Hedge Fund Links ~ 8/14/15

The Single Family Office: Creating, Operating & Managing Investments [Richard Wilson]

Julian Robertson's second dalliance with investors disappoints [Reuters]

A look inside Tiger Global's private investment partners [ii alpha]

Eminence Capital discovers alpha in shorts [ValueWalk]

Has David Einhorn lost his mojo? [MebFaber]

Hedge funds bloodied by China rout in worst month since 2011 [Bloomberg]

Behind enemy lines: foreign hedge funds thrive in China [Reuters]

Stung by losses, Kyle Bass hopes for comeback [InsideSources]

Paulson to reap fortune flipping US land banks [Independent]

The transatlantic divide in hedge fund pay [eFinancialCareers]

Meet the new king of subprime lending [WSJ]

Tiger Management partners with Yulan Capital in China [StreetInsider]

Activist investors' secret ally: big mutual funds [WSJ]

Poor returns see investors lose interest in commodity hedge funds [FT]

What We're Reading ~ 8/12/15

Avoiding process drift [A Wealth of Common Sense]

GOOG: Do you trust Larry Page? [Stratechery]

Giving Google room to dream big [NYTimes]

Pichai tapped to run restructured Google within Alphabet [Bloomberg]

Inside SoftBank's struggle to turn around Sprint [WSJ]

A short seller's new target: Canadian housing [Globe and Mail]

Quick pitch on Nationstar (NSM) [Oozing Alpha]

A look at Mondelez [Brooklyn Investor]

And another Mondelez analysis [Elevation Capital]

How baseball's tech team built the future of television [TheVerge]

Ad woes pummel TV firms [WSJ]

Why Disney and ESPN will be OK [Stratechery]

Alan Greenspan sees pending bond market bubble [Bloomberg]

Investors find ways to indirectly profit from start-ups [NYTimes]

IACI: Tinder and the dawn of the dating apocalypse [Vanity Fair]

Why streaming services are so secretive [Bloomberg View]

A profile of Exor's John Elkann [NYTimes]

The power of admitting your own errors [WSJ]

Tiger Global Updates 58.com Stake (WUBA)

Chase Coleman's hedge fund Tiger Global has filed a 13G with the SEC regarding its stake in 58.com (WUBA).  Per the filing, Tiger Global now holds 6.3% of the company with over 13.18 million shares (via over 2.16 million ADR shares and over 8.84 million class A ordinary shares).

This is an increase in their net position size since the end of Q1, but there's a caveat here.  While it seems they've reduced their holdings in the ADR shares from 2.45 million shares down to 2.16 million, they now have exposure to class A shares (8.84 million shares).

It appears as though the bulk of this is due to the fact that Ganji.com has merged with 58.com and Tiger Global held a stake in Ganji as well via its venture capital arm. 

The new filing was made due to activity on August 6th.

We've also recently highlighted some other portfolio activity from Tiger Global here.

Per Google Finance, 58.com is "a holding company. The Company operates an online marketplace serving local merchants and consumers in China. The Company's online marketplace enables local merchants and consumers to connect, share information and conduct business. The Company's online marketplace contains local information in approximately 395 cities, across the content categories, including housing, jobs, used goods, automotive, pets, tickets, yellow pages and other local services. The Company conducts automatic and manual screening using its technology and processes. The Company's users post listings on its marketplace covering a range of services and products on its Website, www.58.com. The Company organizes the listings on its marketplace by content categories, such as jobs, housing, used goods, automotive, yellow pages, pets and tickets.."

Pennant Capital Increases Manitowoc Position

Alan Fournier's hedge fund firm Pennant Capital has filed a 13G with the SEC regarding its position in Manitowoc (MTW).  Per the filing, Pennant now owns 7.4% of the company with over 10.13 million shares.

This means they've increased their position size by almost 2 million shares.  Pennant previously owned over 8.15 million shares of MTW as of the end of the first quarter.  The filing was made due to activity on July 30th.

Two other prominent investors are also involved in the shares.  Glenview added to its Manitowoc stake back in late April.  Late last year, Carl Icahn also got involved in MTW and pushed for the company to split up, which they've agreed to do.

Per Google Finance, Manitowoc is "a multi-industry capital goods manufacturer. The Company operates in two markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice). Crane is a provider of engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks. Foodservice is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, holding and cooking needs of restaurants, convenience stores, hotels, healthcare and institutional applications. Its Crane products are marketed under the Manitowoc, Grove, Potain, National Crane, Shuttlelift and Manitowoc Crane Care brand names. Its Foodservice products, services and solutions are marketed under Cleveland, Convotherm, Dean, Delfield, Fabristeel, Frymaster, Garland, Inducs, Koolaire, Kolpak, Kysor Panel Systems and U.S. Range, Lincoln, Manitowoc Ice and Merrychef, among others.."

