Top Funds' Activity in Q1 2017

David Randall and Svea Herbst-Bayliss of Reuters report, Large hedge funds moved out of financial stocks in first quarter:
Several big-name hedge fund investors trimmed their stakes in financial companies in the first quarter as hopes for immediate tax cuts and loosening of regulations after President Donald Trump’s victory in November began to fade.

Boston-based Adage Capital Management cut its position in Wells Fargo & Co, which has come under fire for its sales practices, by 3.9 million shares, according to regulatory filings, while John Burbank’s Passport Capital cut its stake in the company by 947,000 shares.

Third Point cut its stake in JPMorgan Chase & Co by 28 percent, to 3.75 million shares, while Suvretta Capital Management sold all of its shares of Morgan Stanley, JPMorgan Chase and Citigroup Inc.

Overall, financial companies in the S&P 500 were up 2.1 percent in the first quarter, compared with 5.5 percent for the index as a whole. Financials significantly outperformed the broad market following Trump's Nov. 8 election.

Trump had pledged to do a "big number" on the landmark Dodd-Frank financial reform law, which raised banks’ capital requirements and restricted their ability to make speculative bets with customers’ money. The Treasury Department is still filling vacancies and will not be able to complete a review of the law by Trump’s June deadline, sources told Reuters.

Quarterly disclosures of hedge fund managers' stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of tracking what the managers are selling and buying. But relying on the filings to develop an investment strategy comes with some risk because the disclosures come out 45 days after the end of each quarter and may not reflect current positions.

Bank of America Corp was one of the few large banks to gain favor among hedge fund investors in the first quarter. David Tepper’s Appaloosa Management took a new stake in the company, buying 8.7 million shares, while Dan Och’s Och-Ziff Capital Management added 12.78 million shares, increasing its position by 156 percent.

Separately, several hedge fund managers added new positions in media companies. Tiger Global bought 429,000 shares of Netflix Inc. Shares of Netflix are up 29.2 percent for the year. Omega Advisors, which is facing a U.S. Securities Exchange Commission insider trading case, added positions in Netflix, AMC Networks Inc and Sinclair Broadcast Group Inc.

Tiger did, however, halve its position in Google parent Alphabet Inc, whose shares are up 21 percent since Jan. 1.
Brandon Kochkodin and Sabrina Willmer also report, Here's Where Hedge Funds Invested in the First Quarter:
The favorite new bets by hedge funds ranged from the predictable Facebook Inc. to the less known VCA Inc., a pet-service provider.

Many companies attracting the most hedge fund money in the first quarter have either agreed to deals or closed them. Dow Chemical’s $78 billion merger with DuPont Co. is expected to close in August. Liberty Media Corp. purchased Formula 1 in January, Mead Johnson Nutrition Co. agreed to buy Reckitt Benckiser Group during the first quarter, and T-Mobile US Inc. has been in preliminary talks to merge with Sprint Corp.

Hedge funds also showered love on new media, Snap Inc., whose shares have been on a roller coaster, and the old, Time Warner Inc. What’s more, managers applauded the planned shakeup at railroad CSX Corp., and are relieved that the Trump administration’s efforts to build a wall at the border with Mexico, from where Constellation Brands Inc. imports much of its beer, has stalled (click on image).

Jeff Cox of CNBC also reports, Hedge funds have been selling big winners this year:
Hedge fund managers' most popular stock to start the year has been a familiar name that is falling short in terms of performance, while the least popular companies all have been crushing the market.

Procter & Gamble pulled in nearly $2.7 billion in hedge fund cash during the first quarter, nearly double the next most popular stock, according to figures released this week from S&P Global Market Intelligence.

Nelson Peltz's Trian Management was solely responsible for the gush of interest thanks to the $3.5 billion stake it took in the company back in February. Otherwise, P&G actually saw outflows.

The huge flows came even though the company has fallen short compared with the broader market. P&G shares are up just 2.9 percent year to date. The stock did outperform in the first quarter, gaining 6.4 percent to the S&P 500's 4.6 percent, but has fallen off lately.

Shares also outperformed the broader consumer staples sector in Q1 but have fallen behind in that regard as well.

Other hedge fund favorites during the first quarter were Praxair and Marriott International ($1.4 billion each combined in increases and new positions), both of which have been stellar performers, as well as Constellation Brands ($859 million) and Formula One ($765 million).

Among the stocks that had fallen the most out of favor in terms of outflows, the top two are head-scratchers: Microsoft and Amazon, which have seen declines in hedge fund investments of $1.6 billion apiece. The former is up more than 9 percent year to date, easily beating the market, while Amazon has roared more than 23 percent higher.

Other big exits came from Autodesk (-$913 million), Safran (-$898 million) and Charter Communications (-$732 million). Each company has beaten the S&P 500 easily this year.

Hedge funds broadly this year are up 3.1 percent, as gauged by the HFRI Fund Weighted Composite Index. That compares with the 7.2 percent total return for the S&P 500 through April.

