Friday, February 21, 2014

Will Deflation Expose Naked Swimmers?

Deflation Threat Worries G-20 Roiled by Emerging Markets:
Janet Yellen and Mario Draghi have a new reason to consider what International Monetary Fund chief Christine Lagarde calls the “ogre” of deflation: eroding confidence in emerging markets.

Weaker growth from Brazil to South Africa risks unleashing a “disinflationary impulse through the global economy,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York. Cheaper commodities, slower trade and sliding exchange rates in developing markets all could soften price pressures internationally.

That in turn could force Federal Reserve Chair Yellen and European Central Bank President Draghi to keep monetary policy loose for longer, increasing the attractiveness of their financial assets even at the threat of creating asset bubbles.

“Emerging market volatility is likely to continue,” said Roberto Perli, a former Fed economist and now a partner at Cornerstone Macro LP in Washington. That “over time could lead to easier monetary policies than large central banks would have otherwise preferred, mainly through potential disinflationary effects.”

Perli says that would be supportive of assets in the developed world, whose outperformance is shown by the MSCI World Index’s 17 percent gain of the last year. Its emerging-market equivalent is down 10 percent.

G20 Debate

The dynamics of the world economy will be debated this week when central bankers and finance ministers from the Group of 20 gather in Sydney. For the first time since the G-20 became the premier forum for economic policy discussion in September 2009, it is officials from developing nations who are on the defensive as growth fades and markets tumble.

In contrast, the U.S. and Europe will be at the forefront in powering a pickup in global growth this year, to 3.7 percent from 3 percent in 2013, according to the IMF.

Managing Director Lagarde said rich nations can’t be complacent. “We see rising risks of deflation, which could prove disastrous for the recovery,” she said in a speech in Washington on Jan. 15. “Deflation is the ogre that must be fought decisively.”

Central bankers so far don’t sound concerned. Yellen told lawmakers on Feb. 11 that some of the recent softness in prices “reflects factors that seem likely to prove transitory” and the trading volatility sparked by emerging markets doesn’t pose a “substantial risk to the U.S. economic outlook.”

Limited Declines

Draghi said Feb. 6 that while “there’s certainly going to be a subdued inflation,” deflation is not a risk. Europe is strengthening and price declines outside of food and energy are mainly limited to the so-called peripheral economies, which need to adjust to become more competitive, he said.

Strategists at Barclays Plc have a different view of the euro area, where inflation of 0.7 percent is already less than half the ECB’s target. They calculate the currency union is the most vulnerable to region-wide deflation since the final quarter of 2009, when the world economy was just starting to recover from the deepest recession since the Great Depression.

Kasman’s team at JPMorgan estimates inflation in advanced nations will end the year at 1.7 percent, less than the 2 percent rate many central bankers regard as price stability. Sluggish demand has hurt the ability of companies to raise prices, while high unemployment makes it difficult for workers to win higher wages.

Falling Prices

Kimberly-Clark Corp., the Dallas-based maker of Huggies diapers and Kleenex tissues, said on Jan. 24 that net selling prices in North America for its personal care group fell 2 percent in the fourth quarter from a year earlier. “We wanted to be a bit more competitive on the shelf every day,” Chief Executive Officer Thomas Falk said on a conference call.

Compounding the concern about falling prices is the slowdown of emerging markets, which account for about 40 percent of global gross domestic product. India, South Africa and Brazil were among those to raise interest rates last month as investors dumped their currencies.

More tightening of policy is likely. Bank of America Corp. predicts South Africa, Brazil, South Korea, Hungary and Malaysia will all boost benchmark rates by the end of this year.

Declining demand from such countries will put downward pressure on commodity prices, potentially imparting another disinflationary wave worldwide. Although the Standard & Poor’s GSCI Spot Index is little changed this year, Michala Marcussen, global head of economics at Societe Generale SA, said the larger sway emerging markets have over global GDP means any slackening now could “have a much greater impact” on prices.

Currency Gains

The U.S. and other advanced economies could also feel a pinch if their currencies continue recent gains against those of developing countries, hurting their trade position and making prices of goods from abroad cheaper.

A Bloomberg index tracking the 20 most actively traded emerging-market currencies has fallen 9 percent over the last year, while the dollar has risen 4 percent on a trade-weighted basis.

Import prices in the U.S. declined 1.5 percent in January from a year earlier, after dropping by the same amount in the 12 months ended January 2013, according to the Labor Department in Washington.

Much depends on how China holds up, given that it’s now the world’s second-largest economy as well its biggest importer of soybeans, cotton and iron ore. Leaders’ efforts to rebalance growth away from investment, which accounts for about half of GDP, and toward domestic demand could weaken prices elsewhere as raw-materials imports fall, said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam.
Landing Scenario

“Even in a soft-landing scenario you’re seeing changing demand patterns, which means commodity prices will be more subdued,” he said.

Falling prices for items such as oil also could be “positive” for developed-market consumers, by increasing their spending power, said Paul Donovan, a global economist at UBS AG in London.

And emerging markets may only be swooning rather than slumping, with investors differentiating between them. The MSCI Emerging Markets Index last week logged its biggest weekly gain since September.

The danger is that the sub-par price performance begins to affect consumer and company psychology, convincing people that it’s better to put off spending today in hopes of even lower prices tomorrow.
‘Feedback Loop’

“If you’re a central bank targeting inflation and inflation does the opposite of what you want, then you have more pressure to act,” said Andrew Roberts, head of European rates strategy at Royal Bank of Scotland Group Plc. He sees a “feedback loop” between emerging market weakness and lower inflation elsewhere.

The ECB may have the most to worry about. Despite Draghi’s assurances, Barclays strategists say the euro area faces a bigger chance of Japanese-style deflation than investors or policy makers accept. ECB policy is looking too tight, budgets have been cut deeply and bank lending has yet to improve, they said in a report last week.

