Top Funds' Activity in Q4 2014
Top U.S. hedge fund management firms, including David Einhorn's Greenlight Capital and Philippe Laffont's Coatue Management, reduced their stakes in Apple Inc during the fourth quarter, ahead of the iPhone maker's strong rally in 2015, according to regulatory filings.It's that time of the year again when everyone gets all hot and bothered dissecting the 13F filings of overpaid hedge fund gurus. Well, today you're in for a treat but first let's go over a few more articles.
Apple was a big winner in 2014, with its shares rising nearly 38 percent. The company's stock is up more than 16 percent year to date and reached an intraday record high of $128.88 per share. Last week, its stock market value rose above $700 billion, bigger than Switzerland's gross domestic product.
Although Apple is the biggest position in Coatue Management's portfolio, the firm sold 1.7 million shares at the end of the quarter, or more than 15 percent of its stake, leaving it with 8.9 million shares, according to a regulatory filing on Tuesday.
In a filing on Friday, Greenlight said it cut Apple holdings by 6.2 percent to 8.6 million shares during the quarter.
Eric Mandelblatt's Soroban Capital Partners sold 4.3 million Apple call options, liquidating the fund's position. And David Tepper's Appaloosa Management hedge fund said it had dissolved its stake in Apple, while Leon Cooperman's Omega Advisors sold 808,000 Apple shares to own 383,790 shares at the end of the fourth quarter.
Last week, billionaire activist investor Carl Icahn said the technology company's shares should be trading at $216 apiece, equivalent to a market capitalization of $1.26 trillion.
The actions by Greenlight and Coatue were revealed in quarterly disclosures of manager stock holdings, known as 13F filings, with the U.S. Securities and Exchange Commission. They are of great interest to investors trying to divine a pattern in what savvy traders are selling and buying.
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 on the long side.
The filings do not disclose short positions. 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 positions in the fourth quarter.
ABBVIE
Lee Ainslie's Maverick Capital liquidated its stake, selling 4.7 million shares in the drug maker after its planned merger with Shire was scuttled. John Paulson' Paulson & Co. also liquidated his position, selling 13 million shares.
ACTAVIS PLC
Coatue Management opened a new position, buying 964,155 shares, as drugmaker Actavis won a high-stakes battle to buy Botox maker Allergan Inc.
Daniel Loeb's Third Point upped its stake by 20 percent to 3.5 million shares. But Neil Chriss' Hutchin Hill cut its position by 13 percent, selling 17,201 shares to own 28.3 million at the end of the quarter.
Omega Advisors raised its stake by 237,100 shares to own 943,572 shares.
ALLERGAN,
Scott Ferguson's Sachem Head liquidated its position in the Botox-maker that was at the heart of a heated takeover battle run by William Ackman, Ferguson's former boss.
AGRIUM INC
Activist investor ValueAct bought 2.9 million shares of the Canadian fertilizer producer to own 8.2 million at the end of the quarter.
AMGEN INC
The biotechnology company is being pressured by hedge fund investor Daniel Loeb to break itself apart.
Alex Denner, who now runs Sarissa Capital after working for Carl Icahn, upped his stake by 165 percent to 50.6 million shares.
BAKER HUGHES INC
Farallon Capital Management bought 3.5 million shares, a new position, of the oilfield services company, which will be bought by rival Halliburton Co.
Activist fund ValueAct Capital took an even bigger new position, buying 14.9 million shares. ValueAct also took a 20.9 million-share stake in Halliburton.
Omega Advisors took a new stake in Baker Hughes of 65,500 shares and sold its entire 1.9 million-share stake in Halliburton.
BANK OF AMERICA CORP
John Burbank's Passport Capital, which made money this year by betting against energy exchange-traded funds, added a position in Bank of America, buying 2.8 million shares.
CITIGROUP
Leon Cooperman's Omega Advisors cut its stake in the bank by 915,200 shares to 4.2 million shares.