Due to Peltz's P&G investment, the first quarter was stellar for consumer staples, which easily outdistanced the other S&P 500 sectors.
You can read more articles on 13-F filings on Barron's, Reuters, Bloomberg, CNBC, Forbes and other sites like Insider Monkey, Holdings Channel, and whale wisdom.

Interestingly, Insider Monkey now compiles a list of top 100 hedge funds based on tracking their long positions on each quarterly 13-F filing. This list can be found here.

Below, a small sample of articles covering Q1 activity (click on the links to read articles):
Hedge funds crushing it? Some are but most of them are getting crushed in a brutal market and if my worst fear of global deflation materializes, a lot of hedge funds superstars are going to close shop.

It really is a brutal environment for a lot of top hedge funds. For example, John Burbank's fund Passport Capital is nursing fresh losses as assets shrink. And he's not the only one struggling in this environment.

Bill Ackman who got killed on Valeant Pharmaceuticals just came out to say 2-and-20 doesn’t work anymore for hedge funds. In an effort to garner support from institutional investors fed up with his lousy performance, his fund adjusted its fee structure last year so that clients only pay on profits in excess of 5 percent (a noble move but pretty much a marketing ploy after suffering terrible losses).

The only hedge funds that are delivering consistent returns in these markets are quant funds taking over this world. This is why they're once again at the very top of alpha's rich list.

Anyway, below I provide you with a list of top funds, not just hedge funds, and you can take your time to carefully go over their Q1 holdings.

How do you do this? Just click on the link to the fund and it will take you to the NASDAQ site which covers their latest holding.

For example, earlier this week I went over why Bridgewater's Ray Dalio is worried about the big picture and finished that comment by looking at his fund's stock holdings as of the end of March:
By the way, since I'm talking about Bridgewater, I can share with you that fund's top positions as of the end of March (click on image):

And where the fund significantly upped its stakes in Q1 (click on image, you need to click on the column heading, Change % )

As always, please remember this data is lagged and unless you're a professional trader and investor, don't bother buying or selling any stock based on top funds' 13-F filings. If you don't know what you're doing, you will get burned, and even these top funds get burned in these markets.

Case in point, check out shares of Express Scripts Holding Company (ESRX), a top holding of Bridgewater and many other top quantitative hedge funds which increased their position in Q1 as the shares declined (click on image):

Now, when you have Bridgewater, Blackrock, Renaissance Technologies and Two Sigma all significantly increasing their stake in a company as shares drop in price, it's typically a good sign but it doesn't mean the pain has ended as they all lost money on this trade (we don't know if they're adding now or dumped it).
Again, the data are lagged, we don't know whether these funds dumped shares, especially large quant funds which churn their portfolios many times throughout the quarter, but it gives you an idea of what to look for when trying to figure out which stocks to buy and sell.

In the hands of expert traders and top hedge funds and long-only active managers, this information is very useful, especially when seeing funds take concentrated positions in stocks that have declined significantly and continue to decline.

But in these markets, anyone can get burned including top funds, so you need to manage risk 100 times more carefully, or accept huge volatility if you're going to take concentrated positions in stocks.

Still, there is a lot of great information here if you know how to use it to take intelligent stock specific risk. Let me show you what I mean. One of the tech stocks I have been tracking is Akamai Technologies (AKAM).

Shares of Akamai have been hit hard this year and the stock is at a very interesting level in terms of its weekly chart (click on image):

Here you will notice the price of Akamai hit its 400-week moving average this week, which tells me shares are extremely oversold on a weekly basis. Typically, this is a beautiful buy-the-dip setup for this company (in the past, that's when you needed to load up).

I went and looked at the top holders of Akamai and saw the familiar asset manager and mutual fund giants (Blackrock, Fidelity, Wellington, Capital Research, etc.) but also well-respected alpha shops like AQR Capital Management which increased its stake in Q1 as shares declined (click on image):

I then clicked on the column heading (Change %) to see who increased their holdings significantly in Q1 (click on image):

Here you will notice two well-known hedge funds -- Highbridge Capital Management and Citadel -- significantly increased their stake in Q1 as shares declined.

Now, I'm not telling you to go out and buy shares of Akamai Technologies (AKAM) based on the little information I provided you above, but from a risk-reward perspective, these are the setups I love to swing trade and this is why I keep telling you, smart funds know how to take smart risks.

What else? From looking at the top holdings of Soros Fund Management, I noticed his fund significantly increased its stake in Trip Advsiror (TRIP) as shares declined. I then looked at the top holders of Trip Advisor, and clicked on the Change % column to see who else signifcantly added as shares delined (click on image):

Lo and behold, Two Sigma, a top quantitative hedge fund run by John Overdeck and David Siegel, also increased its stake in Trip Advisor as shares declined (click on image):

Now, that is not a bullish chart by any means and I don't know what is going on with this compamy but I'm bringing it to your attention to demonstrate 1) top funds aren't always right and/ or 2) top funds might see a turnaround before others do so keep it on your watch list as a possible turnaround candidate.

