Insider Monkey HF Newsletter - May 2013

Hedge Fund Alpha
The Best Stock Picks of The Best Hedge Funds

Q1 2013 Issue:4
Inside This Issue
1 Performance Update
3New Stock Picks
5 In-depth Analysis of New Stock
Picks
3522 Billionaire Fund
Managers
79 Most Popular Stocks Among
Hedge Funds
86Least Popular Stocks Among
Hedge Funds
89Most Popular Stocks Among
Best Performing Hedge Funds
90Most Concentrated Positions
Among Hedge Funds
92 30 Picks by Our New Bonus
Mid Cap Strategy
92 15 Stocks That are Dumped
by Hedge Funds
Dont pay hedge funds
hefty fees when you can
buy the best stock picks
of best hedge fund
managers at a fraction
of what they charge
Performance Update: Small-Cap Strategy
We published the first issue of our newsletter at the end of August and
started sharing the 15 quarterly stock picks of our small-cap strategy. Our
strategy is pretty straight forward to implement. We hold these stocks in
our portfolio for about 3 months and update our portfolio with the new
names as soon as we publish a new issue of the newsletter. Our Small
Cap Strategy gained an average of 47.5% between September 4th and
May 15
th
. During the same time period S&P 500 index ETF (SPY) gained
only 19.1%. The Small Cap Strategy also returned 12.6% between
February 15
th
and May 16
th
, beating SPYs 9.2% return by 3.4 percentage
points.

Here is how each of our small-cap picks from the last newsletter
performed:

1. United Rentals (URI): 4.8%
2. Gardner Denver (GDI): 9.1%
3. MetroPCS (PCS): 14.4%, This stock was acquired by TMUS on
May 1st
4. Visteon (VC): 13.6%
5. W.R. Grace (GRA): 7.5%
6. Lear (LEA): 7.9%
7. Owens Corning (OC): 3.1%
8. Genworth Financial (GNW): 17.1%
9. Abercrombie & Fitch (ANF): 5.1%
10. Allscripts Healthcare Solutions (MDRX): 25.1%
11. Brookdale Senior Living (BKD): 4.0%
12. Ocwen Financial (OCN): 8.4%
13. US Airways (LCC): 31.9%
14. Hillshire Brands (HSH): 14.9%
15. Sally Beauty Holdings (SBH): 13.8%

Historically this strategy beat the S&P 500 index by about 4.25
percentage points per quarter and its performance over the last 8.5
months was twice as good.
This issue is licensed to the Insider Monkey account owner associated with rob_vignozzi@yahoo.it
Hedge Fund Alpha
2
Performance Update: Secret Strategy
Historically our secret strategy performed much better than the
market. In our 10-year back test this strategy beat the S&P 500 index
by 2 percentage points per month. It is a riskier strategy than our
small-cap strategy though.

Our secret strategy gained 25.2% between September 4
th
and May 16
th
.
Overall this strategy outperformed the S&P 500 index by 6.1
percentage points in 8.5 months. This is a very good result in
comparison to what most hedge funds and mutual funds deliver.
However, it is also clear that this strategy has been performing below
its historical track record.

Here is how our stock picks from the previous quarter performed
during the last 3 months:

1. ADT Corp (ADT): -9.6%
2. Realogy Holdings (RLGY): 20.6%
3. Gardner Denver (GDI): 9.1%
4. NYSE Euronext (LAMR): 9.1%
5. Workday Inc (WDAY): 33.2%
6. Verisign (VRSN): 5.9%
7. PBF Energy (PBF): -18.0%
8. Spirit Realty Capital (SRC): 14.6%
9. National Bank Holdings Corp (NBHC): 0.1%
10. Dynegy (DYN): 18.8%
11. MetroPCS (PCS): 14.4%, This stock was acquired by TMUS on May
1st
12. LinnCo (LNCO): 4.1%
13. WhiteWave Foods (WWAV): 26.0%
14. Warnaco Group (WRC): NA, It was acquired by PVH Corp on
Feb. 13th
15. Grupo Financero Sntdr (BSMX): 14.3%

In the next page you will find the stock picks of our small-cap and
secret strategies. You will notice that secret strategy has a much higher
turnover than the small-cap strategy. All 15 stock picks of the secret
strategy are new stocks. On the other hand there are only 9 new stocks
in the small-cap strategy. This means our small-cap strategy has lower
transaction costs than our secret strategy.
Secret Strategy beat the
S&P 500 index by 2
percentage points per
month in our 10-year
back test. This strategy
returned 25.2% between
September 4
th
and
February 15th
Hedge Fund Alpha
3
New Stock Picks: Small-Cap Strategy
1. United Rentals (URI)
2. Visteon Corp. (VC )
3. Lamar Advertising Co. (LAMR)
4. US Airways Group (LCC)
5. W.R. Grace & Co. (GRA)
6. MetroPCS Communications, Inc. (PCS)
7. Owens Corning (OC)
8. CommonWealth REIT (CWH)
9. Newcastle Investment Corp. (NCT)
10. Fortinet Inc. (FTNT)
11. Carter's, Inc. (CRI)
12. Genworth Financial (GNW)
13. Lear Corp. (LEA)
14. Dean Foods Company (DF)
15. Community Health Systems (CYH)

United Rentals (URI)
has been the most
popular small-cap stock
among hedge funds in
our first three issues of
our newsletter. It
returned 78% during
the last 8.5 months.
New Stock Picks: Secret Strategy
1. Axiall Corporation (AXLL)
3. Starz (STRZA)
4. Radian Group Inc. (RDN)
5. Constellation Brands Inc. (STZ)
7. American Realty Capital Properties (ARCP)
8. NXP Semiconductors NV (NXPI)
9. Newcastle Investment Corp. (NCT)
10. Norwegian Cruise Line Holdings (NCLH)
11. Bright Horizons Family Solutions (BFAM)
12. Ulta Salon, Cosmetics & Fragrance (ULTA)
13. Copart, Inc. (CPRT )
14. BMC Software (BMC)
15. Emeritus Corp. (ESC)

Hedge Fund Alpha
4
How To Use This Hedge Fund Newsletter
We will start publishing
a monthly BONUS
newsletter in June. This
will cost $149 for non-
members but for the
current premium
members it is FREE.
1. I dont have time to trade in and out of stocks every quarter and I want to
invest in only the best ideas. What should I do?

Dont read the rest of this newsletter. Our 10-year historical analysis showed that
the top 3 small-cap stocks among hedge funds beat the market by 284 basis points
per month. The top 5 small-cap stocks among hedge funds beat the market by 220
basis points per month. The good thing about investing in these top 3-5 stocks is
that they stay in our portfolio for relatively long periods of time. This means lower
transaction costs and you will have more time to spend on other things. United
Rentals (URI) has been the most popular small-cap stock since the inception of our
strategy and this stock gained 78% during the past 8.5 months. Visteon (VC) is
another stock that was consistently among the top 5 stocks and it returned 39%
over the same time period.

The downside of this approach is that it isnt diversified enough. Usually it isnt a
good idea to allocate a large chuck of your portfolio to a very small number of
stocks.

2. You present a lot of strategies and lists in this newsletter. What is your
official recommendation? Which strategy should we follow?

Our flagship strategy is the Small Cap Hedge Fund Strategy. Our premium members
are free to do whatever they like but we suggest they buy the 15 stocks picked by
our flagship strategy every quarter and sell the stocks that drop out of the list. We
have a graph on almost every page on our website showing the performance of this
strategy since its inception. We will also take a much closer look at these stocks in
the next section.

3. Investing is a hobby for me. I have a lot of time on my hands and would like to
come up with great investment ideas by looking at what hedge funds are doing.
What do you recommend?

We provide tons of information for subscribers who want to dig deeper and come
up with additional promising stock picks. We present a lot of lists (and the historical
returns of each list) at the end of this newsletter. You can also analyze the
portfolios of billionaire hedge fund managers. However, we should warn you that
usually its not a great idea to imitate hedge funds all stock picks. For example
David Einhorns large-cap stock picks significantly underperform his small-cap stock
picks. We will start distributing a monthly bonus newsletter where we will focus on
a single hedge fund manager and share his promising stock picks with you. This
newsletter will be free for our premium members.

Hedge Fund Alpha
5
Analysis of Small Cap Strategys Picks:
1. United Rentals (URI)
Current Price: $58.68
Price when first
recommended: $32.31
(Aug 31, 2012)
Dividends Paid: 0
No. of HFs: 50
United Rentals has been our #1 pick for the past year. A very peculiar case of
a construction/industrial equipment rental company that's booming to a
greater degree than its industry: the prime rental equipment market (non-
residential construction) is considered moderate (at best) by most
economists, and the majority don't expect a complete recovery until 2014-
2015. One major trend, though, that was an effect of the last recession was
a push away from buying construction equipment to renting instead. The
latest sequester fears have pushed URI--the largest equipment rental
company in the world--to even greater heights, as businesses have placed an
even greater premium on short-term rental agreements.

1) Special Situations: No

2) Short Interest: 17.6% of float is short. This percentage itself has increased
by nearly 50% since the end of March; URI's first-quarter revenues missed
targets ever so slightly, which may explain the rising short interest. No major
investors have proclaimed they're short.

3) Developments/Catalysts: Still, URI's guidance is intact, along with the
analyst optimism on Wall Street (avg. price target of $64.67 vs. current price
of $58.70). Shares are up 15% since the mid-April Q1 report. Oppenheimer
just boosted its PT to $68, and Citigroup boost its to $70 earlier this month.
In short, URI is a great hedge against political uncertainty in Washington.
Most business confidence indices are strong, but they're remained stagnant
since February. Continued uncertainty will continue to push businesses to
short-term rentals, and thus, URI.

4) Options: Jan 2015 $60 calls are $12; 2015 $65 calls are $9.76. Jan 2014
$60 calls are $7.10. Jan 2014 $65 calls are $5. Best play here Jan 2014 at $60
strike.

5) Insider Sentiment: No insider purchases since 2009. Two strict sales (non-
option) have occurred in the past 90 days. Both aren't significant in size, and
both are Directors at URI.

6) 13D/13G Owners: No +5% owners to track.
Hedge Fund Alpha
6
1. United Rentals (URI): Popularity over the last 4 quarters
Company Name Ticker SH/PRN Option
Value
(x1000) Activity
% in
Portfolio Fund
UNITED RENTALS INC URI PRN N 115107 0% 0.2% Citadel Investment Group
UNITED RENTALS INC URI SH N 103090 -14% 1.5% Point State Capital
UNITED RENTALS INC URI PRN N 93624 0% 3.6% Alpine Associates
UNITED RENTALS INC URI SH N 85314 -37% 1.0% Highbridge Capital Management
UNITED RENTALS INC URI SH N 77113 0% 2.4% PAR Capital Management
UNITED RENTALS INC URI SH N 76407 25% 0.1% Citadel Investment Group
UNITED RENTALS INC URI SH N 62251 975% 0.3% SAC Capital Advisors
UNITED RENTALS INC URI SH N 55330 58% 1.4% Egerton Capital Limited
UNITED RENTALS INC URI SH N 55100 -25% 1.9% Odey Asset Management Group
UNITED RENTALS INC URI SH N 52530 22% 0.2% Millennium Management
Top 10 Hedge Funds with Positions in the Stock:
See the entire list and the history of hedge fund positions in this stock!
Hedge Fund Alpha
7
2. Visteon Corp (VC)
Price when first
recommended: $46.02
(Aug 31, 2012)
Dividends Paid: 0
No of HFs: 48
An automotive supplier to major auto OEMs globally, Visteon's favoritism in
the smart money's world appears to be valuation driven. The company sold
its automotive lighting business to Varroc for less than $100 million in early
Aug. 2012; a $100M share repurchase program was also announced. Later
that month late, CEO/President/Chairman Don Stebbins resigned, with
Timothy Leuliette, previously a board member, named as the interim to all
three posts. Visteon's stock responded to this move very well, popping more
than 10% in a day's time. In early October 2012, Visteon confirmed Leuliette
was made the official CEO/President. The Chairman position was re-
assigned, and the CFO was replaced later that month. Another double-digit
gain followed these moves, and $200M more in share repurchases were
announced in Jan. 2013.


2) Short Interest: 2.5% of float is short.

3) Developments/Catalysts: Visteon crushed first quarter rev/earnings
estimates, registering 8.1% and 110% yoy growth, respectively. VC stock
itself has risen more than 9% since reporting earlier this month, and 14%
overall since the end of Q1. Wall Street's average price target, though, lies
nearly 13% higher than Visteon's current stock price of $65.77.

In addition to the company-specific factors that warrant investors' optimism,
S&P holds a "positive" outlook for the auto parts and equipment sub-
industry as a whole. "Rising demand" domestically and in China are expected
to contribute to long-term growth, though Eurozone troubles and "elevated"
oil prices are worth keeping an eye out for. In the U.S., the average age of
each car on the road is 11 years, the highest on record--another bullish
factor in the shorter term.

4) Options: Jan 2015 $70 calls are $6. Jan 2015 $75 calls are $2.85. Jan 2014
$75 calls are $1.60. Preference would be Jan 2014 at a strike of $75.

5) Insider Sentiment: There were three separate insider purchases in Dec.
2012, and one bearish insider since the start of 2013, a direct sale.

6) 13D/13G Owners: No +5% owners to track.
Hedge Fund Alpha
8
2. Visteon (VC): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
VISTEON CORP VC SH N 150134 3% 0.7% SAC Capital Advisors
VISTEON CORP VC SH N 133124 22% 2.8% JANA Partners
VISTEON CORP VC SH N 121589 0% 14.1% Centerbridge Partners
VISTEON CORP VC SH N 117716 -3% 42.2% Solus Alternative Asset Management
VISTEON CORP VC SH N 104830 13% 1.0% Highfields Capital Management
VISTEON CORP VC SH N 80696 1% 7.5% Silver Point Capital
VISTEON CORP VC SH N 79659 -23% 1.7% York Capital Management
VISTEON CORP VC SH N 63095 10% 1.3% Eton Park Capital
VISTEON CORP VC SH N 60844 -18% 10.5% Alden Global Capital
VISTEON CORP VC SH N 60036 -60% 1.8% Owl Creek Asset Management
Hedge Fund Alpha
9
3. Lamar Advertising (LAMR)
Lamar has some of the most impressive growth prospects in the outdoor
advertising industry, with a transition to digital billboards driving the sell-
sides solid current-year (15%) and extreme year-ahead (76%) bottom line
growth forecasts. More importantly, Lamar is looking at a REIT conversion by
January 2014, with MKM Partners analyst Eric Handler saying quite
succinctly, "billboards will make good real estate assets.