“The ECB is aware of the danger,” said Philippe Gudin, head of European economics research at Barclays in Paris. He predicts the bank will cut its 0.25 percent benchmark rate in March as well as its deposit rate, and may even begin quantitative easing at some point if the world suffers a shock such as a worsening emerging-markets crisis.
Smallest Gain

At the Fed, policy makers have been surprised by the ebbing price pressures. Excluding food and energy costs, the personal consumption expenditure price index rose 1.2 percent in 2013, matching 2009 as the smallest gain since 1955. Of 27 categories of goods and services in the gauge, 18 showed smaller price increases over the past two years, according to data compiled by Bloomberg.

Fed policy makers are forecasting inflation will rise to about 1.5 percent at the end of this year and gradually increase thereafter toward their 2 percent target.

It won’t measure up to those expectations, forcing the central bank to delay its first interest rate increase until early 2016, said Michael Hanson, a former Fed economist who is now senior U.S. economist for Bank of America in New York. Most policy makers expect to start raising rates next year, according to projections released in December.

“There’s a fair bit of disinflationary pressure out there globally,” Hanson said. “There’s a lot of excess capacity.”
I have long argued the titanic battle over deflation is the most important macroeconomic event of our time. I also argued that Fed tapering will lead to deflation and central banks have to be very careful not to stoke another crisis in emerging markets because this will reinforce deflationary headwinds around the world.

And make no mistake, deflation is a central banker’s nightmare:
Stephen Poloz says he thinks deflation in Canada is “very unlikely” but he’s not ruling out the possibility. The Governor of the Bank of Canada is clearly worried about our low rate of inflation, 1.2 per cent in December, which he says is “underperforming all our models.”

Why should you care? Because deflation is a bad thing — in fact, it’s every central banker’s second-worst nightmare. (I’ll tell you what number one is later).

In a deflationary situation, the price of many goods and services falls. That may mean cheaper food, cheaper houses, cheaper haircuts, cheaper Maple Leafs tickets.

So what’s wrong with that? The danger is that the economy collapses into what is known as a deflationary spiral where prices keep falling. People stop buying everything but necessities because they believe they’ll pay less next week. Inventories build, output drops, layoffs accelerate, wages are cut and the economy slumps into recession or even depression.

As each dollar becomes worth more in purchasing power, the cost of carrying debt increases, putting more pressure on borrowers and governments. Meantime the value of real assets drops.
The New York Times opines Europe is flirting with deflation. The Telegraphs' Ambrose Evans-Pritchard writes France is looking straight down the barrel of a deflation shock. And according to a study by economists at Wells Fargo, the U.S. economy may prove more prone to deflation than the Federal Reserve acknowledges and that may present a reason to keep monetary policy loose:
Deflationary pressures have been “relatively high” since January 2010 and now have a 66 percent chance of prevailing in the U.S., according to Charlotte, North Carolina-based economists John Silvia, Azhar Iqbal and Blaire Zachary. Their calculations include factors such as the personal consumption expenditures price deflator, unemployment rate and the Fed’s inflation target.

The model is “useful for policy makers, investors and consumers who can attach a probability with each more-likely scenario of future price trends: inflationary, deflationary or price stability,” the economists said in a Feb. 17 report.

They say that such a persistently higher probability can highlight a looming threat. In the 1980s, for example, the model would have pointed to the risks of higher inflation, which did mark that decade.

“The recent year’s surge in the deflationary pressure probabilities may offer a justification for the highly accommodative monetary policy,” the authors said in the report.

The Wells Fargo model is more worrying than one created by the Federal Reserve Bank of Atlanta, which is based on the market for Treasury inflation-protected securities. As of Feb. 14, that gauge said the probability of deflation was steady at zero.

Central bankers so far don’t sound worried by a deflation threat. Fed Chair Janet Yellen told lawmakers on Feb. 11 that some of the recent softness in prices “reflects factors that seem likely to prove transitory.”
Please go back and read my comments on the outlook for 2014 and hot stocks of 2013 and 2014. And read my recent comments on hedge fund kings of 20132013's best hedge fund manager and top funds' activity during Q4 2013 where I wrote this about the macro environment:
I also read everything I can on the macroeconomic backdrop, trying to gain insights on the titanic battle over deflation.  I still think the end game is deflation, not inflation and agree with Van Hoisington and Lacy Hunt who wrote this in their latest quarterly comment:
The slow nominal growth rate anticipated for 2014 should continue to put downward pressure on the inflation rate as the insufficiency of demand continues to create highly competitive markets. With slower inflation, lower long-term interest rates are a probable outcome.
My good friend Francois Trahan is always harping on why in a zero interest rate world inflation matters more than interest rates and he's right. But there is a tremendous amount of liquidity out there and Fed tapering won't change the path of risk assets in the short-run, they're still going higher.
Which sectors do I like? Biotech, solar, education, health, medical devices and selected technology. The key for me going forward is who has pricing power if a global deflationary shock does hit us.

Warren Buffett famously quipped: "Only when the tide goes out do you discover who's been swimming naked." I fear that when deflation eventually does take hold, we'll see lots of unsuspecting investors get caught with their pants down, especially those praying for an alternatives miracle.

But fret not dear readers, even if the Fed continues to taper, there is still plenty of liquidity to drive risk assets much higher in the short-run. So enjoy the beta ride while it lasts but don't get caught swimming naked because when the music stops, the Titanic will sink.

I am off to Jamaica for some R & R. I am going to enjoy the sun, beach, food, drinks, music and smoke some good old Jamaican ganja with Tatiana and Svetlana of MCM Capital Management. They tell me business is booming and I believe them. There are so many pension suckers paying alpha fees for leveraged beta, it's actually a running gag!

