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What do the top hedge fund and mutual fund gurus like in the money center and foreign banking (MCFB) sector? This article, the thirteenth in a series, identifies through research of the latest available institutional 13-F filings the gurus who are most invested in the MCFB sector, and the specific MCFBs they prefer to hold in their portfolios. The first 12 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, Oil and Gas Exploration Industry, the Automobile Industry, the Biotech Industry, the Consumer Non-Durable Goods Sector, the Gold and Silver Mining Industry, and the Regional Banking Industry, and the stocks within those sectors that they hold in their portfolios. Definitions of "guru" and other jargon can be found there as well.
The total capitalization of the US equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading money center banks is $1.32 trillion and the market cap of leading foreign banks traded on the U.S. stock exchanges is another $330 billion for a total of $1.65 trillion, which is approximately 11% of the overall market. The table lists four investment gurus whose funds have invested above that average in MCFBs. The following is a list of their picks in that sector:
  • U.S. based global financial holding companies such as JP Morgan Chase & Co. (JPM) that provides private, commercial, and investment banking and treasury services in over 60 countries; Bank of America Corp. (BAC) that offers banking and non-banking financial services in the U.S. and over 40 foreign countries; and Citigroup Inc. (C) that offers banking, investment, insurance and credit card services in more than 160 countries.
  • Scottish holding company Royal Bank of Scotland ADR (RBS) that operates via over 4,000 branches in Europe, U.S. and Asia.
  • Foreign bank Banco Santander SA ADR (STD) of Spain operating via over 13,000 branches in Europe, Latin America and the U.S.
Table
Fund and Guru
Type of Fund
Assets Under Management
Percent Portfolio in the Money Center and Foreign Banks
Major Money Center and Foreign Bank positions in Portfolio
Jabre Capital Partners (Philippe Jabre)
Asset Management including Hedge Fund
$1.7 billion
37.6%
JPM, BAC, C
Appaloosa Management LP (David Tepper)
Hedge Fund
$ 4.9 billion
22.8%
C, BAC, RBS, JPM, STD
Eton Park (Eric Mindich)
Hedge Fund – Multi-Strategy
$ 12.1 billion
16.9%
JPM, C, BAC
Pershing Square Capital Management, L.P. (Bill Ackman)
Hedge Fund – Deep Value and Shareholder Activist
$ 5.8 billion
11.9%
C
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.
New Jersey-based Hedge Fund Appaloosa Management, co-founded by David Tepper, manages almost $5 billion. It invests in public equity and fixed income markets globally with a focus on equities and debt of distressed companies, bonds, exchange warrants, options, futures, notes and junk bonds.
Eton Park Capital Management, launched in 2004, has over $12 billion in assets under management (AUM). Prior to founding Eton Park, Mr. Mindich was a partner at Goldman Sachs (GS), becoming the youngest partner there at the age of 27. Investors in the fund generally have committed their capital for between three and five years, which is considerably longer than the quarterly redemption notices characteristic of many hedge funds.
New York-based Pershing Square, founded by Bill Ackman in 2003, is a $5.8 billion hedge fund. He has a deep value orientation and is a shareholder activist, meaning that the fund can take large stakes in target investments and then can use its influence resulting from the ownership to effect change at these companies, with the objective of eventually selling them for a tidy profit. He currently holds a concentrated portfolio of 12 positions.
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. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: Money Center and Foreign Bank Picks by Fund Gurus Concentrated in the Sector