1) Special Situations: REIT Conversion

2) Short Interest: 4.3% of float is short.

3) Developments/Catalysts: Since announcing in August 2012 that it was
considering a move to REIT status for tax advantages, LAMR has risen over
50%, and Wall Street's high estimate still sees a 25% upside from current
prices near $48 a share.

S&P calls 2013 a transition year for the advertising industry, with a secular
shift toward digital billboards offset by a fewer top-dollar opportunities like
the Olympics, for example. Still, over the longer term, Lamar is looking like
it'll be a prominent player in the dig-Ad space, which should serve its
investors very well.

4) Options: Jan 2014 $50 calls are $3.45. Jan 2014 $55 calls are $1.57. Jan
2015 $50 calls are $5.30. an 2015 $55 calls are $3.70. Preference is Jan 2015
calls at a strike of $50.

5) Insider Sentiment: No insider purchases since 2011. Four insider sales in
2013.

6) 13D/13G Owners: SPO Advisory Corp owns 11.3%, Perry Corp owns 7.9%,
and Southeastern Asset Management owns 6%.
Price when first
recommended: $48.12
(May 16, 2013)
Dividends Paid: 0
No of HFs: 47
Hedge Fund Alpha
10
3. Lamar Advertising (LAMR): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
LAMAR ADVERTISING CO LAMR SH N 404143 -18% 5.5% SPO Advisory Corp
LAMAR ADVERTISING CO LAMR SH N 283221 0% 9.0% Perry Capital
LAMAR ADVERTISING CO LAMR SH N 214372 -19% 1.0% Southeastern Asset Management
LAMAR ADVERTISING CO LAMR SH N 156915 -53% 3.0% Luxor Capital Group
LAMAR ADVERTISING CO LAMR SH N 89295 602% 0.4% SAC Capital Advisors
LAMAR ADVERTISING CO LAMR SH N 71287 -31% 0.8% Glenview Capital
LAMAR ADVERTISING CO LAMR SH N 70801 New 2.8% Tiger Consumer Management
LAMAR ADVERTISING CO LAMR SH N 70478 1% 4.5% Southpoint Capital Advisors
LAMAR ADVERTISING CO LAMR SH N 61768 -77% 6.0% Abrams Capital Management
LAMAR ADVERTISING CO LAMR SH N 57938 -16% 1.3% Brookside Capital
Hedge Fund Alpha
11
4. US Airways (LCC)
US Airways' merger with AMR Corporation was announced in February
2013, and was approved by a bankruptcy judge earlier this May. Since news
of the formal approval, shares of LCC have gained more than 9% and
currently trade at $19.01 a share, but the agreement is still awaiting U.S. and
European regulatory approval, providing another catalyst for more upside in
the short term. Most analysts expect the deal to be completed by Q3 2013.

1) Special Situations: Merger arbitrage; possible investment post-merger.

2) Short Interest: 32.9% of float short.

3) Developments/Catalysts: Wall Street is betting that there's still an 11.3%
upside in this merger arbitrage opportunity. If a deal does go through, LCC
shareholders will receive an undetermined amount of shares of the newly
merged airline. All in all, LCC shareholders will own about 28% of the new
company, which most estimate to be worth more than $10 billion, and
annual revenues in excess of $40B, making it the largest airline in the U.S.

With that being said, LCC investors do have the opportunity to ride their
original investment past the merger, as President Scott Kirby has cited a
massive potential to ""hit the ground running," adding that the two are
"going to get the code share up within weeks compared to what's taken
much longer at some other mergers." Kirby has also pointed out that they
expect "operational integration done effectively and with very minimal
customer disruption.

2015 $20 calls are $3.10. Preference is Jan 2014 calls at a strike of $20.

5) Insider Sentiment: No insider purchases on record. Six different insiders
were selling in late April 2013.

6) 13D/13G Owners: FMR owns 9.2%, Vanguard Group owns 5.8%,
Appaloosa owns 5.8%.

Price when first
recommended: $14.50
(Feb 15, 2013)
Dividends Paid: 0
No of HFs: 47
Hedge Fund Alpha
12
4. US Airways (LCC): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
U S AIRWAYS LCC SH CALL 424250 0% 37.9% BlueCrest Capital Mgmt.
U S AIRWAYS LCC SH N 181525 -11% 3.8% Appaloosa Management LP
U S AIRWAYS LCC PRN N 171520 -13% 8.3% Whitebox Advisors
U S AIRWAYS LCC SH N 133128 99% 1.6% Soros Fund Management
U S AIRWAYS LCC SH N 101961 200% 17.5% Alden Global Capital
U S AIRWAYS LCC SH PUT 60564 New 1.3% Empyrean Capital Partners
U S AIRWAYS LCC SH CALL 42564 New 2.8% Lakewood Capital Management
U S AIRWAYS LCC PRN N 36925 0% 0.4% Highbridge Capital Management
U S AIRWAYS LCC SH N 27016 -56% 5.6% Standard Pacific Capital
U S AIRWAYS LCC SH N 26464 New 0.2% Columbus Circle Investors
Hedge Fund Alpha
13
5. WR Grace & Co (GRA)
WR Grace & Co is a specialty chemicals company best known for its catalysts
used to convert oil into transportation fuels. Shares were up more than 40%
last year on rising hopes that its decade of asbestos-related court drama--
and bankruptcy protection--was turning the right corner. In 2013, GRA is up
nearly 20% and recently cracked the $80 mark for the first time in their
history.

1) Special Situations: Bankruptcy


3) Developments/Catalysts: While a sizable chunk of GRA's value has
already been taken, shares are still cheap on a cash basis (10th lowest in the
50-stock specialty chemicals industry), and the sell-side expects bottom line
growth in the mid-to-high teens next year. Topeka Capital Markets, who has
a Hold rating on GRA, says the company is "finally set to emerge" from
bankruptcy protection by the end of this year or "early 2014." Average PTs
on GRA lie in the $87 range--an 8% upside from current levels.

One intriguing aspect of GRA's business is its innovations in the fluid
catalytic cracking (FCC) arena, specifically in manufacturing the catalysts that
drive this process. the company recently reached a joint venture with Al
Dahra Agriculture to build the first FCC catalyst plant in the United Arab
Emirates. The facility "will serve refineries throughout the Middle East and
potentially into South Asia" by Q4 2015, according to an official statement.
On a longer-term, macro-level scale, global demand for FCC catalysts are
expected to rise significantly in the coming half-decade, with GRA expected
to be a major player, and likely, the leader in this space.

4) Options: Jan 2014 $82.50 calls are $3.20. Jan 2014 $85 calls are $4.13. Jan
2014 $87.50 calls are $3.21. Jan 2015 $85 calls are $7.40. Jan 2015 $90 calls
are $5.60. Preference is Jan 2015 calls at a strike of $85.

5) Insider Sentiment: No insider purchases since 2009. Three insider sales in
May 2013; none of significant size.

6) 13D/13G Owners: FMR owns 10.2%, Vanguard Group owns 6.1%, and
Iridian Asset Management owns 5.8%.
Price when first
recommended: $57.76
(Aug 31, 2012)
Dividends Paid: 0
No of HFs: 46
Hedge Fund Alpha
14
5. WR Grace & Co (GRA) : Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
WR GRACE & CO GRA SH N 278819 1% 4.1% Iridian Asset Management
WR GRACE & CO GRA SH N 232530 28% 2.9% Blue Ridge Capital
WR GRACE & CO GRA SH N 194639 15% 5.2% Chilton Investment Company
WR GRACE & CO GRA SH N 140986 -10% 8.3% Hound Partners
WR GRACE & CO GRA SH N 132388 40% 0.5% OZ Management
WR GRACE & CO GRA SH N 118978 -46% 1.8% Tiger Global Management LLC
WR GRACE & CO GRA SH N 115791 New 0.6% Lone Pine Capital
WR GRACE & CO GRA SH N 107915 15% 5.7% Gates Capital Management
WR GRACE & CO GRA SH N 100763 0% 7.4% Marble Arch Investments
WR GRACE & CO GRA SH N 96888 0% 7.5% H Partners Management
Hedge Fund Alpha
15
6. MetroPCS Communications (PCS)
Was acquired by T-Mobile USA, completed on May 1
st
.
Current Price: NA
Price when first
recommended: $10.35
(Feb 15, 2013)
Dividends Paid: 0
No of HFs: 46
Hedge Fund Alpha
16
7. Owens Corning (OC)
A favorite of many investors betting on a housing market recovery, Owens
Corning is the quintessential leader in roofing and various glass fiber
products, including insulation and reinforcements.



3) Developments/Catalysts: Roofing and insulation are two of the most
important beneficiaries of the continued housing market recovery, with the
former (insulation) showing a slight lag in comparison to industry-level
growth. Shares of OC are up more than 21% since the start of the year, and
trade at price-to-sales parity with an attractive forward earnings multiple
below 15.0.

S&P holds a "positive" outlook for the building products industry, citing
expectations of "ongoing gains in existing home sales, and more home
improvement projects" in the intermediate term.

2014 $47 calls are $2.75. Jan 2014 $50 calls are $1.72. Preference is Jan
2014 calls at a strike of $46.

5) Insider Sentiment: No insider buys in 2013. Three insider sales in the last
three months.

6) 13D/13G Owners: Wayzata Investment Partners owns 7.2%, Blue Ridge
Capital owns 6.2%, and Artisan Partners owns 5.3%.
Price when first
recommended: $42.79
(Feb 15, 2013)
Dividends Paid: 0
No of HFs: 47
Hedge Fund Alpha
17
7. Owens Corning (OC): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
OWENS CORNING OC SH N 325561 -8% 35.8% Wayzata Investment Partners
OWENS CORNING OC SH N 282122 7% 3.5% Blue Ridge Capital
OWENS CORNING OC SH N 125190 80% 2.4% Pennant Capital Management
OWENS CORNING OC SH N 106599 14% 2.3% Appaloosa Management LP
OWENS CORNING OC SH N 106365 -1% 0.5% SAC Capital Advisors
OWENS CORNING OC SH N 74604 179% 3.2% Valinor Management LLC
OWENS CORNING OC SH N 61972 New 1.9% Samlyn Capital
OWENS CORNING OC SH N 53861 71% 1.8% Ascend Capital
OWENS CORNING OC SH N 52245 9% 2.3% Sigma Capital Management
OWENS CORNING OC SH N 45917 -50% 0.7% Iridian Asset Management
Hedge Fund Alpha
18
There are battleground stocks, and then there are outright wars. The
developing situation surrounding CommonWealth REIT's fight with Icahn cub
Corvex Management and Related Fund Management is one of a kind, if not
the first of its kind.

Corvex and Related are currently engaged in a hostile takeover of the
Maryland-based office REIT, after originally disclosing a 9.8% stake in CWH
this past February--and an outright offer of $25 per share. CWH's stock price
immediately rose above this level when the news broke, but Mr. Market's
optimism over a successful takeover has fallen since, with shares losing
more than 18% since March; they now trade in the mid-range of the original
price and the buyout offer's price (Corvexs latest 13D filing shows a 9.2%
stake (see their presentation)).

CWH has a poison pill defense in place that limits outside buyers from taking
positions greater than 10% of the REIT, and more troublingly, a staggered
board means that CWH can resist the hedge fund duo's efforts for two years
before giving up a majority.

Additionally, a provision initially adopted without shareholders' support,
exists that makes all disputes with shareholders up for arbitration--adding
more months, and maybe years, to the process. If this provision is rejected
by CHW's home-state legal system, it would strike a major blow to CHW
management, but Corvex and Related also need a loophole in the REIT's
documents--allowing for all directors to be removed by written consent--to
be held in place by Maryland's legislature.

If Corvex and Related can successfully use the loophole, and have the ability
to avoid arbitration, shares do have upside to $25 a piece. It's this scenario,
which is viewed as probable by many analysts, that almost all bulls are
betting on. Frankly, the twisted nature of this entire situation is one reason
why retail investors may not have recognized the buying opportunity that's
present.

1) Special Situations: Takeover


3) Developments/Catalysts: CWH's stock price hasn't fared very well post-
recession. Shares are down more than 30% over the past five years, in a
time when the office REIT industry is up around 4%. It is this
underperformance that Corvex and Related seek to change, and is a likely
reason why they will receive shareholder support in their takeover quest.

Still, this will be up to the courts, hence the discount that's currently
available.
Price when first
recommended: $20.43
(May 16, 2013)
Dividends Paid: 0
No of HFs: 41
Hedge Fund Alpha
19
8. CommonWealth REIT (CWH), Cont.
4) Options: Oct 2013 $22.50 calls at $1.15. No contracts available beyond
this date, due to the legal uncertainty surrounding CWH.

5) Insider Sentiment: No insider buys or sales on record.

6) 13D/13G Owners: Aside from Corvex and Related, Vanguard Group owns
9.7%. Perry Corp owns 5.6%.
Price when first
recommended: $20.43
(May 16, 2013)
Dividends Paid: 0
No of HFs: 41
Hedge Fund Alpha
20
8. CommonWealth REIT (CWH) : Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
COMMONWEALTH REIT CWH SH N 145860 New 4.6% Perry Capital
COMMONWEALTH REIT CWH SH N 125148 -12% 2.4% Luxor Capital Group
COMMONWEALTH REIT CWH SH N 121743 New 3.6% Corvex Capital
COMMONWEALTH REIT CWH SH CALL 96492 New 1.8% Fir Tree
COMMONWEALTH REIT CWH SH N 96169 New 2.8% Owl Creek Asset Management
COMMONWEALTH REIT CWH SH N 84324 New 0.8% Highfields Capital Management
COMMONWEALTH REIT CWH SH N 67320 New 0.8% Senator Investment Group
COMMONWEALTH REIT CWH SH N 51658 New 0.2% OZ Management
COMMONWEALTH REIT CWH SH N 47611 New 1.0% York Capital Management
COMMONWEALTH REIT CWH SH N 44880 New 0.9% Empyrean Capital Partners
Hedge Fund Alpha
21
9. Newcastle Investment (NCT)
Multiple empirical studies have shown that spinoffs and the entities that
perform them: a) outperform the market, b) are typically underrated by Wall
Street, and c) are undervalued post-split. In 45 years of data from the
Purdue duo of McConnell and Ovtchinnikov, freshly split entities have
outperformed Mr. Market by more than 19% twelve months after the split,
with 24-month (24.4%) and 36-month (26.3%) returns of even greater
significance. Newcastle Investment, which recently spun off its its residential
real estate assets into New Residential (NRZ), falls into this category.

