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What do the top Hedge Fund and Mutual Fund gurus like in the Automobile Industry? This article, the eighth in a series, identifies through a research of the latest available institutional 13-F filings the gurus that are most invested in the Automobile Industry, and the specific Automobile companies which they prefer to hold in their hedge fund portfolios. The first seven articles in the series identified gurus that are over-weight in the solar sector, utilities sector, china stocks, airline sector, optical networking sector, chemicals industry and the oil and gas exploration Industry, and the stocks within those sectors that they hold in their portfolios (For those familiar with the series, skip over to the fifth paragraph).

A guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.

Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called gurus.

The study of the investing habits of gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.

The total capitalization of the U.S. equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading automobile manufacturing stocks is approximately $480 billion or 3.18% of the overall market. The Table lists four investment gurus whose funds have invested over four times that or at least about 12.7% in the Automobile Industry, and the following is a list of their picks in that industry:

  • Global manufacturers of passenger cars and other vehicles such as Ford Motor (NYSE:F) and General Motors Company (NYSE:GM).
  • Global manufacturers of automobile components such as U.S. and Sweden-based Autoliv Inc. (NYSE:ALV) that manufacturers airbags and seatbelt safety restraint systems; Canada-based Magna International Inc. (NYSE:MGA) that make automotive systems, assemblies, modules, components, and complete vehicles for automotive manufacturers; Michigan-based BorgWarner Inc. (NYSE:BWA) that makes engine and drive-train components for light-vehicle automobile manufacturers; Michigan-based Federal Mogul Corp. (NASDAQ:FDML) that manufactures vehicular parts, components, modules and systems for the automotive and other industries; New Jersey-based Wabco Holdings Inc. (NYSE:WBC) that manufacture electronic and electromechanical products for automotive OEMs, after-markets and auto manufacturers; and Illinois-based Tenneco Inc. (NYSE:TEN) that makes emission control and ride control products and systems for light, commercial and specialty vehicle applications.
  • Local or regional manufacturers such as Indian company Tata Motors Ltd. ADS (NYSE:TTM) that makes passenger cars, commercial vehicles, utility vehicles and accessories, China-based China Yuchai International Ltd. (NYSE:CYD) that manufactures diesel engines for light, medium, and heavy-duty trucks and buses in China.

Table

Fund and guru

Type of Fund

Assets Under Management

Percent Portfolio in Chinese Stocks

Major Automobile Manufacturing company positions in Portfolio

Tyrus Capital, LLP (Tony Chedraoui)

Hedge Fund – Event-driven

$ 116 million

26.0%

GM

Capital Growth Management LP (Ken Heebner)

Mutual Fund Manager

$ 6.8billion

23.2%

F, BWA, TTM, MGA, ALV, TEN, GM, WBC, CYD

Jabre Capital Partners (Philippe Jabre)

Asset Management including Hedge Fund

$1.7 billion

19.7%

F, GM

Icahn Capital LP and Icahn Carl C. (Carl Icahn)

Hedge Fund – Shareholder Activist

$12.2 billion

12.7%

FDML

Tony Cherdaoui founded Hedge fund Tyrus Capital in 2009, and specializes in event-driven investments. He holds a concentrated portfolio of seven stocks in his portfolio, as of the filing for the December 2010 quarter.

Ken Heebner, co-founder of Capital Growth Management, manages the CGM family of mutual funds. He has a reputation of making bold sector bets, and was on the cover of the June 9, 2008 issue of Fortune magazine, and was called as America’s hottest investor.

Jabre Capital Partners, headquartered in Geneva was started by Lebanese-born Philippe Jabre in 2007. It is an asset management firm that offers both hedge fund and traditional management strategies. Its hedge fund uses an equity-driven arbitrage strategy.

Carl Icahn is a well-known American financier and corporate raider. He is an ‘activist’ hedge fund manager, meaning that he takes large stakes in distressed public corporations, and then uses his influence resulting from the ownership to effect change at these companies, eventually in many cases selling them for a "tidy" profit. In the past, he has taken substantial or controlling positions in RJR Nabisco, TWA (OTCPK:TWAC), Texaco, Philips Petroleum, Western Union (NYSE:WU), Gulf & Western, Viacom (VIA.B), Uniroyal, Dan River, Marshall Field, American Can, USX, Marvel Comics, Revlon (NYSE:REV), Imclone, Federal-Mogul (FDML), Fairmont Hotels, Blockbuster (OTC:BLOAQ), Kerr-McGee, Time Warner (NYSE:TWC) and Motorola (NYSE:MMI).

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Top Automobile Industry Picks by Hedge / Mutual Fund Gurus