Hedge Fund Tracking: Shumway Capital Partners (Chris Shumway), Q3 2008

by: Market Folly

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered:

Next up is Shumway Capital Partners run by Chris Shumway. Shumway started his own fund after leaving well-known Julian Robertson's Tiger Management, and thus, as a progeny of Robertson, he is a part of what people call the 'Tiger Cubs' (people who have started their own firms after succeeding at Tiger). We've already covered many of the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global.

The following is taken from our post on 'Tiger Cub' biographies:

Chris Shumway is the Founding Partner of Shumway Capital Partners (“SCP”), an investment management firm founded in 2001. SCP, which manages a multibillion dollar group of private investment funds, uses a private equity-like research model for public market investment on a global basis. Prior to forming SCP, Mr. Shumway was a Senior Managing Director at Tiger Management (1992-1999), an Analyst at Brentwood Associates (1990-1991), and an Analyst at Morgan Stanley & Co. (1988-1990). He received an M.B.A. from Harvard Business School (1993) and a B.S. from the McIntire School of Commerce at the University of Virginia (1988).

Shumway's Ocean Fund was up 0.85% for the month of October but was -8.24% for the year at that time, as we noted in our October hedge fund performance update (see also our recent November update). Lastly, at a recent 'Tiger Cub' hedge fund manager panel, Shumway suggested that buying stocks that were down largely due to hedge fund liquidations would be a winning strategy longer-term.

The following were Shumway's long equity, note, and options holdings as of September 30, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that it initiated in the last quarter):

  • CVS Caremark (NYSE:CVS)
  • Medco Health (NYSE:MHS)
  • Focus Media (NASDAQ:FMCN)
  • Wyeth (WYE)
  • News Corp (NWS.A)
  • Hansen Natural (HANS)
  • Mercadolibre (NASDAQ:MELI)

Some Increased Positions (A few positions it already owned but added shares to):

  • SBA Comm (NASDAQ:SBAC): Increased position by 20%
  • Qualcomm (NASDAQ:QCOM) Calls: Increased position by 1.6%

Some Reduced Positions (Some positions it sold some shares of - note not all sales listed):

  • Cisco Systems (NASDAQ:CSCO): Reduced position by 86%
  • Google (NASDAQ:GOOG): Reduced position by 84%
  • Teva Pharma (NYSE:TEVA): Reduced position by 74.5%
  • Qualcomm (QCOM): Reduced position by 72%
  • Potash (NYSE:POT): Reduced position by 68%
  • Chipotle (CMG.B) B Shares: Reduced position by 55%
  • Waters (NYSE:WAT): Reduced position by 49%
  • Sirius Satellite (NASDAQ:SIRI) Notes: Reduced position by 37%
  • Mastercard (NYSE:MA): Reduced position by 35%
  • Zimmer Holdings (ZMH): Reduced position by 34%
  • NII Holdings (NASDAQ:NIHD): Reduced position by 29%

Removed Positions (Positions it sold out of completely):

  • Union Pacific (NYSE:UNP)
  • XTO Energy (XTO)
  • Burlington Northern (BNI)
  • Apple (NASDAQ:AAPL)
  • St Jude (NYSE:STJ)
  • Research in Motion (RIMM)
  • American Tower (NYSE:AMT)
  • Visa (NYSE:V)
  • Crown Castle (NYSE:CCI)
  • Colgate Palmolive (NYSE:CL)
  • Occidental Petroleum (NYSE:OXY)
  • EMC Corp (EMC)
  • Baidu (NASDAQ:BIDU)
  • Monsanto (NYSE:MON)
  • Chipotle (NYSE:CMG)
  • Staples (NASDAQ:SPLS)
  • Mosaic (NYSE:MOS)
  • Liberty Global (NASDAQ:LBTYK) Series C Common
  • Liberty Global (NASDAQ:LBTYA)

Top 20 Holdings (by % of portfolio):

  1. Qualcomm (QCOM) Calls: 11.9% of portfolio
  2. Mastercard (MA): 11.8% of portfolio
  3. NII Holdings (NIHD): 9.4% of portfolio
  4. Qualcomm (QCOM): 8.8% of portfolio
  5. SBA Comm (SBAC): 8.6% of portfolio
  6. CVS Caremark (CVS): 8.3% of portfolio
  7. Waters (WAT): 7.3% of portfolio
  8. Teva Pharma (TEVA): 5.9% of portfolio
  9. Zimmer Holdings (ZMH): 5.6% of portfolio
  10. Medco Health (MHS): 4.1% of portfolio
  11. Potash (POT): 3.8% of portfolio
  12. Cisco Systems (CSCO): 3.2% of portfolio
  13. Focus Media (FMCN): 2.2% of portfolio
  14. Wyeth (WYE): 2% of portfolio
  15. Google (GOOG): 1.6% of portfolio
  16. Sirius (SIRI) Notes: 1.4% of portfolio
  17. News Corp (NWS.A): 1.1% of portfolio
  18. Chipotle (CMG.B) B shares: 1.1% of portfolio
  19. Sirius (SIRI) Notes2: 1.1% of portfolio
  20. Hansen Natural (HANS): 0.4% of portfolio

Assets from the collective holdings were $7.88 billion last quarter and were $1.78 billion this quarter. As you can easily tell from the raw figures, Shumway was making a large move out of equity markets over the last quarter, and was largely scaling out of natural resource and commodity-related names that have seen extreme selling pressure the past few months.

Please note that we have not detailed every single change to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings and do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, etc).

Overall, it's been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.