Tuesday, November 17, 2015

Top Funds' Activity in Q3 2015

Alexandra Stevenson and Matthew Goldstein of the New York Times report, Filings Show Rocky Quarter for Many Hedge Funds:
Some of the richest investors on Wall Street on Monday gave the world a glimpse of how they make their money. Or, in the case of the last quarter, how many of them lost money for their clients.

Investors like William A. Ackman, Larry Robbins, Leon G. Cooperman, Daniel S. Loeb, David Einhorn, Jeffrey W. Ubben and many more lost billions of dollars in large measure because the shares of the companies they placed bullish bets on plummeted over the summer and fall.

Grantham Mayo Van Otterloo, the investment management firm co-founded by Jeremy Grantham, increased its stake in Valeant Pharmaceuticals just as the Canadian drug company came under siege and its shares tumbled. In the third quarter, the Boston-based firm added 6.5 million shares of Valeant to its portfolio, making it one of the firm’s largest stock holdings.

Viking Global, the hedge fund led by O. Andreas Halvorsen, also added more Valeant stock to its portfolio during the same period, making it one of the top 20 shareholders. ValueAct, the multibillion-dollar firm founded by Mr. Ubben, held on to its position as a top shareholder. John A. Paulson, meanwhile, sold 110,000 shares in Valeant but still holds 8.9 million.

Shares of Valeant fell by more than 28 percent over the quarter that ended Sept. 30. They have plunged further into the red since then and are down 59 percent since the end of the third quarter.

These investors were among the thousands of hedge funds and other investment firms that made public information about which stocks they bought when they filed regulatory disclosures to the Securities and Exchange Commission on Monday. Known as 13Fs, the reports are filed four times a year. They offer investors a chance to see which sectors these traders were betting on when the quarter ended, roughly 45 days ago.

Valeant has been a feature in this quarter’s filings. In early August, the company rewarded investors as its shares surged to an all-time high of $262. But since then Valeant has ranked as one of the worst performing pharmaceutical stocks, facing concerns about a federal investigation into the company’s drug pricing policies and its reliance on a little-known mail-order pharmaceutical firm to distribute some of its products.

Other stocks have suffered, too. Some of the more popular names within the $3 trillion hedge fund industry — stocks like Platform Acquisition Holdings, Cheniere Energy and Community Health Systems — were among the worst performing big market-capitalization stocks in the third quarter.

While closely watched, the filings are an imperfect window into the holdings of money managers because they are inherently backward-looking. They include only stocks traded in the United States and do not include short positions, or bets managers might have made that a stock will fall in price. The filings also do not disclose what price a firm bought or sold a stock at, making it difficult to determine how much a hedge fund lost or made in trading a given stock.

Mr. Cooperman’s Omega Advisors, for instance, disclosed that it bought 485,000 shares of Valeant in the third quarter. But the firm did not appear to hold on to them for long. Steven G. Einhorn, Omega’s vice chairman, speaking at the Reuters Investment Summit on Monday, said the hedge fund had since sold its shares in Valeant.

But one thing the filings do show is that Wall Street’s biggest and wealthiest money managers continue to look a bit like a thundering herd when it comes to the stocks they buy and sell.

Take Kraft Heinz, the giant food conglomerate.

Joining Warren E. Buffett in his bet on Kraft Heinz, several managers added positions in the company, which was formed this year from the merger of H. J. Heinz and Kraft as part of a deal coordinated by Mr. Buffett and the Brazilian private equity firm 3G Capital. Mr. Cooperman, Mr. Loeb of Third Point, York Capital Management and Coatue Management were among the investors who added Kraft Heinz as a new position in their portfolios during the quarter.

Mr. Loeb also continued to build up his position in Baxter International, the medical equipment maker, and now has a 9.8 percent stake in the company. In August, he announced he was seeking two seats on the board of directors. Citadel, which was founded by the billionaire Kenneth C. Griffin and York Capital also bought shares in Baxter, which makes devices like intravenous pumps and dialysis systems. Jana Partners, the hedge fund founded by Barry Rosenstein, became one of the company’s biggest shareholders, buying up a 2.3 percent stake.

Starwood Hotels, which on Monday agreed to be acquired by Marriott International, was another favorite in the quarter. Paulson bought 3.6 million shares, making it the biggest shareholder in the Starwood. Viking built a new 3.1 percent stake, while Citadel now owns a 2.4 percent stake after scooping up shares in the quarter.

The renewable energy company SunEdison is another stock that has been called a hedge fund hotel for its popularity with investors. But both Omega and Third Point sold out of their positions.