Glenn Greenberg's Brave Warrior Capital Boosts Cimpress Stake

Glenn Greenberg's investment firm Brave Warrior Capital has filed an amended 13G regarding its stake in Cimpress (CMPR).  Per the filing, Brave Warrior now owns 11.6% of the company with over 3.79 million shares.

This is an increase of around 1.26 million shares.  They previously owned 2.53 million shares at the end of the first quarter.  The new filing was made due to activity on July 31st.  At the end of July, shares dropped from around $78 down to around $63 and have since rebounded to $70.

Formerly known as Vistaprint, this business has attracted a few other value investors besides Brave Warrior: Arlington Value and Cantillon Capital. 

Greenberg runs a concentrated portfolio and is previously of Chieftain Capital.  We've briefly detailed what Greenberg looks for in an investment before.

Per Google Finance, Cimpress is "a technology and manufacturing company based in the Netherlands, which provides professional marketing products and services. It is engaged in mass customization and Web-to-print technology. The Company aggregates, via the Internet, large volumes of individually small, customized orders for a spectrum of print, signage, apparel and similar products. Its portfolio of brands is aimed at three target groups: small and micro businesses, graphic professionals, and home and family customers, and includes such brands as Vistaprint, pagemodo, webs, Araprint, Drukwerkdeal.nl, Pixartprinting, Printdeal.be, printi, albelli, FotoKnudsen, and Onskefoto, among others. Its products are available in more than 130 countries.."

Luxor Capital Reduces BJ's Restaurants Stake, Adds To Manitowoc

Hedge fund firm Luxor Capital recently filed two disclosures with the SEC regarding BJ's Restaurants (BJRI) and Manitowoc (MTW).


Luxor Reduces BJ's Restaurants Position

First, Luxor has revealed that they now own 9.8% of BJ's Restaurant (BJRI) with over 2.5 million shares.

This is a reduction in their position size as they owned 3.5 million shares at the end of Q1.  The filing details that Luxor recently sold a block of 1 million BJRI shares to UBS at $50.80.

Per Google Finance, BJ's Restaurants is "owns and operates restaurants. The Company operates under the BJ’s Restaurant & Brewery, BJ’s Restaurant & Brewhouse, BJ’s Pizza & Grill and BJ’s Grill names. The Company owns and operates 158 restaurants. Its menu consists of deep-dish pizza, craft beers and other beers, as well as a range of appetizers, entrees, pastas, sandwiches, specialty salads and desserts, including its Pizookie dessert. Its menu also includes starter salads, handcrafted burgers, sandwiches and tacos, desserts, lunch specials, housemade soups and salads, and gluten-free menu, among others. Its Snacks and Small Bites menu category comprises small plate appetizers and salads and a lower calorie and better for you menu category called Enlightened Entrees."


Luxor Boosts Manitowoc Stake

Second,  Luxor has also disclosed they now own 5% of Manitowoc (MTW) with over 6.82 million shares.  Some of their position is common stock underlying call options.

This is a sizable increase from their previous position size.  Luxor used to own 1.788 million shares of MTW as of the end of the first quarter.  The new filing was due to activity on July 31st.

We also just posted that Pennant Capital increased its Manitowoc stake as well.

Per Google Finance, Manitowoc is "a multi-industry capital goods manufacturer. The Company operates in two markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice). Crane is a provider of engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks. Foodservice is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, holding and cooking needs of restaurants, convenience stores, hotels, healthcare and institutional applications. Its Crane products are marketed under the Manitowoc, Grove, Potain, National Crane, Shuttlelift and Manitowoc Crane Care brand names. Its Foodservice products, services and solutions are marketed under Cleveland, Convotherm, Dean, Delfield, Fabristeel, Frymaster, Garland, Inducs, Koolaire, Kolpak, Kysor Panel Systems and U.S. Range, Lincoln, Manitowoc Ice and Merrychef, among others." 

Warren Buffett's Berkshire Hathaway To Buy Precision Castparts (PCP)

Warren Buffett's Berkshire Hathaway is set to acquire Precision Castparts (PCP) for $37.2 billion, or around $235 per share. 

Speaking with CNBC, Buffett said that the deal started to come together "about five or so weeks ago."  

Buffett's conglomerate has owned PCP for a while now and was out buying more shares in the first quarter of 2015 as shares continued to slide.  PCP has been hit due to declines in its oil and gas business exposure but the vast majority of its focus is in aerospace and that's undoubtedly what drew Berkshire to the name.

Buffett said that one of his portfolio managers, Todd Combs, spearheaded this as he bought shares for Berkshire.

