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Chicago-based Hedge Fund Balyasny Asset Management LLC (NYSE:BAM), founded by Chief Investment Officer Dmitry Balyasny in 2001, is a multi-strategy investment firm with $2.2 billion in assets under management. The firm with additional offices in New York, Greenwich, Mumbai and London manages the Atlas Global Investments Fund and Phoenix Plus hedge funds. Of these, the flagship Atlas Global Investments Fund with $1.93 billion generated 16.6% compound annual return since the fund inception in 2004. The firm follows an investment process that combines fundamental research and trading with a dynamic capital allocation system. The strategy of the flagship Atlas Global Investment fund is generalist and trading oriented, and focused on liquid equities and futures.

The fund holds a diversified portfolio of 395 equity positions, and about 35%-40% each are in large caps and in mid caps, with small caps accounting for the remaining 25% of the holdings. The portfolio turnover is 200%, implying an average holding period of six months. Based on the most recent SEC 13-F filing for the March 2011 quarter, we determined that the portfolio is overweight in the Transportation, Services and Healthcare Sectors, and it is underweight the Finance, Utility, and Technology Sectors.

Within Sectors, at a more disaggregated level, our prior analysis of the SEC 13-F filings for the December 2010, quarter had revealed that the fund was overweight in the Construction Industry and the Energy Equipment and Services Industry Group. Based on a review of the most recent SEC 13-F filing for the March 2011, quarter, we determined that it has increased the weighting in the Construction Industry Group, but that it no longer is overweight in the Energy Equipment and Services Group as it sold off most of the big positions in that group, including in Halliburton Co. (NYSE:HAL) and Baker Hughes inc. (NYSE:BKI).

The following summarizes the new picks and pans in the latest reported 13-F filing for the March 2011, quarter, updated based on 13-G filings since the end of the quarter:

