Tuesday, May 24, 2016

Top Funds' Activity in Q1 2016

Svea Herbst-Bayliss and Sam Forgione of Reuters report, Top U.S. hedge funds bet on Alphabet, Netflix and retailers:
Former SAC executive Gabe Plotkin's Melvin Capital took a new position in streaming video service Netflix Inc, buying 950,000 shares and a call option for 1.45 million shares, according to regulatory filings on Monday. Melvin Capital also took a new position in Home Depot Inc, buying 475,000 shares. And Passport Capital added 3.3 million Yahoo Inc shares, upping its stake by 243 percent, filings show.

These hedge-fund SEC 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 investment opportunities.

The filings do not disclose short positions, or bets that a stock will fall. As a result, the public filings do not always present a complete picture of a management firm's stock holdings.

The following are some of the hot stocks and sectors in which hedge fund managers either took new positions or exited existing stakes in the first quarter.


Seth Klarman's Baupost Group bought into the company, putting on a new position with 1.7 million shares. Similarly, Davidson Kempner Capital Management added a new position, buying 833,099 shares while Adage Capital Partners nearly doubled its holdings by buying 547,759 shares to own 1.2 million.

But Senator Investment Group cut its position by more than half when it sold 875,000 shares and Third Point trimmed its holding by selling 400,000 shares to own 5 million. Also, Jana Partners cut its stake by 718,000 shares to 447,000 shares, while Omega Advisors cut its stake by about 221,000 shares to 561,000 shares.


Jana Partners sold its entire stake of 4.3 mln shares. Omega Advisors trimmed its stake by 583,000 shares to 3.5 million shares.


Jana Partners took a new stake of 634,000 Class C shares. Third Point took a new stake of 700,000 Class A Alphabet shares, while Omega Advisors trimmed its stake by 151,000 Class A shares to about 277,000 Class A shares.


John Burbank's Passport Capital sold 36,577 shares, reducing the firm’s holding by 35 percent. Suvretta Capital took a new position, buying 248,311 shares. Omega Advisors sold its entire stake of about 36,000 shares.


Jana Partners took a new stake of 750,000 shares.


Jana Partners sold entire stake of 5.7 million shares.


Sachem Head added a new position, buying 2.46 million shares.


Passport Capital sold 325,434 shares of the social media company, cutting its stake by more than one quarter. Omega Advisors trimmed its stake by 526,000 Class A shares to 459,000 Class A shares.


The retailer saw its stock price surge 66 percent during the first quarter. Davidson Kempner sold its holding of 1 million shares.


Omega Advisors sold its entire stake of 1.1 million shares.


Melvin Capital put on a new position, buying 1.35 million shares in the retailer, which gained 43 percent in the first quarter. Davidson Kempner took a new position, adding 200,000 shares.


Jana Partners sold its entire stake of 5.9 million Class C shares.


Suvretta Capital exited its position, selling 825,900 shares.


Passport Capital sold 1.2 million shares, cutting the firm’s stake by 27 percent. Omega Advisors increased its stake by 947,000 shares to 1.8 million shares.


Sachem Head liquidated its entire position, selling 3.35 million shares.


Senator Investment Group raised its holding by 130 percent when it added 8.5 million shares in the drug maker. Jana Partners increased its stake by 4.3 million shares to 13.5 million shares. Omega Advisors sold its entire stake of 1.3 million shares.


Jana Partners sold its entire stake of 9.2 million shares.


Blue Mountain Capital added 106,011 shares.


Jana Partners sold its entire stake of 1.6 million shares.


Davidson Kempner liquidated its position, selling 1.97 million shares.


A number of hedge funds liquidated their positions. Sachem Head sold 4.2 million shares, exiting the position it took in 2014. Hitchwood Capital sold its entire position, liquidating 2.5 million shares. Twin Capital sold its entire stake of 33,180 shares.
It's that time of the year again when we get to peek into the activity of top hedge funds, with a 45-day lag. Q1 was a very volatile quarter which started off terribly before markets recovered so it's interesting to look at top funds' activity during this quarter.

You can read many articles on 13F filings on Barron's, Reuters, Bloomberg, CNBC, Forbes and other sites like Insider Monkey, Holdings Channel, and whale wisdom. My favorite service for tracking top funds is Symmetric run by Sam Abbas and David Moon but there are other services offered by market folly and you can track tweets from Hedgemind and subscribe to their services too. I also like Dataroma which offers a lot of excellent and updated information on top funds and their holdings.

Before I delve into Q1 activity, let's go over a few more articles. Devika Krishna Kumar of Reuters reports, Paulson cut gold bets again as Soros, others rushed back:
Gold bull John Paulson slashed his bets on bullion while billionaire investor George Soros and other big funds returned to the metal for the first time in years, filings showed on Monday, as prices staged their biggest rally in nearly 30 years.

