hedge funds are reportedly doing.

But since I know most of you won't follow my advice, I'm going to give you a long list of links so you can track the latest quarterly holdings of top funds in detail. I break them down by types and will guide you as to where you can focus your attention if you don't want to be burned by big hedge funds.

Those of you who want me to drill into this information will have to subscribe to my blog ($500 or $1000). I already provide way too much free stuff. If you want to be one up on top hedge funds, you can invest in these ETFs, or you can pay me and a buddy of mine big bucks and we'll create a custom ETF which will  trounce all these top hedge funds and the S&P 500 using no leverage whatsoever (and unlike closet indexers run amok, we won't rape you on fees).

In my previous life working in Pensionland, I allocated money to well known hedge funds. I've met Ray Dalio, Andreas Halvorsen and many other well-known and lesser known hedge fund managers. Most of them are very nice people but a few of them were narcissistic, arrogant jerks. I took great pleasure in grilling the arrogant jerks, no matter how rich and famous they were.

Now, I'm just a blogger on pensions who loves to speculate in the stock market. I track over 1500 stocks in over 80 industries. At the end of each trading day, I look at the most active, top gainers and losers and add to my list of stocks to track. I also like to know which stocks are making new 52-week highs and lows, which stocks are being heavily shorted, and which ones offer the highest dividends.

I mostly track U.S. stocks but also many Canadian stocks and some Chinese stocks, especially Chinese solars. Check out Canadian Solar (CSIQ) over the past year (click on image below):


How would you like to have bought a couple of thousand shares of CSIQ at $2 at the beginning of the year in your tax-free savings account (TFSA in Canada) and watch this puppy rip higher? And if you think that's a fluke, check out Daqo New Energy Corporation (DQ) over the past year (click on image):


It's been volatile but the stock went from $3.50 to $49 in less than a year and is now hovering around $42. Not bad at all and it's not Apple, Amazon, Facebook, Google, Netflix or any other hedge fund favorite.

I remember when the pathetic shorties on Zero Hedge were making fun of me for telling people to ignore hedge fund gurus like Jim Chanos and keep buying solar stocks. Admittedly, some Chinese solar stocks still stink but a lot of them have taken off over the past year as central banks keep pumping up the jam, encouraging speculators to take on more risk.

I can show you even better charts on airline stocks, biotechs, medical equipment, industrials, technology, education stocks and much more but it's useless, a lot of these stocks are now way overbought and the higher the momos (momentum chasers) drive them up, the bigger the risks are that they'll come crashing down.

Making big money trading stocks is all about timing and knowing when to pull the trigger and when to cut your losses and stay on the sidelines.

My friend, Frederic Lecoq, has helped me understand when to buy and sell stocks. He was a fundamental portfolio manager at PSP Investments who is now having fun trading his own money, using technical indicators he developed with another former colleague of mine from PSP. And he's good, very good. I love chatting on the phone with him every day, going over ideas and stocks. He also has a great sense of humor and makes me laugh so hard with his cynical jokes.

In fact, I love talking to people who put their own money at work. This is why I track the quarterly filings of top hedge funds but take this information with a grain of salt. As Fred often reminds me, these "gurus" aren't always right and they are just as prone to making spectacular mistakes in the stock market (J.C. Penney is a perfect example, what a BEAUTIFUL short that was when all the gurus piled in. I have no opinion on it now but tracking it closely).

Anyways, I've rambled on enough. Below, a list of top funds I track every quarter. Going over these filings is time consuming but you will learn a lot by focusing on where they added to existing holdings or initiated new positions. Those of you who like to invest rather than trade should focus on the deep value and activist funds. They don't churn their portfolios as often.   

But I warn all of you, use this information wisely and remember, even the "gurus" get crushed. The stupidest thing you can do is blindly follow their portfolios thinking you are going to make money in the stock market.

Top multi-strategy hedge funds

As the name implies, these hedge funds invest across a wide variety of hedge fund strategies like L/S Equity, L/S credit, global macro, convertible arbitrage, risk arbitrage, volatility arbitrage and statistical pair trading.