1) Special Situations: Spinoff


3) Developments/Catalysts: Looking at shares of the mortgage REIT in mid-
May, Newcastle's stock price has risen 27.8% in just one month's time, and
the combination of impressive first-quarter results with a full-year guidance
boost have bulls clamoring.

In addition the the fundamental bullishness of a post-spinoff environment,
Newcastle's focus on the senior living segment of the marketplace is
expected to boost overall performance in the intermediate term; diversity
will continue to be key advantage it has over most competitors. Non-agency
mortgages, MSRs, and commercial real estate are the other primary areas
that this mREIT operates in, and a yield of 7.20% places it in the upper-
fourth of its industry.

4) Options: Jan 2014 $7.50 calls are $0.10. Jan 2015 $7.50 calls are $0.30.
Preference is Jan 2015 calls at a strike of $7.50.

5) Insider Sentiment: Two insider purchases since the start of 2013. No
insider sales.

6) 13D/13G Owners: Vanguard Group holds 7.4%. FMR holds 7.3%. Credit
Suisse holds 5.7%.

Price when first
recommended: $5.72
(May 16, 2013)
Dividends Paid: 0
No of HFs: 39
Hedge Fund Alpha
22
9. Newcastle Investment (NCT) : Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
NEWCASTLE INVESTMENT CNCT SH N 69751 207% 0.3% SAC Capital Advisors
NEWCASTLE INVESTMENT CNCT SH N 66733 New 1.4% York Capital Management
NEWCASTLE INVESTMENT CNCT SH N 62185 New 2.4% Osterweis Capital Management
NEWCASTLE INVESTMENT CNCT SH N 52291 77% 1.8% Ascend Capital
NEWCASTLE INVESTMENT CNCT SH N 45381 1254% 0.7% Omega Advisors
NEWCASTLE INVESTMENT CNCT SH N 36288 105% 0.6% Two Sigma Advisors
NEWCASTLE INVESTMENT CNCT SH N 34092 390% 0.1% Renaissance Technologies
NEWCASTLE INVESTMENT CNCT SH N 29601 New 2.1% Hutchin Hill Capital
NEWCASTLE INVESTMENT CNCT SH N 21225 7% 5.0% Locust Wood Capital Advisers
NEWCASTLE INVESTMENT CNCT SH N 18431 -21% 0.3% Moore Global Investments
Hedge Fund Alpha
23
10. Fortinet (FTNT)
At first glance, nothing really special stands out about this IT security player.
Down more than 10% since the start of 2013, Fortinet hasnt given investors
much to be excited about of late.



3) Developments/Catalysts: Recently, most of investors pessimism on
Fortinet is related to the fact that it pre-announced its first quarter
financials, missing Wall Streets revenue numbers by 3% while coming short
on EPS estimates by 16%. Industry-wide reports havent been mind-blowing,
but its difficult to think that any bull expected Fortinet to miss so poorly.

On the bright side, however, this short-term dip may give value-hunters an
even better entry point into the stock, as shares now trade at a modest 48
times trailing earnings20% below its average over the past year.

An acquisition of enterprise solutions firm Coyote Point Systems, announced
in March, should also give Fortinet a stronger foothold in the budding cloud
security segment. Its this longer-term cyber security potential that gives
Fortinet some real bite, and while the Coyote deal wont make or break this
stock, it certainly adds some allure to the investment.

2015 $20 calls are $4. Preference is Jan 2014 calls at a strike of $21.

5) Insider Sentiment: No insider purchases, three bearish insiders in 2013.

6) 13D/13G Owners: Wells Fargo owns 13.1%, and Vanguard Group owns
5.3%.
Price when first
recommended: $18.50
(May 16, 2013)
Dividends Paid: 0
No of HFs: 39
Hedge Fund Alpha
24
10. Fortinet (FTNT): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
FORTINET INC FTNT SH N 57378 115% 1.5% Eminence Capital
FORTINET INC FTNT SH N 56282 New 1.8% Hoplite Capital Management
FORTINET INC FTNT SH N 49960 New 0.6% Maverick Capital
FORTINET INC FTNT SH N 46946 36% 2.2% Tremblant Capital
FORTINET INC FTNT SH N 38862 2% 0.1% Citadel Investment Group
FORTINET INC FTNT SH N 22980 New 2.4% Jericho Capital Asset Management
FORTINET INC FTNT SH N 21653 New 0.6% Sandler Capital Management
FORTINET INC FTNT SH N 17168 New 1.7% Empire Capital Management
FORTINET INC FTNT SH N 16736 -81% 0.4% Brookside Capital
FORTINET INC FTNT SH N 13439 53% 0.2% Balyasny Asset Management
Hedge Fund Alpha
25
11. Carters (CRI)
Though it often flies under the radar, Carter's is the single largest branded
marketer of baby apparel in the U.S., with the iconic OshKosh in its staple.
Known for its value-priced products with reasonable quality, Carters is a
domestic consumer confidence play through and through, with some
attractive international growth prospects as well.



3) Developments/Catalysts: A 2011 acquisition of Bonnie Togs has boosted
Carters footprint in Canada considerably, with most estimates predicting
annual growth in the mid-teens over the next five years. Carters Japanese
expansion is also expected to experience similar growth, judging by most
estimates.

As with most apparel producers, one major challenge that Carters has faced
quite well has been an industry-wide shift to e-commerce, specifically in
direct-to-consumer offerings. This, in turn, has led Carters to rely less on
wholesale revenuesa promising sign that on the whole, brand awareness
is headed in the right direction.

The icing on the cake here, though, is that cotton prices are headed in the
right direction, close to a third of their 2011 highs. The spot price of Upland
cotton has fallen by 14% since March, and the desirable combination of
falling demand and rising production has most forecasts predicting further
price depreciation through next year.

Implicitly, this will have a favorable effect on Carters gross margins, which
are already at their highest level in four years.

In early May, Carters also declared its first ever quarterly dividend of $0.16
a share, good for a forward yield near 1.0%; the ex-dividend date is May 29.
A $300 million share repurchase program was also announced at this time.
The growth catalysts just keep on coming.

4) Options: Sep 2013 $75 calls are $0.70. Dec 2013 $80 calls are $1.85.
Preference is Dec 2013 calls at a strike of $80.

5) Insider Sentiment: No insider purchases in 2013, three insider sales since
the beginning of May.

6) 13D/13G Owners: Viking Global owns 6%, Hoplite Capital owns 5.7%,
Matrix Capital owns 5.2%, and Tiger Global owns 5.1%.

Price when first
recommended: $68.98
(Aug 31, 2012)
Dividends Paid: 0
No of HFs: 39
Hedge Fund Alpha
26
11. Carters (CRI): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
CARTERS INC CRI SH N 196372 -8% 1.2% Viking Global
CARTERS INC CRI SH N 186844 9% 6.0% Hoplite Capital Management
CARTERS INC CRI SH N 170378 0% 18.6% Matrix Capital Management
CARTERS INC CRI SH N 168374 New 2.6% Tiger Global Management LLC
CARTERS INC CRI SH N 158298 10% 9.3% Hound Partners
CARTERS INC CRI SH N 129293 179% 0.6% SAC Capital Advisors
CARTERS INC CRI SH N 97880 -1% 0.3% Royce & Associates
CARTERS INC CRI SH N 84050 196% 1.8% Alkeon Capital Management
CARTERS INC CRI SH N 64592 0% 3.8% Polaris Capital Management
CARTERS INC CRI SH N 63267 -38% 0.6% Highfields Capital Management
Hedge Fund Alpha
27
12. Genworth Financial (GNW)
Through mid-May, Genworth Financial has gained more than 40% since the
start of 2013. A generally cheery market notwithstanding, most investors
optimism has been related to a potential three-way breakup.

1) Special Situations: Impending breakup and related value potential.


3) Developments/Catalysts: Genworth Financial is expected to IPO its
Australian mortgage insurance unit for $800 million in the short- to
intermediate-term, in addition to the expected sales of its wealth
management and alternative investment businesses for $400 million in total,
according to most estimates.

Genworth itself has said that its waiting for more evidence of a good IPO
market as recently as this month, but all three moves could allow the
company to focus its efforts on core U.S. mortgage and long-term care
insurance operations.

Though its difficult to place an exact post-breakup value on Genworth
Financial as of yet, Wall Street believes that shares have further upside from
here, with average price targets surpassing the $11.20 mark. High estimates
predict a 20% upside, with greater appreciative potential once an exact date
is set on the Australian IPO.

2015 $12 calls are $2.06. Preference is Jan 2014 calls at a strike of $11.

5) Insider Sentiment: One insider buy, one insider sale in May.

6) 13D/13G Owners: Dodge & Cox own 9.2%, Vanguard Group owns 7.7%,
FMR owns 7.2%, and State Street owns 5%.

Price when first
recommended: $9.06
(Feb 15, 2013)
Dividends Paid: 0
No of HFs: 39
Hedge Fund Alpha
28
12. Genworth Financial (GNW): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
GENWORTH FINANCIAL INCGNW SH N 131676 -52% 1.2% Highfields Capital Management
GENWORTH FINANCIAL INCGNW SH N 90000 131% 0.5% Paulson & Co
GENWORTH FINANCIAL INCGNW SH N 83826 -31% 2.1% ESL Investments
GENWORTH FINANCIAL INCGNW SH N 81224 34% 1.4% Legg Mason Capital Management
GENWORTH FINANCIAL INCGNW SH N 58065 286% 0.1% Renaissance Technologies
GENWORTH FINANCIAL INCGNW SH N 38532 -24% 0.3% Arrowstreet Capital
GENWORTH FINANCIAL INCGNW SH N 22153 New 1.0% ZWEIG DIMENNA PARTNERS
GENWORTH FINANCIAL INCGNW SH N 22063 29% 2.2% Fine Capital Partners
GENWORTH FINANCIAL INCGNW SH N 19882 -13% 2.7% Saba Capital
GENWORTH FINANCIAL INCGNW SH N 16500 371% 0.3% Moore Global Investments
Hedge Fund Alpha
29
13. Lear Corp (LEA)
Lear Corporation is a play on the auto space, and is one of the world's
largest suppliers of seating and electrical power management systems to
automakers. Weve discussed hostile takeovers before, but Lear is a much,
much different situation. Hedge funds Marcato Capital Management and
Oskie Capital Management originally announced their intent to place a
group of nominees for election to Lears Board, but after the Board itself
announced a few value stimulating moves of their own, the activist duo
agreed to withdraw their candidates in April.

More importantly, Marcato and Oskie have now pledged their full support to
Lears existing Board of Directors, with the implicit understanding that
shareholder value will be its first and foremost priority moving forward.

1) Special Situations: Activist influence; continued shareholder value
stimulation.


3) Developments/Catalysts: On April 1, Lear announced that it would
accelerate its existing $1 billion share repurchase program with an additional
$750 million. With Marcato, Oskie and Lears board on the same page, this
stock has risen more than 11% since the start of April through mid-May, and
the sell-sides average price target estimates upside of another 9% in the
short- to intermediate-term. Most recently, S&P Capital IQ raised their
outlook on Lear from a Hold to a Buy in late April.

As weve discussed in our analysis of Visteon above, most analysts expect
the auto supplier space to be bullish in the next 1-2 years, with rising
domestic and Chinese demand expected to be primary contributors to
growth. Record-high levels for vehicle age in the U.S. are also expected to
benefit companies like Lear moving forward.

4) Options: Sept 2013 $65 calls are $1.80. Sept 2013 $70 calls are $0.45. Dec
2013 $65 calls are $2.70. Preference is Dec 2013 calls at a strike of $65.

5) Insider Sentiment: No insider purchases, one insider sale in 2013.

6) 13D/13G Owners: Robeco Investment Management owns 7.3%, Marcato
Capital Management owns 6%, and Harris Associates owns 5%.

Price when first
recommended: $38.83
(Aug 31, 2012)
Dividends Paid: $0.45
No of HFs: 39
Hedge Fund Alpha
30
13. Lear Corp (LEA): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
LEAR CORP LEA SH N 310182 107% 42.8% Marcato Capital Management
LEAR CORP LEA SH N 122154 -25% 5.3% Valinor Management LLC
LEAR CORP LEA SH N 106044 -26% 0.2% Citadel Investment Group
LEAR CORP LEA SH N 80613 -5% 0.3% Adage Capital Management
LEAR CORP LEA SH N 74881 44% 0.2% D E Shaw
LEAR CORP LEA PRN N 73658 766% 2.2% Corvex Capital
LEAR CORP LEA SH N 43937 2% 6.4% Redwood Capital Management
LEAR CORP LEA SH N 43013 -16% 0.1% Renaissance Technologies
LEAR CORP LEA SH N 34487 5% 0.7% York Capital Management
LEAR CORP LEA SH N 32373 -11% 4.0% North Run Capital
Hedge Fund Alpha
31
14. Dean Foods (DF)
Dean Foods is the U.S.s largest dairy processor and distributor, whose
products range from milk to creamers. Deans WhiteWave Foods (WWAV)
segment, which focuses on alternative and organic milk products, will be
spun off later this month.

1) Special Situations: Spinoff


3) Developments/Catalysts: At first glance, a post-split Dean Foods without
its highest-growing segment seems a little bland. Peeking a bit under the
hood of a company thats already in the midst of an operational overhaul,
however, theres beauty in a breakup.

On nearly every basis, Dean Foods dairy business is abnormally cheap in
comparison to industry peers, but until the WhiteWave spinoff is complete,
the markets will be unable to recognize it. Even with a slight multiples
expansion, theres substantial appreciation potential here.

Longer term worries over the lack of growth in milk aside, Dean represents a
solid value play in the short-run; the sell-sides average price target predicts
an 8% upside from current levels. The more bullish analysts predict shares
can flirt with the $27 after WhiteWave spins off later this month.