New York-based hedge fund Paulson & Co, led by John Paulson, one of the world's most influential gold investors, slashed its investment in SPDR Gold Trust, the world's biggest gold exchanged-traded fund (ETF), by 17 percent to 4.8 million shares, U.S. Securities and Exchange Commission filings showed on Monday.

It was Paulson's third cut to his SPDR stake in a year and saw him drop to the third largest investor in the fund from second, behind BlackRock and First Eagle Investment Management.

"If you were already long, which clearly Paulson was, maybe he's just taking some profits off the table," Mike Dragosits, senior commodities strategist at TD Securities said.

In an interview with Reuters last July, Paulson described prices, which were languishing at five-year lows around $1,100 per ounce at the time, as "fairly valued".

His outlook suggested he believed prices had little room to recover significantly as the Federal Reserve prepared to hike rates, ending an era of low rates and taking the sheen off bullion.

Since the end of the first quarter, prices have extended their rally, hitting fresh one-year highs above $1,300 earlier this month as investors have bet that the pace of interest rate increases may be slower than previously expected amid global economic turmoil.

Volatile equity markets and negative rates in some countries have also boosted demand for a store of wealth.

Paulson's view on gold has been closely followed since he earned roughly $5 billion on a bet on the metal in 2010, following a similarly successful $4 billion payday on his bet against the overheated housing market in 2007.

In stark contrast, Soros, who once called gold "the ultimate bubble," returned to gold for the first time in three years in the quarter buying 1.05 million shares in the gold ETF, valued at about $123.5 million.

Soros Fund Management LLC had sold its stake of almost 531,000 shares worth $82 million in the fund in the first quarter of 2013.

Others have followed Soros back into gold, although on a smaller scale, including Jana Partners, led by activist investor Barry Rosenstein, which bought 50,000 shares, worth about $5.9 million.

Monday's 13F filings come after CI Investments Inc [CIXCI.UL], an investment manager of Toronto-based CI Financial Corp, almost quadrupled its stake in the ETF, becoming the sixth-largest shareholder, a May 6 filing showed.


The buying by Soros and other big investors highlights how many funds piled back into bullion ETFs, which are backed by physical gold, as expectations of further U.S. rate increases faded.

In the first quarter this year, spot gold prices rallied 16 percent for their best quarterly performance in nearly three decades and hit their highest level in a year.

Funds have also increased exposure to gold company stocks. The Soros fund returned to invest in Barrick Gold Corp after unwinding its stake in the company in the third quarter of last year.

It bought nearly 19.4 million shares in Barrick Gold at a value of $263.7 million, the filing showed. CI Investments bought 1.5 million shares in Barrick Gold and 2.9 million shares in GoldCorp Inc.
Soros has warned that China is on the wrong path and we might experience another great crash. It seems that he's following his former protege Stan Druckemiller who is bearish and has almost a fifth of his portfolio in call options on the SPDR Gold Trust (GLD).

But Druckenmiller is hedging his bearish bets, moving considerable assets into emerging markets:
In the first quarter, he bought 2,971,000 shares of the iShares MSCI Emerging Markets ETF (EEM) at a cost of around $101.8 million. The holding, which made up 7.6% of his portfolio at the end of the quarter, became his third largest, behind gold and Facebook (FB).

The position has seen little payoff as of Thursday afternoon, with the ETF’s price up 3% from the first-quarter average of $31 per share. Over the past five years, it has slumped 32%.

Investors tracked by GuruFocus seemed split on the investment in the first quarter, with four, including Druckenmiller, starting a new position in the ETF and four, including Leon Cooperman and John Burbank, selling theirs, though Burbank maintains call options. Ray Dalio, head of Bridgewater Associates, has the biggest emerging markets position, with almost 43 million shares worth almost 19% of his long portfolio.
If you believe in the global recovery story, you too should be buying Emerging Markets (EEM), Metals & Mining (XME), Energy (XLE), Oil Services (OIH) and Oil Exploration (XOP) stocks to benefit from this recovery. I remain highly skeptical and think these markets feel more like 1997 than 2007.

Importantly, as the US dollar reverses course in the second half of the year and starts rising again relative to other currencies, you're going to see all these sectors get hit again. 

The rising USD should provide relief in terms of deflationary pressures in Asia and Europe but it also means lower commodity and gold prices. It also means lower import prices for the US which will lower inflation expectations there, effectively importing deflation into that country.

My best advice remains to focus on the big picture which is DEFLATION. This is why I remain bullish bonds (TLT) and to a lesser extent high dividend sectors. The problem with the latter which are made up of utilities, REITS, telecoms and staples is that they ran up too much and have become very crowded. Also, any potential rise in rates will hurt these sectors as they are very interest rate sensitive.

In terms of risk trades, I still trade biotech shares (IBB and XBI) which got slaughtered this year and are coming back strong even if concerns over Valeant (VRX) continue to weigh on the sector.

So, when people ask me my Long/ Short macro trade for the second half of the year it's to go long biotechs (IBB and XBI) and short Metals & Mining (XME), Energy (XLE), and Emerging Markets (EEM).