Talking with CNBC, Buffett said that they'll likely do the majority of the deal with cash, and a little bit of debt.  Berkshire likes to keep around $20 billion in cash on hand, so this big buy means they probably won't do any other large deals for another year.


Other 'Winners' In The Deal?

Berkshire wasn't alone in purchasing PCP shares in Q1 either.  As we flagged in the May issue of our Hedge Fund Wisdom newsletter, PCP was a consensus new buy with the likes of Third Point, ValueAct Capital, Soroban Capital, and Farallon Capital initiating new positions.

One other very notable fund was out buying a lot of PCP as well: Lou Simpson's SQ Advisors.  Prior to founding SQ, Simpson worked at Berkshire Hathaway.  Of the above managers, he bet the biggest on PCP on a position size weighted basis, given that he allocated almost 10% of his portfolio to PCP shares.

Other big name institutions were out adding to their existing PCP stakes in Q1 as well, such as Ruane Cunniff (Sequoia Fund).

So while these funds may have 'won' in that they see their PCP shares appreciate a decent amount in a short period of time, some might lament the deal a little bit. 

Some managers were also buying in Q3 and Q4 of 2014 when prices were right around where Buffett is buying PCP out now, so their return isn't great.  Other managers might be sad to see PCP disappear from their portfolios as they saw a long-term opportunity for appreciation within the aerospace industry.  And lastly, all of the managers who just bought in Q1 will now see these gains hit by short-term capital gains tax.

Glenview Capital Increases Tenet Healthcare Stake Again

Larry Robbins' hedge fund firm Glenview Capital has filed a Form 4 with the SEC regarding its position in Tenet Healthcare (THC).  Per the filing, Glenview now owns over 15.49 million shares of THC.

Robbins' firm was out buying shares on August 5th and 6th at prices ranging from $53.75 to $55.  In total, they purchased 697,917 shares.

This is the second time Glenview has added to its THC position this summer.

Per Google Finance, Tenet Healthcare is "a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets."

Last week we also detailed additional portfolio activity from Glenview here.

Kyle Bass' Hayman Capital Increases NMI Holdings Position

Kyle Bass' hedge fund firm Hayman Capital has filed a 13D and Form 4 with the SEC regarding its stake in NMI Holdings (NMIH).  Per the 13D, Hayman now owns 12.5% of the company with over 7.37 million shares.

The Form 4 indicates Hayman was out buying on August 5th - 7th at prices between $8.25 and $9.21.  In total, they purchased 1.875 million shares.

We also highlighted some other recent buying from Hayman Capital.

Per Google Finance, NMI Holdings is "provides private mortgage guaranty insurance (MI) in the United States. The Company's primary insurance subsidiary, National Mortgage Insurance Corporation (NMIC), is a MI provider on loans purchased by Fannie Mae and Freddie Mac (collectively the Government-sponsored enterprises or GSEs). The Company's reinsurance subsidiary, National Mortgage Reinsurance Inc One (Re One), provides reinsurance to NMIC on certain loans insured by NMIC. NMIC's residential mortgage insurance products primarily provide first loss protection on loans originated by residential mortgage lenders and sold to the GSEs and on low down payment loans held by portfolio lenders. NMIC offers two principal types of MI, primary and pool. The Company offers two types of primary mortgage insurance products to its customers, flow and non-flow."

Donald Yacktman's Talk at Google: Viewing Stocks as Bonds

Donald Yacktman of Yacktman Asset Management recently had a talk at Google about investing and viewing stocks as bonds.

When talking about investing, Yacktman says that, "You're almost always wrong to some degree." 

He goes on to note, "Conceptually, if you think of what you're doing when you're buying an equity is you're buying two cashflows: the cashflow given out as a dividend and the cashflow that is retained by management or invested on your behalf and that's the wildcard.  And the longer term your investment horizon is, the more important that part of the investment equation becomes.  Because it can affect rates of return over long periods of time."

Yacktman also talks about risk management and conviction, noting that you should always allocate more capital to the ideas you have higher conviction in and where you perceive there to be lower risk.  And then your position sizes on less confident names should obviously be smaller.

The key to investing he says: "Have patience. Have a very long horizon time."

He also goes on to do a Q&A session.

Yacktman said there's 3 opportune times to buy: when the whole market goes down/collapses (like the financial crisis of 2008), an industry shortfall (like 1993 with concerns of changing the healthcare industry), or an individual stock temporarily out of favor.

When he can't find bargains, he says "cash is a residual.  When you think about cash, it shouldn't be because you're trying to predict the market. When you don't have opportunity, sometimes it's better off to just sit on it (cash)."

Embedded below is the video of Yacktman's talk at Google: