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Farallon Capital Management, L.L.C. is a San Francisco, CA-based hedge fund management firm founded by Thomas Fahr Steyer. The firm manages over $20 bn (equity + fixed income + real estate) in FCOI II Holdings, L.P., RR Capital Partners, L.P., Tinicum Partners, L.P. and the Farallon family of hedge funds. Farallon primarily manages money for college endowments, foundations, and high net worth individuals. The firm was ranked ninth-largest hedge fund in the US in 2010.

Investment Strategy: Farallon seeks to achieve superior risk-adjusted returns through a process of fundamental, bottom-up analysis. The firm pitches values typically assuming a restructuring or an improvement of the underlying asset and an eventual sale to a buyer or a liquidation of the asset in pieces. For restructurings and value investments, Farallon invests in companies undergoing spin-offs, recaps, litigation events, strategic realignment and other major changes. Stocks selected appear underpriced relative to their intrinsic or fundamental value or are expected to appreciate in value if circumstances change or an event occurs. Investments are often hedged with short positions in market indices, individual company stocks or other derivative instruments.

The firm also invests in special situations. For direct investments, Farallon invests in a business expecting to receive a cash return and additional upside if the business performs according to specific estimates. The merger arbitrage strategy focuses on corporate takeovers, usually taking a position in a publicized takeover candidate; however, if the proposed merger or acquisition is structured as a share-for-share deal, a short position is taken in the company making the acquisition.

The following is a list of its top 15 buys by market value in the last quarter, as released in its most recent 13F filing with the SEC.

Stock

Symbol

Shares Held - 03/31/2011

Change in shares (vs. Dec. 31 position )

Genzyme Corp.

GENZ

6,725,000

4,057,759

Target Corp.

TGT

3,459,000

1,949,000

Massey Energy Co.

MEE

1,165,000

1,165,000

Crown Castle International Corp.

CCI

3,084,185

1,661,185

Liberty Global Inc.

LBTYA

1,690,000

1,690,000

Viacom, Inc.

VIA.B

3,845,000

1,450,000

Comcast Corporation

CMCSA

2,655,000

2,655,000

Beckman Coulter Inc.

BEC

780,000

780,000

General Dynamics Corp.

GD

805,000

805,000

Oracle Corp.

ORCL

4,266,000

1,666,000

Visa, Inc.

V

665,000

665,000

CVS Caremark Corporation

CVS

1,171,400

1,171,400

State Street Corp.

STT

2,865,000

890,000

Microsoft Corporation

MSFT

3,585,000

1,300,000

Union Pacific Corporation

UNP

306,000

306,000

Here are some of the specifics about these companies, including a brief description of their business, growth rates (top-line and bottom-line) and valuation:

Genzyme Corp.
Farallon purchased 4,057,759 shares of Genzyme Corp. last quarter. Genzyme is a leading biotechnology company with products focused on rare inherited disorders, kidney disease, orthopedics, cancer, transplant, and immune disease. The firm was acquired by Sanofi-Aventis (NYSE:SNY) recently. Farallon's position was likely a merger arbitrage play on this deal.

Target Corp.
Farallon purchased 1,949,000 shares of Target Corp. last quarter and now holds a total of 3,459,000 shares. The share price of Target Corp. has decreased from $60.13 on December 31, 2010 to $50.01 on March 31.

Target Corporation operates Target general merchandise stores with an assortment of general merchandise and food. Target’s EPS forecast for the current year is 4.23 and next year is 4.63. According to the consensus estimates, its top line is expected to grow 4.10% in the current year and 4.70% next year. It is trading at a forward P/E of 10.87. Out of 25 analysts covering the company, 19 are positive and have buy recommendations and six have hold ratings.

Massey Energy Co.
Farallon purchased 1,165,000 shares of Massey Energy last quarter. It is a new position for the fund. The share price of Massey Energy has increased from $53.65 on December 31, 2010 to $68.36 on March 31.

Massey produces, processes and sells bituminous coal of various steam and metallurgical grades, primarily of a low sulfur content, through its 25 processing and shipping centers. Massey's EPS forecast for the current year is 3.04 and next year is 5.02. According to the consensus estimates, its top line is expected to grow 31.90% in the current year and 13.30% next year. It is trading at a forward P/E of 11.67. Out of 20 analysts covering the company, three are positive and have buy recommendations, one has a sell recommendation and 16 have hold ratings.

