Todd Walker's  Instablog

Paulson & Co, Adage Capital, D.E. Shaw and ESL Investments all saw their US equity assets jump by over $1 billion over the 2nd Quarter of 2009. The biggest gainer, John Paulson’s Paulson & Co, saw its US equity assets increase by $7,763mm to a reach a total of $17,127mm. A significant portion of the hedge fund manager’s increase can be attributed to brand new investments in Bank of America (BAC): $2,217mm / 167,990,464 shares, and Sun Microsystems Inc (JAVA): $682mm / 74,000,000 shares, Goldman Sachs Group Inc (GS): $294mm / 2,000,000 shares, and Pepsi Bottling Group Inc (PBG) $283mm / 8,371,800 shares.

The next biggest gainer was Boston-based Adage Capital Partners, which saw its assets jump by $2,949mm to end the quarter at $15,353mm. The firm was founded by Harvard Management Co veterans Robert Atchinson and Phil Gross. Like Paulson, Adage Ca did a lot of buying over the second quarter. The hedge fund’s top buys included: Wyeth (WYE): $209mm / 4,615,700 shares, United Technologies Corp (UTX) $165mm / 3,177,864 shares, General Electric Co (GE): $141mm / 12,099,703 shares, and Schering Plough Corp (SGP): $92mm / 3,680,300 shares.

New York-based D.E. Shaw & Co, saw its assets rise by $2,239mm to $19,223mm. The firm's approach is highly quantitative and it uses a suite of proprietary models designed to exploit several independent sources of market inefficiency. The firm’s top buys were Target Corp (TGT): $125mm / 3,179,498 shares, Banco Bradesco S.A. (BBD) $117mm / 7,962,390 shares, and Burlington Northern Santa Fe (BNI): $97mm / 1,329,745 shares.

Rounding out the top five US Hedge Funds are Eddie Lampert’s ESL Investments and Jim Simons’ Renaissance. Despite recent criticisms (please see earlier article) , Greenwich-based ESL saw its assets rise by $1,007mm to $9,709mm. While Renaissance Technologies captured the top spot as the largest US Equity of hedge fund manager, the quant-shop was the only manager out of the top five to see its assets fall. At the end of Q2 2009, Renaissance’s assets stood at $24,265mm, down by $570mm.

For more information on other top hedge funds and portfolio managers, please visit, HedgeTracker’s Complete Hedge Fund Directory

Disclosure: Long GE, WYE

This morning, Teri Buhl released an exclusive report entitled “Wells Fargo’s Commercial Portfolio is a ticking time bomb.” The report details how Wells Fargo (NYSE: WFC) has hired outside consultants to review its commercial portfolio and reportedly “they are shocked with what they are seeing. Not only do the bank’s outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank.”

To view the complete article on Bankimplode.com, please check out: Exclusive – Wells Fargo’s Commercial Portfolio is a ticking time bomb

As of 6/30/09, notable holders of Wells Fargo include:
#1) Warren Buffett’s Berkshire Hathaway: (302,609,212 shares)
#7) Wellington Management Company (132,768,076 shares)
#9) Dodge & Cox (82,146,205 shares)
#50) CalPERS: (10,693,798 shares)

'Disclosure: No positions'

Ramius Capital's most recent portfolio holdings reveal that the hedge fund manager has shifted its portfolio focus to drug manufacturers. The firm’s exposure to US Equity as of June 30th was $366mm, which is down from $788mm at the end of last year. Of the $136.41mm in added positions over the second quarter, $92.62mm was spent by Ramius Capital on healthcare giants Wyeth (WYE) and Schering Plough (SGP). At the same time, the hedge fund dumped its ETFs and opted for investing in individual equities, selling out of its entire $44.21mm of SPDR S&P 500 ETF (SPY) as well as $22.58mm of SPDR Energy Sector (XLE). Overall, the hedge fund sold $92.54 in ETFs over the quarter.

Heeding the widespread call for future rebounds in commodity prices, the firm opened two new oil company positions and a coal company position. Also in line with the rest of the firm’s portfolio, two new information technology companies were added. The largest newly opened positions include
- Metavante Technologies Inc (MV): $10.1mm, 392,255 shares, 0.3% held, Change: $10.1mm / 392,255 shares
- Foundation Coal Holdings Inc (FCL): $6.6mm, 236,000 shares, 0.5% held, Change: $6.6mm / 236,000 shares
- Petro-Canada (USA) (PCZ): $6.4mm, 166,100 shares, 0.0% held, Change: $6.4mm / 166,100 shares
- InterOil Corporation (USA) (IOC): $6.2mm, 211,194 shares, 0.7% held, Change: $6.2mm / 211,194 shares
- Data Domain Inc (DDUP): $5.7mm, 171,350 shares, 0.3% held, Change: $5.7mm / 171,350 shares

Overall, the hedge fund’s portfolio is weighted towards the healthcare and information technology sectors, with holdings in the top 10 totaling $99.59 and $58.95mm respectively. As a percentage of the portfolio, the healthcare sector accounts for 30.9% and information technology accounts for 15%. As of 6/30/2009, Ramius Capital’s top 10 holdings were:
- Wyeth (WYE): $61.7mm / 1,359,900 shares, 0.1% held
- Schering Plough Corp (SGP): $37.9mm / 1,507,270 shares, 0.1% held
- CPI Corp (CPY): $27.4mm / 1,612,909 shares, 23.0% held
- Actel Corp (ACTL): $25.2mm / 2,353,015 shares, 9.0% held
- Agilysys Inc (AGYS): $12.7mm / 2,703,991 shares, 12.0% held
- Scientific Games Corp (SGMS): $10.8mm / 682,550 shares, 0.7% held
- Tollgrade Communications Inc (TLGD): $10.3mm / 1,963,175 shares, 15.5% held
- Metavante Technologies Inc (MV): $10.1mm / 392,255 shares, 0.3% held
- M & F Worldwide Corp (MFW): $7.0mm / 347,800 shares, 1.8% held
- Foundation Coal Holdings Inc (FCL): $6.6mm / 236,000 shares, 0.5% held

The firm’s top five buys included:
- Wyeth (WYE): Change: $57.7mm / 1,271,300 shares
- Schering Plough Corp (SGP): Change: $34.9mm / 1,389,770 shares
- Metavante Technologies Inc (MV): Change: $10.1mm / 392,255 shares
- Foundation Coal Holdings Inc (FCL): Change: $6.6mm / 236,000 shares
- Petro-Canada (USA) (PCZ): Change: $6.4mm / 166,100 shares

Whereas top five sells included:
- Standard & Poors Depository Receipt Trust (SPY): Change: $-44.2mm / -555,942 shares
- SPDR Energy Sector (XLE): Change: $-22.6mm / -470,400 shares
- Orthofix International N.V. (OFIX): Change: $-18.0mm / -973,980 shares
- Crown Holdings Inc (CCK) : Change: $-10.1mm / -417,425 shares
- Market Vectors Agribusiness ETF (MOO): Change: $-9.9mm / -350,000 shares

Ramius Capital Group was founded in 1994 by Peter Cohen, a former Chairman and CEO of Shearson Lehman Brothers. Following the firm’s announced merger with boutique investment bank Cowen Group, which is expected to be finalized during Q4 2009, the firm is expected to adopt the Cowen Group Inc name.

On the activist front, the firm recently failed to win board seats at photography company CPI Corp (CPY). The hedge fund manager was also part of a long-standing proxy battle with telecommunications company Tollgrade (TLGD) in which it succeeded in adding three members to the company’s board in early August.

For more information on Ramius Capital, please click here. For more information on other top hedge funds and portfolio managers, please visit, HedgeTracker’s Complete Hedge Fund Directory              

Disclosure: Long WYE

Maverick Capital's most recent portfolio holdings reveal that the long/short orientated hedge fund bought up Computer Hardware, Drug and Banking companies over the 2nd Quarter of 2009, while dumping Telecom, Big Box Retailer and Communication Equipment companies.

