Algebris Investments was founded in 2006 by Eric Halet and Davide Serra with seed capital from TCI's Chris Hohn. Hohn has a 22% passive stake in Algebris. Halet got his MBA from the University of Pittsburgh and was previously a global industry analyst at Wellington Management. Serra was the former head of European banking research at Morgan Stanley and holds a CEMS Master's in International management. Algebris is a long/short equity fund that focuses on long-term opportunities mostly in financials with a three year horizon or greater. Algebris lost around 32 percent in 2008, gained 31% in 2009. The fund also returned 9.3 percent during the first 10 months of 2010.
According to the latest 13F submission made to the SEC, Algebris Investments owns a total of 20 stocks, valued at approximately $500 million at the end of the second quarter. The fund's holdings have declined by about 16% since the end of the previous quarter ($579 million, 1Q2011). Algebris has sold 6 positions as well as one call option and one put option since the previous quarter (1Q2011), but it has added ten positions as well as one call and one put option, increasing the number of its positions significantly. A summary of Algebris Investment's activities is below.
Company Name | Ticker | value | Activity |
BANK OF AMERICA CALLS | Sold Out | ||
BLACKSTONE GROUP L P | Sold Out | ||
CHUBB CORP | Sold Out | ||
GRUPO FINANCIERO GALICIA S A | Sold Out | ||
MOODYS CORP PUTS | Sold Out | ||
PEOPLES UNITED FINANCIAL INC | Sold Out | ||
STANCORP FINANCIAL GROUP INC | Sold Out | ||
UNUM GROUP | Sold Out | ||
CHUBB CORP CALLS | 71794 | -55% | |
BANCO SANTANDER BRASIL S A | 15841 | -55% | |
CITIGROUP INC | 31956 | -18% | |
JPMORGAN CHASE & CO | 55244 | -12% | |
HARTFORD FINANCIAL SVCS | 28266 | 33% | |
AIG PUTS | 16692 | New | |
CITIGROUP INC CALLS | 24885 | New | |
FIRST MIDWEST BANCORP DE | 2813 | New | |
FULTON FINANCIAL CORP PA | 8390 | New | |
JPMORGAN CHASE & CO CALLS | 35308 | New | |
LENDER PROCESSING SERVICES | 2820 | New | |
M B FINANCIAL INC NEW | 2897 | New | |
MARSH & MCLENNAN COS INC | 5515 | New | |
METLIFE INC | 34988 | New | |
MORGAN STANLEY | 2194 | New | |
SPDR RETAIL ETF PUTS | 132080 | New | |
SIGNATURE BANK NEW YORK N Y | 5719 | New | |
SUSQUEHANNA BANCSHARES | 2843 | New | |
WELLS FARGO & CO NEW | 17078 | New | |
WINTRUST FINANCIAL CORP | 2844 | New |
One of Algebris Investment's largest activities in the last quarter was the sale of over 1.5 million shares of Banco Santander Brasil, which lost 9.2% of its value over the last quarter. The stock currently trades at $11.19 per share. John Griffin's Blue Ridge Capital still has a significant position in BSBS, owning 9.8 million shares, though it has also decreased its position, albeit by only 8%. Renaissance Technologies, on the other hand, increased its stake in Banco Santander Brasil by nearly 400% and now owns 1.9 million shares.
Algebris' largest new position, and largest position overall, is its put option on 2.6 million shares of SPDR Retail ETF, a fund that attempts to reflect S&P Retail Select Industry Index, with major holdings in Barnes & Noble, Gamestop Corp and Vitamin Shoppe Inc. This position lost 2% of its value since the end of March.
Algebris must be happy about its purchase of a put option against nearly half a million shares of AIG, considering AIG's value has fallen off by 20.6% over the last quarter. Bruce Berkowitz's Fairholme (Fairx) has more than $1.5 billion stake in AIG, and some funds such as DE Shaw have taken multiple positions on AIG to hedge other investments. AIG is currently trading for around $28 a share.
Algebris' termination of its put options on Moody's Corp (MCO) was also timely. MCO gained more than 10% and is now trading at around $37 per share. Warren Buffet's Berkshire Hathaway owns 28 million shares of Moodys, worth nearly $1 billion. Valueact Capital, run by Jeffrey Ubben, decided to increase its stake in Moodys by 35%, apparently happy with its strong performance.
Algebris has altered its position on JPMorgan Chase & Co. It sold 12% of its holdings, but Algebris also bought a call option on 765,000 shares of JPMorgan, more than the amount it had sold off. Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, has decreased its holdings of JPM by 50%, though it still has a $642 million stake in the company. Andreas Halvorsen's Viking Global has increased its position by 438% to $466 million.
Algebris Investments focuses on long term investment opportunities and we are confident that they will manage to beat the market in the long run as they have over the past few years.
