What We're Reading ~ Hedge Fund Links 2/6/14

Summary of hedge fund stock picks at the Breakers conference [CNBC]

Hedge funds making profits using freedom of information act requests [ValueWalk]

Hedge fund manager Odey turns super bear on QE [WSJ]

Reinsurance, hedge fund tax 'loophole' rule set for the spring [RiskMarketNews]

Ackman to invest in Clearfield Capital hedge fund [Reuters]

Girls who invest would change Wall Street [Bloomberg View]

Tips for successfully marketing a hedge fund [FINalternatives]

Big money looking for smart plays on energy [CNBC]

Pickens' hedge fund to trade on oil panic in fundraise [Bloomberg]

Why invest in hedge funds if they don't outperform? [Forbes]

Short Selling: Cleaning Up After Elephants By Guy Judkowski

Guy Judkowski, managing member of Waterloo International Advisors, LLC, has authored a piece entitled, Short Selling: Cleaning Up After Elephants, An Investor's Guide to Wall Street's Toughest Job.  He released it on his website here.

He co-managed a short-biased hedge fund for 13 years and has published short sell reports for over 20 years.  His piece looks at numerous case studies including Fruit of the Loom (FTL), Alpharma (ALO), Fossil (FOSL), American Italian Pasta (AIPC), Serologicals (SERO), Orthodontic Centers of America (OCA), Safeskin (SFSK).

Additionally, he highlights certain metrics and patterns to look for in shorts. 

Embedded below is the short selling guide, Cleaning Up After Elephants:



You can download the .pdf here.

Viking Global Boosts Cheniere Energy, Kansas City Southern Stakes

Andreas Halvorsen's hedge fund firm Viking Global has filed two 13G's with the SEC regarding some of their existing positions.


Viking Adds to Cheniere Energy Stake

First, Viking has revealed a 6.5% ownership stake in Cheniere Energy (LNG) with over 15.3 million shares.

This marks an increase of over 9.9 million shares in their position size since the end of the third quarter.  The filing was made due to portfolio activity on January 26th.

Per Google Finance, Cheniere Energy is "engaged in liquid natural gas LNG-related businesses. The Company owns and operates the Sabine Pass LNG terminal in Louisiana through its 59.5% ownership interest in and management agreements with Cheniere Energy Partners, L.P. The Company also also own and operate the Creole Trail Pipeline, which interconnects the Sabine Pass LNG terminal with natural gas markets in North America."


Increases Kansas City Southern Position

Second, Halvorsen's firm has also disclosed a 5% ownership stake in Kansas City Southern (KSU) with over 5.56 million shares.

They've boosted their position size by over 1.3 million shares since the end of the third quarter.  This activity was reported due to activity on January 27th.

Per Google Finance, Kansas City Southern is "a transportation holding company with domestic and international rail operations in North America that are strategically focused on the growing north/south freight corridor connecting key commercial and industrial markets in the central United States with industrial cities in Mexico."

You can view other recent portfolio activity from Viking here.

What We're Reading ~ Analytical Links 2/4/15

Dead companies walking: How a hedge fund manager finds opportunity [Scott Fearon]

Seth Klarman on what he's learned from Warren Buffett [FT]

On mindfulness, meditation and investing [Abnormal Returns]

The future of iron ore [Joe Magyer]

FCC Chairman: this is how we will ensure net neutrality [Wired]

Monetary policy: the great illusion [CapX]

Inside the studio where ESPN is betting billions on the future of sports [The Verge]

On Disney's Bob Iger and Apple's Steve Jobs [Fortune]

Here's why Netflix stock is so volatile [MicroFundy]

How Berkshire can survive beyond Warren Buffett [Stanford]

Study says 'boring' stocks generate better returns [Marketwatch]

On Keynes the stock market investor [SSRN]

Chipotle: the definitive oral history [Bloomberg]

The Chipotle effect: why America is obsessed with fast casual [Washington Post]

Inside RadioShack's slow motion collapse [Bloomberg]

Google is developing its own Uber competitor [Bloomberg]

On declining lethality [NYTimes]

Berkowitz's Fairholme Fund Annual Report: AIG, Bank of America, Fannie/Freddie

Bruce Berkowitz is out with his Fairholme Fund's (FAIRX) annual report for 2014.  The concentrated investor outlines his thoughts on AIG (AIG), Bank of America (BAC), Fannie Mae & Freddie Mac, Sears (SHLD), Leucadia (LUK), and St. Joe (JOE).

Berkowitz dedicates the majority of his letter to his Fannie & Freddie investments, saying that, "Today, Washington bureaucrats are unlawfully holding these profitable companies captive in perpetual conservatorship."

Regarding his two largest positions (AIG and BAC), Fairholme's manager says that both need to "prove that core operations are capable of earning an average of 10% return on equity and demonstrate that such profits are distributable to shareholders.  We anticipate growing profits, dividends, and buybacks from both in the future, particularly when interest rates normalize."

Embedded below is the Fairholme Fund's annual report for 2014:



For more from this manager, be sure to also check out Berkowitz's Wealthtrack interview.