EBAY INC
Jon Jacobson's Highfields Capital raised its stake in online commerce company eBay by 39 percent by adding 1.8 million shares to own 6.5 million at the quarter's end. Third Point bought 5.5 million shares to own 10 million shares, while Omega Advisors raised its stake by 375,200 shares to 3.5 million shares.
FACEBOOK INC
Tiger Consumer cut its holdings in the online social network operator by 28 percent to 854,980 shares. Aaron Cowen's Suvretta Capital bought 629,600 shares, putting on a new position.
GENERAL MOTORS CO
Caxton Associates made a new bet, buying 1.2 million shares of the automaker.
Maverick adds a new position, having bought 659,237 shares.
LIBERTY GLOBAL PLC
Coatue raised its stake in the European cable operator by 34 percent, purchasing 1.4 million shares to own 5.6 million shares. Tiger Consumer sold 527,956 shares, giving it 1.5 million shares.
NETFLIX INC
Coatue cut its position by 13 percent, selling 287,415 shares to own 1.8 million shares. Tiger Consumer, however, opened a new position in the provider of on-demand Internet streaming services, buying 182,098 shares.
PACKAGING CORPORATION OF AMERICA
Activist investor Marcato Capital Management takes new position, buying 3.3 million shares.
RESTAURANT BRANDS INTERNATIONAL
Activist investor William Ackman's Pershing Square Capital Management buys 38 million shares in
TALISMAN ENERGY
Paulson & Co opened a new position, buying 70 million shares.
TESLA MOTORS INC
Highfields Capital took on a new position in the high-end electric car maker, buying 91,296 shares. Tesla shares fell late last year but climbed anew in early 2015.
SUNEDISON INC
Third Point nearly doubled its stake by buying 5 million shares to own 11.2 million. Omega Advisors increased its stake in the solar power company by 1.2 million shares to 9 million shares.
WALGREEN Co.
Andreas Halvorsen's Viking Global Investors added a new position in the drugstore chain, buying 18.9 million shares.
YAHOO INC
Passport Capital slashed its position by 81 percent, selling 6 million shares in the search engine company to own 1.4 million at the end of the quarter.
ZOETIS INC
The animal health company, which made headlines when activist investors William Ackman and Scott Ferguson bought big stakes, also saw new interest from other hedge funds. Highfields Capital bought 252,000 shares.
Kaja Whitehouse of the USA Today reports, Hedge fund billionaires bail on Alibaba:
Hedge fund billionaires Steve Cohen and David Tepper sold their entire stakes in e-commerce giant Alibaba last quarter, along with more than a dozen other hedge funds.Interestingly, Soros Fund Management took new positions in the energy sector in the fourth quarter, including stakes in Devon Energy Corp (DVN) and Transocean (RIG), two of the worst performing S&P 500 stocks in 2014, especially Transocean which was down a whopping 63% last year.
In all, 20 investors booted Alibaba from their portfolios by the end of December — including a whopping 19 hedge funds, according to data from financial research firm FactSet.
Their exit was fortuitously timed, allowing secretive hedge funds to avoid stock drops in January tied to disappointing earnings and concerns over a probe by a Chinese regulator into bribes and fake goods sold on the site.
Alibaba raised $25 billion last year in the biggest initial public offering in history. It’s stock, which trades on the New York Stock Exchange, is down 13.4% this year. The stock recently traded at $87.21 a share, up 0.04% from its previous close.
Cohen’s Point72’s Asia fund sold 500,000 shares. Tepper’s Appaloosa Management sold 725,000 shares, while Eric Mindich’s Eton Park sold 1.2 million shares.
Other hedge fund exits include Farallon Capital, which sold 530,800 shares, and Leon Cooperman’s Omega Advisors, which dropped 410,000 shares.
Of course, some hedge funds also bought shares of Alibaba over the same period for the first time ever, including Tiger Global Management, Tudor Investments and Och-Ziff Capital Management.
Investors that exited Alibaba were dominated by hedge funds, while new entrants to the stock included a wider array of investors, including mutual fund firm Janus Capital, which picked up 3.4 million shares. USAA Investment Management Co., which offers financial planning for military families, bought 428,802 shares.