Of course, if things get really bad, all sectors are going to get slammed hard, especially high beta biotechs, and the only thing that will save your portfolio are good old government bonds.

Bearing this in mind, have fun peering into the portfolios of top funds below but be warned, in these markets, things move so fast that a lot of this information is useless or worse, deadly in the hands of amateurs.

In the hands of experts, however, this information is gold, and there are plenty of ways to make money. As an example, the recent buyouts of Anacor Pharmaceuticals (ANAC) and Xenoport (XNPT) couldn't have been predicted but you had expert funds that bought their dips heavily and made nice profits in the process.

The top fund managers don't look at the crowd, they focus on finding gems in this market and they are great stock pickers. It doesn't mean they're always right or that their timing is right but they have conviction and that's something I like in these markets.

For example, look at Keryx Biopharmaceuticals (KERX). Among its top holders you will see Seth Klarman's Baupost Group and his former protege David Abrams of Abrams Capital (the one-man wealth machine).

Shares of Keryx jumped 18% in April as revenues came in at $6.8 million, driven primarily by a big jump in US sales of Auryxia, a drug to treat renal disease. The chart of Keryx shares is the type of chart I like as you had a big dip and long period of consolidation and now shares are on the verge of breaking out above $6 a share which is very bullish (click on image):

Now, don't go throwing all your money into this or any other small biotech but when you have two of best value investors in the world long the same company, it's because they see things most don't and maybe they're on to a huge multi-bagger here which will eventually be bought out (it won't be the first time Seth Klarman scores big on a small biotech company but it doesn't mean he is always right as his fund has also struggled lately).

I'm just giving you one of many interesting ideas I like but it takes time and it's tedious going through all the holdings of these top funds to find hidden gems. Elite hedge funds have an army of quants dissecting these holdings to see where the best opportunities lie ahead but most people and most funds simply can't be bothered. 

Still, look at the top holdings, look at funds which take concentrated bets, look at the charts and analyze the companies and you'll get plenty of ideas of where to invest in. 

I always start with my macro outlook and then work down to look at themes and companies to invest and trade. It's a tough game which is why a lot of hedge funds and active managers are under-performing this year but if you want company specific ideas, you can learn a lot by track where top funds invest every quarter and more importantly, think as to why they invested there at that time.

Here are the links to top funds' activity. Enjoy but don't take this stuff too seriously, it's a dynamic market where things constantly change and even the best of the best find it tough to make money. 

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) Paloma Partners

20) Perry Capital

21) Visium Asset Management

22) Weiss Multi-Strategy Advisors

23) 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, Carl Icahn, 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) Icahn Associates

3) Duquesne Family Office (Stanley Druckenmiller)

4) Bridgewater Associates

5) Caxton Associates (Bruce Kovner)

6) Tudor Investment Corporation

7) Tiger Management (Julian Robertson)

8) Moore Capital Management

9) Point72 Asset Management (Steve Cohen)

10) 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) Schneider Capital Management

15) Highfields Capital Management 

16) Eminence Capital

17) Pershing Square Capital Management

18) New Mountain Vantage  Advisers

19) Atlantic Investment Management

20) Scout Capital Management

21) Third Point

22) Marcato Capital Management

23) Glenview Capital Management

24) Apollo Management

25) Avenue Capital

26) Armistice Capital

27) Blue Harbor Group

28) Brigade Capital Management

29) Caspian Capital

30) Kerrisdale Advisers

31) Knighthead Capital Management

32) Relational Investors

33) Roystone Capital Management

34) Scopia Capital Management

35) ValueAct Capital

36) Vulcan Value Partners

37) Okumus Fund Management

38) Eagle Capital Management

39) Sasco Capital

40) Lyrical Asset Management

41) Gabelli Funds

42) Brave Warrior Advisors

43) Matrix Asset Advisors

44) Jet Capital

45) Conatus Capital Management

46) Starboard Value

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 LP

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) Tide Point 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) Impala Asset Management

61) Valinor Management

62) Viking Global Investors

63) Marshall Wace

64) York Capital Management

65) 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

37) Ecor1 Capital

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 Landon Dowdy takes a look at how some of the Street's biggest money managers are investing their funds.

Also, David Einhorn and Warren Buffett agree that Apple is a buy. I don't think you need to be Warren Buffett to figure that out but it's worth bearing in mind that Apple faces huge challenges ahead as iPhone sales dwindle (they better come out with something great for iPhone 7 this fall).

Interestingly, the Tiger Fund's Julian Robertson dissolved the hedge fund's stake in Apple; and Farallon Capital Management turned bearish on U.S. stocks, reports CNBC's Kate Kelly.

And according to the firm's 13F filing, hedge fund billionaire David Tepper is out of Apple and taken new positions in Facebook and Bank of America.

If you listen to CNBC, you'd think that Apple, Facebook and Alphabet (Google) are the only companies in the world! The coverage of 13F filings is just horrible. 

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