Thanks to the work of MarketFolly.com, we can get a glimpse into the dealings of some of the most prominent and successful hedge funds. These are useful as they point to tactical opportunities and sometimes, when hedge funds take short positions, they provide lucid guidance pointing to areas or stocks in the market that should be sold or avoided, or for those with the stomachs, to follow short.
Below, MarketFolly.com details the trading activities of John Paulson's, $36-billion hedge fund, Paulson & Company. Paulson is famed for having bet massively against subprime mortgages, and earning returns for his partners over the past 2 years which at one point, were in excess of 1,000%.
Among Paulson's holdings are some notable Canadian companies, Kinross Gold, and BCE. Among the financials, Paulson is long Wachovia, National City, Wells Fargo, and Merrill Lynch; at the same time, Paulson is also long Proshares Ultrashort Financials (SKF). Among the defensive consumer non-durable companies Paulson likes tobacco majors Philip Morris, and UST.
More recently, Paulson appears to be initiating an effort to compel Dow, by sending the company a letter, urging its management to close the acquisition of Rohm. This could get interesting. Paulson reported in a 13G filing that it held 9.24% of Rohm. Who knows what additional interest Paulson owns in Rohm via swaps.
Blue Horseshoe loves Rohm and Haas...
The following is a guest contribution from MarketFolly.com.
This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.
Next up is Paulson & Co ran by John Paulson. His hedge fund has generated massive returns over the past two years, as he bet against financials and all things subprime. One of his funds was even up 589%. Most recently, he has profited by shorting UK banks. Although Paulson is obviously one of the main brains behind the operation, there are also many talented individuals. One of their co-portfolio managers has left to start his own fund, and we'll be keeping an eye on that. At the end of 2008, his Advantage Plus fund ended the year +37.58%, as detailed in our year end 2008 hedge fund performance post. For more info on how Paulson performed in 2008, be sure to check out their year end letter & report.
The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.
Some New Positions (Brand new positions that they initiated in the last quarter):
At&t (T)
Embarq (EQ)
iStar Financial (SFI)
Liberty Media Corp (LMDIA)
National City (NCC)
Northern Trust (NTRS)
Peoples United Financial (PBCT)
St Jude Medical (STJ)
Teva Pharmaceutical (TEVA)
Centennial Communication (CYCL)
UST (UST)
Proshares Ultrashort Financial (SKF)
Wells Fargo (WFC)
Wachovia (WB)
Some Increased Positions (A few positions they already owned but added shares to)
Merrill Lynch (MER): Increased position by 327%
BCE (BCE): Increased position by 308%
Genentech (DNA): Increased position by 242%
NRG Energy (NRG): Increased position by 163%
Cheniere Energy (LNG): Increased position by 60%
Philip Morris International (PM): Increased position by 50%
Rohm & Haas (ROH): Increased position by 20.5%
Boston Scientific (BSX): Increased position by 18%
Some Reduced Positions (Some positions they sold some shares of)
Brocade Communications (BRCD): Reduced position by 28.6%
Removed Positions (Positions they sold out of completely)
Anheuser Busch (BUD)
Barr Pharmaceuticals (BRL)
Applied Biosystems (inactive)
Hercules Offshore (HERO)
Macrovision (MVSN)
Wrigley (WWY)
Top 20 Holdings (by % of portfolio)
- Rohm & Haas (ROH): 18.36% of portfolio
- Boston Scientific (BSX): 12.64% of portfolio
- UST (UST): 11.31% of portfolio
- Kinross Gold (KGC): 8.66% of portfolio
- BCE (BCE): 7.7% of portfolio
- Wachovia (WB): 7.62% of portfolio
- Philip Morris International (PM): 6.45% of portfolio
- Mirant (MIR): 5.72% of portfolio
- Genentech (DNA): 4.68% of portfolio
- Merrill Lynch (MER): 2.68% of portfolio
- National City (NCC): 2.54% of portfolio
- NRG Energy (NRG): 2.02% of portfolio
- At&t (T): 1.41% of portfolio
- Ultrashort Financials (SKF): 1.36% of portfolio
- Embarq (EQ): 1.18% of portfolio
- Northern Trust (NTRS): 0.79% of portfolio
- Peoples United Financial (PBCT): 0.72% of portfolio
- Liberty Media (LMDIA): 0.68% of portfolio
- Centennial Communications (CYCL): 0.66% of portfolio
- St. Jude (STJ): 0.54% of portfolio
Assets from the collective long US equity, options, and note holdings were $7 billion last quarter and were $6 billion this quarter. Keep in mind that many of Paulson's holdings are not listed in these filings because they aren't equities, but rather securities in other markets. However, as evidenced above, he does hold a decent amount of equities due to merger arbitrage and other strategies. We'd be remiss if we didn't also point out that Paulson's team has been hard at work, as they recently filed 13Gs on Rohm & Haas (ROH) and Boston Scientific (BSX). This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. Look for our updates everyday over the next few weeks.
The above article was contributed by MarketFolly.com.
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