Among hedge funds that bought for the first time was Chase Coleman’s Tiger Global, which added a whopping 5.8 million. Paul Tudor Jones’ Tudor Investments picked up 520,750 shares, while OZ Management, a unit of the publicly traded Och-Ziff Capital, bought 1 million shares.
Billionaire investor George Soros, meanwhile, kept his 4.4 million stake, worth $382 million, unchanged last quarter, according to FactSet.
Soros wasn't the only guru buying beaten down energy stocks in the fourth quarter. William Alden and Matthew Goldstein of the New York Times report, Seeing Value After a Plunge, Hedge Funds Bet on Energy Stocks:
A few hedge fund managers have been tiptoeing back into the beaten-down energy sector.
While many investors, including Warren E. Buffett, were selling energy stocks in the final three months of 2014, several hedge funds sought to profit on the turmoil, regulatory filings showed on Tuesday. Third Point, the firm run by Daniel S. Loeb, acquired a sizable stake in the oil refinery company Phillips 66, while Leon G. Cooperman’s Omega Advisors amassed a new position in Laredo Petroleum, and Viking Global Investors, led by Andreas Halvorsen, increased its stake in Cheniere Energy by several million shares.Nothing like having your old billionaire hedge fund boss seeding your new fund with a $200 million commitment. When Steve Cohen votes with his wallet, I pay attention, which is why I'm including the holdings of Melvin Capital in my long list of top funds I track (see below).
At the same time, other hedge funds reduced their holdings of technology stocks, including Apple and Alibaba, which had recently attracted investors in droves.
These moves, by some of Wall Street’s most prominent investors, were disclosed in filings with the Securities and Exchange Commission, providing a partial snapshot of hedge funds’ holdings as of the end of the year. The filings, submitted by a Tuesday deadline, shed some light on which companies and sectors were attracting the affection — or the skepticism — of the so-called smart money.
Investing in energy in recent months has required a strong stomach. The price of a barrel of crude oil, after trading around $100 in June, fell to about $43 in January, putting pressure on a range of oil and gas companies and funds that invested heavily in energy stocks. The filings show Mr. Buffett’s Berkshire Hathaway sold its 41 million shares of Exxon Mobil during the fourth quarter, while Greenlight Capital, David Einhorn’s hedge fund, sold its entire two million-share stake in the British oil giant BP. Barry Rosenstein’s Jana Partners sold its 3.4 million shares in the Apache Corporation, the oil and gas company.
To some hedge fund managers, the rout apparently provided an opportunity for bottom-fishing. Mr. Loeb’s Third Point acquired five million shares of Phillips 66, a stake worth $384.5 million as of Tuesday. Omega Advisors, meanwhile, acquired 2.1 million shares of Laredo Petroleum and 652,500 shares of Sanchez Energy Corporation. But at the same time, Omega sold about 29 percent of its big stake in SandRidge Energy, ending the quarter with 32.2 million shares.
ValueAct Capital, an activist hedge fund, acquired big new positions in Halliburton and Baker Hughes, two oil field services companies that agreed to a $34.6 billion merger in November. The two stakes, each worth more than $900 million, could make ValueAct a forceful advocate for the deal, which will be subject to shareholder votes in March.
While it is far from certain that these energy bets will pay off, some stocks in the sector are showing signs of improvement. Fairholme Capital Management, the fund founded by Bruce R. Berkowitz, bought a stake in the oil and gas company Canadian Natural Resources, whose shares fell 20.5 percent in the fourth quarter but are up 3.6 percent so far this year. Similarly, Eton Park Capital Management, which was started by a Goldman Sachs alumnus, Eric Mindich, bought shares of the natural gas producer EQT. That company’s stock fell 17.3 percent in the fourth quarter but is up 7.8 percent this year.