SunEdison has been a favorite of David Einhorn of Greenlight Capital, who recently called it one of the few stocks that was a “successful winner” in a portfolio that has lost investors billions. Glenview Capital, the hedge fund founded by Mr. Robbins, sold 1.6 million of its shares but stills has a 3.1 percent stake.

On Monday, Mr. Einhorn also disclosed that Greenlight had sold some of its position in SunEdison. But he is still the company’s third-biggest shareholder, with a 5.9 percent stake.
Giddy up! It's that time of the year again when everyone gets all excited peeking at the portfolios of "fabulously rich," overpaid, over-glorified and under-performing hedge fund gurus, many of which are hemorrhaging money after experiencing a brutal year.

You can read many more articles on 13F filings on Barron's, Reuters, Bloomberg, CNBC, Forbes and other sites like Insider Monkey, Holdings Channel, and whale wisdom.  Zero Hedge also did a decent job going over what top hedge funds bought and dumped in Q3.

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. You can also track tweets from Hedgemind and subscribe to their services.

My favorite service for tracking top funds is Symmetric run by Sam Abbas and David Moon. In my opinion, Sam and David have created one of the best services to track hedge fund holdings and more importantly to dynamically rank hedge funds based on their holdings and their alpha generation.

Today, I'm going to do something a bit different as I want to show you how to properly use the information from all the links to top funds below. It's an extensive list sorted out by styles and I keep adding to it.

First, let go over to the Nasdaq website to see who are the top institutional holders of Valeant Pharmaceuticals (VRX) as this stock is killing many top hedge funds (click on image):

Here you will see many top hedge funds including Pershing, Paulson, Brave Warrior Advisors, ValueAct, Lone Pine, and Viking Global but also other top funds like Fidelity (biggest biotech investor on the planet) and Grantham Mayo Van Otterloo. All of them are getting killed on this position as Valeant shares plunged in the last 3 months and keep making new 52-week lows (click on image):

If you ever want to see the danger of following "top" hedge funds, buying what they buy indiscriminately every time 13-F filings come out, just remember the chart above because when there's a fire in the hedge fund hotel, retail investors will get burned right alongside all these gurus.

Is Valeant way oversold and due for a major bounce? Yes but like I stated in this comment, I wouldn't touch it now. The chart is broken and even if it rallies from here, you don't know if there's another shoe to drop and lots of investors will be looking for any rally to get out of this one. Also, smart short-sellers will keep shorting the rips (Bill Ackman might look cool as a cucumber but trust me, he's sweating bullets on this position).

Anyways, forget Valeant, I can show you many examples of raging fires at hedge fund hotels, including SunEdison (SUNE) which is down a whopping 25% so far today following news that Einhorn and other hedge funds cut their stake in the company (click on image):

There should be a warning on some of these stocks: BEWARE OF HEDGE FUND HOTELS! PROCEED AT YOUR OWN RISK!!!

I'm not kidding, there are so many dumb retail and institutional investors buying stocks based on what frigging gurus are doing an it's appalling and disgraceful. Worse, you have the claptraps on CNBC touting these stocks because Ackman, Einhorn or "Soros" bought them.

Go back to read my comment on betting big on a global recovery where I wrote the following:
Take the huge and unbelievable rally in coal stocks going on right now in companies like Arch Coal (ACI) and Peabody (BTU). The former hit a low of $1 earlier this month and is now trading above 8$ while the latter more than doubled during that time.

These are huge moves for coal shares in a sector that has been obliterated and where many companies have filed for Chapter 11, wiping out shareholders (I lost a ton when Patriot Coal went under but Alpha Natural Resources and Water Energy also wiped out shareholders when they filed for bankruptcy).

Is King Coal coming back from the dead? With China slowing down, I strongly doubt it but clearly there are big investors betting on these shares. Billionaire investor George Soros bought stakes in the two coal companies I mentioned above but the dollar amount is peanuts relative to the size of his overall stock holdings. I don't know if he's still buying coal shares this quarter but clearly momentum traders are having fun playing these shares (be very careful trading and investing in this sector, you can get killed).
I went on Stocktwits and told people buying these coal stocks to take their profits and run back then but nobody listened. They all got killed just like I did when Patriot Coal went bankrupt the first time a few years ago (there's nothing, I mean nothing, that compares to losing your money on a big position to learn the most valuable lesson of money management: you're often going to be wrong and when you are, you better have a clear exit strategy especially if you can't stomach the losses).

