Many hedge fund managers had MBA degrees. But there are also some who dropped out of an MBA program of a top business school and started their own hedge funds. Israel Englander, founder of Millennium Management, dropped out of NYU’s MBA program to work on Wall Street. He started Millennium in 1989 with $35 million. By 2005, the fund returned 17% annually and its AUM grew to $8 billion. Today, the company has a portfolio valued at more than $11 billion, and Englander has become one of the top paid fund managers. According to Forbes, as of September 2011, Englander is the 651st richest person in the world, with a net worth of about $2.1 billion.
Top 20 positions in the 13F portfolio of Millennium at the end of the third quarter:
Company Name | Ticker | Value | Activity |
SPDR GOLD TRUST | 109935 | 22% | |
NISOURCE INC | 58862 | 66% | |
HESS CORP | 56303 | 52% | |
OCCIDENTAL PETROLEUM | 53302 | 31% | |
EOG RESOURCES INC | 53042 | 1210% | |
EXPRESS SCRIPTS INC | 50244 | 105% | |
KINETIC CONCEPTS INC | 49306 | 571% | |
MOTOROLA MOB WI | MMI | 44084 | 316% |
CEPHALON INC | 42948 | 129% | |
GOODRICH CORP | 41703 | 435% | |
NALCO HOLDING | 40881 | New | |
ANADARKO PETROLEUM | 40825 | -14% | |
S L M CORP | 38182 | 110% | |
DEVON ENERGY CORP NEW | 37722 | 6% | |
APACHE CORP | 36954 | 407% | |
C M S ENERGY CORP | 35408 | -20% | |
FIRSTENERGY CORP | 35245 | -13% | |
ENERGEN CORP | 34701 | 0% | |
CHESAPEAKE ENERGY CORP | 34657 | 165% | |
PIONEER NATURAL RES | 34495 | 43% |
Over the third quarter, the total value of Millennium’s 13F portfolio was reduced from $12.6 billion to $9.7 billion at the end of September. Englander also cut the number of different positions from 2739 at the end of the second quarter to 2307 at the end of September. Englander sold out many positions. For example, Millennium reported to own $40 million worth of Southern Union Co (SUG) at the end of June. According to the latest 13F filing of Millennium, the fund did not own any shares of SUG at the end of September. SUG returned 3.06% since the end of September, versus 9.77% for SPY.
On the other hand, Millennium also opened some new positions. The largest new position it opened during the third quarter was Nalco Holdings Company (NLC). Millennium initiated a brand new $41 million position in NLC shares. Until December 1, NLC returned 10.92% since the end of September, versus 10.45% for SPY during the same period. Paulson & Co also initiated brand new $300+ million of NLC over the third quarter.
Englander was also bullish about EOG Resources Inc (EOG). In the third quarter, Millennium Management boosted its stakes in EOG by 1210%. At the end of September, Millennium disclosed to own $53 million worth of EOG shares. Since then, EOG returned a stunning 42.59%, heavily beating the market by nearly 33 percentage points. Ric Dillon’s Diamond Hill Capital also invested over $100 million in EOG.
Other large cap stocks Englander was in favor of include Hess Corp (HES), Occidental Petroleum Corp (OXY), Express Scripts Inc (ESRX), Motorola Mobility Holdings (MMI), and Anadarko Petroleum Corp (APC). We like Englander and Millennium Management. The top six positions in which Millennium invested more than $50 million each had a weighted average return of 15.22% since the end of September, outperforming the market by over 5 percentage points. We encourage investors to focus on the top stock picks of Millennium Management and do some in-depth research on these stocks for their own portfolio.
Disclosure: I am long CHK, FE.