Some hedge funds showed caution in the technology sector. One longtime fan of Apple, Mr. Einhorn, who once took the company to court over a plan to eliminate preferred shares, reduced Greenlight Capital’s stake in Apple by about 6 percent, to 8.6 million shares, which were worth more than $1 billion as of Tuesday. Another hedge fund, Coatue Management, which focuses on technology, reduced its Apple holdings by about 15 percent, to 8.9 million shares, as of the end of 2014.
Appaloosa Management, David Tepper’s hedge fund, sold its entire 1.2 million-share stake in Apple, as well as its holdings in Facebook and the Chinese Internet giant Alibaba, which became a hedge fund darling after going public in September. Mr. Tepper’s move on Alibaba appears well-timed, since the stock fell this year after peaking in the fall. With Apple, however, Mr. Tepper and his rivals have been confounded by the stock’s rally so far this year.
These disclosures are limited in important ways. Backward-looking and static, they show only the holdings of United States-listed stocks at the end of the fourth quarter. And they do not include any short positions, or bets against particular stocks.
What’s more, any apparent trends among the hedge funds fail to capture the diversity of the moves. Mr. Loeb, for example, increased his fund’s existing stake in Alibaba during the quarter, while Mr. Einhorn acquired a new stake in Yahoo, an older technology giant. Greenlight Capital also bought 1.25 million shares of Green Dot, one of the nation’s largest sellers of prepaid debit cards. This month, Green Dot, as previously announced by the company, stopped selling its popular MoneyPak prepaid product over concerns about it being misused by online swindlers.
In addition to showing what stocks are getting attention, the filings help reveal how upstart hedge funds are mapping their strategies.
Among the most closely watched of these funds are those run by disciples of Steven A. Cohen, the head of the former SAC Capital Advisors. That firm pleaded guilty to securities fraud in 2013 and has since rebranded itself as Point72 Asset Management, a $10 billion family office that manages mainly Mr. Cohen’s personal fortune.
Gabriel Plotkin, who was one of the top portfolio managers at SAC, set out on his own last year, raising about $1 billion, including a $200 million commitment from Mr. Cohen, for his own hedge fund, Melvin Capital Management.
And Mr. Plotkin did not waste much time putting that money to work, taking positions in more than 40 stocks with an estimated value of $900 million, according to the fund’s regulatory filing. Mr. Plotkin specialized in investing in consumer stocks at SAC, and Melvin Capital appears to be no different, with the fund buying stakes in Amazon.com, the Del Frisco’s Restaurant Group, Deere & Company, Dick’s Sporting Goods, Foot Locker and Yum Brands.
Other relatively new hedge funds led by former disciples of Mr. Cohen are Aaron Cowen’s Suvretta Capital Management and Jason Karp’s Tourbillon Capital Partners. In the fourth quarter, Suvretta reported selling a 467,000-share position in Anadarko Petroleum and a 223,890-share position in Ashland, a specialty chemical company. The fund acquired a new 629,600-share position in Facebook in the period.
Tourbillon, in the fourth quarter, purchased a new 1.45 million share stake in Applied Materials and increased its stake in Cheniere Energy by about 630,000 shares. The fund exited a 280,000-share position in Zebra Technologies.
While betting big on energy might pay off, Svea Herbst-Bayliss of Reuters reports that a few other well-known hedge fund gurus exited tumbling energy shares late last year:
Prominent investors ranging from Leon Cooperman and Steven A. Cohen have long liked exploration and production companies, but when tumbling oil prices wreaked havoc on their share prices late last year, hedge fund billionaires scrambled for the exits.What else? Forbes reports that a growing number of hedge funds are taking stakes in paper stocks for the next round of tax maneuvering but that might end up being another flop as some paper companies are reporting terrible earnings.
Regulatory filings made with the Securities and Exchange Commission detailing what Wall Street's savviest investors owned at the end of the fourth quarter paint a mixed picture. Some hedge funds dumped all of their holdings while others hedged their bets by getting rid of some but not all of their investments in companies involved in the high-risk but potentially high-reward business of finding and producing oil and gas.