A lot of these hedge fund gurus are so cavalier with other people's money and it irritates me when I hear them arrogantly say "if I had more money, I would be loading up on stock X, Y, Z at these levels." Really buddy? How about you learn how to manage your risk more properly and if you don't, Mr. Market will teach you a painful lesson in humility.

Even Warren Buffett manages his risk and has to learn to take his lumps. He sold some Wal Mart and Goldman Sachs shares in Q3 to better manage his risk exposure (mind you, he probably bought more of both recently).

Below, I'll leave it up to you to click on the links to see the holdings of top funds. Don't just look at things in a vacuum. Look at their top holdings, which positions they increased in Q3 but also which stocks they decreased and sold out of (you'd be surprised, sometimes the best bargains are found in the latter two categories).

I like looking at where funds are increasing their shares, especially after a stock took a huge plunge but I use my brain and macro outlook and manage my positions carefully using technical an fundamental analysis. Money management is more of an art than science and a lot of these hedge fund guys are super polished and smart but they stink at managing the risks in their portfolios.

Anyways, I'm busy trading and analyzing markets, so have fun looking at the links below. Everything is there and you can find some real gems here but remember my warning on hedge fund hotels.

Those of you who want to get serious about analyzing this data properly can always contact me and we can discuss a consulting fee as I simply don't have time to spoon-feed all of you with my ideas on where to make money in these markets. If you want my real-time views on stocks, hire me or give me a contract and I'll be happy to share a deeper analysis of this data.

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) Highland Capital Management

11) Pentwater Capital Management

12) Och-Ziff Capital Management

13) Pine River Capital Capital Management

14) Carlson Capital Management

15) Magnetar Capital

16) Mount Kellett Capital Management 

17) Whitebox Advisors

18) QVT Financial 

19) Visium Asset Management

20) 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, Event Driven 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) Elliott Associates

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) Armistice Capital

29) Blue Harbor Group

30) Brigade Capital Management

31) Caspian Capital

32) Kerrisdale Advisers

33) Knighthead Capital Management

34) Relational Investors

35) Roystone Capital Management

36) Scopia Capital Management

37) ValueAct Capital

38) Vulcan Value Partners

39) Okumus Fund Management

40) Eagle Capital Management

41) Sasco Capital

42) Lyrical Asset Management

43) Gabelli Funds

44) Brave Warrior Advisors

45) Matrix Asset Advisors

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) Adage Capital Management

2) Appaloosa Capital 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) Cadian Capital Management

51) Matrix Capital Management

52) Senvest Partners

53) Falcon Edge Capital Management

54) Melvin Capital Partners

55) Owl Creek Asset Management

56) Portolan Capital Management

57) Proxima Capital Management

58) Tiger Global Management

59) Tourbillon Capital Partners

60) Valinor Management

61) Viking Global Investors

62) York Capital Management

63) 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) Armistice Capital

2) Baker Brothers Advisors

3) Palo Alto Investors

4) Broadfin Capital

5) Healthcor Management

6) Orbimed Advisors

7) Deerfield Management

8) BB Biotech AG

9) Ghost Tree Capital

10) Sectoral Asset Management

11) Oracle Investment Management

12) Perceptive Advisors

13) Consonance Capital Management

14) Camber Capital Management

15) Redmile Group

16) RTW Investments

17) Bridger Capital Management

18) Southeastern Asset Management

19) Bridgeway Capital Management

20) Cohen & Steers

21) Cardinal Capital Management

22) Munder Capital Management

23) Diamondhill Capital Management 

24) Cortina Asset Management

25) Geneva Capital Management

26) Criterion Capital Management

27) Daruma Capital Management

28) 12 West Capital Management

29) RA Capital Management

30) Sarissa Capital Management

31) SIO Capital Management

32) Senzar Asset Management

33) Sphera Funds

34) Tang Capital Management

35) Thomson Horstmann & Bryant

36) Venbio Select Advisors

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

36) Akre 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

5) 1832 Asset Management

6) Jarislowsky, Fraser

7) Connor, Clark & Lunn Investment Management

8) TD Asset Management

9) CIBC Asset Management

10) Beutel, Goodman & Co

11) Greystone Managed Investments

12) Mackenzie Financial Corporation

13) Great West Life Assurance Co

14) Guardian Capital

15) Scotia Capital

16) AGF Investments

17) Montrusco Bolton

18) Venator Capital 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

Below, CNBC's Kate Kelly discusses the big moves in Q3 from well-known hedge funds. And Bloomberg discusses which hedge funds cut back on their US stocks. Take all this stuff with a grain of salt and don't be spooked by what these gurus are supposedly dumping.

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