Crown Castle International Corp.
Farallon purchased 1,661,185 shares of Crown Castle International last quarter and now holds a total of 3,084,185 shares. The share price of Crown Castle has decreased from $43.83 on December 31, 2010 to $42.55 on March 31.

Crown Castle owns, operates and leases towers and other wireless infrastructure in the United States. The company’s main business is renting space on its towers through long-term contracts in various forms, including license, sublease and lease agreements. Crown Castle's EPS forecast for the current year is 0.46 and next year is 0.74. According to the consensus estimates, its top line is expected to grow 7.30% in the current year and 6.30% next year. It is trading at a forward P/E of 56.14. Out of 22 analysts covering the company, 16 are positive and have buy recommendations and six have hold ratings.

Liberty Global Inc.
Farallon purchased 1,690,000 shares of Liberty Global last quarter. It is a new position for the fund. The share price of Liberty Global has increased from $35.38 on December 31, 2010 to $41.41 on March 31.

Liberty Global is an international provider of video, broadband Internet and telephony services, with consolidated broadband communications and/or direct-to-home satellite operations. Liberty Global's EPS forecast for the current year is 1.84 and next year is 1.98. According to the consensus estimates, its top line is expected to grow 13.10% in the current year and 6.20% next year. It is trading at a forward P/E of 22.53. Out of 15 analysts covering the company, 13 are positive and have buy recommendations and two have hold ratings.

Viacom, Inc.
Farallon purchased 1,450,000 shares of Viacom last quarter and now holds a total of 3,845,000 shares. The share price of Viacom has increased from $39.61 on December 31, 2010 to $46.52 on March 31.

Viacom Inc. is an entertainment content company. It manages its operations through two reporting segments: Media Networks and Filmed Entertainment. Viacom's EPS forecast for the current year is 3.61 and next year is 4.11. According to the consensus estimates, its top line is expected to grow 6.50% in the current year and 4.10% next year. Out of 29 analysts covering the company, 20 are positive and have buy recommendations and nine have hold ratings.

Comcast Corporation
Farallon purchased 2,655,000 shares of Comcast last quarter. It is a new position for the fund. The share price of Comcast Corporation has increased from $21.97 on December 31, 2010 to $24.72 on March 31.

Comcast is a provider of video, high-speed Internet and phone services to residential and business customers in the United States. Comcast's EPS forecast for the current year is 1.59 and next year is 1.89. According to the consensus estimates, its top line is expected to grow 45.70% in the current year and 6.90% next year. It is trading at a forward P/E of 13.02. Out of 29 analysts covering the company, 19 are positive and have buy recommendations and 10 have hold ratings.

Beckman Coulter Inc.
Farallon purchased 780,000 shares of Beckman Coulter last quarter. It is a new position for the fund. The share price of Beckman Coutler has increased from $75.23 on December 31, 2010 to $83.07 on March 31.

Beckman Coulter is a manufacturer and marketer of biomedical testing instrument systems, tests and supplies that simplify, automate and innovate complex laboratory processes It operates in two segments: Clinical Diagnostics and Life Science. Danaher Corp. (NYSE:DHR) announced its acquisition of Beckman Coulter last quarter. Farallon's position was likely a merger arbitrage play on this deal.

General Dynamics Corp.
Farallon purchased 805,000 shares of General Dynamics last quarter. It is a new position for the fund. The share price of General Dynamics has increased from $70.96 on December 31, 2010 to $76.56 on March 31.

General Dynamics offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; military and commercial shipbuilding, and communications and information technology. General Dynamics' EPS forecast for the current year is 7.14 and next year is 7.66. According to the consensus estimates, its top line is expected to grow 3.80% in the current year and 4.40% next year. It is trading at a forward P/E of 9.57. Out of 24 analysts covering the company, 15 are positive and have buy recommendations and nine have hold ratings.

Oracle Corp.
Farallon purchased 1,666,000 shares of Oracle Corp. last quarter and now holds a total of 4,266,000 shares. The share price of Oracle Corp. has increased from $31.30 on December 31, 2010 to $33.43 on March 31.

