Tuesday, December 05, 2006

Top Holdings By Top Hedge Funds

There was a revealing article in Barron's which identifies five top-notch hedge funds whose investment moves are closely watched by the industry, revealing their top holdings and some recent transactions:

David Tepper's Appaloosa Fund:
(1) Oracle Corp.
(2) Micron Technology Inc.
(3) Applied Materials Inc.
Other big holdings: Cisco Systems Inc., Microsoft Corp., Texas Instruments Inc., NASDAQ 100 Trust Shares ETF, AMR Corp., UAL Corp., and Continental Airlines Corp.
My Take - This lends credence to the belief that NASdaq is primed for a much better few months ahead than the S&P 500. It seems there is a growing consensus among fund managers that Nasdaq is due for big rally in the weeks. ahead.

David Einhorn's Greenlight Fund:
(1) Ameriprise Financial Inc.
(2) Microsoft
(3) Hospira Inc.
In May Einhorn talked about his affinity for Microsoft, saying that buying Microsoft at US$23 was like getting Alex Rodriguez for a merely average price in a fantasy-baseball draft.
My Take - The appearance of Microsoft in the above two funds may be surprising but the yield is very good. Hedge funds cannot keep betting on turnarounds and the "big play", they also need to put in the solid returns as a base to its overall returns.

Steve Mandel's Lone Pine Capital Fund:
(1) Brookfield Asset Management Inc.
(2) Google Inc.
(3) Comcast Corp.
Mandel cut his Google position by 25% in Q3, suggesting it may be getting too rich for him. He added to Comcast and Qualcomm Inc., sold Research In Motion Ltd. and America Movil SA de CV, and established a position in Schlumberger Ltd.
My Take - This is a big swing dick kinda manager, holding Google for the longest time till it surpassed US$500 and then only cutting down its stake only slightly.

Ed Lampert's ESL Investment:

(1) Sears Holdings Corp.
(2) AutoZone Inc.
(3) AutoNation Inc.
The three comprise Sears Holdings' CEO's entire portfolio. Barron's says many hedge-fund managers own Sears out of admiration for his retailing skills.

Activist investor Carl Icahn:
(1) Time Warner Inc.
(2) ImClone Systems Inc.
(3) American Railcar Industries

Ed Lampert and Carl Ichan are invetsors who will get their hands dirty in trying to turnaround the companies, and generally the returns may/may not be there for 2-4 years.

Why no Asian or European stocks? First, the size of funds under management prohibits them from considering stock with market cap of less than US$5 billion at least. If you have US$2 bilion under mgmt, you are not going to be bothered to buy stakes of US$20-30 million and monitor 100 companies. You want to be able to make fewer bets and focus on just 10-15 stocks throughout the year. If you were to place a US$100m buy on a stock in KLSE, how many stocks can you buy without moving it substantially? Hmm ... thats RM360m = or 31m Maybank shares = 12m Genting shares = 30m Resorts World = 48m Public Bank (and foreign to boot). So you cannot even fathom buying those sizes, even over a two week period. Secondly, it has to be your own backyard, invest in things you know best. Its different if you were in private equity as you have a better chance of succeeding venturing overseas as you have a much longer time frame. As active normal fund managers, to invest overseas involves currency exposure and the need to get in and out swiftly. At those portfolio size, you would be loathed to plunk US$300m on Nokia and hoping for right timing as the stock needs to perform within a 12 months period for my hedge fund profit sharing business. If market tanks, I may be stuck not being able to sell down wthout pushing the price down substantially. Liquidity. Even in Europe the liquidity is not as strong as in the US.


Jomaropol said...

Hello! I would like to say, really great work in maintaining your blog. A lot of us think that this is the finest finance blog there is.

Btw, great call on Kinstel-wa! It has appreciated by as much as 40% the last 2 days after you put a call to it.

Salvatore_Dali said...


ty for yr kind words... as a gesture of my appreciation there is a stock u can buy and hold for a few weeks, Konsortium. I cannot divulge any further reasons for buying other than a corporate exercise in the works. Good luck.

Jomaropol said...

Thanks Salvatore!

Konsort - I think there may be a change of shareholder? shift of business direction after disposal of busses to prasarana? I have indeed been eyeing this for a while, and it's very easy to push up because of its illiquidity.

Heard anything about RBland, CIMA?

I think starting from this day we may see the return of the speckies (which includes very cheap beaten down shares and mesdaq counters)

Salvatore_Dali said...

true, the big dogs have had a good long run, speckies would need attention in order to run, they do not want to compete for attention with blue chips, once the blue chips rest to consolidate (e.g. 1,120-1,130 level), we may see a surge of interest in speckies.

boyplunger said...

Congratulations on your calls.

Keep up the good work!

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