Maverick's exposure to US traded equities rose by $915mm over the quarter, ending at $6,444mm. The firm, one of the US’s largest and most revered hedge fund managers, was founded in 1990 by Lee S. Ainslie and Evan, Sam, and Charles Wyly. Before starting Maverick Capital, Mr. Ainslie was a managing director at Julian Robertson’s Tiger Management Corporation. When evaluating companies, the firm typically looks for a combination of value and growth characteristics.

The firm’s largest purchase over the quarter was a new position in Hewlett Packard Co (HPQ). The firm purchased $204.8mm / 5,298,273 shares of the computer hardware company’s stock. Also in the computer hardware sector, the firm reported a large holding in Apple Inc (AAPL), which stood at $248.3mm / 1,743,470 shares. Throughout the quarter, the firm slightly trimmed its AAPL position, selling -$1.8mm / -12,841 shares. As of 6/30/09, Maverick’s other computer hardware positions included:
- Netapp Inc (NTAP): $152.9mm, 7,753,018 shares, 2.3% held, Change: $-7.9mm / -398,334 shares, Sector: Information Technology
- Leap Wireless International Inc (LEAP): $83.4mm, 2,532,494 shares, 3.6% held, Change: $83.4mm / 2,532,494 shares
- DigitalGlobe Inc (DGI): $11.1mm, 580,000 shares, 1.3% held, Change: $11.1mm / 580,000

The hedge fund manager also sought out some value plays in the Banking Sector by buying up shares in State Street Corp (STT) {$101.9mm / 2,159,852 shares}, JP Morgan Chase (JPM) {$63.7mm / 1,868,588 shares} and Fifth Third Bancorp (FITB) {$27.4mm / 3,863,025 shares}. Notably, it turned sour on PNC Financial Services Group Inc (PNC), as it sold its entire position of -$55.6mm / -1,897,270 shares.

The firm also favored a select number of Drug Companies over the quarter, as it bought up shares in:
- Celgene Corp (CELG): $113.1mm / 2,363,132 shares, 0.5% held, Change: $113.1mm / 2,363,132 shares
- Wyeth (WYE): $235.3mm / 5,184,292 shares, 0.4% held, Change: $55.6mm / 1,224,790 shares
- Gilead Sciences Inc (GILD): $140.1mm / 2,990,385 shares, 0.3% held, Change: $43.1mm / 919,461 shares

Meanwhile, the hedge fund manager turned negative on a select number of Communication Equipment stocks, including a significant reduction in its Research In Motion Ltd (RIMM) stake, as well as complete sell-outs of American Tower Corp (AMT) Change: {-$41.1mm / -1,351,540}, and Qualcomm Inc (QCOM) {-$161.9mm / -4,160,846}. At the end of the quarter, the firm’s sector holdings included:
- Research In Motion Ltd (USA) (RIMM): $135.8mm, 1,909,900 shares, 0.3% held, Change: $-162.9mm / -2,291,579 shares
- America Movil S.A. de C.V. (ADR) (AMX): $103.8mm, 2,680,409 shares, 0.1% held, Change: $54.5mm / 1,407,050 shares
- NII Holdings Inc (NIHD): $62.4mm, 3,270,091 shares, 2.0% held, Change: $62.4mm / 3,270,091 shares
- Infinera Corp (INFN): $31.3mm, 3,424,778 shares, 3.6% held, Change: $0.0mm / 3,930 shares

As for Big Box Retail, the firm sold-out of Best Buy Co Inc (BBY), {-$150.7mm / -3,969,750 shares}, while also slashing its Sears Holdings Corp (SHLD) and Walgreen Co (WAG). It did identify a couple of bright spots, as it bought up Gap Inc (GPS) and Chicos Fas Inc (CHS) shares. The firm’s retail positions included:
- Walgreen Co (WAG): $193.7mm / 6,589,658 shares, 0.7% held, Change: $-77.3mm / -2,629,347 shares
- Gap Inc (GPS): $162.3mm / 9,896,009 shares, 1.4% held, Change: $162.3mm / 9,896,009 shares
- Chicos Fas Inc (CHS): $114.0mm / 11,719,279 shares, 6.6% held, Change: $48.3mm / 4,963,402 shares
- Sears Holdings Corp (SHLD): $29.8mm / 447,728 shares, 0.4% held, Change: $-107.7mm / -1,619,385 shares
- Finish Line Inc (FINL): $27.4mm / 3,687,488 shares, 6.8% held, Change: $-6.8mm / -914,754 shares

