Monday, November 17, 2014

Top Funds' Activity in Q3 2014

William Alden, Matthew Goldstein and Michael J. de la Merced of the New York Times report, Alibaba, the I.P.O. Darling, Is Also the Star of Hedge Fund Reports:
Alibaba, the Chinese e-commerce website, was the hot initial public offering of the year on Wall Street. And not surprisingly, shares of Alibaba wound up in the portfolios of many well-known money managers in the third quarter.

Third Point, Viking Global Investors, Paulson & Company and Soros Fund Management were some of the hedge funds that disclosed sizable ownership stakes in Alibaba when they submitted filings to the Securities and Exchange Commission on Friday.

The regulatory filings, known as 13-Fs, are quarterly updates from large money managers about their holdings in stocks traded in the United States.

Viking Global Investors, the fund led by O. Andreas Halvorsen, reported having about 11 million shares of Alibaba, while Daniel S. Loeb’s Third Point reported a stake of 7.2 million shares. Soros Fund Management, which manages the wealth of George Soros, had 4.4 million Alibaba shares. John A. Paulson’s fund said it had 1.9 million shares.

Also reporting a large stake in the Chinese company was Tiger Management, led by Julian Robertson, one of the best-known hedge fund managers. It said it had about 1.2 million shares. Moore Capital, the fund led by Louis Bacon, reported having about 1.5 million shares.

Leon Cooperman’s Omega Advisors and Barry Rosenstein’s Jana Partners disclosed holding smaller stakes in Alibaba. BlueMountain Capital Management disclosed it owned 303,031 shares, while Appaloosa Management said it had 725,000 shares. Even the family office of Stanley Druckenmiller, the billionaire investor, said it had 10,000 shares of the e-commerce company.

Alibaba raised about $22 billion in one of the largest I.P.O.’s ever, and shares soared 38 percent in the first day of trading.

Investor interest in Alibaba had built up well before its stock market debut in September. But a number of prominent hedge fund managers — Mr. Loeb of Third Point, David Tepper of Appaloosa Management and Mr. Bacon among them — pressed for one-on-one meetings with the company in the run-up to the I.P.O.

The 13-F filings offer the first glimpse of which hedge fund managers and mutual funds were able to pick up Alibaba shares. More broadly, they offer a window into the thinking of money managers as they move in and out of stocks. But 13-F filings also do not provide a full picture. They disclose only what money managers, including hedge funds, were invested in as of 45 days ago — something investors should keep in mind when reviewing any 13-F quarterly report. Moreover, October was a particularly volatile month, meaning stock positions could have changed substantially. The filings also do not require investors to disclose short positions, or bets that a stock will fall in price. And sometimes the S.E.C. will permit investors to keep stock positions confidential for a while.

But the filings can reveal some interesting developments.

For instance, Chase Coleman’s Tiger Global Management sharply increased its stake in Soufon Holdings, a Chinese real estate Internet company in the third quarter. The firm reported owning 14 million shares as of Sept. 30, up from 863,648 shares at the end of the second quarter.

Jana, the activist hedge fund run by Mr. Rosenstein, disclosed in its filing that it also owned 842,268 shares of McDonald’s, a move that contributed to a 1 percent gain in McDonald’s share price in early trading on Friday. Moore also reported having 450,000 shares in McDonald’s.

Elsewhere in the world of fast food, another hedge fund, Fir Tree Partners, reported having 1.5 million shares in Burger King Worldwide. In late August, Burger King agreed to buy Tim Hortons, the Canadian chain of coffee-and-doughnut shops.

But while some hedge funds clustered around a few stocks, disagreement was common. The Fortress Investment Group, for example, disclosed owning five million shares in Ally Financial, the onetime financing arm of General Motors. Paulson, meanwhile, sold two million Ally shares, disposing of its entire position.

Mr. Loeb of Third Point sold his position in Hertz, a previously disclosed move. The rental car company said on Friday that it would revise its recent financial statements after discovering errors.

Some new positions reflected headlines. Appaloosa Management disclosed owning 1.4 million shares in Lorillard, the tobacco company that agreed in July to be bought by its larger rival Reynolds American. Soros said it had five million shares in Yahoo, which owns a stake in Alibaba and received a cash windfall in the I.P.O.

Jana, whose activist strategy often involves pressing companies to make changes, took positions in some of the corporate battles of the day. The hedge fund showed a roughly 0.4 percent stake in Valeant Pharmaceuticals, the Canadian pharmaceutical company that has teamed up with the hedge fund manager William A. Ackman in a hostile bid for Allergan, the maker of Botox.

Speaking of Mr. Ackman, his Pershing Square Capital Management finds itself on the opposite side of the debate of Herbalife with Tiger Consumer Management. Tiger Consumer, the hedge fund led by Patrick McCormack, disclosed that it acquired a 1.78 million share stake in Herbalife in the third quarter.

Herbalife has been under assault from Mr. Ackman for nearly two years. Mr. Ackman, who said he spent $1 billion to open a bearish bet on the company’s stock, contends Herbalife is an illegal pyramid scheme and has been openly predicting the company will collapse.