Graham & Doddsville Interview With Bill Ackman & More

The latest issue of Graham & Doddsville is out.  This new edition of the student investment newsletter of Columbia Business School features interviews with Pershing Square's Bill Ackman, Corsair Capital's Jay Petschek and Steve Major, as well as Lyrical Asset Management's Andrew Wellington.

Additionally, the publication showcases student stock pitches on the likes of CDK Global (CDK), Schibsted Media (SCH:NO), JetBlue (JBLU), and First Solar (FSLR).


Highlights From Bill Ackman's Interview

On running a concentrated portfolio: "I'm a big believer in concentration.  But it's not just analysis that protects you, it's the nature of the things you invest in.  If you invest in super high quality, durable, simple, predictable, free cash flow generating businesses, that should protect you as well.  If you pay a fair to cheap price for businesses of that quality, I think it's hard to lose a lot of money.  The key is you have to be a good analyst in order to determine whether it truly is a great business.  You have to really understand what the moats are.  You have to understand the risk of technological entrants."

On position sizing:  "We size things based on how much we think we can make versus how much we think we can lose.  We'll probably be willing to lose 5-6% of our capital in any one investment."

On testing conviction: "One of the best ways to get confidence in an idea is to find a smart person who has the opposing view and listen to all of their arguments."


Embedded below is the latest issue of Graham & Doddsville:



You can download a .pdf copy here.

If you missed past issues of this great newsletter, be sure to also check out their interview with Maverick Capital's Lee Ainslie as well as their interview with Wally Weitz.

Final Chance to Attend Next Week's NY Single Family Office Summit

I just wanted to give you a quick reminder that there is only a week left before the Single Family Office Summit in New York on February 9th.

Market Folly has secured an extra 5 discounted tickets so you can attend this full-day conference for just $797 using the discount code "SFO" here: http://WilsonConferences.com/SFO or you can call (212) 729-5067 to complete your reservation over the phone.

See you at the Summit,

Richard

Richard C. Wilson
CEO & Founder
The Family Office Club: http://FamilyOffices.com
Live Conferences: http://WilsonConferences.com/SFO

The Art of Value Investing: Talks at Google Presentation

John Heins and Whitney Tilson published a book a while ago entitled The Art of Value Investing: How the World's Best Investors Beat the Market.  It's basically a compilation of great quotes from tons of prominent hedge fund managers about a variety of topics on investing.

Featured as part of the Talks at Google series, the two gentlemen gave a presentation at Google about the book, investing, and a look at Google stock as well.

Embedded below is the video of The Art of Value Investing at Talks at Google:



If you haven't read it, The Art of Value Investing is a great book full of wisdom from a ton of investors that have been featured on Market Folly over the years.

Lee Cooperman Trims SandRidge Energy & New Residential Stakes; Adds to THL Credit

Omega Advisors' Lee Cooperman has filed a myriad of amended 13G's with the SEC as of late.  We covered some of his recent portfolio activity here.  In other recent moves, Cooperman was out trimming 2 stakes, and adding to another.


Trims SandRidge Energy

First, Omega Advisors has reduced its position in SandRidge Energy (SD) by over 13.3 million shares since the end of the third quarter.  Per the 13G filed with the SEC, Cooperman now owns just over 32.1 million shares.  This was made due to activity on December 31st.

Per Google Finance, SandRidge Energy is "an oil and natural gas company. The Company focuses on exploration and production activities in the Mid-Continent region of the United States. The Company also operates businesses and infrastructure systems, including gas gathering and processing facilities, marketing operations, a saltwater disposal system, an electrical transmission system and a drilling rig and related oil field services business."


Cuts New Residential Stake

Next, the hedge fund manager also cut his exposure to New Residentail Investment Corp (NRZ).  After selling over 3.8 million shares, he's left owning over 7.97 million shares.  The filing was also made due to activity on December 31st.

Per Google Finance, New Residential Investment Corp is "a real estate investment trust. The Company focuses on investing in, and actively managing, investments related to residential real estate. The Company is managed by an affiliate of Fortress Investment Group LLC, a global investment management. The Company primarily target investments in excess mortgage servicing rights, residential mortgage backed securities, residential mortgage loans and other related investments."


Adds To THL Credit Position

Last, Cooperman also disclosed he has added to his THL Credit (TCRD) position.  After buying over 1.1 million more shares, he now owns over 2.11 million shares of the company.  The 13G was filed due to activity on December 31st.

Per Google Finance, THL Credit is "a non-diversified, closed-end management investment company. It operates as a business development company. The Company’s investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated debt and equity securities of middle market companies. The Company is a direct lender to middle market companies and invest in subordinated, or mezzanine, debt and second lien secured debt, which may include an associated equity component such as warrants, preferred stock or other similar securities."

Don't forget you can see the rest of Cooperman's recent portfolio activity here.

Paul Singer's Interview at the Dealbook Conference

If you missed it, Elliott Management's Paul Singer sat down with Andrew Ross Sorkin at the Dealbook Conference a few months ago to talk about the global investment landscape.

Embedded below is the video of Paul Singer's talk: