Eric Mindich, the founder of Eton Park Capital Management, spent 15 years at Goldman Sachs (GS) before founding his hedge fund in 2004. He started working at Goldman after high school. He studied economics at Harvard College and spent summers at Goldman. After graduation, he led the equities arbitrage department and managed the equities division of Goldman. He became a partner at Goldman Sachs when he was 27 in 1994, the youngest partner ever in the history of Goldman Sachs.
When Eton Park was launched in 2004, it had around $3 billion assets under management. Thanks to Mindich’s successful investments, the fund tripled its size in only seven years. Today, Eton Park manages approximately $10 billion.
Top 20 positions in Eton Park Capital Management’s 13F portfolio as of September 30, 2011:
Company Name | Ticker | Value | Activity |
SPDR GOLD TRUST Call | 1217453 | -11% | |
VIACOM INC NEW | VIA.B | 800461 | 94% |
NEWS CORP | 400673 | New | |
Y P F SOCIEDAD ANONIMA | 334432 | 0% | |
NIELSEN HOLDINGS NV | 312960 | 0% | |
MORGAN STANLEY | 310500 | 53% | |
EBAY INC | 272783 | 106% | |
COMCAST CORP NEW | 266212 | 33% | |
SPDR GOLD TRUST Put | 241657 | New | |
WILLIAMS COS | 231088 | 103% | |
APPLE INC | 228708 | 20% | |
DOLLAR TREE INC | 225330 | 0% | |
MSCI INC | 212310 | 19% | |
BP PLC | 202208 | 0% | |
SPDR S & P 500 ETF TRUST | 172569 | New | |
YUM BRANDS INC Call | 160518 | 0% | |
ELECTRONIC ARTS INC Call | ERTS | 153375 | 275% |
JPMORGAN CHASE Call | 150600 | 0% | |
PFIZER INC Call | 150280 | 0% | |
MEDCO HEALTH SOLNS | 148126 | New |
Mindich reduced his portfolio’s value from $9.5 billion at the end of June to $7.8 billion at the end of September. He also reduced the number of different positions in the portfolio. At the end of the second quarter, Eton Park reported to own 71 different positions; the number was reduced to 53 at the end of the third quarter.
Mindich sold out many positions over the third quarter. For instance, he sold out his equity stakes in SPDR Gold Trust, reduced his position in the GLD call options by 11% and initiated a brand new $242 million of GLD put options. Since the end of September, GLD returned 7.17%, lower than the 12.00% for SPY. Mindich also sold out his stakes in Marathon Oil Corp (MRO), Bank of America Corp (BAC), and Ace Ltd (ACE).
During the third quarter, Mindich increased his stakes in Viacom Inc by 94%. As of September 30, his Eton Park Capital Management had over $800 million invested in VIA.B. This position returned 13.68% so far in the fourth quarter, beating the 12.00% for SPY. Mindich also increased his positions in Morgan Stanley (MS).
At the end of September, Eton Part owned more than $300 million worth of MS shares and the stock returned 28.73% since then, more than doubling the return of the market. Ken Heebner’s Capital Growth Management also invested nearly $100 million in MS shares.
Mindich is also bullish about News Corp. In the third quarter, he initiated a brand new $400+ million of NWSA, which generated a return of 14.28% since the end of September, versus 12.00% for SPY. Mindich bought NWSA call position as well. Stephen Mandel is also bullish about NWSA. His Lone Pine Capital invested $400+ million in this stock. In addition to NWSA, Mindich also bought new stakes in SPDR S&P 500 ETF Trust , Medco Health Solutions Inc and Motorola Mobility Holdings Inc (MMI).
We like Mindich and his investment style. His biggest bet was the GLD call, but he opened another GLD put position to hedge against the risk. He also sold his stakes in GLD stocks and some of the call options. So we think investors may also consider trimming their GLD positions. Additionally, the second and third biggest positions in his portfolio beat the market since the end of September.
We encourage investors to imitate Mindich’s stock picks. Our research has shown that investors were able to beat the market on the average by imitating top stock picks successful hedge fund managers like Eric Mindich.
Disclosure: I am long SPY, MS.
