A Review Of Key Hedge Fund ETF Holdings

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Includes: EWJ, FXI, GLD, IWM, QQQ, SPY, XLB
by: Tom Lydon

Exchange traded funds are slowly but surely catching on with more individual investors and advisors, but hedge funds managers have been using ETFs for years to make quick bets on stocks and precious metals.

For example, the three largest and newest additions to Louis Bacon’s Moore Capital hedge fund were ETFs that covered consumer staples, utilities and dividend stocks, reports Stephen Taub for Institutional Investor. Moore also had sizable positions in a telecom ETF and gold miners.

Additionally, Moore Capital had a large put option on a S&P 500 ETF, which was somewhat hedged by call options on the same ETF. The firm also had a large call option on an ETF that follows 25 Chinese companies, which was hedged with a smaller put exposure on the same fund.

Jeff Vinik, one-time Fidelity money manager, of Vinik Asset management holds ETF investments as five of the six largest holdings in the firm’s portfolio, including a $1 billion position in the SPDR S&P 500 (NYSEARCA:SPY), iShares Russell 2000 Index (NYSEARCA:IWM) and PowerShares QQQ (NASDAQ:QQQ). Together, the three funds made up more than one-quarter of Vinik’s U.S. equity holdings at the end of the third quarter.

Coatue Management, founded by Tiger Cub Philippe, also had a $150 million position in the Nasdaq-100 ETF.

Highbridge Capital, headed by co-founder Glenn Dubin and owned by JPMorgan Chase, bought $1.76 billion worth of the S&P 500 ETF in the third quarter.

Eric Mindich’s Eton Park Capital Management was another notable hedge fund invested in SPY during the third quarter. Mindich also held a large position in call options on SPDR Gold Shares (NYSEARCA:GLD), which was offset by a smaller position of put options on the ETF.

However, Eton Park unloaded its entire 813,000 share position in the ETF. Jamie Dinan’s York Capital also sold its one million share position in GLD. John Paulson, despite clearing out 11 million of his position in GLD, still remains the largest holder of the ETF, with 20 million shares.

Paul Tudor Jones II’s Tudor Investment has GLD as its second largest holding. The iShares MSCI Japan Index (NYSEARCA:EWJ) was Tudor Investment’s largest holding. The firm also had put options on the gold miners, and call options on both Materials Select Sector SPDR (NYSEARCA:XLB) and iShares FTSE China 25 Index Fund (NYSEARCA:FXI).

Richard Perry, founder of Perry Capital, had $1 billion in puts on IWM, which was half of the total value of his $2.4 billion U.S. equity portfolio.

Max Chen contributed to this article.