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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

QQQ

643003

New

SPDR S & P 500 ETF TRUST CALLS

SPY

271560

1100%

ISHARES CHINA CALLS

FXI

183121

-36%

SPDR GOLD TRUST CALLS

GLD

110642

367%

SPDR S & P 500 ETF PUTS

SPY

92218

New

ISHARES EMERGING MARKETS CALLS

EEM

73701

New

GOLD MINERS ETF CALLS

GDX

49671

80%

ISHARES JAPAN

EWJ

49192

New

MICROSOFT CORP CALLS

MSFT

36825

-28%

SPDR GOLD TRUST

GLD

31612

New

YAHOO INC CALLS

YHOO

31337

New

CENTURYLINK INC

CTL

27771

442%

GOLD MINERS ETF CALLS

GDX

27595

New

SECTOR SPDR TRUST PUTS

XLE

26330

New

PFIZER INC

PFE

20058

New

COMCAST CORP NEW

CMCSA

19039

5967%

BAXTER INTL

BAX

18481

New

EXPRESS INC

EXPR

17395

New

GOOGLE INC

GOOG

17363

-38%

LIFE TECHNOLOGIES CORP

LIFE

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.

Source: Billionaire Paul Tudor Jones's Top Stock Picks

Additional disclosure: I am short TLT.