This is not the first time that Tiger Consumer has had position in shares of Herbalife, according to earlier 13-F filings.

The billionaire hedge fund magnate John Paulson disclosed that he bet heavily on corporate inversions, in which United States companies buy foreign rivals in an effort to relocate abroad to reduce their taxes.

His firm, Paulson & Company, disclosed buying 13 million shares in AbbVie, which at the time had agreed to buy the Irish drug maker Shire. The hedge fund also added 5.3 million shares to its holdings in Shire. That deal fell apart last month after the Obama administration clamped down on some of the economic benefits of inversions.

Berkshire Hathaway, the conglomerate run by Warren E. Buffett, added to its telecommunications and media holdings, more than doubling its stake in the cable provider Charter Communications, to five million shares, and buying eight million shares of Liberty Media.
It's that time of the year again when everyone gets all giddy peaking at what top hedge funds and other funds bought and sold last quarter.

Not surprisingly, top hedge funds got allocated a huge chunk of the Alibaba (BABA) IPO in Q3 2014 but the article above fails to mention who the top institutional holder of this company is -- private equity giant Silver Lake Group.

And who is the biggest investor in Silver Lake? The Canada Pension Plan Investment Board (CPPIB). Canada’s largest pension fund invested in the e-commerce company on two fronts: a $100 million direct investment in 2011, and a C$465 million ($450 million) commitment to Silver Lake.

Mark Wiseman, CPPIB’s chief executive, recently told the Financial Post the reason the Canadian pension fund manager was able to make a “very sizeable investment” in what was then “an obscure Internet company” in a city in China few had heard of is because executives had opened an office in Hong Kong back in 2008:
“That investment story which everybody is touting as one of the best investments we’ve ever made, it didn’t happen overnight. That investment started in many respects almost seven year ago,” Mr. Wiseman said.

“It started with a view towards that market, a view that we need to build capabilities in the region, that we need to deepen our understanding of the region, and that we had a long-term view around the Chinese consumer, the importance of the Chinese consumer.”
If Mark Wiseman, CPPIB's senior managers and their board of directors want to truly deepen their understanding of the region and the Chinese consumer, they better carefully read my last comment on why deflation is coming to America.

I'm not very bullish on emerging markets and fear the worst now that Japan has slipped back into recession but I will tell you if I had to invest, I'd be more bullish on India than China over the next decade (CPPIB is also eying Mumbai).

Getting back to what top funds bought and sold in the third quarter, another big Canadian pension fund, Ontario Teachers, bought a big stake in BlackBerry (BBRY) during that quarter. They are not the only ones betting big on BlackBerry. Primecap and Fairfax are still the top holders by far and we shall see if their bets pan out or if this will be another RIM job.

You can read many articles on 13-F filings on Reuters, Bloomberg, CNBC and other sites like insider monkey, Holdings Channel, and whale wisdom. Those of you who want to delve more deeply into these filings can subscribe to services offered by market folly and 13D monitor whose principals also offer the 13D Activist Fund incorporating the best ideas from top activist funds.

But if you want my honest opinion, you should take these filings with a shaker of salt and focus more on a certain group of investors and ignore others. Also, keep in mind by the time the information comes out, many of these top funds have already sold out of their positions and possibly initiated short positions you don't know about.

Another thing I can tell you is all the big action happened early in Q4 and few hedge funds got the energy sector downturn right. I fear a lot of funds are going to get clobbered when deflation eventually comes to America. Macro matters a lot more going forward and many top funds are ill-prepared for the storm ahead.

Please go back to read my October 20th comment on whether it's time to plunge in the stock market where I wrote:
Sure, these [energy and commodity] stocks can bounce up from these oversold levels but I would use any relief rally here to shed positions or short them, not initiate or add to your positions. I can say the same thing about plenty of other energy and commodity stocks. Be very careful buying the dips here because there will be further weakness in these sectors, you will end up regretting it.

And it's not just energy and commodities. This market is becoming more and more selective. I tell all my friends and family to be careful with a lot of stocks, especially high dividend stocks. I think some will outperform in a deflationary environment (because rates will remain low for many years) but others are going to get slaughtered. 
I can't overemphasize just how selective this market has become. If you're in the wrong sectors or stocks, you're dead!!!

I've built a large database over the years and keep adding to it. I screen various stocks and see which ones are overbought/oversold or if there is strength/weakness in a particular sector nd see where the action is on a timely basis.

In addition, I regularly look at the YTD performance of stocks, the 12-month leaders, the 52-week highs and 52-week lows. I also like to track the most shorted stocks and highest yielding stocks in various exchanges.

I can basically tell you in real-time where top hedge funds are focusing their attention. But to get deeper insights into these 13F filings and what's happening real-time you have to pay me big bucks because I'm in no mood to spoon feed many underperforming funds, especially ones that charge 2 & 20 for sub-beta performance (they should drop the 2% management fee).

I already provide way too much information. By clicking on the links below, you will see the top holdings of top funds I've grouped in various categories. I've added quite a few new ones, including  John Lykouretzos' Hoplite Capital Management and David Gallo's Valinor Management, and will keep adding more to this list.

Please remember to use this information wisely and keep in mind, even the best of the best get whacked hard from time to time. Warren Buffett lost more than $2 billion on IBM (IBM) and Coke (KO) in recent weeks. It will be interesting to see if Buffett added to these losing positions in Q4 but he's diversified and has made plenty of money elsewhere, like Direct TV (DTV).

Have fun peering into the portfolios of top funds below. Please remember to support my blog by subscribing or donating via PayPal at the top right-hand side of this web page. Those of you who want deeper insights on what to buy and short should contact me directly for a special consulting mandate (that option is $5000 a year and it's cheap given how lousy most of you hedge funds have been performing).

Top multi-strategy and event driven 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, merger arbitrage, distressed debt 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) Balyasny Asset 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 

17) Visium Asset Management

18) York Capital Management

Top Global Macro Hedge Funds and Family Offices

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.

George Soros, Stanley Druckenmiller, Julian Robertson and now Steve Cohen have converted their hedge funds into family offices to manage their own money and basically only answer to themselves (that is my definition of true investment success).

1) Soros Fund Management

2) Duquesne Family Office (Stanley Druckenmiller)

3) Bridgewater Associates

4) Caxton Associates (Bruce Covner)

5) Tudor Investment Corporation

6) Tiger Management (Julian Robertson)

7) Moore Capital Management

8) Point72 Asset Management (Steve Cohen)

9) Bill and Melinda Gates Foundation Trust (Michael Larson, the man behind Gates)

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

11) Oxford Asset Management

Top Deep Value, Activist and Distressed Debt Funds

These are among the top long-only funds that everyone tracks. They include funds run by legendary investors like Warren Buffet, Seth Klarman, Ron Baron 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 more concentrated portfolio. Distressed debt funds typically invest in debt of a company but sometimes take equity positions.

1) Abrams Capital Management

2) Berkshire Hathaway

3) Baron Partners Fund (click here to view other Baron funds)

4) BHR Capital

5) Fisher Asset Management

6) Baupost Group

7) Fairfax Financial Holdings

8) Fairholme Capital

9) Trian Fund Management

10) Gotham Asset Management

11) Fir Tree Partners

12) Sasco Capital

13) Jana Partners

14) Icahn Associates

15) Schneider Capital Management

16) Highfields Capital Management 

17) Eminence Capital

18) Pershing Square Capital Management

19) New Mountain Vantage  Advisers

20) Atlantic Investment Management

21) Scout Capital Management

22) Third Point

23) Marcato Capital Management

24) Glenview Capital Management

25) Perry Corp

26) Apollo Management

27) Avenue Capital

28) Blue Harbor Group

29) Brigade Capital Management

30) Caspian Capital

31) Kerrisdale Advisers

32) Knighthead Capital Management

33) Relational Investors

34) Roystone Capital Management

35) Scopia Capital Management

36) ValueAct Capital

37) Vulcan Value Partners

38) Okumus Fund Management

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) Omega Advisors (Leon Cooperman)

10) Artis Capital Management

11) Fox Point Capital Management

12) Jabre Capital Partners

13) Lone Pine Capital

14) Paulson & Co.

15) Bronson Point Management

16) Hoplite 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) New Mountain Vantage

28) Andor Capital Management

29) Silver Point Capital

30) Steadfast Capital Management

31) Brookside Capital 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) Bloom Tree Partners

50) Matrix Capital Management

51) Senvest Partners

52) Steelhead Partners

53) York Capital Management

54) Valinor Management

55) Viking Global Investors

56) Zweig-Dimenna Associates

Top Sector and Specialized Funds

I like tracking activity funds that specialize in real estate, biotech, healthcare, 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) Sarissa Capital Management

8) Sectoral Asset Management

9) Oracle Investment Management

10) Perceptive Advisors

11) Consonance Capital Management

12) Camber Capital Management

13) Redmile Group

14) Bridger Capital Management

15) Southeastern Asset Management

16) Bridgeway Capital Management

17) Cohen & Steers

18) Cardinal Capital Management

19) Munder Capital Management

20) Diamondhill Capital Management 

21) Tiger Consumer Management

22) Geneva Capital Management

23) Criterion Capital Management

24) Highland Capital Management

25) Tang 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) Frontier Capital Management

Canadian Asset Managers

Here are a few Canadian funds I track closely:

1) Letko, Brosseau and Associates

2) Fiera Capital Corporation

3) West Face Capital

4) 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

Below, CNBC's Kayla Tausche provides a look at hedge funds reporting 13F filings, including Third Point's Dan Loeb, Appaloosa's David Tepper, and Omega's Leon Cooperman.

And my favorite radio personality, Howard Stern, rants on why the stock market is bullshit (2010). I pissed of laughter listening to this clip and even though stocks are more likely to melt-up than melt down, Stern is right, in this crazy market, beware of charlatans peddling lousy advice on the radio and TV (warning: a lot of profanity in this clip but it's f@#king hilarious!).

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