Leave you with some fabulous images from Negril, Jamaica and the amazing music of the great Bob Marley. I'll be back in ten days unless I do something foolish, like marry Svetalana, in which case you'll never hear from me again. Fyfe and Valentini are crossing their fingers and their toes! (I'm just teasing you Gordon, like you always did when I was working at PSP).

Thursday, February 20, 2014

CalPERS Strikes Fear Into PE Firms?

Matthew DeBord wrote a comment for Southern California Radio O89.3KPC, CalPERS strikes fear in the hearts of private equity firms:
Yesterday, CalPERS, the huge California public employees pension fund, announced some good news: the $248 billion colossus made a 13.26 percent return on its investments in calendar year 2012. They're dancing with their spread sheets in Sacramento, because that's a vast improvement over the 2012 fiscal year performance, which ended on June 30.

How bad was the fiscal year performance? One percent.

Yep, one percent. It was bad.

CalPERS has targeted a rate of return for its investments of 7.5 percent — a target that it reduced from 7.75 percent last year. So that 13.26 percent return, if it holds up through the fiscal year, will go a long way toward helping CalPERS make up what it lost last year.

However, as CalPERS Chief Investment Officer Joe Dear pointed out and Pensions & Investments reported, that 13.26 percent wasn't as thrilling as it sounds. It was "117 basis points below the retirement system's custom benchmark for the calendar year."

Translation: CalPERS expected 14.43 percent (a basis point is 1/100th of a percent, so the math is 1326 + 117). The problem child was private equity:
Mr. Dear attributed the below-benchmark results to disappointing returns in the private equity portfolio, which had a 12.24% return in the period, compared with the custom benchmark's 28.4% return.
That's a pretty hefty expectation on CalPERS' part, and it highlights a challenge facing big pension funds. The 2012 annual return on the S&P 500 was about 13 percent, so money passively invested in that index would have beaten CalPERS private equity portfolio by...76 basis points! (0.76 percent).

Obviously, it's an uncomfortable situation to be a pension fund manager and see that putting state workers' retirement money into an index that runs on autopilot is a better strategy than investing in sexier, riskier alternatives.

But CalPERS can't take its chances with more passive investments, because the bond and equity markets are going to have down years. In order to achieve that (reduced) 7.5 percent benchmark return — which it's only beating, barely, on a ten year basis, according to Dear — CalPERS had to construct a portfolio of alternative investments, including private equity, which can meet a benchmark annual return of nearly 30 percent.

It currently has $45 billion locked up in private equity, and in many cases, those funds are truly locked up — invested for long time frames.

What CalPERS calls "private equity" is actually an amalgam of "sub-asset classes," in the system's language. Of these, venture capital and "buyout" are two of the most familiar, because we hear so much about venture capitalists and their high-tech investments, as well as buyout shops, a good example of which was Mitt Romney's old firm, Bain Capital.

CalPERS, as I wrote last year, has been reviewing its venture capital allocation, in light of the meager returns that VC has generated. That looked like good news for buyout firms:
If CalPERS does greatly reduce its VC investments — and the writing is on the wall that it will — it will have to redeploy those funds in its private-equity portfolio. CalPERS calls everything that isn't "typical" in the portfolio "private equity," combining leveraged buyouts, VC, and other alternatives into one group. What most people now think of as private equity — leveraged buyouts of companies, the kind of thing Mitt Romney did when he was at Bain Capital — has been performing much better than VC.

So while CalPERS' change in investment philosophy may strike fear in the hearts of VCs, it will likely bring a smile to faces of private-equity players. And that could be good for Los Angeles, where private-equity is more entrenched and VC is just beginning to be competitive with Silicon Valley.
But CalPERS' big miss for 2012 on the entire private equity portfolio means that buyout firms, which represent the biggest chunk of investments, aren't doing so well, either. The Economist's Free Exchange blog tackled this problem last year, pointing out that private equity firms invested in by pension funds haven't lived up to outsized expectations.

I reached out to CalPERS for comment — specifically, whether they've broken out returns for VC versus buyout in the private equity portfolio. But according to a spokeswoman, CalPERS hasn't generated that breakdown yet.

A number of state pension funds are starting to seriously question their commitment to alternative assets in their portfolios. CalPERS isn't totally there yet — so far, it's only had major issues with VC. But if private equity continues to miss its marks, there could soon be a day of reckoning in Sacramento.
I thank Andy Moysiuk, the former Managing Partner of HOOPP Capital Partners and now partner at Alignvest, for sending me the article above.

I've already covered why CalPERS is revamping its PE portfolio but think it's important to go over some points again so that everyone understands their reasoning. First, over 5% of CalPERS PE portfolio is allocated to venture capital and it's been a total disaster.

In my humble opinion, Doug Leone of Sequoia Capital is right, pension funds shouldn't be investing in venture capital. In fact, I question whether anyone except for the very best VC funds should be investing in venture capital (I saw how disastrous these investments were at the Business Development Bank of Canada and even though they're doing better, I have my doubts as to whether the BDC should be investing in VC).

Second, CalPERS has way too many private equity relationships, almost 400 in all. That's ridiculous and basically a testament of how Réal Desrochers' predecessor didn't have a clue of how to construct a proper private equity portfolio. With so many goddamn relationships, CalPERS was literally a big private equity cash cow, funding pretty much anyone. It's hardly surprising the returns are mediocre. CalPERS private equity portfolio is one giant PE index, which isn't what you want when you invest in illiquid asset classes that are suppose to deliver absolute returns and handily beat your public market benchmarks over a long period.

In private equity, you're taking on illiquidity risk, and don't want index performance, you want to be handily beating the median return of funds or else you're better off investing in the S&P 500 and having no liquidity risk.