For example, Leon Cooperman's Omega Advisors, long considered one of the industry's top stock pickers, liquidated its entire 3.7 million share investment in Denbury Resources Inc (DNR) during the three months, when its stock price dropped 44 percent, a filing with the Securities and Exchange Commission showed.
But at SandRidge Energy Inc (SD), where Omega ranked as the third-largest investor at the end of 2014, Cooperman cut only 29 percent of his position, selling 13 million shares to own 32 million.
Last year Omega Advisors fell 2.13 percent, according to a person familiar with his numbers. Hedge funds, on average, gained 3 percent, research firm Hedge Fund Research reported. Omega's performance got off to a rocky start in January 2015 with losses, but keeping some exposure to SandRidge was a good call as the stock has climbed nearly 30 percent since Jan. 1.
Meanwhile Cohen's Point72 Asset Management, which invests Cohen's roughly $10 billion personal fortune, slashed its investment in natural gas producer Range Resources Corp (RRC) by 65 percent during the fourth quarter as its stock price dropped 20 percent.
The stock is off roughly 2 percent this year and the company plans to cut its capital budget for the current year because of falling commodity prices.
Halcon Resources Corp (HK), whose share price fell 54 percent during the fourth quarter, also said it was cutting its capital budget for 2015 to conserve cash and avoid a fire sale to a rival.
Several prominent investors, including Rainier Investment Management and Regiment Capital, adjusted their portfolios late last year. Rainier liquidated its 2.5 million share-stake in Halcon, according to a filing. It also sold its interest in oil services company Halliburton Co. (HAL), which is buying rival Baker Hughes Inc (BHI).
Regiment Capital meanwhile made only a small adjustment by selling 50,085 shares of Halcon, cutting its stake by 2 percent, the filing shows.
Cimarex Energy Co (XEC), whose share price dropped 16 percent during the last quarter but has risen 6 percent this year, has attracted some buying interest.
During the fourth quarter, Diamond Hill Capital Management increased its investment in Cimarex by 16 percent to 3.1 million shares. But Senator Investment Group liquidated its investment, selling 1.9 million shares.
You can read many more articles on 13-F filings on Reuters, Bloomberg, CNBC, Forbes 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.
Inan Dogan of Insider Monkey wrote an interesting comment on the 50 stocks that matter most to hedge funds going over Goldman's "hedge fund VIP list."
My advice to all of you is to ignore this list altogether. Why? Because there's a lot of group think in hedge funds (they're being covered by the same investment banks) and when they're all chasing the same stocks, you can easily get burned following their moves.
As far dipping into energy stocks, you can benefit from powerful countertrend rallies but don't overstay your welcome. It really all depends on whether you think the U.S. can lead the world out of global deflation. As I explained in my Outlook 2015, I still see a melt-up in stocks but you have to pick your stocks and sectors carefully:
In this environment, investors should overweight small caps (IWM), technology (QQQ or XLK) and biotech shares (IBB or XBI) and keep steering clear of energy (XLE), materials (XLB) and commodities (GSG). And even though deflationary headwinds will pick up in 2015, I'm less bullish on utilities (XLU) and healthcare (XLV) because valuations are getting out of whack after a huge run-up last year.I can tell you the Baker Brothers purchased 5,333,333 shares of Idera (IDRA) last Friday at a price of $3.75 a share for a total transaction value of $19,999,998.75, which is one reason the stock surged higher. This is one of my favorite small biotech companies along with others listed above.
One of my favorite sectors remains small cap biotechs which are going to outperform once again in 2015. The ALPS Medical Breakthroughs ETF (SBIO) debuted on the market last Wednesday, but my eyes are glued on many small biotech shares, including the ones below courtesy of the Baker Brothers, Fidelity, Perceptive Advisors and others (click on image - updated 08-01-15):
But I warn you, small cap biotechs are extremely volatile and very risky, especially if all you do is chase momentum names (you'll get destroyed!). Last year, I had to stomach insane volatility but I kept my cool, carefully adding to my biotech positions during the big unwind, and had a spectacular year listening to my inner voice and knowing when to go for the kill (ie. when to buy those huge biotech dips!).