  • Baker Hughes Inc. (NYSE:BHI) provides well-bore products and technology services and systems to the global oil and natural gas industry. The position was initiated in early 2010 in the mid-$40s, so its selling out of this position in the mid-$70s at a 70% plus gain in a year is probably just profit-taking and does not constitute a conviction sell.
  • Halliburton Company (HAL) provides reservoir completion and drilling services and products worldwide to the upstream oil and gas industry. The position was initiated in the spring of 2010 in the high-$20s, so its selling $98 million out of a $115 million position in the high-$40s at close to a 100% gain in less than a year is probably just profit-taking and does not constitute a conviction sell.
  • EOG Resources Inc. (NYSE:EOG) is engaged in the production and marketing of crude oil and natural gas in the U.S., Canada, Trinidad, U.K. and China. This position was initiated just in the prior December 2010, quarter, so the sell-out of the $69 million in such a short time is an indication of the conviction of its sell decision.
  • Valero Energy Corp. (NYSE:VLO) is engaged in the refining and marketing of fuels and other petroleum products in the U.S., Canada and Aruba. This is a $60 million buy on top of a prior $81 million position and at $141 million is its largest position and an indication of the conviction of the buy.
  • Tesoro Corp. (NYSE:TSO) is engaged in the refining and marketing of petroleum products in the mid-continental and western U.S. This is the largest new buy in the quarter at $50 million, and an indication of its conviction in the buy decision.
  • Consol Energy Inc. (NYSE:CNX) produces bituminous coal and coal-bed methane gas primarily in the northern and central Appalachian and Illinois basins. This position was initiated in early 2010 in the high-$40s, so the selling out of the position at similar prices during the quarter is an indication of its sell conviction.
  • United Parcel Service (NYSE:UPS) delivers packages and documents throughout the U.S. and in over 200 other countries. This position was initiated in early 2010 in the $60 range, so the addition of another $38 million to the prior $54 million position at higher prices in the low-$70s is an indication of the conviction of the buy decision.
  • Kronos Worldwide Inc. (NYSE:KRO) manufactures titanium dioxide pigments that provide whiteness, hiding power and more to various applications. The stock has shot up since the buy in the December 2010 quarter, so the selling of a portion of this position is probably just profit-taking.
  • Plains All American Pipeline (NYSE:PAA) is an MLP engaged in the transportation, storage, and marketing of crude oil and petroleum in the U.S. and Canada. This is a large $35 million new buy in the quarter and an indication of the firm's conviction in the position.
  • Bristol Myers Squibb Co. (NYSE:BMY) develops branded pharmaceuticals for the treatment of cardiovascular, virological and other infectious diseases. This too is a large $35 million new buy in the quarter and an indication of its conviction in the position.
  • Chesapeake Energy (NYSE:CHK) is engaged in the exploration and production of natural gas and crude oil properties throughout the U.S. This too is a large $34 million new buy in the quarter and an indication of conviction in the position.
  • SM Energy Co. (NYSE:SM) is engaged in the exploration, production and acquisition of crude oil and natural gas in North America. This too is a large $33 million new buy in the quarter and an indication of conviction in the position.
  • Devon Energy Corp. (NYSE:DVN) is engaged in the exploration and production of oil, gas and natural gas liquids in the U.S. and Canada. This position was initiated in the prior December quarter in the $60s so the selling in the March 2011, quarter as the price went north of $90 in just one quarter was probably profit-taking.
  • Ternium SA ADR (NYSE:TX) fabricates semi-finished and finished flat and long steel products for agricultural, construction and manufacturing markets. This is another significant new position taken in the March 2011, quarter.
  • Nexen Inc. (NXY) is a Canadian Company engaged in the exploration and production of crude oil, natural gas, sulfur and chemicals. This is a large position initiated at $80 million in the prior December quarter, so the addition of $11 million more this quarter is significant.
  • Nabors Industries Ltd. (NYSE:NBR) provides oil, gas and geothermal land drilling, land well and work-over services worldwide. This is another large position initiated in the summer of 2010 in the high teens, so the selling of a minor $1 million this quarter is not significant at all as the price has appreciated into the high-$20s since then.
In addition, the company also filed a form 13-G for its 5.9% ownership in Keryx Biopharmaceuticals (NASDAQ:KERX) on May 6, 2011. KERX develops pharmaceutical products to treat cancer, renal disease, and other life-threatening diseases.
Table
Company
Ticker
New or Increased or Decreased or Unchanged Position
Market Value at end of March 2011 Quarter
Change in Value from Prior Quarter
New Picks and Pans
Baker Hughes Inc.
BHI
Decreased
$ 0 million
$ 99.07 million
Halliburton Co.
HAL
Decreased
$ 17.53 million
$ 98.1 million
EOG Resources Inc.
EOG
Decreased
$ 0 million
$ 69.39 million
Valero Energy Corp.
VLO
Added
$ 140.68 million
$ 60.17 million
Tesoro Corp.
TSO
New Position
$ 49.64 million
$ 49.64 million
Consol Energy Inc.
CNX
Decreased
$ 0 million
$ 45.73 million
United Parcel Service Inc.
UPS
Added
$ 91.68 million
$ 37.56 million
Kronos Worldwide Inc.
KRO
Decreased
$ 43.36 million
$ 35.1 million
Plains All American Pipeline L P
PAA
New Position
$ 35.05 million
$ 35.05 million
Bristol Myers Squibb Co.
BMY
New Position
$ 34.57 million
$ 34.57 million
Chesapeake Energy Corp.
CHK
New Position
$ 33.52 million
$ 33.52 million
SM Energy Co.
SM
New Position
$ 33.07 million
$ 33.07 million
Devon Energy Corp.
DVN
Decreased
$ 0 million
$ 28.73 million
Ternium SA
TX
New Position
$ 28.48 million
$ 28.48 million
New 13G 5% Ownership Filing Since End of March 2011 Quarter
Keryx Biopharmaceuticals
KERX
Added
Large Holdings
Nexen Inc.
NXY
Added
$ 91.48 million
$ 11.49 million
Nabors Industries Ltd.
NBR
Decreased
$ 85.44 million
$ 1.24 million
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, 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 New Conviction Buys and Sells of Dmitry Balyasny