Third, Réal Desrochers' private equity strategy is the same one he had at CalSTRS.  His approach in private equity is akin to Warren Buffett's approach in the stock market, ie., take a few concentrated bets with well-known funds (Buffett bets on a few stocks) and outperform the index by a substantial margin over the long-run.

However, Réal doesn't really care how good a fund's past performance and treats each new fund the same way. And if the terms aren't right, he has absolutely no problem walking away, no matter how well-known the private equity funds and its managers are. In fact, he even told me about one popular fund where the decision making power is concentrated in the hands of two partners and he decided not to invest in their new fund, irritating its superstar manager. "I didn't like the governance so I walked away. Still, the fund was oversubscribed because a lot of pension funds just look at the pedigree."

Fourth, as I stated in my comment on CalPERS is revamping its PE portfolio, CalPERS' PE benchmark is ridiculously tough to beat and a lot of that has to do with the allocation to VC:
I remember telling Réal their PE benchmark is too tough to beat, the opposite problem that many Canadian funds encounter. I told him I like a spread over the S&P 500 and even though it's not perfect, over the long-run this is the way to benchmark the PE portfolio.

Andy Moysiuk, the former head of HOOPP Capital Partners and now partner at Alignvest  has his own views on benchmarks in private equity. He basically thinks they're useless and they incentivize pension fund managers to take stupid risks. He raises many excellent points but at the end of the day, I like to keep things simple which is why I like a spread over the S&P 500 or MSCI World (if the portfolio is more global).

Should the spread be 300 or 500 basis points? In a deflationary world, I would argue that many public pension funds praying for an alternatives miracle that is unlikely to happen will be lucky to get 300 basis points over the S&P 500 in their private equity portfolio over the next ten years. To their credit, CalPERS has updated their statement of investment policy for benchmarks, something all public pension funds, especially the ones in Canada should be doing (don't hold your breath!).
On the issue of benchmarks in private equity, Andy Moysiuk shared these words of wisdom with me:
I tend to be a bit more diplomatic than you have suggested in regards to benchmarks. Public index based benchmarks tend to direct activities towards more cyclical investments that move in sympathy to the public markets, defeating some of the purposes of having private equity be a lower correlation investment activity in an overall equities mix.
Further, risk adjusted investment structures can be a highly valuable part of an overall private equity portfolio, and a public benchmark implies there is no value to these critical risk control tools that are often uniquely available in private equity investing. And when one considers the hurdle rates embedded in virtually every private equity partnership contract, the underlying general partners are operating on an incentive model completely unlinked to public market relative performance.
The historical public market biases within institutions are at the root of public market benchmarking, indeed it is public market people that coined the term “alternative investments”, i.e. an alternative to public markets. Alternatives have evolved more broadly to be non-index tracking investment approaches, not necessarily illiquid, and generally investments geared towards making a profit in absolute terms.
A modern approach to benchmarking would evolve as well. I had used an absolute return approach since 1999 in my institutional investing, using the actuarial return for the pension fund as whole as a hurdle rate as a starting point to measure whether the asset class was serving a useful purpose (and this was disclosed in annual reports, along with actual performance).
Really, I was adopting more of a corporate capital allocation model, and I found that this approach was aligned with the incentive models within the general partners, and more closely aligned with how underlying operating companies actually allocated capital and seemed to support the seeking of risk adjusted returns in sympathy with reasonable expectations.
In the end, specific organizations benchmarking approaches can simply reflect the culture and intentions/expectations of a firm, which could appropriately change over time. What matters is the benchmark choice be thoughtfully considered, including the business and behavioural implications, and transparently disclosed.
Andy is one of the nicest and sharpest minds I've had the pleasure of meeting in the course of writing this blog. He really knows his stuff when it comes to private equity and he raises excellent points as to why traditional "public market" benchmarks in private equity will direct activity to more cyclical investment activity, defeating some of the purpose of having private equity in the portfolio.

But I remain undeterred knowing full well that no matter what, private equity is intrinsically tied to public markets. There is no way around this and that's why the correlation between private equity and public equities is a lot stronger than what most risk models lead you to believe. These risk models consistently underestimate the real correlations between public and private investments.

Also, I'm an economist by training. I see things in terms of "opportunity cost." The opportunity cost of taking on too much illiquidity risk in private markets is investing in good old public market benchmarks. Over the long run, you most definitely hope the private equity, real estate and infrastructure portfolios at your large public pension funds are handily beating public market benchmarks or else what's the point of investing in private markets, getting raped on fees?

One thing I will tell you about private markets, the time to invest heavily is when everyone else is selling them to shore up their liquidity. In that sense, PSP and CPPIB have a "liquidity advantage" over most of their competitors because they can pounce when market dislocations occur, buying up private market assets on the cheap and sitting on them for a long time waiting for their values to increase.

But other more mature pension funds that do not have PSP or CPPIB's liquidity profile can still invest wisely in private markets but they need to be smart and control liquidity risk a lot tighter. And they need to carefully consider the opportunity cost of making such investments. For example, blowing billions in the wind might sound sexy but in my opinion, it's a really dumb investment.

Hope you enjoyed this comment and once again let me remind all of you, this is the best blog on pensions and investments so pay up and show your appreciation by subscribing using the PayPal buttons on the top right-hand side (I don't really need your money but will keep harping on all of you, especially those ridiculously overpaid and cheap pension plutocrats that have yet to show me the love I deserve!).

Below, David Rubenstein, CEO at Carlyle Group, discusses philanthropy, income inequality and the state of private equity from the World Economic Forum’s annual meeting in Davos, Switzerland on Bloomberg Television’s “Market Makers.”