And if my prediction of another melt-up in the stock market pans out, it will be led by tech and biotech shares which were on fire in 2014. This is where I see most of the action in 2015 as a nascent biotech bubble forms.
And a perfect example of chasing momentum names is the whacky price action on Rosetta Genomics (ROSG) and especially Genetic Technologies (GENE) which ran up like crazy lately but the laws of gravity seem to have finally caught up to them (click on image):
These are medical laboratory stocks, which like medical devices, also benefit from aging demographics but when you see insane pops like this, you know some big funds like Fidelity are either buying in or more likely, some hedge funds are playing the old pump and dump game (either way, never chase stocks that run up like crazy, wait for them to settle down).
I love stocks, especially in this environment which is as good as it gets for experienced equity traders. With all the QE central banks have engaged in, there is so much liquidity in the global financial system that will propel stocks and risk assets much higher, even if the Fed makes a monumental mistake and starts raising rates in June.
And I'll give you four tech stocks where you could have made a lot of money just playing their earnings over the past month: Apple (AAPL), Cisco (CSCO), Twitter (TWTR) and FireEye (FEYE). I particularly like the latter two names and think they have more upside ahead in the coming year.
In fact, I told my friends and readers to buy the dip on Twitter and as far as FireEye, it's part of a hot group of companies focusing on cyber security (click on image):
And FireEye is a textbook example of a stock that based for a long time and is finally breaking out. This is why I don't particularly get hung up on what the gurus are buying.
I've built a large database over the years and keep adding to it every single day. I screen various stocks and see which ones are overbought/oversold or if there is relative strength/weakness in a particular sector and 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.
Do I use the information provided in 13F filings? Yes but I'm careful and want to see if top funds are adding to their positions after buying a dip. I also use technical indicators and often buy dips of stocks when they go down for no apparent reason (classic bear raids).
This brings me to a very important point. Your head can explode trying to track the moves of all these hedge fund gurus. David Benoit of the Wall Street Journal reports, The Hedge Funds Whose Stock Picks Are Actually Worth Following:
As investors pore over the quarterly disclosures of big name hedge funds Wednesday, it may be worth knowing which funds are actually the best stock pickers.I actually had a chance to talk to Sam Abbas at Symmetric and he's a very smart guy with an interesting background. He studied under the Nobel laureate Daniel Kahneman at Princeton and set up a prop trading firm with someone before moving on to set up Symmetric with someone else.
That’s the goal of Symmetric, a recently launched service that is tracking more than 1,000 hedge funds to find those that select the best individual investments compared to the broader market. Symmetric put out its latest ranking on Wednesday based on the disclosures from hedge funds of their fourth-quarter holdings, which were due at the SEC by Tuesday night.
The list of the 20 best stock pickers is based on how well the hedge fund selected stocks that beat their sector benchmarks. Symmetric weighs how well the funds do over recent quarter, year and three years and looks to find consistency, for instance, penalizing funds that maybe have up and down periods.
Based on the most recent filings and performance metrics, the best pickers include such big names as Starboard Value LP, Pershing Square Capital Management LP, Coatue Management LLC and Viking Global Investors LP.
There are also a host of smaller names, including V3 Capital Management LP, which only discloses holding $320 million in assets, Makaira Partners LLC and Archon Partners LLC.
Every quarter, investors who manage over $100 million are required to disclose their holdings. These filings, known as 13Fs, often generate buzz around which names are popular among the best money managers and which aren’t. In Symmetric’s rankings, Spirit AeroSystems Holdings (SPR) and Netflix (NFLX) provided big boosts to the funds that held them.
Here are the Top 20 Symmetric stock pickers, ordered by how well they’ve done over the past three years on an annualized basis. (Click image; See the whole report here.)
Sam explained to me that they delve deeply into over 4000 hedge funds and do rigorous performance attribution analysis to see how they perform relative to a market, sector and dollar neutral portfolio.