4) Options: Jan 2014 $21 calls are $2. Jan 2014 $22 calls are $1.65. Jan 2014
$23 calls are $0.90. Jan 2015 $22 calls are $2.55. Preference is Jan 2014 calls
at a strike of $23.

5) Insider Sentiment: No insider purchases or sales in 2013.

6) 13D/13G Owners: Vanguard Group owns 9.6%, FMR owns 5.7%, T Rowe
Price owns 5%.

Price when first
recommended: $20.59
(May 16, 2013)
Dividends Paid: 0
No of HFs: 38
Hedge Fund Alpha
32
14. Dean Foods (DF): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
DEAN FOODS CO NEW DF SH N 76655 4% 0.3% Adage Capital Management
DEAN FOODS CO NEW DF SH N 62544 112% 15.2% Sheffield Asset Management
DEAN FOODS CO NEW DF SH N 60736 New 0.8% Scout Capital Management
DEAN FOODS CO NEW DF SH N 45417 New 0.2% OZ Management
DEAN FOODS CO NEW DF SH N 44471 33% 2.6% Hound Partners
DEAN FOODS CO NEW DF SH N 40040 3% 0.6% HBK Investments
DEAN FOODS CO NEW DF SH N 30870 95% 1.0% Ascend Capital
DEAN FOODS CO NEW DF SH N 30767 0% 1.5% East Side Capital (RR Partners)
DEAN FOODS CO NEW DF SH N 27869 -11% 0.6% Appaloosa Management LP
DEAN FOODS CO NEW DF SH N 27739 New 0.3% Highfields Capital Management
Hedge Fund Alpha
33

Community Health Systems has been a high-flyer in 2013, with shares up a
whopping 45% year to date. The hospital operator, cited as an Obamacare
play by many analysts, is assumed to benefit from the Affordable Care Act
by as early as 2014.



3) Developments/Catalysts: Mr. Market isnt placing an overwhelming bet
one way or another on just how Obamacare will affect healthcare
companies. Therein lies the opportunity in Community Health Systems as a
value play.

For investors believing that industry-wide supply declines are on the horizon
in addition to the inevitable demand boom that Affordable Care will bring,
higher healthcare costs will benefit operators like Community Health
Systems, which trades at a mere 9.6 times forward earnings and 0.3 times
sales.

Wall Streets average price target on CYH shares represents an upside of
18% from current levels, with high estimates predicting a price of $67 by
next year.

4) Options: Dec 2013 $45 calls are $5.20. Dec 2013 $46 calls are $4.60. Dec
2013 $47 calls are $4.20. Dec 2013 $48 calls are $3.30. Dec 2013 $49 calls
are $2. Dec 2013 $50 calls are $2.80. Preference is Dec 2013 calls at a strike
of $49.

5) Insider Sentiment: No insider buys, seven insider sales since the start of
May.

6) 13D/13G Owners: Glenview Capital owns 10.3%, Lord, Abbett & Co owns
6.7%, Bamco owns 5.8%, and Vanguard Group owns 5.3%.

Price when first
recommended: $45.22
(Aug 31, 2012)
Dividends Paid: 0
No of HFs: 37
Hedge Fund Alpha
34
15. Community Health Systems (CYH): Popularity over the last 4 quarters
Value
(x1000) Activity
% in
Portfolio Fund
COMMUNITY HEALTH SYS I CYH SH N 427229 5% 4.5% Glenview Capital
COMMUNITY HEALTH SYS I CYH SH N 116439 New 1.5% Maverick Capital
COMMUNITY HEALTH SYS I CYH SH N 79426 New 0.5% Viking Global
COMMUNITY HEALTH SYS I CYH SH N 58939 3% 0.2% AQR Capital Management
COMMUNITY HEALTH SYS I CYH SH N 54626 -65% 2.7% TPG-AXON Management LP
COMMUNITY HEALTH SYS I CYH SH N 37228 181% 0.3% Arrowstreet Capital
COMMUNITY HEALTH SYS I CYH SH N 29382 New 1.8% Deerfield Management
COMMUNITY HEALTH SYS I CYH SH N 27249 New 0.4% Point State Capital
COMMUNITY HEALTH SYS I CYH SH N 22511 New 0.7% Corvex Capital
COMMUNITY HEALTH SYS I CYH SH N 20776 -61% 0.8% Clough Capital Partners
Hedge Fund Alpha
35
Warren Buffett -
Berkshire Hathaway
New Positions
Increased Positions
-Wells Fargo(WFC)
-DirecTV (DTV)

- Starz (STRZA)
- Chicago B&I (CBI)
Reduced Positions
-Bank of NY Mellon (BK)
-Mondelez (MDLZ)
Sold Out
-Archer Daniels (ADM)
-General Dyn. (GD)
Brief Discussion:
Here are a few stocks that Berkshire was buying in the first quarter of 2013:

Wells Fargo. In the fourth quarter of 2012, Wells Fargo (WFC) overtook long-time
Buffett favorite Coca-Cola (KO) to become Berkshire Hathaway's largest holding by
market value; Berkshire kept buying early in this year, and owned about 460 million
shares at the end of March. At a price-to-book ratio of 1.4, Wells Fargo actually trades
at a premium to the book value of its equity, rare among megabanks in the current
environment. It does feature earnings multiples in line with its peers, however, as the
bank has been able to monetize these assets quite well. Wells Fargo had made our list
of the most popular financial stocks among hedge funds in the fourth quarter of 2012.

Chicago Bridge & Iron. The largest "new pick" in Buffett's portfolio- although, in fact,
many of Berkshire's new investments are currently being made by Buffett's designated
successors- was $6.2 billion market cap engineering and construction services company
Chicago Bridge & Iron (CBI). The holding company disclosed ownership of 6.5 million
shares in the 13F; on the news of Berkshire's buy, the stock rose 3% in after hours
trading. Chicago Bridge & Iron carries a beta of 1.9, signifying considerable dependence
on the broader economy. While the company's earnings fell in the first quarter of 2013
versus a year earlier, this was entirely due to acquisition related items; when adding
those back, pretax income rose 48%. Wall Street analysts are quite bullish, going by the
forward earnings multiple of 11 and the five-year PEG ratio of 0.6. SAC Capital Advisors,
managed by billionaire Steve Cohen, had owned 2.7 million shares of the stock at the
end of December.

Davita. Berkshire has a large percentage stake in DaVita (DVA), a provider of kidney
dialysis services at both hospitals and at specialized dialysis centers, and slightly
increased its holdings during Q1 to a total of about 15 million shares. DaVita also had a
special item pull its net income growth negative last quarter, and correcting for that,
pretax income grew 39% compared to the first quarter of 2012. The market
capitalization of $14 billion represents a multiple of 16 on forward earnings estimates;
those targets do include an expectation of significant increases in earnings per share
over the next couple years. Still, given the company's impressive earnings growth (and
revenue rising over 50% over the same time frame) we'd be interested in considering it
as a growth stock. Billionaire David Shaw's D.E. Shaw has been another major
shareholder of DaVita in the past.

Berkshire didn't sell a significant number of shares of any of its ten largest positions,
even as the holding company announced a buyout of Heinz (HNZ) and made the
purchases we've mentioned here. As such Buffett and his team appear to like stocks at
this point in time, and considering the high beta at Chicago Bridge & Iron they seem
confident in the broader economy. We think that these three names are worthy of
consideration by investors, though it's important to note that both DaVita and Chicago
Bridge & Iron are dependent on continuing their strong recent performance rather than
being traditional value stocks. In addition, we would advise considering other large
banks as well before buying Wells Fargo.
Hedge Fund Alpha
36
Warren Buffetts Portfolio:
Value
(x1000) Activity
% in
Portfolio
WELLS FARGO & CO NEW WFC SH N 16947720 4% 19.9%
COCA COLA CO KO SH N 16176000 0% 19.0%
INTERNATIONAL BUSINESS MACHS COR IBM SH N 14530420 0% 17.1%
AMERICAN EXPRESS CO AXP SH N 10227658 0% 12.0%
PROCTER & GAMBLE CO PG SH N 4068235 0% 4.8%
WAL MART STORES INC WMT SH N 3685170 4% 4.3%
DIRECTV DTV SH N 2109415 10% 2.5%
U S BANCORP DEL USB SH N 2085274 0% 2.5%
PHILLIPS 66 PSX SH N 1900660 0% 2.2%
DAVITA INC DVA SH N 1775756 10% 2.1%
MOODYS CORP MCO SH N 1515101 0% 1.8%
CONOCOPHILLIPS COP SH N 1449847 0% 1.7%
WASHINGTON POST CO WPO SH N 772311 0% 0.9%
GENERAL MOTORS CO GM SH N 695500 0% 0.8%
LIBERTY MEDIA CORP DELAWARE CL A LMCA SH N 627622 New 0.7%
M & T BANK CORP MTB SH N 555211 0% 0.7%
BANK OF NEW YORK MELLON CORP BK SH N 530106 -4% 0.6%
NATIONAL OILWELL VARCO INC NOV SH N 529514 41% 0.6%
VIACOM INC NEW VIAB SH N 467691 0% 0.6%
COSTCO WHOLESALE CORP NEW COST SH N 459813 0% 0.5%
U S G CORP USG SH N 451389 0% 0.5%
CHICAGO BRIDGE & IRON CO N V CBI SH N 404185 New 0.5%
VERISIGN INC VRSN SH N 386389 122% 0.5%
PRECISION CASTPARTS CORP PCP SH N 374942 0% 0.4%
DEERE & CO DE SH N 342094 0% 0.4%
WABCO HOLDINGS INC WBC SH N 287748 0% 0.3%
VISA INC V SH N 264179 0% 0.3%
TORCHMARK CORP TMK SH N 253302 0% 0.3%
MASTERCARD INC MA SH N 219158 0% 0.3%
Mondelez International Inc MDLZ SH N 215919 -45% 0.3%
SANOFI SNY SH N 207573 0% 0.2%
STARZ - LIBERTY CAPITAL NASDAQ STRZA SH N 124535 New 0.1%
VERISK ANALYTICS INC VRSK SH N 96339 0% 0.1%
ARCHER DANIELS MIDLAND CO ADM SH N Sold Out 0.0%
GENERAL DYNAMICS CORP GD SH N Sold Out 0.0%
Click to see the entire portfolio and historical filings.
Hedge Fund Alpha
37
Steve Cohen-
SAC Capital
New Positions
Increased Positions
-EQT (EQT)
-Amazon (AMZN)
-Suncor (SU)
-WW Grainger (GWW)
Reduced Positions
-Ebay (EBAY)
-Sirius XM (SIRI)
Sold Out
-Coach (COH)
-Dover (DOV)
Brief Discussion:
Switching e-commerce companies. The fund reduced its stake in eBay (EBAY) from 4.6
million shares to 2.6 million, and instead more than tripled the size of its position in
Amazon (AMZN) to make that company its second largest single-stock position by market
value. Amazons valuation is entirely based on expectations for better earnings numbers in
the future, as the $120 billion market cap company is actually unprofitable on a trailing
basis (and is valued at over 80 times expected earnings for 2014). Wed note that Amazon
was one of the most popular consumer services stocks among hedge funds in Q4 2012.
While eBays multiples certainly arent as high in relative terms, that stock is also
dependent on future growth with the current market cap of $74 billion making for a
trailing earnings multiple of 28. eBay (which owns Paypal as part of its Payments segment)
did experience double-digit growth rates in both revenue and earnings in its most recent
quarter compared to the same period in the previous year, though this multiple might still
be a bit high.

EQT. The new top pick in SACs portfolio is integrated natural gas company EQT (EQT), with
the filing disclosing ownership of 4.3 million shares. Natural gas prices have been very low
(at least domestically) over the last couple of years, as overexpansion in onshore U.S shale
plays have resulted in a supply glut. Theres some hope that higher demand- including,
possibly, from exporting- will emerge going forward though. Cohen and his team are pretty
dependent on growth unfolding here as EQT currently trades at 25 times forward earnings
estimates. So far this quarter, EQT has agreed to buy a portion of Chesapeake (CHK)s
Marcellus assets as that company tries to raise cash and focus on its core assets. Billionaire
George Soros has also been buying EQT.

Suncor. EQT isnt the only energy company Soros likes: he also added shares of Suncor
(SU), which is best known for its assets in Alberta oil sands, to make two unconventional
energy players among his top three picks. The companys earnings fell 24% last quarter
compared to the first quarter of 2012 despite a small rise in revenue. Analysts, however,
are expecting Suncors business to grow considerably over the next couple years and as a
result the forward P/E is 10. Of course, it might not be wise to place too much weight on
sell-side forecasts.