Oracle is an enterprise software company. The company develops, manufactures, markets, distributes and services database and middleware software, applications software and hardware systems, consisting primarily of computer server and storage products. Oracle's EPS forecast for the current year is 2.17 and next year is 2.39. According to the consensus estimates, its top line is expected to grow 32.20% in the current year and 8.70% next year. It is trading at a forward P/E of 14.16. Out of 43 analysts covering the company, 34 are positive and have buy recommendations, one has a sell recommendation and eight have hold ratings.

Visa Inc.
Farallon purchased 665,000 shares of Visa Inc. last quarter. It is a new position for the fund. The share price of Visa Inc. has increased from $70.38 on December 31, 2010 to $73.62 on March 31.

Visa is a global payments technology company that connects consumers, businesses, banks and governments in more than 200 countries and territories, enabling them to use digital currency instead of cash and checks. The company owns, manages and promotes a range of payment brands, including Visa, Visa Electron, PLUS and Interlink, which it licenses to its clients for use in their payment programs. Visa's EPS forecast for the current year is 4.90 and next year is 5.67. According to the consensus estimates, its top line is expected to grow 13.70% in the current year and 10.80% next year. It is trading at a forward P/E of 14.19. Out of 35 analysts covering the company, 31 are positive and have buy recommendations, one has a sell recommendation and three have hold ratings.

CVS Caremark Corporation
Farallon purchased 1,171,400 shares of CVS Caremark Corporation last quarter. It is a new position for the fund. The share price of CVS Caremark Corporation has decreased from $34.77 on December 31, 2010 to $34.32 on March 31.

CVS Caremark is a pharmacy healthcare provider in the United States. It has three segments: Pharmacy Services, Retail Pharmacy and Corporate. CVS Caremark's EPS forecast for the current year is 2.78 and next year is 3.15. According to the consensus estimates, its top line is expected to grow 12.20% in the current year and 4.40% next year. It is trading at a forward P/E of 12.28. Out of 26 analysts covering the company, 17 are positive and have buy recommendations and nine have hold ratings.

State Street Corp.
Farallon purchased 890,000 shares of State Street Corp. last quarter and now holds a total of 2,865,000 shares. The share price of State Street Corp. has decreased from $ 46.34 on December 31, 2010 to $ 44.94 on March 31.

State Street provides a range of financial products and services to institutional investors through its two lines of business: Investment Servicing and Investment Management. State Street's EPS forecast for the current year is 3.76 and next year is 4.30. According to the consensus estimates, its top line is expected to grow 9.80% in the current year and 7.60% next year. It is trading at a forward P/E of 10.74. Out of 24 analysts covering the company, 19 are positive and have buy recommendations and five have hold ratings.

Microsoft Corp.
Farallon purchased 1,300,000 shares of Microsoft last quarter and now holds a total of 3,585,000 shares. The share price of Microsoft Corporation has decreased from $ 27.91 on December 31, 2010 to $ 25.39 on March 31.

Microsoft is engaged in developing, manufacturing, licensing and supporting a range of software products and services for different types of computing devices. Microsoft's EPS forecast for the current year is 2.58 and next year is 2.77. According to the consensus estimates, its top line is expected to grow 11.70% in the current year and 6.40% next year. It is trading at a forward P/E of 8.89. Out of 35 analysts covering the company, 25 are positive and have buy recommendations, one has a sell recommendation and nine have hold ratings.

Union Pacific Corp.
Farallon purchased 306,000 shares of Union Pacific Corp. last quarter. It is a new position for the fund. The share price of Union Pacific Corp. has increased from $ 92.66 on December 31, 2010 to $ 98.33 on March 31.

Union Pacific is a railroad company linking 23 states in the western two-thirds of the United States of America. Union Pacific's EPS forecast for the current year is 6.49 and next year is 7.70. According to the consensus estimates, its top line is expected to grow 12.90% in the current year and 9.30% next year. It is trading at a forward P/E of 12.96. Out of 32 analysts covering the company, 25 are positive and have buy recommendations and seven have hold ratings.

Source: The Top 15 Stocks Farallon Capital Management Is Buying