Top Funds' Activity in Q1 2016
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.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.
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.
ALLERGAN PLC
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.
AMERICAN INTERNATIONAL GROUP
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.
ALPHABET INC
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.
AMAZON.COM INC
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.
BANK OF AMERICA CORP
Jana Partners took a new stake of 750,000 shares.
BAXTER INTERNATIONAL INC
Jana Partners sold entire stake of 5.7 million shares.
ENDO INTERNATIONAL PLC
Sachem Head added a new position, buying 2.46 million shares.
FACEBOOK INC
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.
J.C. PENNEY COMPANY
The retailer saw its stock price surge 66 percent during the first quarter. Davidson Kempner sold its holding of 1 million shares.
JPMORGAN CHASE & CO
Omega Advisors sold its entire stake of 1.1 million shares.
KATE SPADE & CO
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.
LIBERTY GLOBAL PLC
Jana Partners sold its entire stake of 5.9 million Class C shares.
MCDONALD'S CORP
Suvretta Capital exited its position, selling 825,900 shares.
MICROSOFT CORP
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.
MYLAN
Sachem Head liquidated its entire position, selling 3.35 million shares.
PFIZER INC
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.
QUALCOMM INC
Jana Partners sold its entire stake of 9.2 million shares.
UNITED RENTALS
Blue Mountain Capital added 106,011 shares.
VALEANT PHARMACEUTICALS INTERNATIONAL
Jana Partners sold its entire stake of 1.6 million shares.
WENDY'S CO
Davidson Kempner liquidated its position, selling 1.97 million shares.
ZOETIS INC
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.
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.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).
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.
SOARING PRICES
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.
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).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.
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.
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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