Unlike fund of hedge funds, the fees are lower because there is a single manager managing the portfolio, allocating across various alpha strategies as opportunities arise. Below are links to the holdings of some top multi-strategy hedge funds I track closely:

1) Citadel Advisors

2) SAC Capital Management

3) Farallon Capital Management

4) Peak6 Investments

5) Kingdon Capital Management

6) Millennium Management

7) Eton Park Capital Management

8) HBK Investments

9) Highbridge Capital Management

10) Pentwater Capital Management

11) Och-Ziff Capital Management

12) Pine River Capital Capital Management

13) Carlson Capital Management

14) Mount Kellett Capital Management 

15) Whitebox Advisors

16) QVT Financial

Top Global Macro Hedge Funds

These hedge funds gained notoriety because of George Soros, arguably the best and most famous hedge fund manager. Global macros typically invest in bond and currency markets but the top macro funds are able to invest across all asset classes, including equities.

Soros and Stanley Druckenmiller, another famous global macro fund manager with a long stellar track record, have converted their funds into family offices to manage their own money and basically only answer to themselves (that is the sign of true success!).

1) Soros Fund Management

2) Duquesne Family Office

3) Bridgewater Associates

4) Caxton Associates

5) Tudor Investment Corporation

6) Tiger Management (Julian Robertson)

7) Moore Capital Management

8) Balyasny Asset Management

Top Market Neutral, Quant and CTA Hedge Funds

These funds use sophisticated mathematical algorithms to initiate their positions. They typically only hire PhDs in mathematics, physics and computer science to develop their algorithms. Market neutral funds will engage in pair trading to remove market beta.

1) Alyeska Investment Group

2) Renaissance Technologies

3) DE Shaw & Co.

4) Two Sigma Investments

5) Numeric Investors

6) Analytic Investors

7) Winton Capital Management

8) Graham Capital Management

9) SABA Capital Management

10) Quantitative Investment Management

Top Deep Value Funds and Activist Funds

These are among the top long-only funds that everyone tracks. They include funds run by billionaires Warren Buffet, Seth Klarman, and Ken Fisher. Activist investors like to make investments in companies where management lacks the proper incentives to maximize shareholder value. They differ from traditional L/S hedge funds by having a less diversified (more concentrated) portfolio.

1) Berkshire Hathaway

2) Fisher Asset Management

3) Baupost Group

4) Fairfax Financial Holdings

5) Fairholme Capital

6) Trian Fund Management

7) Gotham Asset Management

8) Sasco Capital

9) Jana Partners

10) Icahn Associates

11) Schneider Capital Management

12) Highfields Capital Management 

13) Eminence Capital

14) Pershing Square Capital Management

15) New Mountain Vantage  Advisers

16) Scout Capital Management

17) Third Point

18) Glenview Capital Management

19) Perry Corp

20) ValueAct Capital

21) Vulcan Value Partners

Top Long/Short Hedge Funds

These hedge funds go long shares they think will rise in value and short those they think will fall. Along with global macro funds, they command the bulk of hedge fund assets. There are many L/S funds but here is a small sample of some well known funds.

1) Appaloosa Capital Management

2) Tiger Global Management

3) Greenlight Capital

4) Maverick Capital

5) Pointstate Capital Partners 

6) Marathon Asset Management

7) JAT Capital Management

8) Coatue Management

9) Leon Cooperman's Omega Advisors

10) Artis Capital Management

11) Fox Point Capital Management

12) Jabre Capital Partners

13) Lone Pine Capital

14) Paulson & Co.

15) Brigade Capital Management

16) Discovery Capital Management

17) LSV Asset Management

18) Hussman Strategic Advisors

19) Cantillon Capital Management

20) Brookside Capital Management

21) Blue Ridge Capital

22) Iridian Asset Management

23) Clough Capital Partners

24) GLG Partners LP

25) Cadence Capital Management

26) Karsh Capital Management

27) Brahman Capital

28) Diamondback Capital Management

29) Silver Point Capital

30) Steadfast Capital Management

31) T2 Partners Management

32) PAR Capital Capital Management

33) Gilder, Gagnon, Howe & Co

34) Brahman Capital

35) Bridger Management 

36) Kensico Capital Management

37) Kynikos Associates

38) Soroban Capital Partners

39) Passport Capital

40) Pennant Capital Management

41) Mason Capital Management

42) SAB Capital Management

43) Sirios Capital Management 

44) Highside Capital Management

45) Tremblant Capital Group

46) Decade Capital Management

47) T. Boone Pickens BP Capital 

48) Viking Global Investors

49) Vinik Asset Management

50) Zweig-Dimenna Associates

Top Sector and Specialized Funds

I like tracking activity funds that specialize in real estate, biotech, retail and other sectors like mid, small and micro caps. Here are some funds worth tracking closely.

