Hedge Funds Scooped up Energy, Biotechs in Quarter

Tuesday, 15 Feb 2011 12:14 PM

 

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The list of hot stocks for some hedge fund managers in the fourth quarter of 2010 included energy companies, biotechs and even a well-known breakfast cereal manufacturer.

One flavor du jour continued to belong to bank stocks with David Tepper's Appaloosa Management nearly doubling its Citigroup stake and Coatue Management taking a sizable position in the bank.

That said, Warren Buffett's Berkshire Hathaway exited its Bank of America shares.

But billionaire investor George Soros, who has repeatedly called gold the "ultimate bubble," did not exit his gold position.

Soros maintained his exposure, holding exchange-traded funds that owned gold worth over $774 million at the end of 2010. Hedge-fund billionaire John Paulson also stayed loyal to the yellow metal, maintaining his position in gold ETFs.

Four times a year, U.S. securities regulators require managers like Soros and Paulson to report changes in their funds' stock holdings. It is a chance to see which managers are loading up on gold, tech or industrial materials.

The filings, called 13Fs, are a way for investors to glean whether managers are banking on a broad-based economic recovery or by getting out of some stocks or sectors.

Of course these 13F filings are merely a snapshot of how a top hedge fund's stock holdings looked 45 days ago. These filings do not reflect more recent buying or selling activity in a fund.

Here is a capsule summary of some of the top managers filing on Monday.

SOROS FUND MANAGEMENT

Billionaire investor George Soros's money management firm maintained its huge bet on gold, holding ETFs that owned gold worth over $774 million at the end of 2010.

New York-based Soros Fund Management disclosed owning 4.7 million shares of the SPDR Gold exchange-traded fund, the firm's largest position, and another 5 million shares of the iShares Gold trust, according to a quarterly filing with the SEC. The share totals were about the same as three months earlier.

Soros bought more than 10 million shares of Delta Airlines during the fourth quarter. With 14.7 million shares worth $186 million at the end of 2010, the airline ranked as the fifth-largest holding at the firm.

Soros, considered one of the world's savviest macroeconomic investors since his famed $1 billion bet against the British pound in 1992, has been calling gold "the ultimate bubble" for the past year.

Back in the third quarter, Soros Management reduced bets on some gold mining stocks. But during the fourth quarter, Soros held onto its remaining positions such as 12.9 million shares of NovaGold Resources, the same amount owned at the end of the previous quarter.

BERKSHIRE HATHAWAY

Warren Buffett's Berkshire Hathaway stuck with familiar themes in its $52.56 billion equity portfolio, with names like Coca Cola and Wells Fargo that have been the iconic Buffett's bread and butter in recent years.

Buffett's stake in Coca Cola was unchanged, while his Wells Fargo position grew about 2 percent.

The "Oracle of Omaha," who typically does not make large moves from quarter to quarter in his top holdings, continued with unchanged positions in American Express, Procter & Gamble and Kraft Foods in his top five.

His equity portfolio was up about 8 percent from $48.56 billion at Sept. 30. The portfolio was narrower in scope, though, with 25 stocks as opposed to 33 in the quarter prior. Among the companies in which

Buffett no longer reported a stake were Bank of America, Comcast and Nike.

PAULSON AND CO.

John Paulson, whose bets on gold and against the subprime market netted him the industry' biggest two paydays ever, stayed loyal to his gold positions with SPDR Gold Trust and banks Citigroup and BofA, which he had bought betting the economy would recover.

New York-based Paulson & Co, which oversees roughly $36 billion for pension funds and wealthy investors, also sharply increased its bet in biotechnology firm Genzyme, which is on the cusp of being acquired by Sanofi Aventis.

He also raised his holding in energy company Anadarko.

PERSHING SQUARE

William Ackman, who oversees about $8.7 billion at his Pershing Square Capital Management, trimmed his holdings of Kraft Foods and retailer Target, while picking up shares in the newly listed carmaker General Motors. The activist manager is pushing for big changes at J.C. Penney, where he recently secured a board seat after accumulating some 34.8 million shares of the retailer. JC Penny now ranks as Ackman's most valuable position.

Ackman's 30 percent investment gain in 2010 ranked him among the industry's best performers. Early last year he made a splash when Pershing Square announced a big stake in Citigroup last year — a position the fund continues to hold.

GREENLIGHT CAPITAL

David Einhorn's $6.5 billion Greenlight Capital disclosed new stakes in half a dozen companies from Sprint Nextel to energy company BP.

Einhorn, who became well-known for publicly questioning the accounting of Lehman Brothers months before its 2008 collapse, also disclosed holdings in two companies that recently exited bankruptcy protection — an $88.6 million position in chemicals maker Lyondellbasell Industries and a $52 million position in shares of energy company SemGroup. Einhorn also pared back his stake in CIT Group slightly.

CARL ICAHN

Billionaire activist investor Carl Icahn raised his stake in Motorola at the end of last year, before the company split in January into Motorola Mobility Holdings and Motorola Solutions.

According to the filing, Icahn held a near $2 billion stake at the end of December.

THIRD POINT

Loeb's activist-styled $3.4 billion fund increased its bet on the economic recovery in the most recent quarter. Third Point, which was one of the hedge fund industry's top-performing funds in 2010, created new positions in LyondellBasell Industries, coal producer Massey Energy and Williams, a natural gas producer and pipeline company.

Third Point, which oversees about $1.9 billion in U.S. equities, boosted its position in No. 1 holding Potash Corp by 20 percent, and increased its position in Alcon by about 14 percent.

Loeb's hedge fund slashed its positions in previous No. 3 holding Airgas by 73 percent, while its stakes in its two other previous top-five holdings, Health Net and PHH Corp., remained the same.

FARALLON CAPITAL

Steyer's Farallon, a $20 billion San Francisco-based fund, increased its bets in two takeover targets, boosting its stake in Genzyme by 74 percent and doubling its position in McAfee in the last quarter of 2010.

Intel said in August it was buying McAfee for $7.7 billion, its largest-ever acquisition.

Farallon, run by Tom Steyer, did not own shares of either Genzyme or McAfee before the deals were announced.

Farallon also took new positions in Microsoft and Qwest during the past quarter, and slashed stakes in Potash and Home Depot.

COATUE MANAGEMENT

Philippe Laffont's Coatue Management made a huge bet on Citigroup by buying more than 20 million shares in the giant financial services company, the manager disclosed on Monday in a quarterly filing with the SEC.

Laffont, who got his investing start at Julian Robertson's Tiger Management, trimmed all of his top five holdings, including Qualcomm, Apple, F5 Networks, Google and Baidu, if only slightly.

Laffont, whose fund has been known to favor technology, telecom and media stocks, also added Green Mountain Coffee Roasters as a new holding by purchasing 4 million shares. At the same time, Ciena Corp., in which Coatue owned 3.2 million shares at the end of the third quarter, was not listed on the filing.

TRIAN CAPITAL

Billionaire investor Nelson Peltz's Trian Capital Corp. loaded up on shares of cereal maker Kellogg, while at the same the fund exited a number of financial services companies.

The activist investor, who agitated several years ago for the merger between fast-food restaurant chains Wendy's and Arby's, snapped up some 2.8 million shares of Kellogg in the past quarter.

Meanwhile, Wendy's/Arby's Group remains one of his biggest positions.

Like many hedge fund managers betting on an economic recovery, Peltz last year owned a number of bank stocks, like Bank of America and JPMorgan Chase. But by the end of last year, the activist investor no longer held his once-substantial positions in those stocks.

© 2014 Thomson/Reuters. All rights reserved.

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