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What do the top hedge fund and mutual fund gurus like in the investment bank and investment management industry? This article, the 32nd in a series, identifies through research of the latest available institutional 13-F filings the gurus that are most invested in the investment bank and investment management industry, and the specific stocks within that industry that they prefer to hold in their portfolios. Please note that this group includes investment banks, investment management or asset management companies, investment brokers, and financial market exchanges.

Also, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now beginning to come out. About 40% were out as of this weekend, and most should be filed by the end of this week. As such, once 13-F filings are complete for all guru funds, in the next series starting the end of this week to the beginning of next week, I will bring to you the "Top New and Added Picks" of guru funds by industry/sector detailing this time not the top holdings, but more importantly what "New" positions they took and what existing positions they added to in the latest March 2011 quarter. Please check my article page for previous articles in this series.

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 investment bank and investment management companies is $485 billion or just over 3.2% of the overall market. The Table lists the top five investment gurus whose funds have invested at least twice that average or 6.4% in the investment bank and investment management industry (as defined before). The following is a list of the top investment bank and investment management industry company picks of guru funds over-concentrated in that sector:

  • Global financial services firm Morgan Stanley (NYSE:MS): Operating in 36 countries around the world with over 600 offices and having $779 billion in assets under management; offering capital raising and financial advisory services to corporations, brokerage and investment advisory services to clients who are primarily high net worth clients; and global asset management products in a diverse range of asset categories. Goldman Sachs Group Inc. (NYSE:GS): Engaged in global investment banking, securities, investment management and other financial services primarily with Institutional clients.
  • Global asset management companies Blackstone Group LP (NYSE:BX), an alternative asset management and financial services company that specializes in private equity, real estate and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions, restructurings and reorganizations, and private placements; and Blackrock Inc. (NYSE:BLK), a manager of fixed income, equity and alternative investment products for institutional and individual investors.
  • E-trade financial Corp. (NASDAQ:ETFC), a provider of online brokerage and banking services primarily for retail clients worldwide via etrade.com.
  • Market exchanges NYSE Euronext (NYSE:NYX), an operator of the NYSE, Euronext and NYSE Arca exchange markets that provide trade execution of equity securities; Nasdaq Omx Group Inc. (NASDAQ:NDAQ), a provider of securities listing, trading and information products and services through the Nasdaq stock market.
  • CME Group Inc. (NASDAQ:CME), an operator of two futures exchanges for the trading of benchmark products across major asset classes; and Intercontinentalexchange (NYSE:ICE), an operator of an electronic global futures and over-the-counter marketplace for trading a broad array of products.
  • Janus Capital Group Inc. (NYSE:JNS), a sponsor, marketer and provider of investment advisory, distribution and administrative services to mutual funds worldwide.
  • Calamos asset management Cla (NASDAQ:CLMS), a provider of investment advisory and money management services to institutions and individuals.
  • MVC Capital Inc. (NYSE:MVC), a business development company investing in businesses through common and preferred stock and senior and subordinated debt.
  • Capital Southwest Corp. (NASDAQ:CSWC), a business development company focused on early-stage and expansion financings, management buyouts, and recapitalizations.

Table

Fund and Guru

Type of Fund

Assets Under Management

Percent Equity Portfolio invested in Equities of investment banking and investment management companies

Major investment banking and investment management company positions in Portfolio

Fairholme Capital management LLC (Bruce Berkowitz)

hedge fund - Deep Value

$ 15.8 billion

13.3%

MS, GS

Centaur Capital Partners, LP (Zeke Ashton)

hedge Fund

$ 98 million

10.1%

CLMS, MVC, CSWC

Jabre Capital Partners (Philippe Jabre)

asset management including hedge Fund

$ 1.7 billion

8.6%

BLK, BX, JNS, ETFC, ICE

Horizon asset management (Murray Stahl)

mutual Fund

$ 4.1 billion

7.6%

CME, NYX, NDAQ, ICE

Clinton Group Inc. (George Hall)

hedge fund - Multi-strategy

$ 3.5 billion including $131 million in equities

6.7%

GS

Miami-based hedge fund and mutual fund manager Fairholme Capital management LLC is a deep value investment manager, founded by Chief investment Officer and Managing Member Bruce Berkowitz in 1997. Fairholme Capital seeks long-term growth by investing in concentrated portfolio of equities. Fairholme's preferred investment strategy is to silently partner with exceptional owner-managers who have demonstrated success, honesty, and integrity. The firm buys when it finds such companies generating or holding significant cash when compared to market values. Purchases are made without regard to categorization. The firm also invests in special situations, including, but not limited to, Chapter 11 reorganizations.

Zeke Ashton's Centaur Capital Partners manages the investments for the Centaur Value fund and the Tilson Dividend fund. Its investment philosophy is Buffet-like based upon value principles, and selects stock investments based upon true business value as reflected by asset value, cash flow generation, management quality, and the competitive advantages of the underlying businesses when such stocks are available at compelling prices.

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.

hedge fund Clinton Group, founded by George Hall in 1991, is focused on mortgage-backed securities, convertible bonds, global fixed income and a multi-strategy fund.

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks investment Research, DailyGraphs®, 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.

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 Investment Management Picks by Fund Gurus Concentrated in the Sector