The Alberta oil sands do have a good deal of potential as an energy source, and could
certainly drive Suncors business, but it might be best to wait until the company is
recording increases in its net income. We actually dont like Amazon right now- certainly
the business is doing well in expanding its scope but were worried that it is quite a way
out from earnings numbers which would make us feel comfortable with its valuation- and
as weve mentioned eBay is pricy enough that we are skeptical it is a value play at this
time. EQT might also be a bit speculative, and were not sure it merits its premium to
Chesapeake among others, but merits notice as a way that some billionaires are playing a
potential natural gas recovery. Billionaire Jorge Paulo Lemanns 3G Capital initiated a new
position in SU during the first quarter.
Hedge Fund Alpha
38
Steve Cohens Portfolio:
Value
(x1000) Activity
% in
Portfolio
SPDR S & P 500 ETF TRUST SPY SH PUT 732654 69% 3.5%
E Q T CORP EQT SH N 288728 205% 1.4%
ISHARES TRUST TLT SH PUT 246019 226% 1.2%
AMAZON COM INC AMZN SH N 235530 234% 1.1%
SUNCOR ENERGY INC NEW SU SH N 213038 19293% 1.0%
VISA INC V SH N 211119 330% 1.0%
MICRON TECHNOLOGY INC MU SH N 188438 300% 0.9%
MICHAEL KORS HOLDINGS LIMITED KORS SH N 183656 84% 0.9%
S M ENERGY CO SM SH N 183376 144% 0.9%
STARBUCKS CORP SBUX SH N 181681 -9% 0.9%
NOBLE ENERGY INC NBL SH N 169081 -10% 0.8%
G N C HOLDINGS INC GNC SH N 167999 2430% 0.8%
SIRIUS X M RADIO INC SIRI SH N 164812 -23% 0.8%
BOEING CO BA SH N 154530 7% 0.7%
PRICELINE COM INC PCLN SH N 150645 20% 0.7%
VISTEON CORP VC SH N 150134 3% 0.7%
EBAY INC EBAY SH N 140607 -43% 0.7%
DISNEY WALT CO DIS SH N 138304 834% 0.7%
EQUINIX INC EQIX SH N 133398 77% 0.6%
TRANSOCEAN LTD RIG SH N 132726 229% 0.6%
VMWARE INC VMW SH N 130700 100% 0.6%
CARTERS INC CRI SH N 129293 179% 0.6%
RENAISSANCERE HOLDINGS LTD RNR SH N 126898 1031% 0.6%
WHOLE FOODS MARKET INC WFM SH N 125796 184% 0.6%
GRAINGER W W INC GWW SH N 122918 37016% 0.6%
BAKER HUGHES INC BHI SH N 120710 27426% 0.6%
CHESAPEAKE ENERGY CORP CHK SH PUT 119290 New 0.6%
PLAINS EXPLORATION & PROD CO PXP SH N 117726 67% 0.6%
STARWOOD HOTELS & REST WLDWD INC HOT SH N 117540 74% 0.6%
HARLEY DAVIDSON INC HOG SH N 116190 166% 0.6%
SANOFI SNY SH N 207573 0% 0.2%
COACH INC COH SH N Sold Out 0.0%
DOVER CORP DOV SH N Sold Out 0.0%
VIRGIN MEDIA INC VMED SH N Sold Out 0.0%
ISHARES INC JAPAN EWJ SH CALL Sold Out 0.0%
Hedge Fund Alpha
39
Stan Druckenmiller-
Family Office
New Positions
Increased Positions
-Delta (DAL)
-Gold ETF Calls (GLD)
-News Corp (NWSA)
Reduced Positions
-Google (GOOG)
-US Airways (LCC)
Sold Out
-Emerging Mkts. (EEM)
-Merck (MRK)
Brief Discussion:
News Corp. We don't show Druckenmiller owning any shares of News Corp (NWSA) at the
beginning of 2013, but by the end of Q1 his family office had bought 2.3 million shares.
Value investors have been crowding into News Corp as the company prepares to break
into two; this situation is thought to have similar effects to a spinout, with management
of the new companies being better able to focus on operations (read more about why
hedge funds like investing in spinouts). The stock has risen 67% in the last year on this
investor interest as well as a general rally among media and entertainment stocks.
Currently, the company as it exists is valued at 17 times forward earnings estimates. That
multiple is not particularly high, meaning that even after the rally the market's
expectations for the benefits of the breakup are not that high.

Dumping Merck. The 13F reported that Druckenmiller had closed his position in Merck
(MRK), which had been one of his top stock picks at the beginning of 2013. Large
positions in Pfizer (PFE) and Eli Lilly (LLY) remain, showing that he is not bearish on drug
manufacturers generally. Merck has some attractive defensive characteristics, with a
dividend yield of 3.7% at current prices and a beta of 0.4, but of course the same is the
case for many large pharmaceutical companies. At first glance, Merck doesn't look so
great as a value investment with a trailing P/E of 24 and with both revenue and earnings
down by 8-9% last quarter compared to the first quarter of 2012. Wall Street analysts are
predicting that the company will rebound, but Druckenmiller's move here is
understandable. Pfizer and Merck had both made our list of the most popular healthcare
stocks among hedge funds in the fourth quarter of 2012.

Changing planes. Druckenmiller cut his stake in US Airways (LCC) from about 4 million
shares down to 1.2 million, and more than doubled the size of his position in Delta (DAL)
making that stock another of his ten largest holdings by market value. The much-derided
airline industry has been on a tear in the last year, in part because investors expect US
Airways' acquisition of American out of bankruptcy to result in higher prices. Both of
these companies are valued at only 6 times consensus earnings for 2014, and while we
don't recommend buying any stock solely off of sell-side forecasts that is a low enough
figure that we find Delta and US Airways at least somewhat interesting. Billionaire David
Tepper's Appaloosa Management has been bullish on airlines in the past.

We'd be interested in doing more research on the airlines, though we would note that US
Airways does face integration risk from its acquisition. We're not sure what has caused
Merck's financials to fall off, but we are certainly skeptical that it is any better a value
than its peers when we look at the numbers. As for News Corp, while the stock is well
above its levels from a year ago it apparently isn't all that expensive in terms of the
company's fundamentals. It may be worth trying to determine how much upside the
breakup could result in- it seems that the market is currently expecting very little.
Hedge Fund Alpha
40
Stanley Druckenmillers Portfolio:
Click to see the entire portfolio and historical filings here.
Value
(x1000) Activity
% in
Portfolio
SPDR GOLD TRUST GLD SH CALL 282680 New 19.5%
LENNAR CORP LEN SH N 115928 0% 8.0%
PFIZER INC PFE SH N 98701 0% 6.8%
D R HORTON INC DHI SH N 84185 0% 5.8%
GOOGLE INC GOOG SH N 83588 -25% 5.8%
LILLY ELI & CO LLY SH N 78001 0% 5.4%
NEWS CORP NWSA SH N 70234 New 4.9%
DELTA AIR LINES INC DAL SH N 63753 127% 4.4%
JOHNSON & JOHNSON JNJ SH N 58457 0% 4.0%
PIONEER NATURAL RESOURCES CO PXD SH N 39760 New 2.7%
NOBLE CORP BAAR NE SH N 39447 New 2.7%
GOLDMAN SACHS GROUP INC GS SH N 33491 New 2.3%
GILEAD SCIENCES INC GILD SH N 29888 New 2.1%
PROCTER & GAMBLE CO PG SH N 26647 New 1.8%
ABBOTT LABORATORIES ABT SH N 26056 New 1.8%
CABOT OIL & GAS CORP COG SH N 25759 New 1.8%
CHARTER COMMUNICATIONS INC CHTR SH N 23128 New 1.6%
E Q T CORP EQT SH N 22493 New 1.6%
U S AIRWAYS GROUP INC NEW LCC SH N 20890 -69% 1.4%
ADOBE SYSTEMS INC ADBE SH N 20452 New 1.4%
THE ADT CORP ADT SH N 18940 0% 1.3%
LIBERTY GLOBAL INC LBTYA SH N 16290 New 1.1%
WISDOMTREE TRUST DXJ SH N 15199 New 1.1%
SOUTHWESTERN ENERGY CO SWN SH N 14382 New 1.0%
DISH NETWORK CORPORATION DISH SH N 14023 -42% 1.0%
PBF ENERGY INC PBF SH N 11987 New 0.8%
TENET HEALTHCARE CORP THC SH N 11895 0% 0.8%
SECTOR SPDR TRUST XLP SH N 11610 New 0.8%
SECTOR SPDR TRUST XLU SH N 11539 New 0.8%
SECTOR SPDR TRUST XLV SH N 11533 New 0.8%
ISHARES TRUST EEM SH N Sold Out 0.0%
MERCK & CO INC NEW MRK SH N Sold Out 0.0%
TIME WARNER INC NEW TWX SH N Sold Out 0.0%
AMERICAN INTERNATIONAL GROUP INC AIG SH N Sold Out 0.0%
SOUTHERN CO SO SH N Sold Out 0.0%
Hedge Fund Alpha
41
T. Boone Pickens-
BP Capital
New Positions
Increased Positions
-Pioneer Natural Re (PXD)
-Goodrich Petr. (GDP)
-Apache (APA)
-Tesoro (TSO)
Reduced Positions
-Anadarko(APC)
-Halliburton (HAL)
Sold Out
-Southwestern En (SWN)
-Range Resources (RRC)
Brief Discussion:
Apache. Pickens initiated a position of about 120,000 shares in Apache (APA) during the
first quarter of 2013. The oil and gas exploration and production company has been
struggling, reporting lower revenue and earnings in Q1 versus a year earlier, and is
currently priced at a premium to the oil majors with a trailing price-to-earnings multiple
of 17. Analyst estimates suggest that Apache has more of an upside than its larger peers,
however, resulting in a forward P/E of 8. Citadel Investment Group, managed by
billionaire Ken Griffin, had been buying Apache during Q4 2012.

Selling Valero. At the beginning of 2013, BP Capital's largest holding by market value was
Valero (VLO), a $22 billion market cap oil and gas refining and marketing company.
However, Pickens looks to have cut his stake by about 80% between January and March.
Like many other companies in the industry, Valero has been on a tear in the last year (it
has nearly doubled in price) and yet is still trading at value levels with both its trailing and
forward P/E multiples coming in at 7. Wall Street analysts are expecting at least some
earnings growth going forward, which would make the stock undervalued if that turns
out to be the case; the five-year PEG ratio is 0.8. Arrowstreet Capital had been another
major shareholder at the end of 2012.

Getting out of oilfield services. None of Pickens's ten largest positions are oilfield
equipment and services companies, after he sold National Oilwell Varco (NOV) and
reduced his stake in Halliburton (HAL) with none of those companies' peers taking their
places. This is interesting because both of these particular stocks had made our list of the
most popular energy stocks among hedge funds during the fourth quarter of 2012.
Halliburton is actually not looking that cheap at this time; while the sell-side is optimistic
here as well, with consensus forecasts for 2014 implying a forward P/E of 11, revenue
growth last quarter compared to the first quarter of 2012 was light. National Oilwell
Varco's recent results were more mixed, as higher costs offset an impressive
performance on the top line resulting in a 17% decrease in net income.

Goodrich. In addition to Apache, the billionaire was buying Goodrich Petroleum (GDP)
between January and March of this year. Goodrich's market cap is only about $480
million, but on average 1.2 million shares of the stock are traded per day. Like Apache, it
is an exploration and production company; its acreage is primarily in the Texas-Louisiana
region in onshore shale plays. We'd note that Goodrich has been recording operating
losses in the past several quarters, and in fact has been missing estimates in the process
as well.

Contra to Pickens, we think that oilfield services is an interesting industry at this time,
and National Oilwell Varco seems to be a good place to start looking for value in that
area. Refiners- including Valero as well as its peers- also look to be priced attractively
even after their run-up in price. As for the oilman's E&P picks, Goodrich seems a bit
dependent on a turnaround for our liking. Apache is certainly better positioned, and if
the company can match the trajectory analysts are looking for it would turn out to be a
good value, but we aren't sure it's necessarily a better buy than the majors.
Hedge Fund Alpha
42
T. Boone Pickens Portfolio:
Value
(x1000) Activity
% in
Portfolio
PIONEER NATURAL RESOURCES CO PXD SH N 12922 71% 12.8%
APACHE CORP APA SH N 9632 New 9.5%
GOODRICH PETROLEUM CORP GDP SH N 9390 580% 9.3%
DEVON ENERGY CORP NEW DVN SH N 6900 0% 6.8%
OCCIDENTAL PETROLEUM CORP OXY SH N 6136 24% 6.1%
TESORO CORP TSO SH N 5835 New 5.8%
MARATHON PETROLEUM CORP MPC SH N 5804 New 5.8%
GULFPORT ENERGY CORP GPOR SH N 5729 New 5.7%
PHILLIPS 66 PSX SH N 5578 New 5.5%
CONSOL ENERGY INC CNX SH N 5048 214% 5.0%
ONCHO RESOURCES INC CXO SH N 4384 New 4.3%
ANADARKO PETROLEUM CORP APC SH N 3935 -51% 3.9%
HALCON RESOURCES CORP HK SH N 3882 New 3.8%
ARCH COAL INC ACI SH N 3530 175% 3.5%
VALERO ENERGY CORP NEW VLO SH N 3313 -79% 3.3%
BASIC ENERGY SERVICES INC BAS SH N 3076 New 3.0%
HALLIBURTON COMPANY HAL SH N 2021 -67% 2.0%
GASTAR EXPLORATION LTD GST SH N 2007 0% 2.0%
NEWMONT MINING CORP NEM SH N 503 New 0.5%
FREEPORT MCMORAN COPPER & GOLD FCX SH N 261 -92% 0.3%
ENTERPRISE PRODUCTS PARTNERS LP EPD SH N 241 New 0.2%
GENERAL ELECTRIC CO GE SH N 231 New 0.2%
APPLE INC AAPL SH N 221 New 0.2%
B P PLC BP SH N 212 New 0.2%
DOW CHEMICAL CO DOW SH N 121 New 0.1%
SOUTHWESTERN ENERGY CO SWN SH N Sold Out 0.0%
RANGE RESOURCES CORP RRC SH N Sold Out 0.0%
NATIONAL OILWELL VARCO INC NOV SH N Sold Out 0.0%
MARATHON OIL CORP MRO SH N Sold Out 0.0%
NEWFIELD EXPLORATION CO NFX SH N Sold Out 0.0%
TRANSOCEAN LTD RIG SH N Sold Out 0.0%
WEATHERFORD INTL LTD NEW WFT SH N Sold Out 0.0%
SANDRIDGE ENERGY INC SD SH N Sold Out 0.0%
Hedge Fund Alpha
43
Stephen Mandel-
Lone Pine Capital
New Positions
Increased Positions
-News Corp (NWSA)
-Mead Johnson (MJN)
-Valeant (VRX)
-Virgin Media (VMED)
Reduced Positions
-Google (GOOG)
-Cognizant (CTSH)
Sold Out
-Facebook (FB)
-Crown Castle (CCI)
Brief Discussion:
Stephen Mandel is a Tiger Cub, having previously worked at legendary investor- and
billionaire- Julian Robertsons Tiger Management. Mandel has become a billionaire
himself through managing Lone Pine Capital, which has over $15 billion in assets under
management. Read on for our analysis of three themes in the hedge funds portfolio and
compare its holdings to those reported in previous filings.

News Corp. The fund increased the size of its position in News Corp (NWSA) to a total of
about 22 million shares. News Corp has been a very popular stock among the hedge
funds which we track in our database- at the beginning of this year, it was actually the
most popular consumer services stock (see more consumer services stocks hedge funds
loved). It actually isn't that expensive in terms of its earnings multiples, with analyst
consensus for the fiscal year ending in June 2014 implying a forward P/E of 17. That's
with the media and entertainment company reporting very good results, and with the
potential for the breakup of News Corp to increase shareholder value as management of
the new companies becomes better able and incentivized to improve operations. As such
we'd suggest News Corp as a potential target for further research.