And the DLD Munich conference hosted WhatsApp co-founder Jan Koum. A month later Facebook purchased the messaging app for $19 billion. The forum was moderated by David Rowan of Wired UK. There is no bubble in private markets? Yeah right! Short Facebook and go long Twitter over next five years and please pay me a nice slice of your profits!!!

Tuesday, February 18, 2014

Top Funds Activity During Q4 2013

Svea Herbst-Bayliss and Jennifer Ablan of Reuters report, Hedge funds buy GM in Q4; Soros takes stakes in JP Morgan, Citi:
Top U.S. hedge fund managers in the fourth quarter focused on the consumer sector, with investment plays ranging from high-end auction house Sotheby's to big retailers Target Corp and Walgreen Co

General Motors also became the flavor of the quarter with many hedge funds as the U.S. government exited its position. This year, however, the stock price has fallen nearly 14 percent, making for a rough start for new Chief Executive Officer Mary Barra.

But on Friday, the automaker's stock rose 75 cents, or 2.13 percent, to $35.95.

Soros Fund Management LLC, founded by billionaire investor George Soros, purchased new stakes in banking giants J.P. Morgan Chase & Co. and Citigroup in the fourth quarter. Soros also boosted holdings in GM.

The quarterly disclosures of manager stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are always intriguing for investors trying to divine a pattern in what savvy traders are selling and buying.

But relying on the filings to develop an investment strategy comes with some peril because the disclosures are backward looking and come out 45 days after the end of each quarter.

Still, the filings offer a glimpse into what hedge fund managers saw as opportunities to make money on the long side. The filings don't disclose short positions, bets that a stock will fall in price. And there's also little disclosure on bonds and other securities that do not trade on exchanges.

Upon request, the SEC also permits managers to omit sensitive stock positions from 13F filings. As a result, the public filings don't always present a complete picture of a manager's stock holdings. Here are some of the hot stocks and sectors in which hedge fund managers either took new positions or exited from in the fourth quarter.


Soros's fund owned about 2.8 million shares of JP Morgan as of December 31, and 2.3 million shares of Citi. Soros held no shares in either bank at the end of the third quarter.


Activist investor Marcato Capital Management, run by Mick McGuire, boosted the firm's holdings of Sotheby's by 35 percent, having bought an additional 1,200,000 shares in the auction house to now own 4,562,991.

Eric Mindich's Eton Park Capital Management also is a huge fan of Sotheby's, buying an additional 265,000 shares, bringing the firm's stake to 2.2 million shares.


Tiger Consumer Management got back into Facebook after exiting it in the third quarter. The filing shows the fund owned 1,384,507 shares of the social media powerhouse at the end of the fourth quarter.

Andreas Halvorsen's Viking Global Investors bought an additional 13.9 million class A shares, bringing its stake to 18.3 million class A shares.

Scout Capital Management closed out of its position, selling 3 million shares. Scout Capital may be going on a junk food diet, as it liquidated its entire position in Whole Foods and Starbucks but added 3.9 million shares in Yum! Brands Inc.

The fund's owners said last month that they are splitting up and shutting down the $6.7 billion fund after 13 years. Returns were strong at 21 percent last year.


Kyle Bass's Hayman Capital announced in early December that he established a position and that the 4,606,005 million shares he owned made up nearly one quarter of his portfolio.

Bridger Capital trimmed its holdings in General Motors Co by selling 155,000 shares, but the fund still owns 1,695,000 shares, which ranks the stock as the fund's fourth largest position.

Bronson Point Management, founded by former managers at SAC and Pequot, added to its holding of GM by buying another 400,000 shares, increasing its stake by 34 percent. And Cooperman's Omega added a new position, buying 1.04 million shares of the automaker.

Leon Cooperman's Omega added a new position, buying 1.04 million shares, and Mindich's Eton Park Capital Management opened a new stake of 2.74 mln shares.

Soros Fund Management held more than 4.9 million shares of GM and more than 1.4 million call options, the filing showed, up from around 1.28 million shares and more than 350,000 call options on September 30.


Blue Ridge sold all of its Netflix stake, liquidating 349,000 shares of the American provider of on-demand Internet streaming media, while billionaire activist investor Carl Icahn cut his stake by 2.9 million shares, bringing his exposure to 2.7 million shares.

Chase Coleman and Feroz Dewan's Tiger Global Management bought an additional 223,000 shares, bringing their stake to 663,000 shares.


Carlson Capital took a new position in Target, buying 1.4 million shares only weeks before the retailer made headlines after becoming the victim of computer hackers who stole millions of credit card records.


Viking Global Investors opened a new stake of 11.6 million shares. Jana Partners increased its stake in Walgreen to 7.3 million sole shares versus 1.3 million sole shares. For more on activist investors Jana Partners, please see.


Fresh from bankruptcy and a merger with US Airways, the "new" American has become a new favorite with money managers and the stock has climbed 38.71 percent this year alone.

Hutchin Hill opened a new position in the airline with 875,000 shares.


Farallon Capital Management added to its holding of Time Warner Cable Inc in the fourth quarter by buying 1,905,500 shares. It owned 2,432,00 shares at the end of the quarter, making it the firm's biggest position.

On Thursday, a proposed all-stock deal in which Comcast Corp would take over Time Warner Cable for $45.2 billion was announced.


Viking Global Investors opened a new stake of 15.1 million shares.


Aaron Cowen's Suvretta Capital opened a new position, buying 322,000 shares to make it his fund's third biggest positions, while Omega Advisors added 209,630 shares.

Adage sold 607,400 shares of the scientific instrument maker, cutting its stake by 43 percent to own 800,505 shares at the end of the quarter. And Loeb's Third Point also dissolved its share stake in Thermo Fisher.


Loeb's Third Point took a stake in BlackBerry, the Canadian telecommunication and wireless equipment company best known as the developer of the BlackBerry brand of smartphones and tablets, of 10 million shares.


