market folly

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis of each individual fund here in the coming weeks. We've already covered Whitney Tilson's T2 Partners, Peter Thiel's Clarium Capital, Bill Ackman's Pershing Square, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, and Timothy Barakett's Atticus Capital. Next up, we have John Griffin's Blue Ridge Capital. Now, Griffin is similar to Stephen Mandel at Lone Pine Capital and Lee Ainslie at Maverick Capital in that they all are 'Tiger Cubs' (a.k.a. pupils of Julian Robertson while at Tiger Management). Griffin though, is more well known because he was Julian Robertson's right hand man. So, needless to say, he knows his stuff. Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems. And, right off the bat that presents us with a bit of a problem in terms of analyzing 13F's. 13F's don't show short positions, they show long positions (unless the firm is short through puts, which we *can* see). So, the inherent problem with analyzing Blue Ridge (or any fund for that matter) is that we can't see the other side of their portfolio. But, this is increasingly important for Blue Ridge simply due to Griffin's investment strategy and the fact that his short positions are equally or more important than his longs. We have, however, gotten one sneak peek at what Blue Ridge has been shorting. Both Griffin at Blue Ridge and Lee Ainslie over at Maverick Capital like to effectively hedge with a solid balance of both long and short positions (like a true hedge fund... not like some of the crazy funds these days that aren't truly hedged).

Griffin attended the University of Virginia for undergrad and received his MBA from Stanford. Recently, the University of Virginia hosted a hedge fund panel which consisted of many of the 'Tiger Cubs' as well as the founder of Tiger Management, Julian Robertson. At the panel, numerous hedge fund managers laid out some of their investment theses. Additionally, we noted that Blue Ridge recently disclosed a 5.47% stake in Millipore (MIL) and Julian Robertson had recently bought some stocks to hedge his overall short portfolio.

Now, onto the 13F. We'd like to thank Alex Prywes for their help in our 13F tracking series as it has allowed us to cover more funds. Before beginning, we'd like to suggest that you check out Blue Ridge's portfolio from last quarter, so you can get a feel for how they're altering their portfolio. The following were Blue Ridge's long equity and options holdings as of September 30th, 2008 as filed with the SEC.


New Positions (Brand new positions that they initiated in the last quarter):
Hansen Natural (HANS): 3.6% of portfolio
SPDR Gold Trust (GLD): 3.49% of portfolio
Illumina (ILMN): less than 1% of portfolio
Goldman Sachs (GS): less than 1% of portfolio
Lululemon (LULU): less than 1% of portfolio
Las Vegas Sands (LVS): less than 1% of portfolio
Foster Wheeler (FWLT): less than 1% of portfolio
Wachovia (WB): less than 1% of portfolio


Added to (Positions they already owned but added more shares)
Amazon (AMZN): Increased position by 146%
Goodrich Petroleum (GDP): Increased position by 108%
Berkshire Hathaway (BRK.A): Increased position by 97%
Target (TGT): Increased position by 47%
Echostar (SATS): Increased position by 35%
Thermo Fisher Scientific (TMO): Increased position by 27.6%
Anadarko Petroleum (APC): Increased position by 24%
Grupo Televisa (TV): Increased position by 20%


Reduced Positions (Positions they sold some shares of)
Amgen (AMGN): Sold off 85%
Charles Schwab (SCHW): Sold off 70%
Martin Marietta (MLM): Sold off 55%
Netflix (NFLX): Sold off 50%
Grupo Aeroportuario del Pacifico (PAC): Sold off 49%
Exterran Holdings (EXH): Sold off 47.6%
Discovery Holding (DSY): Sold off 41.5%
Eagle Materials (EXP): Sold off 41%
Packaging Corp (PKG): Sold off 30%
Broadridge Financial Solutions (BR): Sold off 11%
Compton Petroleum (CMZ): Sold off 11%
Visa (V): Sold off 10.4%
Fomento Economico Mexicano (FMX): Sold off 9%


Positions with no change
Covanta (CVA)
Millipore (MIL)
MBIA (MBI)
American Express (AXP) Calls
Greenlight Capital RE (GLRE)
Gold Reserve Inc (GRZ)
Elong (LONG)
Perfect World (PWRD)
Washington Mutual (WM) Puts


Removed Positions (Positions they sold out of completely)
Apple (AAPL)
American Express (AXP): They sold all their common shares, but still hold Calls, as noted above
Bare Escentuals (BARE)
Countrywide Financial
Crocs (CROX)
Fairfax Financial (FFH)
Fannie Mae (FNM)
Freddie Mac (FRE)
First Marblehead (FMD)
Google (GOOG)
Indymac (IDMCQ)
Nutrisystem (NTRI)
Research in Motion (RIMM)
Rowan (RDC)
Vulcan Materials (VMC)
Walmart (WMT)
Wyeth (WYE)


Top 20 Holdings (by % of portfolio)

1. Berkshire Hathaway (BRK.A): 8.13% of portfolio
2. Grupo Televisa (TV): 7.6% of portfolio
3. Target (TGT): 7.44% of portfolio
4. Covanta (CVA): 7.2% of portfolio
5. Millipore (MIL): 7% of portfolio
6. Amazon (AMZN): 6.4% of portfolio
7. ThermoFisher (TMO): 5.6% of portfolio
8. Anadarko (APC): 5.3% of portfolio
9. Broadridge Financial (BR): 3.7% of portfolio
10. Hansen Natural (HANS): 3.6% of portfolio
11. Visa (V): 3.6% of portfolio
12. SPDR Gold Trust (GLD): 3.5% of portfolio
13. Fomento Economico Mexicano (FMX): 2.67% of portfolio
14. Echostar (SATS): 2.6% of portfolio
15. Martin Marietta (MLM): 2.6% of portfolio
16. Charles Schwab (SCHW): 2.5% of portfolio
17. Packaging Corp (PKG): 2.5% of portfolio
18. Discovery Holdings (DSY): 2.2% of portfolio
19. Goodrich Petroleum (GDP): 2.2% of portfolio
20. Amgen (AMGN): 2.17% of portfolio