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James Dinan is the hedge fund manager at York Capital Management. He founded the hedge fund in 1991 with $3.6 million after having lost his entire life savings in 1987, on “Black Monday”. Dinan has since grown his hedge fund to over $5 billion.

Dinan uses his background in merger arbitrage (he cut his teeth in investment banking at Donaldson, Lufkin & Jenrette and mergers at Kellner DiLeo) to form the basis of his strategy. He focuses on upcoming mergers, distressed companies and restructuring opportunities to select and exploit devalued positions.

This strategy served Dinan well in the past, frequently earning his York Capital Management double digit returns. Unfortunately, the days of wine and roses appear to be over, at least for now.

Dinan’s top stock picks in his 13F portfolio have lost 22% since the end of June, compared to the S&P 500’s loss of 14.6% for the same period. In fact, Dinan’s only positive return out of his top 25 stock picks was in the popular SPDR Gold Trust (NYSEARCA:GLD); he gained 26% in the position he increased by 161% last quarter. SPDR is a popular position in several hedge funds, including John Paulson (see John Paulson’s top stock picks), Eric Mindich (Eton Park Capital), and Jean-Marie Eveillard (First Eagle Investment)

CompanyName

Ticker

Value (x1000)

Activity

Return Since June

DOLLAR THRIFTY

DTG

405635

32%

-15%

HERTZ GLOBAL

HTZ

333503

32%

-41%

TYCO INTL

TYC

270244

37%

-23%

IVANHOE MINES

IVN

236149

27%

-32%

FORTUNE BRANDS

FO

230370

-6%

-19%

GRACE W R & CO

GRA

223085

1%

-26%

SPDR GOLD TRUST

GLD

144979

161%

26%

PETSMART INC

PETM

134601

16%

-13%

CENTERPOINT ENERGY

CNP

128211

New

-3%

WALTER ENERGY INC

WLT

123481

22%

-37%

ROCKWOOD HOLDINGS

ROC

123264

New

-24%

ABOVENET INC

ABVT

118892

-25%

-23%

MANITOWOC CO INC

MTW

118230

155%

-48%

FORD MOTOR CO DEL

F

115391

458%

-27%

RALCORP HOLDINGS

RAH

114485

New

-6%

MASCO CORP

MAS

100065

51%

-38%

SARA LEE CORP

SLE

93682

18%

-9%

RADWARE LTD

RDWR

91928

9%

-31%

EMBRAER S A

ERJ

89640

7%

-26%

BLACKROCK INC

BLK

83591

New

-21%

WILLIAMS COS

WMB

81016

New

-21%

FAMILY DOLLAR STORES

FDO

80422

-22%

-9%

DANA HOLDING CORP

DAN

76100

1400%

-40%

ANADARKO PETROLEUM

APC

75870

New

-15%

LYONDELLBASELL

LYB

72581

-66%

-25%

Dinan lost over 48% in his position in Manitowoc Co Inc (NYSE:MTW). Dinan himself had increased his position in the company by over 155% last quarter. The construction machinery and equipment company is a favorite of Jim Simons. Simons increased his position in Manitowoc by 115% last quarter (check out Jim Simons’ favorite stocks).

Dinan also lost big on Hertz Global (NYSE:HTZ) and Dana Holding Corp (NYSE:DAN), losing 41% and 40% in his respective positions. Dinan has a considerable position in Hertz Global, the car rental company, and increased his position 32% further last quarter. While this position has not realized a large return, Hertz may have better times coming. Roberto Mignone, the hedge fund manager famous for his long positions, is an investor with the popular car rental company (check out Mignone’s bullish stock picks). Dana Holding is a favorite of Doug Silverman (Senator Investment Group) and David Gallo (Valinor Management), both of whom significantly increased their positions in the real estate company, by 133% and 72% respectively.

In other words, Dinan’s top 13F picks may be down lately, but if popular consensus of some of the world’s biggest hedge fund managers is any indicator, he may be able to turn this losing streak around. Investors could snag a deal mirroring Dinan right now because so many of his top stock picks are depressed in price right now. While, popular consensus is no guarantee of success, Dinan is definitely one hedge fund manager to watch.

Source: James Dinan's Top Stock Picks