David Einhorn's Greenlight Capital took a sole share stake in Take-Two Interactive of 4.2 million shares in the fourth quarter, while Icahn dissolved his entire share stake of 12 million shares.

Svea Herbst-Bayliss of Reuters also reports that Soros cuts J.C. Penney, trims Herbalife, others follow:
Soros Fund Management, one of the hedge fund industry's most closely watched investors, trimmed its stakes in J.C. Penney and Herbalife late last year, marking a notable shift in course only months after buying into the companies.

The New York-based firm, which ranked as J.C. Penney's second biggest investor, sold 6.15 million shares during the last three months of 2013, according to a regulatory filing on Friday. At the end of the quarter, the firm owned 13.8 million shares, down 30 percent from what it held at the end of the third quarter. It also cut its stake in Herbalife, where it was the fifth biggest investor.

J.C. Penney and Herbalife spent most of last year in the spotlight, with the retailer's stock price losing half its value as an ambitious overhaul fizzled and the nutrition and weight loss company surging 139 percent in the wake of a dramatic faceoff between some of the world's biggest investors.

At both companies, Soros' involvement, fueled by the firm's history of making a lot of money on savvy bets, boosted the share price and raised their credibility quotients, possibly even drawing in other hedge fund investors.

In the 40 years since 83-year old George Soros founded the firm, it has earned its investors $40 billion, including $5.5 billion last year, according to industry data. Even though the firm now invests only Soros' personal fortune, its investment decisions are still followed closely.

So when Soros bought 17.4 million J.C. Penney shares in April, not long after Ron Johnson was ousted as chief executive officer, investors cheered and pushed the share price up.

But as the company's once-ambitious turnaround plans lost steam and a former CEO returned to the helm, its biggest investor, William Ackman's Pershing Square Capital Management, abruptly exited in August. The share price kept tumbling and has lost 68 percent in the last 12 months.

While Soros was a steady J.C. Penney supporter through the end of the third quarter, the firm evidently changed its mind in the last months of 2013.

It had company in the form of other prominent managers who also made changes. Richard Perry, whose Perry Corp owned 10 million shares, sold out, and Kyle Bass's Hayman Capital liquidated its 5.6 million shares. David Tepper's Appaloosa Management also sold all of its 737,800 shares.

Fund managers who oversee more than $100 million are required by the U.S. Securities and Exchange Commission to report their U.S. stock holdings 45 days after the end of the quarter. And while the information is often backward looking, it can shed light on certain trends.

J.C. Penney still has prominent supporters, however, with filings showing that Larry Robbins' Glenview Capital kept its stake steady at 12.3 million shares and Highfields Capital still owned 3.2 million shares at the end of the fourth quarter.

Soros' involvement was similarly critical at Herbalife, where the media quickly identified Soros and Carl Icahn, Herbalife's biggest backer with $16.9 million shares, as the industry's elder statesmen facing off against a younger rival, Ackman. The 47-year-old's Pershing Square Capital Management has a $1.16 billion short bet against Herbalife and is accusing the company of running an illegal pyramid scheme. The company denies that accusation.

Icahn kept his Herbalife holding steady, but Soros has now trimmed its stake by 36 percent to 3.2 million shares from 5 million shares.

The family foundation of Soros' former lieutenant, Stanley Druckenmiller, no longer listed Herbalife on its filing, after having had held 79,032 shares at the end of the third quarter.

Hayman's Bass, another closely followed manager, liquidated his firm's stake by selling 436,371 shares.

Other firms have take some money off the table. Tiger Consumer Management cut its position by 48 percent to 400,000 shares, while Adage Capital Partners cut its stake by 40 percent to 441,276 shares.

Since January, a U.S. lawmaker's calls for regulators to probe Herbalife's business practices has helped push its share price down 15 percent.
Why did Soros, the undisputed king of hedge funds, cut his stake in J.C. Penney in Q4 2013? Maybe he read my November 15th comment on top funds activity during Q3 2013 where I stated the following:
"... 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 (Lecoq) 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)."
It's that time of year again when all the Soros wannabes get all wet peering into the stock portfolios of well known gurus. The poor turds, most of them don't have a clue of what they're doing, which is why most hedge funds stink!

But don't fret my little Soros wannabes, if you wanna start a hedge fund, there are plenty of dumb and horny public pension fund managers out there who fly first class to attend silly hedge fund conferences in London, New York and Geneva. Once there, they schmooze with the likes of Tatiana at MCM Capital Management where they get suckered into paying alpha fees for sub-beta performance. 

In fact, Tatiana tells me business is booming, she can hardly keep up and had to hire some more eye candy to "entertain" all these lonely and horny institutional clients. In fact, she's having such a hard time keeping up with demand, she's resorted to finding beautiful single Russian ladies on Indeed, love knows no boundaries, especially when big pension checks are at stake. Tatiana sent me a pic of her latest hire, a 22 year old babe called Svetlana:

Ouff!!! Hoyt me!!! How do you say "hawt" in Russian?? I don't know what "niche strategy" she's peddling, but I'm sure there are plenty of pension suckers lapping her, umm it, up!

No wonder business is booming at MCM Capital Management. With eye candy like that, those hopelessly horny pension fund managers are like silly putty in the hands of a shark like Tatiana (oh she's good, she can work the toughest clients over and if things get tricky, she just flat out bribes them with offers they can't refuse).

But Igor and Yuri, Tatiana's cousins, are bored. They are trained Russian physicists and they need a new project to work on. They've filled out all those silly due diligence questionnaires, wooed clients with a bunch of useless risk-adjusted metrics and they need something new to sink their teeth into, so let's put our penises back in our pants and get on with it and get more insights into what the coveted "investment gurus" bought and sold during Q4 2013.

