market folly

While Market Folly typically focuses on that of equities traded on US exchanges, we also like to track the UK holdings of the top hedge funds. Today we'll summarize the latest moves in the UK from some of the biggest managers due to regulatory filings.

First, Crispin Odey's hedge fund firm Odey Asset Management has increased their position in Pendragon (LON: PDG) two times in recent months. Due to portfolio activity on August 8th, Odey boosted their stake from a 14.56% stake to 16.35%. Then, on the 9th of September, Odey again raised their stake, this time to the current 17.79% ownership level. Pendragon is a UK car dealer and Odey has actually been involved in this sector/industry for much of the year.

Back in February, we posted up an investor letter from their flagship Odey European fund in which Odey disclosed a position in another UK car dealer, Lookers (LON: LOOK). We can't confirm whether or not Odey still have the Lookers stake as they've not crossed above the UK"s mandated 3% disclosure threshold. However, Odey has revealed their thesis behind the car dealer play writing,

"I have bought well managed businesses, where management have taken the necessary action to live in a world in which demand remains excessively weak. Where management have demonstrated the ability to take advantage of further dislocation - for instance if interest rates were to rise, they would be able to exploit this as an opportunity to buy their rivals. In the UK this has put me into the likes of Lookers and Pendragon, both car dealers. Current new car sales are running 1.8 million cars a year, some thirty per cent below the replacement rate of 2.8 million cars. Money is being made in used car sales and servicing, both of which are benefitting from the ageing of the fleet. On a P/E for this year of 5x, I find shares that are on discount to a level of profitability which already discounts the worst. That double discount gives me a great deal of comfort."

For more thoughts from this hedge fund, head to Crispin Odey's recent market outlook.

Second, we see that Eric Mindich's Eton Park Capital has disclosed a brand new position in Goldenport Holdings (LON: GPRT). They own 5.57% of the shares outstanding and this was due to portfolio activity on September 8th, 2010. Taken from Google Finance, Goldenport Holdings is "an international shipping company that owns and operates a fleet of container and dry bulk vessels that transport cargo worldwide." In terms of other activity from Eric Mindich's hedge fund, we revealed their new stake in Doral Financial (DRL) in August and also detailed some of Eton Park's portfolio as well.

Third, we'll turn to portfolio activity from Steven Heinz and Paul Ruddock's Lansdowne Partners. The major UK hedge fund reduced their position in Petropavlovsk (LON: POG) below the regulatory threshold of 5% ownership in a company. Petropavlovsk is involved in the development and mining of gold. Previously, the hedge fund owned greater than a 5% stake but now we no longer can view their stake due to portfolio activity on August 5th. Conversely, Lansdowne increased their position in RGI International (LON: RGI) to a 4.76% ownership stake due to portfolio activity on August 20th. RGI is involved in property development in Russia. Other past portfolio activity from Lansdowne includes covering their Old Mutual short position.

Last, we wanted to touch on a few merger arbitrage related plays. Eric Mindich's Eton Park has been in Dana Petroleum (LON: DNX), a company in takeover talks with a Korean company. Also, John Paulson's hedge fund Paulson & Co has been in SSL which is in takeover talks with Reckitt Benckiser.

For all our other coverage of stocks in this market, head to our posts on UK positions taken by hedge funds.