Excluding the positions mentioned above, Maverick Capital's other top overall holdings included:
- Cognizant Technology Solutions Corp (CTSH): $214.2mm / 8,022,136 shares, 2.7% held, Change: -$3.4mm / -126,763 shares
- Pepsico Inc (PEP): $203.9mm / 3,709,858 shares, 0.2% held, Change: $103.5mm / 1,882,388 shares
- Lorillard Inc (LO): $171.5mm / 2,531,080 shares, 1.5% held, Change: -$49.0mm / -722,693 shares
- Progressive Corp (PGR): $165.3mm / 10,941,615 shares, 1.6% held, Change: $57.1mm / 3,781,556 shares
- Staples Inc (SPLS): $163.8mm / 8,115,753 shares, 1.1% held, Change: $163.8mm / 8,115,753 shares

For more information on the hedge funds mentioned in this article, please see free HedgeTracker’s free Hedge Fund Directory.

Diclosure: Long JPM and WYE

Hedge fund manager Greenlight Capital sold out of a number of positions over the second quarter of 2009. Overall, the firm made purchases of $417mm, while selling $1,148mm, for a net change of $730mm. Since there seemed to be no broad trends regarding Greenlight Capital’s investments over the quarter, it is clear the firm screened equity investments on a company by company basis. The four new purchases made over the quarter include two insurers, a healthcare company, and a natural gas producer:
Cardinal Health Inc (CAH) - Change 3,971,173 Shares / $121.32 mm
Transatlantic Holdings Inc (TRH) - Change 325,000 Shares / $14.08 mm
ATP Oil & Gas Corp (ATPG) - Change 1,750,500 Shares / $12.18 mm
Endurance Specialty Holdings Ltd (ENH) - Change 256,359 Shares / $7.51 mm

While the firm only established four new equity positions over the quarter, it closed out of a staggering 21 positions. The largest of the fund's closed positions included:
streetTRACKS Gold Trust (GLD) - Change -4,209,090 Shares / -$380.00 mm
Target Corp (TGT) - Change -3,475,444 Shares / -$119.52 mm
Hess Corporation (HES) - Change -1,300,000 Shares / -$70.46 mm
Commscope Inc (CTV) - Change -3,717,890 Shares / -$42.24 mm
MEMC Electronic Materials Inc (WFR) - Change -3,643,849 Shares / $-64.90 mm

The firm’s Top 10 Holdings in order of largest amount held include Pfizer (PFE), URS Corp (URS), Teradata Corp (TDC), Wyeth (WYE), Cardinal Health Inc (CAH), Market Vectors Gold Miners ETF (GDX), Allegheny Energy Inc (AYE), EMC Corp (EMC), Einstein Noah Restaurant Group (BAGL) and Aspen Insurance Holdings Ltd (AHL). These $1.24 billion in value positions accounted for over 60% of Greenlight’s $2.02 billion portfolio.

As far as existing positions are concerned, there were identifiable trends regarding the fund’s allocation. The firm added to its existing positions in healthcare and insurance, whereas it sold off a fair amount of its existing shares in technology. The largest changes of existing positions include:
Pfizer Inc (PFE) - $1.80mm held (11,987,000 shares); Change 6,057,000 Shares / $90.86 mm
EMC Corp (EMC) - $9.49mm held (7,244,000 shares); Change -5,576,000 Shares / -$73.05 mm
Wyeth (WYE) - $1.30mm held (2,860,000 shares); Change 1,430,000 Shares / $64.91 mm
MEMC Electronic Materials (WFR) - $6.49mm held (3,643,849 shares); Change -3,643,849 Shares / -$64.90 mm
URS Corp (URS) - $1.58mm held (3,194,924 shares); Change -1,240,000 Shares / -$61.40 mm
Aspen Insurance Holdings Limited (AHL) - $9.25mm held (4,140,000 shares); Change 1,761,468 Shares / $39.35 mm

The fund's Co-founder David Einhorn, whose claim to fame is the short of Lehman Brothers Inc. prior to its failure, adheres to a strict value-oriented investment philosophy. He founded the firm in 1996 with Co-President Jeffrey A. Keswin. The firm manages a series of value-oriented hedge funds and reinsurer Greenlight Capital Re.