Sam Forgione of Reuters reports, Top U.S. hedge funds cling to eBay, Apple in fourth quarter:
E-commerce auction house eBay Inc became a darling among top U.S. hedge funds in the fourth quarter just before billionaire activist investor Carl Icahn urged the company to spin off its PayPal payments business, regulatory filings showed on Friday.

Farallon Capital Management took a new stake of 3,295,000 shares in the online auction house and Leon Cooperman's Omega Advisors also took a new stake of 854,800 shares ahead of Icahn's proposal, which the company rejected.

The enthusiasm for eBay further spotlights the company after it announced on January 22 that Icahn had taken a 0.82 percent stake earlier that month. Icahn, chairman of Icahn Enterprises L.P., is known for taking large stakes in companies and pushing for management change.

Icahn's latest quarterly disclosures appeared to confirm eBay's timeline, since they did not show a stake in the company as of December 31, 2013.

Reuters reported a day after eBay announced Icahn's stake that the activist investor had taken a larger stake of close to 2 percent, according to a source.

The confidence in eBay's shares suggests that key investors see further gains. The company's stock price rose 7.6 percent in 2013 and is up 7.4 percent so far this year. The stock price jumped as much as 12 percent after it reported better-than-expected earnings and Icahn's stake on January 22.

Not all hedge funds showed their love for eBay in the fourth quarter. Eric Mindich's Eton Park Capital Management cut its position in the company by more than 2 million shares in the fourth quarter, still leaving the stake at a sizeable 2.4 million shares, according to the regulatory filings with the U.S. Securities and Exchange Commission, known as 13Fs.

Ebay was not the only stock that Icahn and others agreed on in the fourth quarter. Icahn, who announced a "large position" in Apple Inc via Twitter in mid-August, found kindred spirits in activist investor Daniel Loeb and Blue Ridge, both of whom opened new positions in the company.

Loeb's Third Point hedge fund took a stake of 100,000 shares in Apple, while Blue Ridge took a new position of 320,000 shares. David Tepper's Appaloosa Management was an exception, cutting its stake by 12 percent to 215,320 shares.

For his part, Icahn's stake of 4.7 million shares at the end of December showed that he did not buy any shares of the company between October 24 and the end of last year.

In a letter to Apple Chief Executive Tim Cook made public on October 24, Icahn revealed that he owned 4,730,739 shares in the company as of that morning, the same amount disclosed in the regulatory filing for the period ended December 31.

In late January, however, Icahn tweeted that he had bought another half-billion dollars of Apple stock, boosting the value of his stake in the company to more than $4 billion.

Icahn waged a public campaign to get Apple to return more cash to shareholders but said earlier this week in a letter to shareholders that he was ditching his non-binding proposal to force Apple to add another $50 billion to its stock buyback plan.

He cited the company's recent repurchases as well as influential proxy advisory firm Institutional Shareholder Services Inc's call against his proposal.

Icahn's latest regulatory filings also showed that he owned 60.8 million shares of Nuance Communications, marking a 15.9 percent increase from his stake in the third quarter. Nuance makes the software that runs the Siri feature on Apple's iPhones.

Icahn did not show a stake in car rental company Hertz Global Holdings Inc in his fourth-quarter regulatory filings. CNBC television reported on January 3 that the investor had acquired between 30 million and 40 million shares in the company, which sent its shares up about 1.7 percent.
I'm glad Icahn took my advice and stopped appearing on CNBC lambasting Bill Ackman. What a pathetic display of hedge fund cannibilism that was. Icahn has been making excellent stock picks and made another killing today when Activis bought Forest Labs for $25 billion, creating a windfall gain for him:
Generic drugmaker Actavis Plc (ACT.N) said on Tuesday it would buy Forest Laboratories Inc (FRX.N) for about $25 billion in cash and stock, expanding its portfolio of specialty pharmaceuticals for neurological and other disorders.

The deal delivers a major payday to activist investor Carl Icahn, the second-largest shareholder at Forest Labs, who waged two proxy battles and threatened a third to change its leadership and strategy.

Actavis said it would pay the equivalent of $89.48 per share, representing a premium of 25 percent to Forest's closing price on Friday. The offer comprises $26.04 in cash and 0.3306 Actavis share for every Forest share.

Actavis shares rose nearly 8 percent in premarket trading on Tuesday as investors backed the latest step in the company's strategy of acquiring specialty drugmakers to boost profit margins and sales. Shares of Forest jumped nearly 30 percent.
Now, does this mean you should indiscriminately buy whatever Carl Icahn is buying? Hell no! I think he's wasting his time with Apple (AAPL) and his stakes in Nuance (NUAN), TransOcean (RIG) and Talisman Energy (TLM) might eventually pay off big but there is no rush to buy these stocks as the charts are ugly (of the three, I prefer Nuance).

And speaking of Apple, I'm sick and tired of hearing about this company. Analysts are all touting it because they want their underwriting business but I just bought the new BlackBerry Q10 and love it. I think BlackBerry is going to make a major comeback this year and I'm not alone. Prem Watsa's Fairfax Financial is still the top holder of BlackBerry (BBRY) but Dan Loeb's Third Point initiated a sizable position during Q4 2013. Viking Global Investors and Coatue Management are also among the top holders of BlackBerry.

In other words, some of the best investors in the world are long BlackBerry and the stock is gaining significantly on the news and in my opinion, will rise significantly more over the next couple of years as companies realize nothing beats the security of a BlackBerry (never mind what iPhone geeks tell you, the corporate world doesn't care about apps!).