This is the type of analysis that I wish I had when I was investing in L/S Equity managers at the Caisse. It would have really helped me track which funds are adding real alpha as opposed to the ones who are becoming glorified asset gatherers.
I think all pension funds, sovereign wealth funds and family offices should contact Sam (SimnanAbbas@symmetric-info.com) and get informed on how they can use their analysis to make more informed decisions in their hedge fund portfolios or simply use the data to take outsized positions in stocks, avoiding paying 2 & 20 in fees altogether.
Having said this, I still think most pensions are better off heeding the wise advice of George Soros and getting the out of hedge funds altogether. Soros fired many of his outside managers for poor performance and so should you (he might want to contact Sam as well).
Also worth noting many top hedge funds are now moving out of the U.S. market and many are betting big on a Greek recovery which is risky but can pan out in a huge way. Just look at the recent price action on the National Bank of Greece (NBG) and Global X FTSE Greece 20 ETF (GREK).
In fact, NBG is exploding up on Friday as it looks increasingly like Greece and Germany will sign a deal, maybe as soon as tonight (click on image):
On that note, have fun peering into the portfolios of top funds below. I cover a lot of funds, not just hedge funds. By the way, that handsome and distinguished fella talking on his cell phone above is Andreas Halverson, founder of Viking Global, one of my favorite L/S Equity hedge funds and one of the best hedge funds in the world.
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
39) Eagle Capital Management
40) Lyrical Asset 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) Cadian Capital Management
51) Matrix Capital Management
52) Senvest Partners
53) Falcon Edge Capital Management
54) Melvin Capital Partners
55) Portolan Capital Management
56) Proxima Capital Management
57) Tourbillon Capital Partners
58) Valinor Management
59) Viking Global Investors
60) York Capital Management
61) 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) Palo Alto Investors
3) Broadfin Capital
4) Healthcor Management
5) Orbimed Advisors
6) Deerfield Management
7) Sarissa Capital Management
8) SIO Capital Management
9) Sectoral Asset Management
10) Oracle Investment Management
11) Perceptive Advisors
12) Consonance Capital Management
13) Camber Capital Management
14) Redmile Group
15) RTW Investments
16) Bridger Capital Management
17) Southeastern Asset Management
18) Bridgeway Capital Management
19) Cohen & Steers
20) Cardinal Capital Management
21) Munder Capital Management
22) Diamondhill Capital Management
23) Tiger Consumer Management
24) Geneva Capital Management
25) Criterion Capital Management
26) Highland Capital Management
27) SIO Capital Management
28) Tang Capital Management
29) 12 West 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
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
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 outlines some of the most profitable bets made by Wall Street's whales in the fourth quarter. Kelly also discusses the best performing hedge funds in the fourth quarter.
Also, institutional investor Michael Peltz shares the list of the top performing hedge funds of 2014, with CNBC's Kate Kelly. Don't forget to read my comment on the best and worst hedge funds of 2014 which covers a broad gamut of strategies.
Lastly, much has been made about Wal Mart increasing wages of it over one million employees. Jan Kniffen, CEO, J. Rogers Kniffen Worldwide Enterprises, and Tsedeye Gebreselassie, National Employment Law Project, discuss whether Wal-mart's move to increase wages is really enough, particularly in light of the rise in cost of living and how much money the company make.
So, a special message to all you grossly overpaid hedge fund gurus. I read an article on how the king of real estate, Blackstone's Jonathan Gray is helping build charter schools in Harlem. You should follow his and Blackstone co-founder's lead and invest more of your precious time in philanthropy and less time trying to make Forbe's or Bloomberg's silly list of the richest hedge fund titans.
Take it from a guy who has battled multiple sclerosis for close to 20 years, there is a lot more to life than fame and extraordinary wealth. Health and your loved ones are everything and if you're successful, you should thank God and give back to those less fortunate.
On that note, please remember to support my efforts by subscribing or donating via PayPal at the top right-hand side of my blog. I love writing these comments but please support my tireless work via a financial contribution. It is always greatly appreciated.
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