Four times a year, hedge funds & asset managers with > $100 million AUM (assets under management) are required to report to the SEC their holdings from the previous quarter. I check these 13F filings quarterly just to get a sense as to where these funds are putting their money sector wise. If you just sit down and do some simple number crunching between last quarter's 13F and this quarter's 13F, you can see exactly where these funds have been moving their money.
Please note, these 13F's should be treated as a lagging indicator simply because the 13F's that were just released August 10-15th 2008 show the funds' holdings as of June 30th 2008. So, in the past month and a half, they could have completely changed their portfolio. But, at the same time, its easy to see which sectors they are flocking to. See more of my introduction to the current series here.
Next up, we have Clarium Capital. Clarium is a $6 billion global macro hedge fund run by Peter Thiel, the co-founder of PayPal. Although they had a rough July (-6.8%), Clarium is still up over 45% year to date. Assets under management have recently ballooned to the highest amount in Clarium's history. It will be interesting to see how effective Clarium will be at deploying this new capital. And, to those who want a little more background on Thiel and his investment style, I first wrote about him here.
Now, to the 13F. I actually hesitated even doing a 13F analysis on Clarium Capital simply because when I say they are a global macro fund, I really mean it. The 13F they filed with the SEC details only the equities held in their portfolio. And all their equities combined only totaled a little over $93 million. So, considering they have over $6 billion AUM, we have a bit of a problem here. The bulk of their holdings/trades seem to be in the actual commodities, futures, and currency markets themselves. The 13F only details equities held. So, I just wanted to point that out to everyone before proceeding further. I still think it's interesting to at least see what they hold. But take it with a grain of salt, because the majority of their capital is deployed in other financial instruments/markets.
The following are Clarium Capital's current holdings as of June 30th 2008, as released in their most recent 13F filing with the SEC. I've compared the positions in this most recent 13F to last quarter's 13F and here are the changes they made to their portfolio:
New Positions: (in no particular order)
Wendy's (NASDAQ:WEN) 7,400 shares
Pinnacle Air (PNCL) 15,220 shares
Fairfax Financial (FFH) 15,000 shares
Nvidia (NASDAQ:NVDA) 18,000 shares
NRG Energy (NYSE:NRG) 9,776 shares
MFA Mortgage Investments (NYSE:MFA) 50,000 shares
Marathon Oil (NYSE:MRO) 10,000 shares
Johnson and Johnson (NYSE:JNJ) 12,000 shares
ITT Corp (NYSE:ITT) 35,000 shares
Istar Financial (SFI) 99,800 shares
Honeywell (NYSE:HON) 17,700 shares
Conoco Phillips (NYSE:COP) 107,900 shares
Chevron (NYSE:CVX) 6,000 shares
Canadian Superior Energy (SNG) 500,000 shares
Black and Decker (BDK) 23,437 shares
Altria Group (NYSE:MO) 52,639 shares
Aircastle (NYSE:AYR) 23,400 shares
Frontier Oil (NYSE:FTO): Increased their position by 1353%
Occidental Petroleum (NYSE:OXY): Increased their position by 302%
CVS Caremark (NYSE:CVS): Increased their position by 179%
American Express (NYSE:AXP): Increased their position by 111%
Colgate Palmolive (NYSE:CL): Increased their position by 77%
Oneok Inc (NYSE:OKE): Increased their position by 75%
Sothebys (NYSE:BID): Increased their position by 60%
Nucor (NYSE:NUE): Increased their position by 49%
Cabot Oil and Gas COG): Increased their position by 42%
Foster Wheeler (FWLT): Increased their position by 22%
Walmart Stores (NYSE:WMT): Increased their position by 21%
McDonald's (NYSE:MCD): Increased their position by 14%
Royal Caribbean (NYSE:RCL): Increased their position by 11%
Hewlett Packard (NYSE:HPQ): Increased their position by 3%
Mylan (NASDAQ:MYL): Decreased their position by 25%
Procter and Gamble (NYSE:PG): Decreased their position by 75%
Removed Positions (Positions Clarium sold out of completely):
Zimmer Holdings (ZMH)
Western Refining (NYSE:WNR)
United Technologies (NYSE:UTX)
McGraw Hill (MHP)
Lockheed Martin (NYSE:LMT)
Leggett and Platt (NYSE:LEG)
General Motors (NYSE:GM)
General Dynamics (NYSE:GD)
Cisco Systems (NASDAQ:CSCO)
Anheuser Busch (NYSE:BUD)
Positions with no change:
Schering Plough (SGP)
Burlington Northern (BNI)
Top 10 holdings by % of portfolio:
1. Hewlett Packard (HPQ)
2. Conoco Phillips (COP)
3. American Express (AXP)
4. McDonalds (MCD)
5. Burlington Northern (BNI)
6. Occidental Petroleum (OXY)
7. Fairfax Financial (FFH)
8. Foster Wheeler (FWLT)
9. Royal Caribbean (RCL)
10. Frontier Oil (FTO)
Breakdown: Clarium's portfolio really looks "plain jane," doesn't it? There's nothing ridiculously exciting going on. It almost reminds me of a portfolio Warren Buffett would put his stamp of approval on. AXP, BNI, COP, and MCD are for the most part just slow and steady names that chug along with consistent returns. Again, this is why I want to reiterate that Clarium takes the majority of their positions in the commodities, futures, or currency markets since they truly are a global macro fund. The equity holdings reported in this SEC filing represent just a small sliver of their assets under management. So, on the equity side of things, Thiel has focused mostly on larger cap names with international exposure.
Clarium is definitely heavily weighted in the energy sector. They brought Conoco Phillips (COP) in as a new holding and bumped it up all the way to their 2nd largest equity position. He was also out adding to his Frontier Oil (FTO) and Occidental Petroleum (OXY) positions in a big way. Keep in mind that these holdings were reported as of June 30th, 2008 (ie: Crude Oil hadn't started its rapid descent yet). So, we'll have to see next quarter whether he was building up long term positions in these names, or merely trying to ride the oil wave higher.
Thiel has a large bet on tech, but pretty much solely through Hewlett Packard (HPQ). He added some Nvidia (NVDA), but HPQ is the fund's top equity holding. I can't disagree with this choice, as HPQ has been firing on all cylinders with Mark Hurd really turning the company in the right direction. But, even though the company is performing well, the stock really isn't.
I also noticed that Thiel seems to also be playing the 'pooring of America' theme. His MCD and WMT positions give him exposure to the companies that offer everything on the cheap. But, what surprised me a little bit was his Royal Caribbean (RCL) stake being as large as it is. To me, this translates to a discretionary item since its a cruise/vacation after all. And, with the economy the way it is, you'd think that reservations would be down. But, Thiel obviously sees something here, so it might be worth looking at more in depth.
I also want to point out Thiel's position in American Express (AXP), now his fund's 3rd largest equity position. I'm seeing more and more funds pick up stakes in AXP. For the most part, funds have favored Mastercard (NYSE:MA) and even Visa (NYSE:V) for their payment processing business models. Now though, it seems more funds are rotating into AXP to get some credit exposure as well. While I think American Express (AXP) is a well run company and typically has a higher credit grade portfolio, I still question adding this name. The credit exposure will continue to provide headwinds for the company and I'm curious to see what these funds do with this position over time.
Lastly, I just wanted to mention Burlington Northern (BNI). If there is one other common theme amongst hedge fund holdings, it is the rails. No matter how small or large their position, practically everyone has at least some sort of exposure to the rails. For Thiel & Clarium, BNI is their 5th largest equity holding.
You can view Clarium Capital's entire 13F as filed with the SEC here.