Hedge Fund Tracking: Pequot Capital Management (Art Samberg), Q3 2008

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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.

The other funds we've already covered include:

Next up is Pequot Capital Management ran by Art Samberg. Pequot was founded by Art in 1986 with $3 million in assets and peaked with $15 billion in assets around the tech bubble. Today, he manages over $4 billion. It has 150 employees and employ multiple strategies, including private equity and venture capital, as Art believes equity returns will decline over time. Art holds a S.B. from Massachusetts Institute of Technology, an M.S. from Stanford University, and he received his MBA from Columbia University. Pequot Capital Management was recently ranked 93rd in Alpha's hedge fund rankings.

The following were its 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):

  • XTO Energy (XTO) Calls
  • Chesapeake Energy (NYSE:CHK) Calls
  • Wells Fargo (NYSE:WFC)
  • Microsoft (NASDAQ:MSFT)
  • iShares Emerging Markets (NYSEARCA:EEM)
  • Exxon Mobil (NYSE:XOM)
  • Petrohawk (NYSE:HK)
  • Nasdaq (NASDAQ:NDAQ)
  • Bank of NY Mellon (NYSE:BK)
  • Union Pacific (NYSE:UNP)
  • Lender Processing (NYSE:LPS)
  • Moody (NYSE:MCO)
  • State Street (NYSE:STT)
  • CSX (NASDAQ:CSX)
  • McGraw Hill (MHP)
  • Mohawk Industries (NYSE:MHK)
  • Amgen (NASDAQ:AMGN)
  • Burlington Northern (BNI)
  • XTO Energy (XTO)
  • Spdr S&P500 (NYSEARCA:SPY)
  • iShares Russell 2000 (NYSEARCA:IWM)
  • JPMorgan Chase (NYSE:JPM)
  • NYSE Euronext (NYSE:NYX)
  • Intercontinental Exchange (NYSE:ICE)
  • Schering Plough (SGP)
  • Chesapeake Energy (CHK)
  • St Jude (NYSE:STJ)
  • CME Group (NASDAQ:CME)
  • Chipotle (NYSE:CMG)
  • Halozyme Therapeutics (NASDAQ:HALO)

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

  • Spdr Gold Trust (NYSEARCA:GLD): Increased position by 997%
  • iShares Emerging Markets (EEM) Puts: Increased position by 477%
  • Onyx Pharma (NASDAQ:ONXX): Increased position by 179%
  • Bank of America (NYSE:BAC): Increased position by 150%
  • Alexion Pharma (NASDAQ:ALXN): Increased position by 100%
  • Apollo Group (NASDAQ:APOL): Increased position by 36%
  • Cigna Corp (NYSE:CI) Puts: Increased position by 30%

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

  • Petroleo Brasileiro (NYSE:PBR): Increased position by 72%
  • Freeport McMoran (NYSE:FCX): Increased position by 70%
  • Qualcomm (NASDAQ:QCOM): Increased position by 33%
  • Occidental Petroleum (NYSE:OXY): Increased position by 31%
  • Jack in the Box (JBX): Increased position by 29%
  • Helmerich & Payne (NYSE:HP): Increased position by 29%
  • Southwestern Energy (NYSE:SWN): Increased position by 23%
  • Halliburton (NYSE:HAL): Increased position by 20%
  • JC Penney (NYSE:JCP): Increased position by 11%

Removed Positions (Positions it sold out of completely):

  • Insulet (NASDAQ:PODD)
  • SPDR S&P500 (SPY) Puts
  • Schering Plough (SGP) Calls
  • Cree (NASDAQ:CREE)
  • New Oriental Education (NYSE:EDU)
  • Companhia Vale (NYSE:RIO) Calls
  • Netflix (NASDAQ:NFLX) Calls
  • Elan (NYSE:ELN) Puts
  • Burger King (BKC)
  • Akamai (NASDAQ:AKAM) Calls
  • Spirit Aerosystems (NYSE:SPR)
  • Wells Fargo (WFC) Puts
  • Broadcom (BRCM) Calls
  • First Solar (NASDAQ:FSLR)
  • Focus Media (NASDAQ:FMCN)
  • Energy Conversion Devices (NASDAQ:ENER)
  • Map Pharma (NASDAQ:MAPP)
  • Career Education(NASDAQ:CECO)
  • Focus Media (FMCN) Calls
  • Google (NASDAQ:GOOG)
  • Baidu (NASDAQ:BIDU) Calls
  • First Advantage (FADV)
  • Apple (NASDAQ:AAPL) Calls
  • Juniper Networks (NYSE:JNPR) Calls
  • Intuitive Surgical (NASDAQ:ISRG) Puts
  • Research in Motion (RIMM)
  • Sandisk (NASDAQ:SNDK) Calls
  • Barrick Gold (NYSE:ABX)
  • Arcelor Mittal (NYSE:MT)
  • Powershares QQQ (QQQQ) Puts

Top 20 Holdings (by % of portfolio):

  1. iShares Emerging Markets (EEM) Puts: 10.2% of portfolio
  2. Spdr Gold Trust (GLD): 9.9% of portfolio
  3. XTO Energy (XTO) Calls: 6.2% of portfolio
  4. Chesapeake Energy (CHK) Calls: 4.8% of portfolio
  5. Akorn (NASDAQ:AKRX): 3.9% of portfolio
  6. Ultra Petroleum (NYSE:UPL): 2.7% of portfolio
  7. Qualcomm (QCOM) Calls: 2.5% of portfolio
  8. JC Penney (JCP): 2.1% of portfolio
  9. Onyx Pharma (ONXX): 1.9% of portfolio
  10. McDonalds (NYSE:MCD): 1.8% of portfolio
  11. Southwestern Energy (SWN): 1.8% of portfolio
  12. Wells Fargo (WFC): 1.6% of portfolio
  13. Chipotle Class-B (CMG-B): 1.5% of portfolio
  14. Healthcare Services (NASDAQ:HCSG): 1.5% of portfolio
  15. Qualcomm (QCOM): 1.5% of portfolio
  16. Walmart (NYSE:WMT): 1.5% of portfolio
  17. Microsoft (MSFT): 1.4% of portfolio
  18. iShares Emerging Markets (EEM): 1.4% of portfolio
  19. Weatherford International (NYSE:WFT): 1.3% of portfolio
  20. Exxon Mobil (XOM): 1.2% of portfolio

Assets from the collective long U.S. equity, options, and note holdings were $4 billion last quarter and were $3 billion this quarter. It's interesting to see that Pequot started two new Call option positions in XTO and Chesapeake and brought them both up to very large positions, the third and fourth largest fund positions respectively.

Please note that we have not detailed changes 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. They do not reflect its cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, etc.).

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