market folly

This post is the preface to the series we will be doing in the coming weeks here at Market Folly that details what many prominent hedge funds have been up to in the first quarter of 20010 as per their just released SEC 13F filings.

Four times a year (once each quarter), hedge funds & asset managers with greater than $100 million AUM (assets under management) are required to disclose their holdings to the SEC. These filings only disclose long US equity positions, options (calls & puts), as well as notes and convertibles. The 13F filing does not disclose positions in commodities, currencies, or other markets. It also does not showcase short positions or cash.

As such, it is typically wise to only track long/short equity managers as equities will be the primary assets held in their portfolio. While we can't see their shorts, we do get a look at their exposure on the long side. Additionally, it is generally recommended to only track value oriented managers or funds with a longer investment horizon and not trading oriented firms. This is advised because of the timelag associated with 13F filings. The most recent filings that are just now being released (first quarter 2010) disclose hedge fund portfolio positions as of March 31st, 2010. As you can see, there is a 45 day time lapse between when the portfolio snapshot is taken and when the information is disclosed to the public. While many firms will have undoubtedly shifted their portfolio around a bit since then, you still get a glimpse at their core holdings.

We check these 13F filings quarterly to get a sense as to where these funds are putting their money. If you just sit down and do some simple number crunching between this quarter's 13F and the one prior, you can see exactly where they've shifted their portfolio. Why bother doing this, you ask? Well, it's simple: following select hedge fund managers can provide some great investment ideas to do more research on.

Not to mention, if you wanted to 'piggyback' their positions, you'd be surprised at some of the outperformance you'd see. Using Alphaclone, you can backtest hedge fund portfolios to determine what kind of performance you would have seen by simply mirroring various managers. Alphaclone aggregates all the data directly from the SEC and analyzes what hedge funds have been buying and selling on a quarter over quarter basis. Not to mention, you can combine multiple hedge fund managers into a custom portfolio that aggregates some of the managers' shared investment ideas. It's the best hedge fund replicator out there, hands down. We're pleased that Market Folly readers can receive a special free 30 day trial to Alphaclone if you're interested in checking it out. It is the source we use for all of our hedge fund tracking.

Let's turn next to the list of hedge funds we track here at Market Folly. Firstly, we obviously detail the latest portfolio movement from some very notable value & activist funds. Click the links below to be taken to the respective portfolio update:

- Seth Klarman's Baupost Group
- David Einhorn's Greenlight Capital
- Dan Loeb's Third Point LLC
- Bill Ackman's Pershing Square Capital Management
- Eddie Lampert's RBS Partners/ESL Investments
- Ricky Sandler's Eminence Capital
- Mohnish Pabrai's Investment Fund
- Bruce Berkowitz's Fairholme Capital

We also follow the 'Tiger Cubs'. These are investment managers that were former proteges under Julian Robertson at legendary hedge fund Tiger Management. They learned and excelled within Tiger's intensive research process and eventually went on to start their own funds. Additionally, we'll also track the disclosures of Julian Robertson as his Tiger Management LLC still files with the SEC. Here are the Tiger Cubs we track:

- John Griffin's Blue Ridge Capital
- Stephen Mandel's Lone Pine Capital
- Lee Ainslie's Maverick Capital
- Andreas Halvorsen's Viking Global
- Roberto Mignone's Bridger Management
- Shumway Capital Partners (Chris Shumway)
- Philippe Laffont's Coatue Capital Management
- David Gerstenhaber's Argonaut Capital Management
- Tom Brown's Second Curve Capital
- Rob Citrone's Discovery Capital Management
- Robert Karr's Joho Capital
- Robert Bishop's Impala Asset Management
- John Lykouretzos' Hoplite Capital Management
- Anu Murgai's Suranya Capital Partners

We'll also be tracking the aptly named 'Tiger Seeds.' These funds were actually seeded by Julian Robertson after he wound down Tiger Management and many of these promising young managers still office at Tiger's Park Avenue address:

