Top Funds' Activity in Q3 2022
For many hedge funds, Elon Musk’s $44 billion “forced” purchase of Twitter represented an easy money trade.
“You didn’t have to be a genius to realize that he was going to finish that deal,” said Carl Icahn at the Forbes Iconoclast Summit on November 3, adding that he would have considered waging a proxy fight if the deal fell through.
Icahn told the audience at New York’s Historical Society that he made a profit of around $250 million by investing in Twitter this summer. But he was far from the only one to benefit. Regulatory filings show that billionaire-led hedge funds including Citadel Advisors, Millennium Management, D.E. Shaw and Third Point built large positions in Twitter in the second and third quarters, as well as other firms like Pentwater Capital and Farallon Capital.
Musk signed a merger agreement to buy Twitter for $54.20 per share in April, but the stock was trading as low as $32.65 by July when he tried to terminate the deal. That created an arbitrage opportunity for as much as a 66% return for investors who doubted Musk had much of a chance in the Delaware Court of Chancery to back out.
It's been a while since I covered top funds' activity so I thought I'd go through it here.
Twitter which is now delisted since Elon Musk took it private is an easy example of where top funds made money:
Layoffs of thousands of employees, firings of engineers openly critical of his ownership, and an impersonation causing a pharmaceutical company's stock to drop.— NBC News (@NBCNews) November 17, 2022
Here’s a complete timeline of Elon Musk's Twitter takeover: https://t.co/j55ZufZHdE
"Some internal estimates showed that at least 1,200 full-time employees resigned on Thursday...Twitter had 7,500 full-time employees at the end of October, which dropped to about 3,700 after mass layoffs earlier this month."https://t.co/Rv6kBrgs0X— Steve Lookner (@lookner) November 18, 2022
#Twitter reportedly told its employees on Thursday that it was temporarily closing its offices, effectively immediately, and suspending all employee badge access.— The Epoch Times (@EpochTimes) November 18, 2022
Twitter said its offices would reopen Nov. 21, without providing a reason for the shutdown. https://t.co/NCnnz6vCVu
There is a right way and a wrong way to fire people. Everything about the firings at Twitter has been the wrong way https://t.co/smyXAzqBdM— Businessweek (@BW) November 18, 2022
And my personal favorite:
Here is a thought, maybe Elon Musk is the world's richest person (for now) but he stinks as a manager and needs to stop tweeting and get real here, things are not going well at Twitter.
And judging by the looks of this weekly chart, things are not going well at Tesla either:
Tesla short sellers are making great money lately but the real killing lies ahead!
Alright, it's that time of the year again when we get a sneak peek inside the portfolios of the world's top money managers with a customary 45-day lag.
Before I get to it, make sure you read the last time I covered top funds' activity in Q4 2021 where I warned my readers this isn't the time to chase Chase Coleman and other gurus and ended with this stark warning:
[...] I used to invest in top hedge funds and grill their managers hard on their positions, macro views and risk management (most are terrible at managing downside risks).
I can sit down with all these "gurus" and drill down into their portfolios and point out the dogs and what's worth holding on to.
Right now is a dangerous time to be invested in stocks and bonds.
Everyone is wondering if the Nasdaq will retest its January low and hold or keep sinking lower:
I have no clue, the only thing I know is investors need to manage their risk carefully here because the monetary coronavirus that afflicted bears two years ago is gone.
One question I always get, especially from young traders, is can stocks go a lot lower?
My answer is unequivocal: "You bet your ass they can go a lot lower".
Unless you've lived through the tech meltdown of 2001 and the great financial crisis meltdown, you have no clue about how it feels being in a nasty bear market.
Who knows? Maybe not but always, always be prepared for anything and manage your downside risk very carefully.
Never mind chasing Chase Coleman and other gurus, that’s a sure road to ruin!
I can't stress this enough, now isn't the time to speculate on stocks, now more than ever is the time to manage your risk carefully and really understand the macro backdrop extremely well.
I'm also going to take this opportunity to plug Trahan Macro Research here because I hate to say it, but most investors still don't get what is going on in the US economy and how to properly position their portfolios.
Importantly, as I stated in my recent comment on whether the Fed is willing to sacrifice the market and economy to tame inflation: "Anyone who still thinks the Fed can engineer a soft landing next year deserves to have their head handed to them."
