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Israel Englander founded Millennium Management in 1989. At that point, he did it with just a B.S. in finance and $35 million. Since then, Englander has risen to become one of the top paid fund managers in the world (see the entire list here), growing the fund to over $11 billion and making himself one of the richest men in the world in the process.

Englander’s fund is one of the largest funds in the world, both in size and scope. He uses his entire network of over 120 analysts to manage over 2,000 positions. Englander makes his profits by exploiting small market inefficiencies, disparities that are sometimes so small that the average investor would not be able to mirror him because so much of the advantage would be eaten away by transaction fees.

Even if you tried to just focus on his new high conviction stock picks, the result still isn’t the same. For instance, Englander has lost 13% on his new high conviction stock picks since the end of last quarter, versus an 8.85% loss for the S&P 500 (NYSEARCA:SPY) during the same period. These are the stocks he at least doubled his position during the second quarter (see Englander's entire portfolio activity).

Company

Ticker

Value (x1000)

Activity

Return Since June

CITIGROUP INC

C

78593

308%

-30%

APPLE INC

AAPL

62607

117%

14%

OCCIDENTAL PETRO

OXY

59035

New

-18%

KEYCORP NEW

KEY

55984

277%

-26%

ALPHA NATURAL RES

ANR

53276

457%

-26%

HESS CORP

HES

52947

169%

-21%

DISCOVER FINANCIAL

DFS

50852

547%

-7%

COMERICA INC

CMA

49418

101%

-32%

U S BANCORP DEL

USB

46101

251%

-11%

E N S C O PLC

ESV

44084

118%

-8%

C M S ENERGY CORP

CMS

43844

1687%

-1%

CAPITAL ONE FINANCIAL

COF

42993

304%

-15%

ARCH COAL INC

ACI

39836

248%

-23%

P N C FINANCIAL

PNC

39654

161%

-17%

QUICKSILVER RESOU

KWK

38864

395%

-35%

VALERO ENERGY CORP

VLO

37913

150%

-13%

BAKER HUGHES INC

BHI

35823

123%

-17%

EXPRESS SCRIPTS INC

ESRX

35700

537%

-14%

AVALONBAY COMMU

AVB

34376

New

6%

NORTHERN TRUST CORP

NTRS

33699

1533%

-18%

E Q T CORP

EQT

33636

2867%

12%

NISOURCE INC

NI

33610

699%

7%

JPMORGAN CHASE & CO

JPM

31530

307%

-14%

EBAY INC

EBAY

31376

100%

-8%

EXXON MOBIL CORP

XOM

29671

739%

-9%

KINDER MORGAN INC

KMI

29541

1072%

-10%

LAS VEGAS SANDS CORP

LVS

29044

138%

14%

BANK OF NEW YORK

BK

28902

11775%

-19%

GREAT PLAINS ENERGY

GXP

28197

132%

-7%

ROWAN COMPANIES

RDC

27986

105%

-6%

The biggest reason for Englander’s poor performance so far this quarter is his position in Citigroup. The position is the largest high conviction pick, at a value of almost $78.6 million and it is also his largest loss, at -30%. To make matters worse, Englander had increased his position in the company by 308% last quarter. Englander isn’t the only hedge fund manager to make a decision to increase his position in Citigroup last quarter. Ken Heebner of Capital Growth Management did the same thing and so did many others. But that doesn’t mean it was smart. Big players like John Paulson of Paulson & Co sold a fifth of his gigantic stake in the company (check out Paulson’s top picks).

Englander has however done better than many of his contemporaries so far this quarter (See the worst performing funds here). His positions in Las Vegas Sands returned 14% since the end of the second quarter, as did his position in the ever popular Apple (check out the top 10 most popular hedge fund stocks). Englander also enjoyed modest returns from his positions in EQT, NI Sources and Avalon Bay, earning 12%, 7% and 6%, respectively.

Overall, we like Englander but mirroring him as a private investor isn’t a good idea unless you can afford to maintain an extensive portfolio, have extremely low transaction fees and you can afford to risk missing short-term opportunities.

Disclosure: I am long C, SPY.

Source: Israel Englander's New High Conviction Stock Picks