Selling Cognizant. Lone Pine still owned 8.7 million shares of Cognizant Technology
Solutions (CTSH), a $19 billion market cap IT consulting company and outsourcing
services provider, but this was down considerably from what it had owned three months
earlier. Cognizant had actually recorded high growth on both top and bottom lines last
quarter compared to the first quarter of 2012; earnings for example, were up 17%.
William Gray's Orbis Investment Management has been another major shareholder in
Cognizant.

Still likes retail. Once again three of Mandel's eight largest holdings are retailers- this
quarter we have two dollar stores (Dollar General (DG) and Dollar Tree (DLTR)) and Gap
(GPS). The dollar stores stand out for having very limited exposure to the broader
economy, with each carrying a beta of 0.1. Dollar General and Dollar Tree also grew their
earnings in their most recent quarter compared to the same period in the previous fiscal
year, though Dollar Tree did considerably better with 22% earnings growth (driven
mostly by higher sales). Their trailing P/Es are in the 18-19 range, so these valuations are
dependent on future improvements. Gap, which is up 51% in the last year, trades at
about the same level relative to trailing earnings. It experienced double-digit growth
rates in revenue and net income over the same time frame that the dollar stores did well.

All five of the stocks we've covered here are doing well in business terms. Neither News
Corp nor the retailers is a classic value stock, given their P/E multiples, but there's at least
some potential for each of these stocks which Mandel and his team like. News Corp, of
course, has the additional catalyst of the breakup; between that factor and the secular
trends in its financials it's certainly of interest to us. The dollar stores could be of
particular interest to investors trying to make their portfolios more defensive, and Dollar
Tree has certainly been doing well enough going by its 10-K that it might be worth its
premium to the larger discount retailers. Gap might also be worth looking into to see
how the company can sustain its current performance.
Hedge Fund Alpha
44
Stephen Mandels Portfolio:
Value
(x1000) Activity
% in
Portfolio
PRICELINE COM INC PCLN SH N 1218190 0% 6.3%
GOOGLE INC GOOG SH N 1110685 -10% 5.8%
DOLLAR GENERAL CORP NEW DG SH N 720451 7% 3.7%
GAP INC GPS SH N 713488 9% 3.7%
MONSANTO CO NEW MON SH N 703765 24% 3.7%
NEWS CORP NWSA SH N 673549 30% 3.5%
COGNIZANT TECHNOLOGY SOLS CORP CTSH SH N 663827 -21% 3.4%
DOLLAR TREE INC DLTR SH N 581496 2% 3.0%
VERISIGN INC VRSN SH N 562509 -19% 2.9%
QUALCOMM INC QCOM SH N 555578 27% 2.9%
MEAD JOHNSON NUTRITION CO MJN SH N 544224 87% 2.8%
KINDER MORGAN INC KMI SH N 534470 -8% 2.8%
RALPH LAUREN CORP RL SH N 534438 -20% 2.8%
EBAY INC EBAY SH N 528139 14% 2.7%
EQUINIX INC EQIX SH N 496108 -18% 2.6%
ULTA SALON COSMETICS & FRAG INC ULTA SH N 488548 42% 2.5%
CHARTER COMMUNICATIONS INC CHTR SH N 476851 -5% 2.5%
MICHAEL KORS HOLDINGS LIMITED KORS SH N 458582 -11% 2.4%
INTUITIVE SURGICAL INC ISRG SH N 436511 118% 2.3%
TRANSDIGM GROUP INC TDG SH N 390896 -12% 2.0%
VALEANT PHARMACEUTICALS INTL INC VRX SH N 368535 New 1.9%
WYNDHAM WORLDWIDE CORP WYN SH N 357718 -6% 1.9%
TRIPADVISOR INC TRIP SH N 341479 -1% 1.8%
LULULEMON ATHLETICA INC LULU SH N 335118 11% 1.7%
VISA INC V SH N 332689 -13% 1.7%
KINDER MORGAN INC KMI SH N 318598 5% 1.7%
B E AEROSPACE INC BEAV SH N 286853 -1% 1.5%
AMERICAN INTERNATIONAL GROUP INC AIG SH N 285079 5% 1.5%
CAPITAL ONE FINANCIAL CORP COF SH N 279103 15% 1.4%
VIRGIN MEDIA INC VMED SH N 277161 New 1.4%
WABCO HOLDINGS INC WBC SH N 243104 -2% 1.3%
OCEANEERING INTERNATIONAL INC OII SH N 240793 -24% 1.2%
FACEBOOK INC FB SH N Sold Out 0.0%
CROWN CASTLE INTERNATIONAL CORP CCI SH N Sold Out 0.0%
HERBALIFE LTD HLF SH CALL Sold Out 0.0%
Hedge Fund Alpha
45
Ray Dalio-
Bridgewater Associates
New Positions
Increased Positions
-Oracle (ORCL)
-Intel (INTC)
-CenturyLink (CTL)
-General Electric (GE)
Reduced Positions
-Microsoft (MSFT)
-CVS Caremark (CVS)
Sold Out
-Apollo Group (APOL)
-Hewlett Packard (HPQ)
Brief Discussion:
Tech giants. The three largest single-stock holdings in Dalio's portfolio at the end of
March were Microsoft (MSFT), Oracle (ORCL), and Intel (INTC)- tech companies with
market caps of over $100 billion in each case. These businesses have had a range of
reactions to the decline of the PC. Intel is currently in the worst shape, with net income
falling 25% last quarter compared to the first quarter of 2012, though we can't imagine
the continuation of this trend being good for Microsoft either (currently that company's
revenue and earnings are up, but it's possible that that is due to the release of Windows
8 giving a temporary boost to the business). All three companies' forward earnings
multiples are in the 11-12 range. In Oracle's case this does represent a significant
increase in earnings per share, even though the enterprise software company's numbers
have been about flat. Microsoft and Oracle had made our list of the most popular tech
stocks among hedge funds for the fourth quarter of 2012 (find more tech stocks hedge
funds loved).

Dumping Apollo. At the beginning of this year, Bridgewater owned 1.8 million shares of
Apollo Group (APOL) but the fund closed its position in the for-profit education company
between January and March. Apollo's stock price is down 41% in the last year as society's
skepticism about the benefits of for-profit education increase- which may not only hurt
business directly, but may also lead to changes in the student lending programs which
currently serve as a major source of funding for the industry. Earnings were down almost
80% in the most recent quarter (which ended in February) compared to the same period
in the previous fiscal year. Wall Street analysts are somewhat optimistic, and as a result
the forward P/E is 9, but many investors actually find Apollo overvalued with 21% of the
float held short. Donald Yacktman has a large position in APOL.

Lockheed Martin. After a number of tech companies- including those we've mentioned
and EMC- the largest single-stock holding in the fund's portfolio was its roughly 220,000
shares of Lockheed Martin (LMT). The company recently reported an increase in earnings
compared to the first quarter of 2012, but revenue was down slightly and there is a good
deal of speculation that the business will be impacted by cuts in U.S. military spending.
The trailing P/E of 12 is just a bit higher than what we see at other aerospace and
defense companies. Billionaire Ken Griffin's Citadel Investment Group reported a position
of 1.2 million shares at the end of December (check out Griffin's stock picks). Lockheed
Martin pays a dividend yield of 4.5% at current prices and dividend levels.

Lockheed Martin might not be the best value in the aerospace industry, however, and so
even with the yield it might be better to check out the company's peers. Microsoft and
Intel are potential value plays, we suppose, but we are skeptical that these companies
will be able to maintain their current business going forward and with earnings multiples
above 10 we wouldn't call them "extremely" cheap; in Oracle's case, we think that we'd
have to wait to see the company's earnings actually growing before buying at these
prices. For profit education, including Apollo, certainly looks cheap but has all of the
components of a classic value trap and so we'd tread carefully when evaluating the
company's financials. Billionaire Steven Cohens SAC Capital boosted its LMT stake
significantly during the first quarter.
Hedge Fund Alpha
46
Ray Dalios Portfolio:
Value
(x1000) Activity
% in
Portfolio
VANGUARD INTL EQUITY INDEX FUNDS VWO SH N 3602637 25% 32.8%
SPDR S & P 500 E T F TRUST SPY SH N 3274685 3% 29.8%
ISHARES TRUST EEM SH N 2848627 17% 25.9%
ISHARES TRUST LQD SH N 43614 0% 0.4%
MICROSOFT CORP MSFT SH N 40353 -9% 0.4%
ORACLE CORP ORCL SH N 29604 116% 0.3%
ISHARES TRUST IVV SH N 27538 0% 0.3%
INTEL CORP INTC SH N 22832 38% 0.2%
E M C CORP MA EMC SH N 21350 34% 0.2%
LOCKHEED MARTIN CORP LMT SH N 21155 340% 0.2%
C V S CAREMARK CORP CVS SH N 18721 -44% 0.2%
JUNIPER NETWORKS INC JNPR SH N 17244 769% 0.2%
INTUIT INC INTU SH N 16799 634% 0.2%
CENTURYLINK INC CTL SH N 16521 New 0.2%
EXPRESS SCRIPTS INC ESRX SH N 16369 98% 0.1%
F 5 NETWORKS INC FFIV SH N 16329 256% 0.1%
HUMANA INC HUM SH N 15710 248% 0.1%
UNITEDHEALTH GROUP INC UNH SH N 14993 75% 0.1%
MONSANTO CO NEW MON SH N 14979 69% 0.1%
CITRIX SYSTEMS INC CTXS SH N 14849 432% 0.1%
GENERAL ELECTRIC CO GE SH N 14172 New 0.1%
ST JUDE MEDICAL INC STJ SH N 13788 -19% 0.1%
C A INC CA SH N 13678 -50% 0.1%
CH ROBINSON WORLDWIDE INC CHRW SH N 13564 2642% 0.1%
NORTHROP GRUMMAN CORP NOC SH N 13219 23% 0.1%
DISNEY WALT CO DIS SH N 13218 New 0.1%
EXPEDITORS INTERNATIONAL WA INC EXPD SH N 12734 New 0.1%
QUALCOMM INC QCOM SH N 12395 -39% 0.1%
K L A TENCOR CORP KLAC SH N 12120 89% 0.1%
XEROX CORP XRX SH N 11386 -47% 0.1%
APOLLO GROUP INC APOL SH N Sold Out 0.0%
HEWLETT PACKARD CO HPQ SH N Sold Out 0.0%
SAFEWAY INC SWY SH N Sold Out 0.0%
DELL INC DELL SH N Sold Out 0.0%
Hedge Fund Alpha
47
Bill Ackman-
Pershing Square
New Positions
Increased Positions
-NA
-Mondelez (MDLZ)
Reduced Positions
-Proctor & Gamble Calls
(PG)
-Matson (MATX)
Sold Out
-NA

Brief Discussion:
Bill Ackman, the billionaire manager of Pershing Square, has been in the news quite a
bit in the last several months thanks to his public statements about his large short
position in Herbalife. In December he accused the company of being a pyramid
scheme; fellow billionaire and longtime Ackman rival Carl Icahn (see Icahn's stock
picks) began buying the stock after it fell in price, and slugged it out with Ackman
himself on CNBC (though the angry conversation focused on their history rather than
the merits of Herbalife as an investment). We have gone through Ackmans most
recent filing compared to what Pershing Square has previously reported owning and
here are three things which we noticed:

Mondelez. Pershing Square was buying Mondelez International (MDLZ) during the first
quarter of 2013 and owned about 6 million shares at the end of March. Mondelez was
formed from the breakup of Kraft, with the North American grocery business currently
operating under the name Kraft Foods Group. The companys financial statements
have shown that it trades at 20 times trailing earnings, and given the stability of its
business that does seem a bit high from a value perspective (though 20 is about where
many other large food stocks are trading). There has been some speculation that
Mondelez could merge with giant beverage and snack foods company PepsiCo, though
buying a stock primarily based on rumors such as these is likely not a smart move.

Selling Matson. The fund reported owning a little over 3 million shares of $1.1 billion
market cap shipping company Matson (MATX), down slightly from the beginning of
2013. Matson, which was formerly known as Alexander & Baldwin Holdings, primarily
operates container ships, experienced an 8% rise in revenue last quarter compared to
the first quarter of 2012. Earnings more than doubled, but obviously its not
sustainable for net income to continue increasing at a much faster rate than the top
line. The market is pricing in growth going forward, with a trailing P/E of 21, and Wall
Street analysts are at least forecasting that earnings per share will indeed increase
significantly over the next couple of years.

Consumer stocks. Adding Mondelez to his portfolio only further increases Ackmans
emphasis on consumer stocks in his long portfolio. His second and third largest
holdings, respectively, are Procter & Gamble (PG) and General Growth Properties
(GGP), with other names including Beam and Burger King. Procter & Gamble is a
classic defensive stock, with a beta of 0.3 and a dividend yield of 3% at current prices,
though the hunt for stocks meeting this criteria has resulted in it carrying earnings
multiples in the high teens despite its business (similarly to that of Mondelez) not
showing much growth potential. General Growth, which is a retail-focused real estate
investment trust, pays a fairly low yield for a REIT at 2.1% (real estate investment
trusts receive favorable tax treatment conditional on distributing a large share of
taxable income to shareholders, often resulting in high yields). Note that while
Pershing Square likes a large number of consumer stocks, its not necessarily a
reflection of bullishness- many of these companies are consumer staples.