Disclosure: Long WYE, PFE

BP Capital Management’s second quarter SEC filing shows that the hedge fund manager is focusing solely on energy companies these days. While the firm’s founder and Chief Investment Officer T. Boone Pickens has been publically supporting clean energy technologies, his stock portfolio suggests that he is still a strong believer in dirty energy. After selling-out of its basic materials sector holdings, the fund now holds 100% of its portfolio in the energy sector, specifically oil and natural gas companies.

BP Capital’s top holding, offshore oil drilling and exploration company Transocean Inc (RIG), was trimmed over the quarter by 125,000 shares / $9.2mm. Even after the share sales, the company still accounts for 22.6% of the hedge fund’s portfolio, representing $26.7mm or 360,000 shares. The firm’s other top 5 positions included:
Suncor Energy Inc (USA) (SU) - $18.81mm; 620,000 Shares, 15.9% of Portfolio
Occidental Petroleum Corp (OXY) - $17.11mm; 260,000 Shares, 14.5% of Portfolio
Devon Energy Corp (DVN) - $15.28mm; 280,400 Shares, 12.9% of Portfolio (Purchased 30,400 shares)
Cabot Oil & Gas Corp (COG) - $8.43mm; 275,000 Shares, 7.1% of Portfolio (Purchased 75,000 shares)

Independent oil and gas companies account for 51% of BP Capital’s portfolio. These companies should be the first to rebound (in the form of higher prices) when demand picks up, including the aforementioned Occidental, Devon, and Cabot, as well as:
Chesapeake Energy Corp (CHK) - $6.64mm ; 335,000 Shares, 5.6% of Portfolio
Forest Oil Corp (FST) - $3.88mm ; 260,000 Shares, 3.3% of Portfolio
XTO Energy Inc (XTO) - $3.62mm ; 95,000 Shares, 3.1% of Portfolio
Denbury Resources Inc (DNR) - $3.17mm ; 215,000 Shares, 2.7% of Portfolio
Anadarko Petroleum Corp (APC) - $2.27mm ; 50,000 Shares, 1.9% of Portfolio

Selling Activity
Besides Transocean, BP Capital also trimmed its exposure to oil and gas equipment services provider Schlumberger Ltd (SLB) by selling 75,000 shares, bringing down its holdings to 100,000 shares or $5.4mm. Of the eight positions BP Capital exited, five were basic materials stocks. The remaining three exited positions included oil and gas equipment manufacturer Halliburton Co (HAL), industrial equipment manufacturer Shaw Group (SGR), and independent oil and gas company McMoran Exploration Co (MMR). Although an obvious departure from the fund’s general sentiment towards independent oil and gas companies over the quarter, BP’s divestment of MMR does not come unwarranted. Over the past year, the stock has fallen from a peak of $34 in August 2008 to a recent low of $8, which has been fueled by unsustainable operating margins within the company.

BP Capital exited the following positions over the second quarter:
Alpha Natural Resources Inc (ANR) - Change -230,000 Shares / $-4.08mm
Consol Energy Inc (CNX) - Change -150,000 Shares / $-3.79mm
Fluor Corp (FLR) - Change -219,000 Shares / $-7.57mm
Foster Wheeler Ltd (FWLT) - Change -222,000 Shares / $-3.88mm
Halliburton Co (HAL) - Change -200,000 Shares / $-3.09mm
Massey Energy Co (MEE) - Change -325,000 Shares / $-3.29mm
McMoran Exploration Co (MMR) - Change -200,000 Shares / $-0.94mm
Shaw Group Inc (SGR) - Change -80,000 Shares / $-2.19mm

As reported in July, T. Boone’s BP Capital Energy Fund II and Energy Equity Fund II posted 79% and 14% returns, respectively, through the first half of 2009. For more information on BP Capital, please click here. For more information on top hedge funds and portfolio managers, please see, HedgeTracker’s Complete Hedge Fund Directory