- Chase Coleman's Tiger Global
- Charles Anderson's Fox Point Capital Management
- Jonathan Auerbach's Hound Partners
- Dane Andreeff's Maple Leaf Partners
- Manish Chopra's Tiger Veda Management
- Kris Kristynik's Longhorn Capital Partners
- Quincy Fennebresque's Venesprie Capital Management
- Tom Facciola's Tigershark Partners
- Pat McCormack's Tiger Consumer Management
- Marc Anderson & Eliav Assouline's Axial Capital Management
- Pasco Alfaro and Richard Tumure's Miura Global Management

We will also be following what we have termed the 'Tiger GrandCubs' (we realize the terminology is a bit ridiculous, any other ideas?) These are funds started by former employees of some of the Tiger Cubs on the first list above. We're tracking the following managers, but please contact us if you know of any others:

- David Stemerman's Conatus Capital (Stemerman was formerly at Lone Pine)
- David Gallo's Valinor Management (Gallo was previously at Bridger Management)
- Lee Hobson's Highside Capital (Hobson left Maverick to start his fund)
- Matt Iorio's White Elm Capital (Iorio also started his fund after working at Lone Pine)
- John Thaler's JAT Capital (Thaler was previously at Shumway Capital Partners)

Next, we'll turn our focus to the Commodities Corporation "offspring" which have gone off to start their own funds and typically employ a global macro strategy. We don't track them for their specific equity holdings since they typically deal in futures markets. We mainly check in on them to see what sectors they might be flocking to and whether or not they have large exposure to US equities.

- Tudor Investment Corp (Paul Tudor Jones)
- Moore Capital Management (Louis Bacon)
- Caxton Associates (Bruce Kovner)

We also follow an assortment of funds that employ strategies ranging from risk arbitrage to event-driven and often run concentrated portfolios. We track these funds due to their solid returns over the years and their prominence within the hedge fund industry:

- John Paulson's Paulson & Co
- David Tepper's Appaloosa Management
- Philip Falcone's Harbinger Capital Partners
- Bret Barakett's Tremblant Capital
- Boone Pickens' BP Capital
- Barry Rosenstein's Jana Partners
- Eric Mindich's Eton Park Capital
- Thomas Steyer's Farallon Capital Management
- John Burbank's Passport Capital
- Ken Griffin's Citadel Investment Group
- Jeffrey Gendell's Tontine Associates
- Anand Parekh's Alyeska Investment Group (Parekh was formerly at Citadel)
- Passport Capital (John Burbank)
- Sprott Asset Management (Eric Sprott)
- Balyasny Asset Management (Dmitry Balyasny)

And last, but certainly not least, we watch the movements of well known investment gurus as well:

- Warren Buffett (Berkshire Hathaway)
- Carl Icahn (Icahn Partners)
- George Soros (Soros Fund Management)

As you can see, we've taken on quite a workload of fund coverage. While Market Folly is a one-man team, we've enlisted the help of a few others for this series so that there will be as much hedge fund content as possible on a daily basis. We've also fielded a lot of reader requests and plan to also cover the following requested funds: Paul Reeder's PAR Capital, Mathews Capital (Phil Mathews), Marko Dimitrijevic's Everest Capital, Roc Capital Management, Manatuck Hill Partners, RWC Biltmore Fund, Roderick Wong's RTW Investments, Alex Klabin & Doug Silverman's Senator Investment Group, Li Lu's Himalaya Capital Management, Scout Capital, Plural Investments, Pollen Capital, Xenion, Matrix Capital Management, and AYM.

Over the coming weeks we'll touch on some of the important portfolio moves these funds and market gurus have made. As always, if you have access to any investor letters or presentations from the funds listed above, please get in contact with us at the top of the site (rest assured, we treat all contributions as anonymous). The hedge fund portfolio tracking series (first quarter 2010 edition) starts today, so spread the word and check MarketFolly.com daily for updates. First up in separate posts: Seth Klarman's Baupost Group and Warren Buffett's Berkshire Hathaway.