Paul Tudor Jones is one of the most successful traders of the past century. As of March 2011, he was estimated to have a net worth of $3.3 billion and was ranked as the 336th richest person in the world, according to Forbes. In 1980, Jones founded Tudor Investment Corporation, which is today a leading asset management firm.
One of Jones’ earliest and major successes was predicting Black Monday in 1987. He held large short positions during that period, tripling his money. Paul Tudor mainly focuses on equity, venture capital, debt, currency, and commodity markets.
Top 20 positions in Tudor’s portfolio as of September 30, 2011
Company Name | Ticker | Value | Activity |
POWERSHARES QQQ TRUST PUTS | 643003 | New | |
SPDR S & P 500 ETF TRUST CALLS | 271560 | 1100% | |
ISHARES CHINA CALLS | 183121 | -36% | |
SPDR GOLD TRUST CALLS | 110642 | 367% | |
SPDR S & P 500 ETF PUTS | 92218 | New | |
ISHARES EMERGING MARKETS CALLS | 73701 | New | |
GOLD MINERS ETF CALLS | 49671 | 80% | |
ISHARES JAPAN | 49192 | New | |
MICROSOFT CORP CALLS | 36825 | -28% | |
SPDR GOLD TRUST | 31612 | New | |
YAHOO INC CALLS | 31337 | New | |
CENTURYLINK INC | 27771 | 442% | |
GOLD MINERS ETF CALLS | 27595 | New | |
SECTOR SPDR TRUST PUTS | 26330 | New | |
PFIZER INC | 20058 | New | |
COMCAST CORP NEW | 19039 | 5967% | |
BAXTER INTL | 18481 | New | |
EXPRESS INC | 17395 | New | |
GOOGLE INC | 17363 | -38% | |
LIFE TECHNOLOGIES CORP | 17201 | 7893% |
Jones increased his 13F portfolio’s value from $1.98 billion at the end of June to $2.58 billion at the end of September. Though the value of the portfolio was higher, the number of positions in the portfolio was reduced from 758 at the end of June to 686 at the end of the third quarter. Jones sold out many positions, including iShares FTSE Xinhua China 25 Index (FXI), iShares Barclays 20+ year Treasury Bonds (TLT), iShares MSCI Emerging Markets Index (EEM), Dell Inc Call (DELL), Prologis (PLD), and Alexandria Real Estate Equities Inc (ARE).
On the other hand, Jones also opened a few new positions over the third quarter. For instance, he initiated a brand new $20 million position in Pfizer Inc (PFE). The stock returned 10.86% since the end of the third quarter, versus the 6.10% for SPY in the same period. Ken Fisher also invested nearly $400 million in PFE shares. In addition to PFE, Jones also bought new stakes in Baxter International Inc (BAX), Express Inc (EXPR), and Vodafone Group (VOD).
Jones was also bullish about Centurylink Inc (CTL). He significantly increased his stakes in this position by 442% over the third quarter. According to Tudor Investment’s latest 13F, the fund had $28 million invested in CTL at the end of September. CTL returned 9.75% since September 30, beating the market by more than 3 percentage points. Jim Simons also had $11 million worth of CTL in his portfolio.
“Key is to play great defense, not great offense”, says Jones, who once generated three-digit returns in five consecutive years. His large put positions in major indices protected him against further declines in the market and his call options on gold stocks, major indices and country ETFs netted him large gains in these volatile markets. Our research indicates that by focusing on the best stock picks of hedge funds like Tudor Investment, investors are more likely to beat the market in the long term.
Additional disclosure: I am short TLT.
