Top Funds' Activity in Q4 2017
Billionaire David Tepper’s Appaloosa Management more than tripled its stake in Apple Inc. and almost doubled its holding of Facebook Inc. in the final three months of last year.It's that time of the year where we get a sneak peek into the holdings of top funds, lagged by 45 days.
Appaloosa reported shares in Apple worth $777 million as of Dec. 31, which represented 7.4 percent of the hedge fund firm’s U.S. stock holdings, according to a regulatory filing Wednesday. Tepper added to his stake in Facebook, his second-biggest position, by more than 2 million shares. That position was valued at $976 million at the end of the fourth quarter.
The FAANG stocks have posted mixed performance this year. Apple is down about 1 percent, while Amazon.com Inc. and Netflix Inc. have soared.
Other big names also expect that the two tech darlings have more room to run. Louis Bacon’s Moore Capital Management added 900,000 shares of Apple, boosting its holding to about $200 million, according to filings. Chase Coleman’s Tiger Global Management pumped up its position in Facebook.
Stephen Mandel’s Lone Pine Capital added a $900 million wager on Amazon snapping up 770,000 shares in the fourth quarter of 2017. The online retailer accounts for nearly 5 percent of the hedge fund’s U.S. stock holdings. The hedge fund firm also started a $625 million stake in Alphabet, buying up about 598,000 shares in the fourth quarter. Meanwhile, it reduced its Facebook position, selling about 632,000 shares of the company.
Some prominent hedge funds retreated from the FAANGs in the fourth quarter.
Philippe Laffont’s Coatue Management, which rode the FAANG wave last year, sold 2.84 million shares of Apple, bringing the value of its holding to $730 million as of Dec. 31. In September, Laffont called the new iPhone X “groundbreaking” but its sales have since disappointed. The firm also reduced its Facebook position by 1.71 million shares, according to regulatory filings Wednesday.
Tiger Global dumped 1.3 million shares of Netflix, leaving it with a stake worth $337 million, and trimmed its Amazon position. Maverick Capital, run by Lee Ainslie, reduced its Facebook and Alphabet Inc. stakes.
From the large, well-known hedge funds, Chase Coleman's Tiger Global just had an astounding year, gaining 50% on its long positions but losing 19% on its shorts:
As Charles “Chase” Coleman looks back on 2017, with his hedge fund Tiger Global up 50% on long exposure but down 19% on the shorts, he has no regrets, sort of.According to Bloomberg, Mr. Coleman's fund also recently amassed a stake of about $1 billion in Barclays Plc, according to a person with knowledge of the hedge fund’s investment:
“TGI’s hit rate on its long positions was the highest ever in our 17-year history and the portfolio generated four times as much profit from its three largest gainers as it lost on its three worst performing positions,” he told investors in year-end review letter reviewed by ValueWalk ( the letter is dated January 31st, 2018). “On the short side of the portfolio, we felt similarly good about our research process in 2017, but the outcomes were more frustrating. Our short portfolio consists largely of businesses we believe are on the wrong side of change, frauds, and cyclical assets that are over-earning and trading at peak multiples.”
The New York-based firm’s holding now amounts to about 2.5 percent, the person said, asking not to be identified as the investment hasn’t been publicly disclosed. The purchase makes Tiger Global a top 10 investor in Barclays, the person said. It would be the seventh largest holder, according to data compiled by Bloomberg.Smart money buys shares when opportunities arise. Warren Buffett’s Berkshire Hathaway Inc (BRK-A) on Wednesday disclosed a new stake in generic drugmaker Teva Pharmaceutical Industries Ltd (TEVA) and said it bought more shares of Apple Inc (AAPL), which surpassed Wells Fargo & Co (WFC) as its largest common stock investment.
A spokesman for Barclays declined to comment, while officials for Tiger Global in New York could not be reached outside regular business hours on Monday. The Financial Times reported Tiger Global’s investment earlier.