What else? I love the biotech sector, especially small to mid size biotech shares (XBI) and regularly track top biotech funds for individual company ideas. However, it's a very volatile sector and definitely not for the faint of heart, especially when investing in individual biotech shares.

Still, volatility presents opportunities for swing trades and some of the top biotech funds like Perceptive Advisors really made great moves in Q1 adding to shares of Alnylam Pharmaceuticals (ALNY) and La Jolla Pharmaceutical (LJPC) and as shares declined (click on images):

Other top biotech funds you will find below also made some excellent and some not so excellent moves in Q1. Again, this sector is very volatile (biotech is binary), so it has its share of hits and blowups.

I can show you other interesting opportunities but it takes a lot of time for me to write these long comments and painstakingly go through each setup and why it makes sense to take stock specific risks in one case and not in another (don't buy every dip blindly, most of the times you will get killed!).

What I can tell you is analyzing markets and stocks is a passion of mine. 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 and I have a list of stocks I track in over 100 industries/ themes to see what is moving in real time.

Lastly, in a recent comment of mine on the pension storm, I provided you with my macro thoughts:
[...] given my views on the reflation chimera and a potential US dollar crisis later this year or next year despite the recent selloff, I would be actively shorting emerging markets (EEM), Chinese (FXI), Industrials (XLI), Metal & Mining (XME), Energy (XLE) and Financial (XLF) shares. The only sector I like and trade now, and it's very volatile, is biotech (XBI) but technology (XLK) is also doing well, for now.

But as I stated plenty of times before, if you want to sleep well, buy US long bonds (TLT) and thank me later this year. In this environment, US bonds are still the ultimate diversifier and will save your portfolio from huge losses.

Despite the James Comey selloff today, I foresee very choppy markets this summer. Still, the risks of a reversal are high, so be prepared for a downturn and hedge your portfolio accordingly.

Of course, if quant funds have their way, we will see another melt-up like 1999-2000 where stock prices go parabolic. If that happens, the risks of a bigger downturn down the road will be magnified.
These are crazy markets but I see plenty of opportunities out there if you know how to take intelligent risks. The good news is that as this bull market matures, top stock pickers will be in high demand.

On that note, have fun going through the holdings of top funds below but be careful, things are constantly changing and even the best of breed managers find it tough making money in these schizoid markets.

I added a few funds to the list below, including hedge funds that are crushing it.

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) Weiss Multi-Strategy Advisors

21) 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 across fixed income, currency, commodity and equity markets.

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) Pointstate Capital Partners 

6) Caxton Associates (Bruce Kovner)

7) Tudor Investment Corporation

8) Tiger Management (Julian Robertson)

9) Moore Capital Management

10) Point72 Asset Management (Steve Cohen)

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

12) Joho Capital (Robert Karr, a super succesful Tiger Cub who shut his fund in 2014)

Top Market Neutral, Quant and CTA Hedge Funds

These funds use sophisticated mathematical algorithms to make their returns, typically using high-frequency models so they churn their portfolios often. A few of them have outstanding long-term track records and many believe quants are taking over the world. 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

12) PDT Partners

13) Princeton Alpha 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 (the one-man wealth machine)

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) Gabelli Funds

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) Schneider Capital Management

36) ValueAct Capital

37) Vulcan Value Partners

38) Okumus Fund Management

39) Eagle Capital Management

40) Sasco Capital

41) Lyrical Asset Management

42) Gabelli Funds

43) Brave Warrior Advisors

44) Matrix Asset Advisors

45) Jet Capital

46) Conatus Capital Management

47) Starboard Value

48) Pzena Investment 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) 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 (it shut down again, for now)

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) Park West Asset Management

55) Melvin Capital Partners

56) Owl Creek Asset Management

57) Portolan Capital Management

58) Proxima Capital Management

59) Tiger Global Management

60) Tourbillon Capital Partners

61) Impala Asset Management

62) Valinor Management

63) Viking Global Investors

64) Marshall Wace

65) Light Street Capital Management

66) Honeycomb Asset Management

67) Whale Rock Capital

70) Suvretta Capital Management

71) York Capital Management

72) 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) Boxer Capital

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) Southeastern Asset Management

34) Sphera Funds

35) Tang Capital Management

36) Thomson Horstmann & Bryant

37) Venbio Select Advisors

38) Ecor1 Capital

39) Opaleye Management

40) NEA Management Company

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 (Bill Miller)

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

37) Brandywine Global

38) Brown 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 Leslie Picker reports on what hedge funds have been buying and selling. Mark Spellman, Alpine Funds, weighs in. And is tech too crowded? The "Fast Money" traders weigh in on hedge funds betting big on tech stocks.

As always, if you enjoy reading my comments, please remember to kindly contribute to this blog on the top right-hand side (under my picture) using PayPal. I thank all of you who take the time to contribute to this blog, it's greatly appreciated.