What are some of the other gurus buying and selling? Luciana Lopez and Steven C. Johnson of Reuters report Buffett's Berkshire dumps stake in Dish, Glaxo:
Warren Buffett's Berkshire Hathaway Inc eliminated its stake in Dish Network Corp in the fourth quarter and added a stake in financial giant Goldman Sachs, according to a regulatory filing on Friday.

Berkshire had taken the Dish position in the second quarter. The regulatory filing does not disclose exactly when in the fourth quarter that Berkshire sold its 547,312 shares in the satellite TV company. The stock jumped about 36 percent from the end of the second quarter to the end of last year.

The changes were disclosed in a U.S. Securities and Exchange Commission filing made public on Friday, which detailed Berkshire equity investments as of December 31.

U.S. regulators require large investors to disclose their stock holdings every quarter, and the disclosures can offer a window into their strategies for buying and selling stocks.

The filing also showed a new addition of 12,631,531 shares in Goldman Sachs Group Inc. Berkshire Hathaway disclosed in the previous quarter that it had exercised its warrant to buy shares of Goldman Sachs.

Berkshire converted warrants in Goldman Sachs acquired during the financial crisis.

Buffett received the warrants when his investment in Goldman was seen as a vote of confidence in the bank, which was reeling from turmoil in the credit market.

Calls and emails to Dish, Berkshire Hathaway and Goldman Sachs were not returned immediately.

Berkshire owns more than 80 businesses in such areas as insurance, railroads, utilities, chemicals and food.
You can peer into the Oracle of Omaha's portfolio below along with those of many other top funds I track every quarter. You can also read more Reuters articles on what hedge funds and top funds bought and sold during the third quarter here.

For example, Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the fourth quarter, even as others exited when bullion prices posted their biggest annual loss in 32 years (read my Outlook 2014 for more insights on gold). And Jana Partners LLC built a major stake in Juniper Networks in the fourth quarter but exited Agrium (great move, I like networking stocks like Juniper, Ciena and a few others).

Now, if you're serious about trading stocks, you need to do what I do but it's extremely time consuming. 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 also read everything I can on the macroeconomic backdrop, trying to gain insights on the titanic battle over deflation.  I still think the end game is deflation, not inflation and agree with Van Hoisington and Lacy Hunt who wrote this in their latest quarterly comment:
The slow nominal growth rate anticipated for 2014 should continue to put downward pressure on the inflation rate as the insufficiency of demand continues to create highly competitive markets. With slower inflation, lower long-term interest rates are a probable outcome.
My good friend Francois Trahan is always harping on why in a zero interest rate world inflation matters more than interest rates and he's right. But there is a tremendous amount of liquidity out there and Fed tapering won't change the path of risk assets in the short-run, they're still going higher.

Please take the time to read my Outlook 2014 and my hot stocks of 2013 and 2014 for more of my  insights on these markets. Let me remind all of you reading, especially those cheapass pension plutocrats that have yet to show me the love and respect I fully deserve, to contribute to this blog. 

Importantly, I put a hell of a lot of time and effort into reading, writing, and correcting typos on this blog. I present you all with investment insights that you will never read elsewhere. My timely piece on shorting Canada was a true masterpiece and people who made a lot of money on my call to short the loonie should give me a cut of their profits. 

Derek "hardass" Murphy once told me: "you can be arrogant but you better be good." Oh Murph, for all your tough talk on the 'virtues of capitalism', how I'd love for you, Fyfe and Valentini to trade seats with me for a year and see how you would survive in my chair. It's a lot tougher when you don't have a mutli billion dollar balance sheet to trade (ask Christian Pestre) or to write big ass checks to your favorite private equity buddies like André Collin did, effectively buying his seat at Lone Star Funds (what a frigging joke!). 

Folks, you might have noticed I've been a little irritated lately. Big Lloyd has been training me hard and I see the light. I've dealt with so much bullshit in my life from the likes of Mario Therrien, Gordon Fyfe, Henri-Paul Rousseau and far too many other egos who blew smoke up my ass while they enriched themselves and their buddies.

Let me be crystal clear on something. You can all discriminate against me because I have MS and I'm very opinionated. You can violate my rights as you consistently do with other minorities, foolishly disrespecting diversity in the workplace, but  MS doesn't define me and I've got more balls and brains than all those brainless turds working at these large pension funds. The only difference is they have to put up with nonsense because they need the paycheck (most people privately tell me they can't stand working at these large pension funds but shut up in order to make the money. The culture at these places sucks!!!).

Now that I got that off my chest, let me end by asking George Soros, Julian Robertson and Stanley Druckenmiller to contact me ( so I can introduce you to an amazing activist hedge fund manager in Canada who is definitely worth seeding. I don't like wasting people's time or money so if I tell you he's worth meeting, trust me, he's worth it (seen my share of charlatans in the hedge fund biz). I would introduce him to Canadian pension funds but they're way too busy taking on too much illiquidity risk, investing in private equity, real estate and infrastructure.

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.  I added a couple of well known Canadian funds, Letko, Brosseau & Associates, Hexavest and West Face Capital. They are all excellent funds.

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) Marcato Capital Management

19) Glenview Capital Management

20) Perry Corp

21) ValueAct Capital

22) Vulcan Value Partners

23) Letko, Brosseau and Associates

24) West Face Capital

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) Hayman Capital Management

45) Highside Capital Management

46) Tremblant Capital Group

47) Decade Capital Management

48) T. Boone Pickens BP Capital 

49) Bronson Point Management

50) Viking Global Investors

51) Vinik Asset Management

52) 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

35) Hexavest

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

Below, Institutional Investor's Alpha Magazine is out with its annual hedge fund report card. Michael Peltz, Institutional Investor executive editor, provides insight on CNBC. The top performers are always in the top five or ten and don't forget, the undisputed king of hedge funds remains George Soros, who now has fun managing his multi billions. That, Mr. Murphy, is the"best gig in the world!"