1) Baker Brothers Advisors

2) SIO Capital Management

3) Broadfin Capital

4) Healthcor Management

5) Orbimed Advisors

6) Deerfield Management

7) Sectoral Asset Management

8) Visium Asset Management

9) Bridger Capital Management

10) Southeastern Asset Management

11) Bridgeway Capital Management

12) Cohen & Steers

13) Cardinal Capital Management

14) Munder Capital Management

15) Diamondhill Capital Management 

16) Tiger Consumer Management

17) Geneva Capital Management

18) Criterion Capital Management

Mutual Funds and Asset Managers

Mutual funds and large asset managers are not hedge funds but their sheer size makes them important players. Some asset managers have excellent track records. Below, are a few funds investors track closely.

1) Fidelity

2) Blackrock Fund Advisors

3) Wellington Management

4) AQR Capital Management

5) Sands Capital Management

6) Brookfield Asset Management

7) Dodge & Cox

8) Eaton Vance Management

9) Grantham, Mayo, Van Otterloo & Co.

10) Geode Capital Management

11) Goldman Sachs Group

12) JP Morgan Chase & Co.

13) Morgan Stanley

14) Manulife Asset Management

15) RCM Capital Management

16) UBS Asset Management

17) Barclays Global Investor

18) Epoch Investment Partners

19) Thornburg Investment Management

20) Legg Mason Capital Management

21) Kornitzer Capital Management

22) Batterymarch Financial Management

23) Tocqueville Asset Management

24) Neuberger Berman

25) Winslow Capital Management

26) Herndon Capital Management

27) Artisan Partners

28) Great West Life Insurance Management

29) Lazard Asset Management 

30) Janus Capital Management

31) Franklin Resources

32) Capital Research Global Investors

33) T. Rowe Price

34) First Eagle Investment Management

Pension Funds, Endowment Funds, and Sovereign Wealth Funds

Last but not least, I track activity of some pension funds, endowment funds and sovereign wealth funds. I like to focus on funds that invest in top hedge funds and have internal alpha managers. Below, a sample of pension and endowment funds I track closely:

1) Alberta Investment Management Corporation (AIMco)

2) Ontario Teachers' Pension Plan

3) Canada Pension Plan Investment Board

4) Caisse de dépôt et placement du Québec

5) OMERS Administration Corp.

6) British Columbia Investment Management Corporation (bcIMC)

7) Public Sector Pension Investment Board (PSP Investments)

8) PGGM Investments

9) APG All Pensions Group

10) California Public Employees Retirement System (CalPERS)

11) California State Teachers Retirement System (CalSTRS)

12) New York State Common Fund

13) New York State Teachers Retirement System

14) State Board of Administration of Florida Retirement System

15) State of Wisconsin Investment Board

16) State of New Jersey Common Pension Fund

17) Public Employees Retirement System of Ohio

18) STRS Ohio

19) Teacher Retirement System of Texas

20) Virginia Retirement Systems

21) TIAA CREF investment Management

22) Harvard Management Co.

23) Norges Bank

24) Nordea Investment Management

25) Korea Investment Corp.

26) Singapore Temasek Holdings 

27) Yale Endowment Fund

Hope you enjoyed this comment and please remember to contribute to this blog by following the PayPal links on the top right-hand side under the banner. Institutional investors who want me to delve deeply into this topic are kindly requested to subscribe ($500 or $1000 a year) and contact me directly via my email at LKolivakis@gmail.com.

Below, Robert Olstein, Olstein Funds Chairman, CEO & CIO, explains why good companies that are looking at revenues are "going to end badly," including Amazon. "You can't give revenues to investors."

And famous hedge fund manager Jim Rogers says there is a flip-flopping sense out there as to when and exactly how the Federal Reserve is going to stop this massive monetary stimulus.

Great insights but as central banks keep pumping liquidity into the system, the risks of a melt-up, not meltdown, keep growing. So if you think 1999 was crazy, get ready, you ain't seen nothing yet!