Tiger Global, headed by former Julian Robertson protege Chase Coleman, bought some of its stake in Barclays when the bank’s shares slumped to a 52-week low of less than 180 pence in November, the person said. The investment comes amid Barclays Chief Executive Officer Jes Staley’s strategy to focus on the firm’s U.S.-led investment bank and its U.K.-based consumer banking operation.
I've discussed Teva Pharmaceuticals a few times on this blog, noting that David Abrams, Jonathan Jacobson, Ken Griffin and other top managers bought big stakes before and after shares plunged in Q4 (click on image):
You can see a list of Teva's top institutional holders here
Now, full disclosure: After some initital reticence, I listened to my friend in Trois-Rivières, Quebec and bought Teva's shares at $14 after the big plunge. I see more upside and have yet to sell but that can change depending on many factors.
Why was I hesitant? Because I typically don't buy broken charts and huge dips on any stock but when I saw David Abrams and Highfields’ Jonathan Jacobson -- two deep value gurus -- buying a big stake back in Q3 before the big plunge, I inititiated a position after the big dip in Q4 and added to my shares. This week's Berkshire announcement was icing on the cake.
But I'm constantly looking at stocks, hundreds and thousands of stocks and while I'm making great money on Teva shares, I kicked myself for not holding a huge position in Mirati Therapeutics (MRTX) when it was trading at $5 (click on image):
That's the type of chart I like, a big dip, huge consolidation over many months, and then "BAM!", breakout to the upside and making new highs.
And if you look at the top institutional holders of Mirati here, you won't find Warren Buffett and other deep value gurus, but some great biotech funds I track regularly every quarter (see links to all of them below).
Why am I bringing this up? Because when I told you it's time to take a closer look at hedge funds, I wasn't just referring to the large, well-known funds, I was also referring to smaller funds that crushed it in 2017, like Joseph Edelman's Perceptive Life Sciences fund which surged 43 percent last year (that's him at the top of this comment).
Edelman’s Perceptive Advisors and a few other top biotech funds have been generating incredible returns, above and beyond the biotech indexes, and they are part of a new generation of highly specialized sector managers who really know their stuff (still, in biotech, for every home run, you're going to have a few bombs, and even Perceptive has had its share).
I mention this because it's important to look at some of the smaller funds that are delivering alpha. For example, CNBC used data from hedge fund tracking firm Symmetric.io to find the top 10 managers and their biggest bets, according to recent filings. Take the time to read this article here.
Whatever you do, stop chasing after Chase Coleman and other large hedge funds coming off great years. You need to really look into their portfolio and think about the positions they're taking given the macro environment.
This is why I spend so much time focusing on macro, because if you don't get your macro calls right, chances are you won't get your hedge funds right and will likely get burned.
Take the time to read some of my macro and market comments form the start of the years:
- Outlook 2018: Return to Stability
- The Great Melt-Up of 2018?
- Why the 2018 Consensus is Wrong?
- The 2018 Treasury Bond Bear Market?
- How Scary Is the Bond Market?
- The Danger of Irrational Complacency?
- US Wage Inflation Spooking Markets?
- Growing Fears of a Stock Market Crash?
- A Correction or Something Far Worse?
Why am I sharing this? Because you can be the best stock picker but if the macro winds change abruptly and go against you, it will hurt your portfolio and you will suffer material losses.
This is why I keep telling you to hedge your portfolio risk by putting 50% of your money in US long bonds (TLT) and another 50% in the S&P 500 low vol ETF (SPLV) and "just relax and sleep well at night”. Forget what top funds are buying and selling, if you follow them blindly, you will get crushed.
However, I realize there are traders, portfolio managers and investors who like buying a portfolio of stocks and know how to critically examine what top funds bought and sold last quarter. That's why I put up these quarterly comments.
All I can tell you is analyzing and trading 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.
When I'm not looking at thousands of stocks and charts and who bought or added to positions, the other thing I love doing is thinking macro. If I were to write a macro comment this week, it would have been titled "Much Ado About US Inflation?", basically ridiculing the inflation scare story because all you need to do is look at the US dollar over the last year to understand this is cyclical (temporary) inflation, not something which is sustainable going forward (lower US dollar, higher import prices, not higher wages!!).
Anyway, have fun looking at the fourth quarter activity of top funds listed below. The links take you straight to their top holdings and then click on the fourth column head, % chg, to see where they decreased (click once on % chg column head) and increased their holdings (click twice on % chg column head).
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 (Paul Tudor Jones)
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 Quant and Market Neutral 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) Cubist Systematic Strategies (a quant division of Point72)
6) Numeric Investors
7) Analytic Investors
8) AQR Capital Management
9) SABA Capital Management
10) Quantitative Investment Management
11) Oxford Asset Management
12) PDT Partners
13) Princeton Alpha Management
14) Angelo Gordon
15) Quantitative Systematic Strategies
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) Tiger Global Management (Chase Coleman)
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) Penserra 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) Park West Asset Management
55) Melvin Capital Partners
56) Owl Creek Asset Management
57) Portolan Capital Management
58) Proxima Capital Management
59) Tourbillon Capital Partners
60) Impala Asset Management
61) Valinor Management
62) Viking Global Investors
63) Marshall Wace
64) Light Street Capital Management
65) Honeycomb Asset Management
66) Rock Springs Capital Management
67) Whale Rock Capital
68) Suvretta Capital Management
69) York Capital Management
70) 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) Birchview Capital
10) Ghost Tree Capital
11) Sectoral Asset Management
12) Oracle Investment Management
13) Perceptive Advisors
14) Consonance Capital Management
15) Camber Capital Management
16) Redmile Group
17) RTW Investments
18) Bridger Capital Management
19) Boxer Capital
20) Bridgeway Capital Management
21) Cohen & Steers
22) Cardinal Capital Management
23) Munder Capital Management
24) Diamondhill Capital Management
25) Cortina Asset Management
26) Geneva Capital Management
27) Criterion Capital Management
28) Daruma Capital Management
29) 12 West Capital Management
30) RA Capital Management
31) Sarissa Capital Management
32) Rock Springs Capital Management
33) Senzar Asset Management
34) Southeastern Asset Management
35) Sphera Funds
36) Tang Capital Management
37) Thomson Horstmann & Bryant
38) Venbio Select Advisors
39) Ecor1 Capital
40) Opaleye Management
41) NEA Management Company
42) Great Point Partners
43) Tekla 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 (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
39) Victory Capital Management
Canadian Asset Managers
Here are a few Canadian funds I track closely:
1) Addenda Capital
2) Letko, Brosseau and Associates
3) Fiera Capital Corporation
4) West Face Capital
5) Hexavest
6) 1832 Asset Management
7) Jarislowsky, Fraser
8) Connor, Clark & Lunn Investment Management
9) TD Asset Management
10) CIBC Asset Management
11) Beutel, Goodman & Co
12) Greystone Managed Investments
13) Mackenzie Financial Corporation
14) Great West Life Assurance Co
15) Guardian Capital
16) Scotia Capital
17) AGF Investments
18) Montrusco Bolton
19) CI Investments
20) Venator Capital Management
Pension Funds, Endowment Funds, and Sovereign Wealth Funds
Last but not least, I the track activity of some pension funds, endowment 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 highlights 13F filings which include investments in retailers. She also highlights Berkshire Hathaway's new stock positions from their fourth-quarter 13F filing.
Hope you enjoyed reading this comment. As always, please remember to kindly donate or subscribe to this blog on the top right-hand side, under my picture and show your support for the work that goes into these comments. I thank all of you who value my efforts and support my blog through a monetary contribution, it's greatly appreciated.
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