Davy Bui's  Instablog

With the recent market rally, 2009 Q2 13F filings hold the allure of possibly yielding some indication as to what these respected managers may think of the rally.

You can view Seth Klarman and Baupost's hedge fund portfolio changes in spreadsheet form:. As always, the caveat with Klarman's 13F filings is that Baupost plays in many different sandboxes (for instance, their recent participation in bailing out CIT Group ). Thus, a lack of activity may not necessarily indicate a bearish slant -- the fund could just be pursuing better opportunities in other arenas than equities.

• According to the filing, Baupost initiated no new positions. Domtar (UFS) shows up due to their reverse-split but that is not a new position.
• Klarman added meaningfully to only one position - Alliance One International (AOI), a tobacco leaf merchant sporting a PE ratio around 2.
• Notable divestitures included Linn Energy (LINE). However, Klarman maintained the Breitburn Energy LP (BBEP) position despite the distribution suspension, suggesting LINE was sold due to valuation or some other company-specific change rather than a bearish opinion on energy.
• Baupost also reduced positions in Horizon Lines (HRZ) and PDL Biopharma (PDLI) by 19%. I have talked about Horizon Lines, the heavily indebted Jones Act shipper, extensively in the past.

Because Martin Whitman's SEC filing encloses holdings across the entire Third Avenue fund family, Whitman's Q2 2009 portfolio holdings are best viewed in spreadsheet form.

• Only two new positions added: Provident Energy Trust (PVX) and HCC Insurance Holdings (HCC).
• The most notable stock sold was Radian Group (RDN). Whitman is a notorious vulture investor, especially in financial stocks, which hurt him in the last year or so. Of course, RDN has rallied from under $2 to over $7 per share since the close of Q2 so it looks like the pain just keeps on coming for Third Avenue.
• Weyerhauser (WY) and especially Pharmaceutical Product Development (PPDI) are the two positions that jumped out when looking at stocks Third Avenue were accumulating. While the WY position is small relative both to its market cap and Third Avenue's size, the PPDI position is moderately sizable. Apparently, the company "is a global contract research organization engaged in providing drug discovery and development services, post-approval expertise and compound partnering programs." After reading that, I still don't know what the company does so it looks like the research curve might be steep on this one but a 3% yield near 52-week lows may offer sufficient reward to put in the effort.

David Einhorn also has an SEC filing a mile long so take a look at Greenlight Capital's hedge fund holdings in this spreadsheet.

• By far, Einhorn's largest new position was a huge slug of SPRD S&P 500 (SPY) puts. Is it safe to say he's bearish on this rally?
• Greenlight also sold their position in the Gold ETF (GLD) as well as their stake in Target (TGT). Does this mean Einhorn is backing off his view on inflation, which prompted him to make large bets on GLD and various gold miners earlier in the year? The firm still has a meaningful position in the Gold Miners ETF (GDX).
• Among accumulated positions, Einhorn doubled his exposure to the Pfizer/Wyeth merger and increased his stake in Everest RE Group (RE) by 600%.
• Notable reduced stakes include EMC, URS and MEMC Electronics (WFR).

You can view other managers' 13F holdings spreadsheets here.

• Seth Klarman Q2 2009 13F Holdings Spreadsheet
• Marty Whitman Q2 2009 13F Holdings Spreadsheet
• David Einhorn Q2 2009 13F Holdings Spreadsheet

Disclosure: short BBEP puts