We do find Pershing Squares focus on consumer stocks relative to, say, financials or
tech companies worth noting. However, were not sure that General Growth, Procter
& Gamble, or Mondelez are actually good values at this time; it is true that buying
Mondelez would result in upside in the event of a merger but that seems like too
speculative a move for us. As for Matson (which, as a container ship company, could
also be read as tied to consumer demand), its probably best to wait for another
quarter or two of results to see how earnings numbers unfold, as the current rate of
revenue growth doesnt seem high enough to justify the current valuation.
Hedge Fund Alpha
48
Bill Ackmans Portfolio:
Click to see Pershing Squares historical filings.
Value
(x1000) Activity
% in
Portfolio
CANADIAN PACIFIC RAILWAY LTD CP SH N 3152141 0% 31.3%
PROCTER & GAMBLE CO PG SH N 2153588 0% 21.4%
GENERAL GROWTH PPTYS INC NEW GGP SH N 1485707 0% 14.8%
BEAM INC BEAM SH N 1322811 0% 13.1%
BURGER KING WORLDWIDE INC BKW SH N 732908 0% 7.3%
PENNEY J C CO INC JCP SH N 590435 0% 5.9%
HOWARD HUGHES CORP HHC SH N 299036 0% 3.0%
Mondelez International Inc MDLZ SH N 183016 New 1.8%
MATSON INC MATX SH N 74636 -17% 0.7%
PROCTER & GAMBLE CO PG SH CALL 73793 -78% 0.7%
Hedge Fund Alpha
49
Paul Singer-
Elliott Management
New Positions
Increased Positions
-Hess (HES)
-Compuware (CPWR)
-Range Res. Calls (RRC)
Reduced Positions
-Delphi (DLPH)
-NetApp (NTAP)
Sold Out
-SPY Puts (SPY)
-Brocade (BRCD)
Brief Discussion:
Paul Singer, now a billionaire, founded Elliott Management in 1977. It now has about $15
billion in assets under management. Elliott occasionally engages in activism against
underperforming companies or those which it believes could be managed more
effectively. Read on to see some moves the fund made in its portfolio in the fourth
quarter of 2012 and research Singer's previous filings.

Hess. Singer increased the size of his position in Hess (HES) to a total of about 17 million
shares- over ten times as many as his fund had owned at the beginning of 2013. Elliott
had been trying to push the oil and gas company into divesting its downstream
operations in order to focus on exploration and production activities (which Hess has
been doing) and also fighting with the company for control of the Board of Directors (in a
recent deal, the fund will gain three Board seats in exchange for dropping its proxy fight).
Currently Hess trades at 12 times forward earnings estimates, which while low in
absolute terms would actually represent a small premium to many oil majors.

Dumping Brocade. According to the 13F, the fund sold all its shares of Brocade
Communications Systems (BRCD) after the $2.5 billion market cap networking and data
storage systems company had been one of its top picks during Q4. Brocade has often
been thought of as a potential acquisition, but the companys new CEO has, at least
publicly, rejected the idea of selling. While Wall Street analysts like the business- their
forecasts for the fiscal year ending in September 2014 imply a forward P/E of only 8-
these projections are highly dependent on earnings growth as trailing earnings per share
is currently well below what the sell-side is expecting going forward. Revenue was up
only 5% in Brocades last quarterly report compared to the same period in the previous
fiscal year.

Acquisition targets (though one might be gone). During the quarter Elliott was buying
shares of Compuware (CPWR) and of Virgin Media (VMED) which looks ready to be
acquired by Liberty Global. Elliott had launched a takeover bid for Compuware, though
this was eventually rejected by the company. There have been rumors that the fund will
now partner with private equity and propose another buyout, but its probably not wise
to get too excited about the stock on that basis. The market seems to have already
accounted for some prospect for a deal, with both trailing and forward P/Es above 25.
The Virgin Media-Liberty Global deal, meanwhile, is scheduled to close in the second
quarter of 2013. Merger arbitrage is a common strategy among hedge funds, since the
returns on buying the acquired companys stock depend on whether or not the
transaction closes and so tend to be independent of market fluctuations.

As weve mentioned, the Compuware rumors are probably not enough reason to buy the
stock at this time. The Virgin Media acquisition, being more of a sure thing, might be
worth a look but its possible that the stock is already very close to the takeover price and
might not offer a high enough return particularly for investors with limited leverage.
Given how dependent Brocade is on increasing its earnings per share in line with analyst
expectations, wed also avoid that company at least for now. We like Hesss increased
focus on one aspect of its business, and its possible that will lead management to
improve operations, but its valuation isnt that low compared to where its peers trade
and so Hess might be better placed on a watch list for further developments.
Hedge Fund Alpha
50
Paul Singers Portfolio:
Value
(x1000) Activity
% in
Portfolio
HESS CORP HES SH N 1074149 1136% 22.5%
DELPHI AUTOMOTIVE PLC DLPH SH N 972447 -14% 20.3%
B M C SOFTWARE INC BMC SH N 634458 2% 13.3%
NEWS CORP NWS SH N 310445 0% 6.5%
ISHARES TRUST IWM SH PUT 242684 New 5.1%
COMPUWARE CORP CPWR SH N 232688 54% 4.9%
RANGE RESOURCES CORP RRC SH CALL 201569 New 4.2%
SPDR SERIES TRUST XOP SH PUT 120980 New 2.5%
JPMORGAN CHASE & CO JPM SH PUT 71189 New 1.5%
POWERSHARES QQQ TRUST QQQ SH PUT 68969 -43% 1.4%
NATIONAL BANK HOLDING NBHC SH N 68043 0% 1.4%
VERIFONE SYSTEMS INC PAY SH CALL 60112 New 1.3%
NETAPP INC NTAP SH PUT 59643 -13% 1.2%
EMULEX CORP ELX SH N 58285 0% 1.2%
JPMORGAN CHASE & CO JPM SH N 44188 New 0.9%
MELCO CROWN ENTERTAINMENT LTD MPEL SH N 43235 0% 0.9%
NETAPP INC NTAP SH CALL 42699 New 0.9%
NETAPP INC NTAP SH N 39311 -41% 0.8%
CORONADO BIOSCIENCES INC CNDO SH N 36230 0% 0.8%
BORGWARNER INC BWA SH PUT 34802 0% 0.7%
CABOT CORP CBT SH CALL 34009 New 0.7%
SOUTHWESTERN ENERGY CO SWN SH CALL 33601 New 0.7%
ULTRA PETROLEUM CORP UPL SH CALL 26039 New 0.5%
RIVERBED TECHNOLOGY INC RVBD SH CALL 18201 New 0.4%
GENERAL MOTORS CO GM SH PUT 14674 -66% 0.3%
UNITED STATES STEEL CORP NEW X PRN N 10392 0% 0.2%
CADENCE DESIGN SYSTEMS INC CDNS PRN N 9377 0% 0.2%
SECTOR SPDR TRUST XLI SH PUT 8351 0% 0.2%
LINEAR TECHNOLOGY CORP LLTC SH N 8027 New 0.2%
SPDR S & P 500 E T F TRUST SPY SH PUT Sold Out 0.0%
NEXEN INC NXY SH N Sold Out 0.0%
BROCADE COMMUNICATIONS SYS INC BRCD SH N Sold Out 0.0%
ISHARES TRUST OEF SH PUT Sold Out 0.0%
Hedge Fund Alpha
51
Nelson Peltz -
Trian Partners
New Positions
Increased Positions
NA
-Mondelez (MDLZ)
-PepsiCo (PEP)
Reduced Positions
-State Street (STT)
-Tiffany & Co (TIF)
Sold Out
-MeadWestvaco (MWV)
Brief Discussion:
Trian Partners, known for its activist ways, is a hedge fund founded and managed by
Nelson Peltz, Peter May and Edward Gardner. The fund generally meshes a value-
based approach with their activist positions, with over $2 billion in 13F capital at their
disposal.

Recently, Peltz and his team have opened large positions in consumer-centric
companies, namely PepsiCo (PEP) and Mondelez (MDLZ). But first, lets go over a bit of
background on a couple of their other, more bearish moves.

Selling Tiffany and State Street. In Q1, Peltz and Trian sold a boatload of luxury
jeweller Tiffany & Co. (TIF). At the end of 2012, the fund reported ownership of a little
over 1 million shares; on March 31, Trian held approximately 10,000 sharesa 99%
decrease. Sitting here in mid-May, Tiffanys stock price has surged 33% since the start
of 2013, with shares currently trading at a little over $77 a pop. TIF is about as
expensive as industry norms, with its trailing P/E (23.85) nearly equalling its peer
group-average of 23.50, so its possible that Peltz doesnt see a value opportunity here
any longer.

Trian also sold shares of State Street Corporation (STT), an investment management
services provider that has its fair share of hedge fund bulls. Peltzs move didnt really
come as much of a surprise though, as Trian sold more than half their STT stake last
year, before cutting it by another 25% (qoq) in the first three months of 2013. Trian
still owns 2.3 million shares, worth about $140 million, but we wouldnt overlook his
consistent selling behaviour. On the bright side, shares of State Street now rest near
$65 a share, significantly higher than their July 2012 high of $45.

Post-split Mondelez. On the flip side, Peltz went even longer on Mondelez, the snacks
and soft drinks producer, adding almost 21 million shares to their existing position. As
of March 31, the total value of the 40 million MDLZ shares held by Trian was more
than $1.2 billion. Mondelez was formally part of Kraft Foods (KRFT) and was spun off
on October 1, 2012, when Trian began building its holding. Eight months later, the
stock price has managed a modest 6% advance, with shares currently trading just
above the $30 mark halfway through May.

Pepsi. Trian is also heavily invested is PepsiCo. Peltz and his colleagues started buying
shares of the soft drink producer in the final quarter of 2012. As of the start of 2013,
the fund reportedly owned 3.9 million shares and since then, theyve upped their
stake by more than 200%. As of its most recent 13F, Trian holds over 12 million
PepsiCo shares, worth approximately $952 million. Since the start of the year,
PepsiCos stock price has risen by 23%; the company posted earnings of $0.77 per
share and revenue of $12.6 billion during its latest quarter, surpassing Wall Street
expectations. Analysts expect even stronger performance in the second quarter of
2013, so well be watching closely.
Hedge Fund Alpha
52
Nelson Peltzs Portfolio:
Click to see Trians historical filings.
Value
(x1000) Activity
% in
Portfolio
Mondelez International Inc MDLZ SH N 1233801 New 26.4%
PEPSICO INC PEP SH N 951760 New 20.3%
INGERSOLL RAND PLC IR SH N 741021 0% 15.8%
FAMILY DOLLAR STORES INC FDO SH N 529611 0% 11.3%
WENDYS CO WEN SH N 471026 0% 10.1%
LEGG MASON INC LM SH N 414231 0% 8.9%
LAZARD LTD LAZ SH N 191093 0% 4.1%
STATE STREET CORP STT SH N 139195 -25% 3.0%
HEINZ H J CO HNZ SH N 7697 0% 0.2%
TIFFANY & CO NEW TIF SH N 741 -99% 0.0%
MEADWESTVACO CORP MWV SH N Sold Out 0.0%
Hedge Fund Alpha
53
Seth Klarman-
Baupost
New Positions
Increased Positions
-AIG (AIG)
-Rovi Corp (ROVI)
-Elan (ELN)
-Citigroup (C)
Reduced Positions
-News Corp (NWS)
-Oracle (ORCL)
Sold Out
-News Corp (NWSA)
-Genworth Finl (GNW)
Brief Discussion:
Hated companies. Because of their Gulf of Mexico disaster and government bailout,
respectively, BP (BP) and American International Group (AIG) are characterized by
pretty poor investor sentiment. Klarman and his team were buying both stocks during
Q1, and they are now both among the fund's three largest holdings by market value.
There's a value case to be made for either of these two companies: BP trades at 8 times
forward earnings estimates (though this isn't particularly out of the ordinary for an oil
major in the current environment, as can be seen from looking at the company's peers)
while AIG's price-to-book ratio is only 0.7 (meaning the stock is priced at a significant
discount to book value). While AIG was the most popular stock among hedge funds
during the fourth quarter of 2012, it is not widely owned by large institutional investors
such as mutual funds. BP also merits attention for a dividend yield of 5% at current
prices and dividend levels.

Selling News Corp. One of Baupost's largest holdings at the beginning of this year had
been News Corp (NWSA), but the fund sold a large portion of its shares between
January and March. The pending breakup of News Corp has attracted considerable
attention from value investors, and the stock is currently up 67% from its levels a year
ago. The forward P/E here is only 17, and while that isn't value territory it could leave
the stock undervalued if business grows at a pace similar to current rates (revenue rose
14% last quarter compared to the fourth quarter of 2012) and if management
capitalizes on the breakup by improving efficiencies at the child companies.

Selling Oracle. News Corp wasn't the only one of Klarman's favorites from three months
ago to get demoted during Q1, with Baupost cutting its stake in Oracle (ORCL) by about
two-thirds. The company's most recent 10-Q showed flat performance versus a year
earlier, but the stock carries a trailing earnings multiple of 16 (implying that at least
some earnings growth is already priced into the stock). As a result Oracle doesn't look
too exciting to us, and some of the company's peers might be better values.

