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Fir Tree Partners was founded by Jeffrey Tannenbaum in 1994. Tannenbaum is a devoted value investor. He views stock purchasing as buying a piece of the business. He invests in distressed companies and companies going through bankruptcies. He invests in companies with low downside risks with a 2 to 4 year horizon. In May 2011, Fir Tree along with Noam Gottesman’s GLG and Empyrean Capital collectively purchased 25% of Global Eagle Acquisition Corp.

During the second quarter, Jeffrey Tannenbaum reduced his fund’s stake in CVS Caremark (NYSE:CVS) by 26%, Medco Health Solutions (NYSE:MHS) by 36%, and Amdocs Ltd. (NASDAQ:DOX) by 40%. Since the end of June, CVS lost 8%, MHS lost 5%, and DOX lost 12%. He also reduced his call positions in Equinix (NASDAQ:EQIX) by 37%, Medco Health Solutions (MHS) by 44%, and JPMorgan Chase & Co. (NYSE:JPM) by 8%. All these companies realized negative returns since the end of the second quarter. Here are Fir Tree’s top holdings at the end of June:

Company

Ticker

Value (x1000)

Activity

Return Since June

MICROSOFT CORP

MSFT

384805

27%

-2%

SPDR S & P 500 ETF Puts

SPY

263940

New

-11%

GENERAL MOTORS CO

GM

234373

52%

-25%

WILLIAMS COS

WMB

223135

31%

-16%

CISCO SYSTEMS Calls

CSCO

205740

140%

-1%

EQUINIX INC Calls

EQIX

189918

-37%

-12%

MEDCO HEALTH SOL Calls

MHS

186516

-44%

-5%

BANK OF AMERICA Calls

BAC

179684

New

-29%

PFIZER INC

PFE

175955

0%

-11%

CITIGROUP INC

C

175413

46%

-28%

EQUINIX INC

EQIX

165993

43%

-12%

C V S CAREMARK CORP

CVS

155399

-26%

-8%

JPMORGAN CHASE & CO

JPM

148530

56%

-11%

TIME WARNER INC NEW

TWX

132965

0%

-18%

CISCO SYSTEMS INC

CSCO

131124

New

-1%

MEDCO HEALTH SOL

MHS

130175

-36%

-5%

HEWLETT PACKARD CO

HPQ

125517

31%

-32%

EL PASO CORP

EP

119203

New

-10%

MARATHON OIL CORP

MRO

103764

New

-19%

M G I C INVESTMENT

MTG

90844

24%

-59%

QUALCOMM INC

QCOM

90559

0%

-13%

WELLPOINT INC

WLP

84770

0%

-23%

JPMORGAN CHASE Calls

JPM

83108

-8%

-11%

UNITEDHEALTH GROUP INC

UNH

81393

0%

-11%

AMDOCS LTD

DOX

79665

-40%

-12%

In the second quarter, Fir Tree purchased put options on SPDR S&P 500 ETF Trust worth $263.9 million. It is currently the second largest holding of Fir Tree’s 13F portfolio. Since the end of June, SPY has lost -10.6%. Jeffrey Altman’s Owl Creek Asset Management also has put options of SPDR S&P 500 ETF Trust. During the second quarter, Altman increased SPY by 100 times (view Jeffrey Altman’s top holdings).

Microsoft Corp. makes up 7.39% of Fir Tree’s equity portfolio. In the second quarter Tannenbaum increased his stake in Microsoft by 27%. Microsoft lost 2% since then but outperformed the market. David Einhorn’s Greenlight Capital and Ken Fisher’s Fisher Asset Management have one of the top 5 positions in the company. During the second quarter, David Einhorn increased stake in Microsoft by 63% while Ken Fisher increased by 1% (view David Einhorn’s new stock picks).

Jeffrey Tannenbaum is also bullish about another mega-cap tech stock: Cisco Systems. During the second quarter, he bought $131 million worth of stake in the company. He also increased his call options position by 140%. Cisco has lost 1% since the end of June. Jean-Marie Eveillard’s First Eagle Investment Management has the largest position in Cisco (check out the $21 billion equity portfolio of Jean-Marie Eveillard’s First Eagle Investment Management).

Fir Tree increased Williams Companies Inc. by 31% during the second quarter. The company has returned -16% since the end of June. Fir Tree has $223 million invested in the company and has the 3rd largest position. The highest position is held by Michael Lowenstein’s Kensico Capital. Lowenstein has $304 million invested in Williams Companies (take a look at Michael Lowenstein’s top holdings)

Fir Tree Partners had several large cap stock picks that underperformed the market. GM lost 25%, BAC lost 29%, C lost 29%, PFE lost 11%, HPQ lost 32% and JPM lost 11%. In fact, the average stock in Fir Tree’s portfolio performed worse than the market but his put options on the SPY and his call options on various stocks provided significant downside protection. The put option on the SPY was especially very timely.

Source: Fir Tree Partners' Portfolio and Recent Activity