As I told Francois Trahan on a call earlier today, it amazes me how so many investors are getting this hard versus soft landing wrong but by this time next year when the US unemployment rate will be a lot higher, the harsh reality is going to settle in:
Here's another crazy stat: U.S. workers lost more purchasing power in 2022 than in any year since the 1970s. I've been compiling a list of "firsts" for me and this one is stunning. I suspect there are many more surprises ahead as the economy heads into recession in 2023/24. pic.twitter.com/MAUpnVpBcf— Francois Trahan (@FrancoisTrahan) November 28, 2022
A MUST read on #inflation. Anyone who cares about financial markets should read this one. It might not change your mind about the outlook but it is an extraordinary study of how inflation has behaved across history once it has broken out to higher levels.https://t.co/97P9OKKH6F— Francois Trahan (@FrancoisTrahan) November 26, 2022
I first posted this in the Spring and some had an allergic reaction to it. It's another way to show the lagged effects of higher rates on the market. I won't bore you with too many details, but it helps explain why I believe next year will be more difficult than 2022 for stocks. pic.twitter.com/YCnExydMaV— Francois Trahan (@FrancoisTrahan) November 22, 2022
Everyone is so worried about a Fed pivot that they forgot the main point. Despite all the gains in wage inflation this year, consumers still lost the most spending power since 1995. It's more like 1980, but who's counting. This is why the Fed is hellbent on curbing inflation. pic.twitter.com/KECLoKOooO— Francois Trahan (@FrancoisTrahan) November 14, 2022
The 6-month growth rate in the Leading Economic Index fell further into negative territory in October and is at levels that have signaled a high probability of recession in the past (2020, 2008, and 2001)...https://t.co/Py6ZJpKXYk pic.twitter.com/jGzANY9tD5— Charlie Bilello (@charliebilello) November 18, 2022
US Existing Home Sales fell for the 9th consecutive month, down 28% over the last year. This is the largest YoY decline since February 2008.— Charlie Bilello (@charliebilello) November 18, 2022
Following same pattern as the last housing bubble: Affordability collapses -> Sales plummet -> Prices decline...
Charting via @ycharts pic.twitter.com/L9TJ1OVWU7
Best leading indicator there is. https://t.co/qQukdIhtbP— David Rosenberg (@EconguyRosie) November 18, 2022
My point in all this is get the macro right and to do this properly, you need to pay for quality macro research which is why I'm doing all of you a favor in plugging Trahan Macro Research (nobody marries macro insights with market insights better).
What else surprised me this week? All the hoopla about James Bullard's comments:
Give me a break, I think CNBC's Steve Liesman was the only person who got it right, explaining the Taylor Rule and why Bullard stated a 7% terminal rate may be necessary.
Stock bulls hate the Taylor Rule, they just want the Fed to provide them with more monetary heroine.
They'll soon find out that their imaginary pivot isn't coming:
The Nasdaq made its all time high a year ago early in Thanksgiving week. Then it went into a sideways coiled spring into the end of the year. Then it exploded down.— Mac10 (@SuburbanDrone) November 18, 2022
Bargain hunters are ahead of the curve this year.
The chart of the week: pic.twitter.com/5fiwbPdwVZ
Financials don't like an inverted yield curve.— Mac10 (@SuburbanDrone) November 18, 2022
This chart predicts full scale meltdown BEFORE the end of 2022. pic.twitter.com/71aNAUkBXI
Ah Leo, are you getting all bearish on us? Come on, the major averages ticked higher in afternoon trading Friday to end the day on an upbeat note and stocks have done well over the past month.
Yup, it's called a bear market rally, stocks never go up or down in a straight line!
As Francois Trahan explained in his latest conference call, the macro data will look temporarily better fooling many to believe the worst is behind us, but it isn't.
Bear market rallies are fun but you'll know when the real bear market hits us because buying the dip indiscriminately won't work.
Still, I will be the first to tell you some dips on some stocks generated huge returns this year.
For example, here are some I've been tracking this year:
Some bullet notes below to walk you though these charts:
- Bill Ackman was way too early buying and then selling Netflix (NFLX), taking a $400 million loss back in April, but from bottoming at $163 in June to hitting a recent high of $312, this stock had a great run (I wouldn't touch it now, get ready to short it).
- NVIDIA (NVDA) is the beta beast in the semi world and some hedge funds like Coatue bought it last quarter. After hitting a low of $108 in October, its stock price rocketed up to a recent high of $170 before declining after earnings this week (again, I wouldn't touch it, get ready to short it again).
- Amazon (AMZN) was a great buy before the May CPI report came out mid June and bounced a bit after the September CPI report came out in mid October but it remains weak so I wouldn't rush to buy it here.
- Same with Adobe, it popped recently but remains very weak.
- Chinese tech stocks (KWEB) led by Alibaba (BABA) and Bidu (BIDU) have come off their lows but they remain very weak and move up and down on rumors of China reopening.
- I can kick myself for not buying the big dip on Mirati Therapeutics (MRTX) back in May as I knew it was a top holding of Perceptive Advisors, one of the best biotech funds. Its top holding remains Amicus Therapeutics (FOLD) and some of its other top holdings like Global Blood Therapeutics, got bought out recently (Pfizer bought it out).
- Last but not least, while everyone is talking about how great traditional energy stocks have done this year, check out shares of First Solar (FSLR) which hit a low of $59.60 back in July and then never looked back (don't chase it here after this huge run-up but this is a very bullish chart, the most bullish of all the other ones). Steve Cohen's Point72 added to its position last quarter but the big investors here are not hedge funds.
Alright, I've rambled on enough, time to wrap it up.
I should charge hedge fund premium prices just for my market comments but alas, most of you are getting them for free (you can donate any amount under my picture on the top left-hand side of my blog via PayPal).
Now, have fun looking into the portfolios of the world's most famous money managers.
The links below take you straight to their top holdings and then click to see where they increased and decreased their holdings (see column headings).
Top multi-strategy, event driven hedge funds and large hedge fund managers
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. Below are links to the holdings of some top multi-strategy hedge funds I track closely:
1) Appaloosa LP
2) Citadel Advisors
3) Balyasny Asset Management
4) Point72 Asset Management (Steve Cohen)
5) Peak6 Investments
6) Kingdon Capital Management
7) Millennium Management
8) Farallon Capital Management
9) HBK Investments
10) Highbridge Capital Management
11) Highland Capital Management
12) Hudson Bay Capital Management
13) Pentwater Capital Management
14) Sculptor Capital Management (formerly known as Och-Ziff Capital Management)
15) ExodusPoint Capital Management
16) Carlson Capital Management
17) Magnetar Capital
18) Whitebox Advisors
19) QVT Financial
20) Paloma Partners
21) Weiss Multi-Strategy Advisors
22) York Capital Management
23) Man Group
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 have converted their hedge funds into family offices to manage their own money.
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) Discovery Capital Management (Rob Citrone)
10 Moore Capital Management
11) Rokos Capital Management
12) Element Capital
13) Bill and Melinda Gates Foundation Trust (Michael Larson, the man behind Gates)
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. Some are large asset managers that specialize in factor investing.
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 now part of Man Group
7) Analytic Investors
8) AQR Capital Management
9) Dimensional Fund Advisors
10) Quantitative Investment Management
11) Oxford Asset Management
12) PDT Partners
13) Angelo Gordon
14) Quantitative Systematic Strategies
15) Quantitative Investment Management
16) Bayesian Capital Management
17) SABA Capital Management
18) Quadrature Capital
19) Simplex Trading
Top Deep Value, Activist, Growth at a Reasonable Price, 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) TCI Fund Management
4) Baron Partners Fund (click here to view other Baron funds)
5) BHR Capital
6) Fisher Asset Management
7) Baupost Group
8) Fairfax Financial Holdings
9) Fairholme Capital
10) Gotham Asset Management
11) Fir Tree Partners
12) Elliott Investment Management (Paul Singer)
13) Jana Partners
14) Miller Value Partners (Bill Miller)
15) Highfields Capital Management
16) Eminence Capital
17) Pershing Square Capital Management
18) New Mountain Vantage Advisers
19) Atlantic Investment Management
20) Polaris 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
49) Trian Fund Management
51) Fayez Sarofim & Co
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) Viking Global Investors
3) Greenlight Capital
4) Maverick Capital
5) Pointstate Capital Partners
6) Marathon Asset Management
7) Tiger Global Management (Chase Coleman)
8) Coatue Management
9) D1 Capital Partners
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) Honeycomb Asset Management
27) New Mountain Vantage
28) Penserra Capital Management
29) Eminence 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) Suvretta Capital Management
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) Marshall Wace
63) Light Street Capital Management
64) Rock Springs Capital Management
65) Rubric Capital Management
66) Whale Rock Capital
67) Skye Global Management
68) York Capital Management
69) 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) Avoro Capital Advisors (formerly Venbio Select Advisors)
2) Baker Brothers Advisors
3) Perceptive Advisors
4) RTW Investments
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) Palo Alto Investors
14) Consonance Capital Management
15) Camber Capital Management
16) Redmile Group
17) Casdin Capital
18) Bridger Capital Management
19) Boxer Capital
20) Omega Fund Management
21) Bridgeway Capital Management
22) Cohen & Steers
23) Cardinal Capital Management
24) Munder Capital Management
25) Diamondhill Capital Management
26) Cortina Asset Management
27) Geneva Capital Management
28) Criterion Capital Management
29) Daruma Capital Management
30) 12 West Capital Management
31) RA Capital Management
32) Sarissa Capital Management
33) Rock Springs Capital Management
34) Senzar Asset Management
35) Southeastern Asset Management
36) Sphera Funds
37) Tang Capital Management
38) Thomson Horstmann & Bryant
39) Ecor1 Capital
40) Opaleye Management
41) NEA Management Company
42) Great Point Partners
43) Tekla Capital Management
44) Van Berkom and Associates
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.
2) BlackRock Inc
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) UBS Asset Management
16) Barclays Global Investor
17) Epoch Investment Partners
18) Thornburg Investment Management
19) Kornitzer Capital Management
20) Batterymarch Financial Management
21) Tocqueville Asset Management
22) Neuberger Berman
23) Winslow Capital Management
24) Herndon Capital Management
25) Artisan Partners
26) Great West Life Insurance Management
27) Lazard Asset Management
28) Janus Capital Management
29) Franklin Resources
30) Capital Research Global Investors
31) T. Rowe Price
32) First Eagle Investment Management
33) Frontier Capital Management
34) Akre Capital Management
35) Brandywine Global
36) Brown Capital Management
37) Victory Capital Management
38) Orbis Allan Gray
39) Ariel Investments
40) ARK Investment 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
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
21) Van Berkom and Associates
22) Formula Growth
23) Hillsdale Investment Management
Pension Funds, Endowment Funds, Sovereign Wealth Funds and the Fed's Swiss Surrogate
Last but not least, I the track activity of some pension funds, endowment, sovereign wealth funds and the Swiss National Bank (aka the Fed's Swiss surrogate). Below, a sample of the 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) Healthcare of Ontario Pension Plan (HOOPP)
7) British Columbia Investment Management Corporation (BCI)
8) Public Sector Pension Investment Board (PSP Investments)
9) PGGM Investments
10) APG All Pensions Group
11) California Public Employees Retirement System (CalPERS)
12) California State Teachers Retirement System (CalSTRS)
13) New York State Common Fund
14) New York State Teachers Retirement System
15) State Board of Administration of Florida Retirement System
16) State of Wisconsin Investment Board
17) State of New Jersey Common Pension Fund
18) Public Employees Retirement System of Ohio
19) STRS Ohio
20) Teacher Retirement System of Texas
21) Virginia Retirement Systems
22) TIAA CREF investment Management
23) Harvard Management Co.
24) Norges Bank
25) Nordea Investment Management
26) Korea Investment Corp.
27) Singapore Temasek Holdings
28) Yale Endowment Fund
29) Swiss National Bank (aka, the Fed's Swiss surrogate)
Below, CNBC's Kristina Partsinevelos joins 'Fast Money' to discuss Appaloosa Management's David Tepper and his 13F filing. She also reports on Q3 investment actions made by Tiger Global.
Next, Roger Ferguson, former Federal Reserve vice chairman, joins CNBC's 'Squawk Box' to discuss the possibility of a Fed pivot on interest rates. He says the Fed has a long way to go. Take the time to watch this, he's spot on.
Fourth, Eric Johnston, Cantor Fitzgerald head of equity derivatives and cross asset, joined 'Closing Bell' Thursday to remark on his latest bearish call, earnings estimates and valuations risks in 2023 and the trajectory of Fed policy.
Lastly, the Macro Specialist Designation (M²SD) from Francois Trahan of Trahan Macro Research is a study program designed to help financial professionals understand how macro trends impact equity markets and how to successfully implement macro techniques in their investment analysis.
It is structured around three levels of study and can be completed in as little as 18 months. The goal of the M²SD is to better prepare investors for today’s rapidly changing markets by helping them gain the knowledge to invest under all sorts of possible macro backdrops.