Rovi. Turning away from large caps, the fund increased its holdings of digital program
guide and recommendations provider Rovi (ROVI) to a total of 8.2 million shares. Wall
Street analysts like the $2.4 billion market cap company, with consensus earnings
forecasts implying a forward P/E of10 and a five-year PEG ratio of 0.9. However,
revenue shrunk 10% in its most recent quarter compared to the same period in the
previous year, while those projections assume an increase in earnings per share.
As a result, we'd have to see that Rovi can sustain its current business and possibly
provide some growth before considering it as a value stock. BP and AIG certainly look
cheap, and we'd recommend that investors do further research on the companies,
although in BP's case in particular some industry peers may be better buys. As for
Baupost's big sales, they are certainly dependent on growing their earnings going
forward but at least in the case of News Corp we can see that recent performance has
been good even without accounting for the potential benefits of the breakup.
Hedge Fund Alpha
54
Seth Klarmans Portfolio:
Click to see Bauposts historical filings.
Value
(x1000) Activity
% in
Portfolio
B P PLC BP SH N 725322 57% 23.3%
VIASAT INC VSAT SH N 532840 0% 17.1%
AMERICAN INTERNATIONAL GROUP INC AIG SH N 460025 69% 14.8%
THERAVANCE INC THRX SH N 320141 0% 10.3%
ROVI CORP ROVI SH N 174706 97% 5.6%
NEWS CORP NWS SH N 124498 -69% 4.0%
ORACLE CORP ORCL SH N 109498 -68% 3.5%
ELAN PLC ELN SH N 107689 New 3.5%
IDENIX PHARMACEUTICALS INC IDIX SH N 92189 26% 3.0%
NOVAGOLD RESOURCES INC NG SH N 78729 0% 2.5%
THERAVANCE INC THRX PRN N 60435 0% 1.9%
MICROSOFT CORP MSFT SH CALL 57210 0% 1.8%
CITIGROUP INC C SH N 47634 New 1.5%
SYNERON MEDICAL LTD ELOS SH N 40880 0% 1.3%
A V E O PHARMACEUTICALS INC AVEO SH N 36036 0% 1.2%
ALLIANCE ONE INTERNATIONAL INC AOI SH N 31632 -7% 1.0%
ENZON PHARMACEUTICALS INC ENZN SH N 29228 -2% 0.9%
CENTRAL PACIFIC FINANCIAL CORP CPF SH N 28260 0% 0.9%
ITURAN LOCATION & CONTROL LTD ITRN SH N 20978 -21% 0.7%
DIRECTV DTV SH N 11731 New 0.4%
AMERICAN INTERNATIONAL GROUP INC AIG SH N 9712 New 0.3%
NOVACOPPER INC NCQ SH N 9160 0% 0.3%
NEWS CORP NWSA SH N Sold Out 0.0%
GENWORTH FINANCIAL INC GNW SH N Sold Out 0.0%
ALLIED NEVADA GOLD CORP ANV SH N Sold Out 0.0%
Hedge Fund Alpha
55
Leon Cooperman -
Omega Advisors
New Positions
Increased Positions
-Sprint (S)
-Linn Energy (LINE)
-LyondellBasell (LYB)
-Occidental Pet. (OXY)
Reduced Positions
-Dish Network (DISH)
-KKR & Co(KKR)
Sold Out
-Humana (HUM)
-WellPoint (WLP)
Brief Discussion:
Here are some themes that we noticed in Omegas most recent 13F portfolio compared
to previous filings:

High yielding energy stocks. Cooperman and his team remained interested in energy,
and interested in particular with energy stocks paying high yields at current prices and
dividend payments. Their eight largest holdings included Linn Energy (LINE) (which the
fund had added to considerably during the first quarter of the year), Kinder Morgan
(KMI), and Atlas Pipeline Partners (APL). Linn's current yield is over 8%; it is an $8.4
billion market cap oil and gas company. It did underperform analyst estimates last
quarter, even as revenue grew 36% compared to the first quarter of 2012, and doesn't
look like too good a value at a forward P/E of 21.

Kinder Morgan and Atlas are both pipeline companies, paying dividend yields of close to
4% and 6% respectively. Kinder Morgan boasts a market capitalization of over $40
billion, and its large size may offer more confidence in the company's stability.
Acquisitions helped fuel large increases on both top and bottom lines in its most recent
quarter compared to the same period in the previous year. Atlas looks quite expensive
in terms of its trailing earnings, but Wall Street analysts are bullish on the company.
Still, the stock trades at 17 times its forward earnings estimates and should only be of
interest to investors who place a good deal of emphasis on current yield.

Sprint. Sprint Nextel (S) had been the fund's largest holding at the beginning of the
year, and Omega actually added shares between January and March. Dish Network and
SoftBank are currently bidding for the opportunity to acquire Sprint Nextel; merger
arbitrage is a popular strategy among hedge fund managers as the returns on the stock
of the acquisition target depend on whether or not the transaction closes and are
therefore somewhat independent of market conditions. Currently, Sprint is actually
trading a bit above Softbank's offer price.

Qualcomm. Omega increased its stake in Qualcomm (QCOM) to a total of 3.3 million
shares by the end of the quarter. The $110 billion market cap communications
equipment company's net income fell last quarter versus a year earlier, but this was
because of earnings from discontinued operations in the year-ago period; earnings from
continuing operations actually came in 30% higher. The stock is valued at 18 times its
trailing earnings, so we wouldn't call it a pure value stock, but the recent performance
is quite strong and so Qualcomm may offer "growth at a reasonable price." That's
certainly what the sell-side thinks, as their earnings estimates imply a forward P/E of 13
and a five-year PEG ratio of 0.8.

As a result Qualcomm looks interesting to us, and we'd be interested in taking a closer
look at the company to see how it might grow enough over the next several years to
merit a higher valuation. We're wary of getting involved in Sprint at a price higher than
the takeover offer- it seems a bit speculative to us, and would certainly require a good
deal of confidence that bids will be raised. As for the energy dividend plays, we certainly
don't like those in value terms. Income investors could of course find yields of up to 8%
attractive, but even in that case it's probably wise to examine why the stock is trading
at its current multiples and what the chances are of a severe decline in price.

Hedge Fund Alpha
56
Leon Coopermans Portfolio:
Value
(x1000) Activity
% in
Portfolio
SPRINT NEXTEL CORP S SH N 405083 16% 6.3%
S L M CORP SLM SH N 306894 -4% 4.8%
AMERICAN INTERNATIONAL GROUP INC AIG SH N 300750 -1% 4.7%
LINN ENERGY LLC LINE SH N 271307 68% 4.2%
SIRIUS X M RADIO INC SIRI SH N 221610 1% 3.4%
KINDER MORGAN INC KMI SH N 195050 1% 3.0%
ATLAS PIPELINE PARTNERS L P APL SH N 175284 1% 2.7%
ATLAS ENERGY L P ATLS SH N 171477 0% 2.7%
HALLIBURTON COMPANY HAL SH N 162040 7% 2.5%
N Y S E EURONEXT NYX SH N 159537 7% 2.5%
EXPRESS SCRIPTS INC ESRX SH N 157921 3% 2.4%
MCMORAN EXPLORATION CO MMR SH N 156904 5% 2.4%
CHIMERA INVESTMENT CORP CIM SH N 155689 122% 2.4%
K K R FINANCIAL HOLDINGS L L C KFN SH N 152777 -1% 2.4%
SANDRIDGE ENERGY INC SD SH N 140159 9% 2.2%
MOTOROLA SOLUTIONS INC MSI SH N 132926 1% 2.1%
BOSTON SCIENTIFIC CORP BSX SH N 128656 13% 2.0%
X L GROUP PLC XL SH N 122210 0% 1.9%
DISH NETWORK CORPORATION DISH SH N 121279 -13% 1.9%
WILLIAMS COS WMB SH N 118411 0% 1.8%
METLIFE INC MET SH N 115147 1% 1.8%
POLYCOM INC PLCM SH N 108680 73% 1.7%
EASTMAN CHEMICAL CO EMN SH N 107767 94% 1.7%
FREEPORT MCMORAN COPPER & GOLD FCX SH N 102345 0% 1.6%
CITIGROUP INC C SH N 99191 147% 1.5%
CAPITAL ONE FINANCIAL CORP COF SH N 94492 38% 1.5%
FACEBOOK INC FB SH N 93758 16% 1.5%
UNITEDHEALTH GROUP INC UNH SH N 92694 1% 1.4%
ALTISOURCE PORTFOLIO SLTNS S A ASPS SH N 87016 29% 1.3%
HUMANA INC HUM SH N Sold Out 0.0%
WATSON PHARMACEUTICALS INC WPI SH N Sold Out 0.0%
WELLPOINT INC WLP SH N Sold Out 0.0%
WESTERN UNION CO WU SH N Sold Out 0.0%
Hedge Fund Alpha
57
Ken Griffin-
Citadel Investment Gr.
New Positions
Increased Positions
-Invesco (IVZ)
-Disney (DIS)
-Norfolk Southern (NSC)
-Foot Locker (FL)
Reduced Positions
-Apple Calls (AAPL)
-Google (GOOG)
Sold Out
-NetApp(NTAP)
-Newell Rubb. (NWL)
Brief Discussion:
Disney. Griffin and his team increased the size of their position in Walt Disney (DIS) to a
total of 6.6 million shares. Its been a good year for media and entertainment stocks, and
Disney is no exception having risen 50% in the last year. The companys most recent fiscal
quarter ended in March, with the 10-Q reporting that earnings had grown 32% versus a
year earlier, so the rise in the stock price has somewhat tracked fundamental
improvements in Disneys business. Currently markets are expecting growth to continue,
at least moderately, with the stock being valued at 20 times trailing earnings. Disney does
have some very strong assets, including ESPN, and remains dedicated to pushing out its
new content libraries from its Marvel and Lucasfilm acquisitions across its television, film,
and theme park platforms.

EOG. Citadel was also buying EOG Resources (EOG) between January and March, closing
the quarter with 2.6 million shares in its portfolio. The oil and gas exploration and
production company has been growing rapidly: in the first quarter of 2013, revenue
increased 27% compared to Q1 2012 with net income rising 53%. The market has already
incorporated high growth over the next several years into the current stock price, but Wall
Street analysts judge that EOG is about fairly valued. Specifically, their consensus forecasts
have EOG trading at 17 times forward earnings estimates and at a five-year PEG ratio of 1.
Oil majors are generally cheaper than EOG in terms of trailing numbers, but also have far
fewer growth opportunities.

Selling defensive consumer stocks. Two of Citadels three largest holdings by market value
at the beginning of 2013 were McDonalds (MCD) and Procter & Gamble (PG). McDonalds
and Procter & Gamble are similar in that they are commonly thought of as classic
defensive stocks: in fact, both the fast food restaurant and the personal products company
carry a beta of 0.3 and pay a dividend yield of just over 3% at current prices. However,
Griffin cut his McDonalds stake roughly in half in the first quarter of the year while selling
over 80% of his Procter & Gamble shares. Its possible that this is a signal that Citadel has
become more bullish on the market. Of course, its also possible that the fund believes
that high demand for safe assets has also made these stocks less attractively priced.
Recent growth rates have been quite low at both McDonalds and Procter & Gamble, and
judging by sell-side forecasts that is expected to continue, yet partly because of their
defensive characteristics they boast trailing P/E multiples in the high teens.

We dont think you have to be bullish for Griffins move in these two stocks to make sense-
it does appear that the market may be a bit too excited about the yield and relative safety
that McDonalds and Procter & Gamble offer. EOGs growth rates are impressive, though
the stock price does account for quite a bit of that growth and it might be best to wait and
see how future quarters compare to the trajectory that analysts are expecting. As for
Disney, its not a classic value stock either and wed suggest comparing the company to its
peers before deciding if its good performance and brand are enough to make it a buy given
where it is trading.

Hedge Fund Alpha
58
Ken Griffins Portfolio:
Value
(x1000) Activity
% in
Portfolio
APPLE INC AAPL SH CALL 2766198 -39% 4.2%
APPLE INC AAPL SH PUT 1742882 -40% 2.6%
GOOGLE INC GOOG SH PUT 654154 -2% 1.0%
GOOGLE INC GOOG SH CALL 506782 -13% 0.8%
INVESCO LTD IVZ SH N 415653 93% 0.6%
DISNEY WALT CO DIS SH N 375917 878% 0.6%
AMERICAN TOWER CORP AMT SH N 341914 22% 0.5%
EOG RESOURCES INC EOG SH N 332613 100% 0.5%
ALLSTATE CORP ALL SH N 317287 52% 0.5%
CITIGROUP INC C SH N 296310 3% 0.4%
U S BANCORP DEL USB SH N 290979 22% 0.4%
PRICELINE COM INC PCLN SH PUT 287486 10% 0.4%
APPLE INC AAPL SH N 283642 -38% 0.4%
ANADARKO PETROLEUM CORP APC SH N 275306 -9% 0.4%
CABOT OIL & GAS CORP COG SH N 269088 49% 0.4%
VERISIGN INC VRSN PRN N 268990 32% 0.4%
KELLOGG CO K SH N 268336 22% 0.4%
TIME WARNER INC NEW TWX SH N 263903 -26% 0.4%
MCDONALDS CORP MCD SH N 261035 -49% 0.4%
UNITED TECHNOLOGIES CORP UTX SH N 247876 14% 0.4%
VISA INC V SH N 246076 154% 0.4%
P N C FINANCIAL SERVICES GRP INC PNC SH N 245928 227% 0.4%
BROADCOM CORP BRCM SH N 244404 42% 0.4%
AFFILIATED MANAGERS GROUP INC AMG SH N 242052 101% 0.4%
CIMAREX ENERGY CO XEC SH N 238553 243% 0.4%
S B A COMMUNICAITONS CORP SBAC SH N 237602 0% 0.4%
CONAGRA INC CAG SH N 229377 -15% 0.3%
MORGAN STANLEY DEAN WITTER & CO MS SH N 224944 -32% 0.3%
MICROCHIP TECHNOLOGY INC MCHP PRN N 223138 2% 0.3%
LOCKHEED MARTIN CORP LMT SH N 221873 92% 0.3%
NETAPP INC NTAP SH N Sold Out 0.0%
BIOMARIN PHARMACEUTICAL INC BMRN PRN N Sold Out 0.0%
NEWELL RUBBERMAID INC NWL SH N Sold Out 0.0%
RENAISSANCERE HOLDINGS LTD RNR SH N Sold Out 0.0%
Hedge Fund Alpha
59
Julian Robertson -
Tiger Management
New Positions
Increased Positions
-Google (GOOG)
-Junior Gold Miners ETF
(GDXJ)
-H&R Block (HRB)
-McGraw-Hill (MHFI)
Reduced Positions
-Charter Comm (CHTR)
-Ocwen Finl (OCN)
Sold Out
-Apple (AAPL)
-Dole Food (DOLE)
Brief Discussion:
The legendary Julian Robertson- who not only became a billionaire himself through his
success at Tiger Management, but also groomed several "Tiger Cubs" who have gone on to
become successful hedge fund managers themselves- has filed his 13F for the first quarter
of 2013. These filings disclose many of an investor's long positions in U.S. stocks as of the
end of the quarter. We track these filings as part of our work developing investment
strategies (we have found, for example, that the most popular small cap stocks among
hedge funds outperform the S&P 500 by 18 percentage points per year on average) but
also like to see what big names such as Robertson did over the previous quarter. We have
compared his most recent 13F to the one from the end of December (see Robertson's
previous filings) and here are three trends which investors might find interesting:

Dumping Apple. Robertson had cut his stake in Apple (AAPL) by 58% during Q4 2012, but it
had still been one of his five largest holdings by market value at the beginning of this year.
Between January and March, however, he kept selling and owned no shares by the end of
March. Apple had lost its place as the most popular stock among hedge funds to AIG in the
fourth quarter. Apple's stock price has done poorly recently, and it currently trades at 10
times earnings whether we consider trailing results or forward projections from analysts
(and that doesn't account for the fact that a sizable portion of the company's value is
composed of cash). Shrinking margins have caused earnings to decline even as revenue
rises, and the current valuation implies that markets are expecting net income to go even
lower. Peer Google (GOOG) is now Robertson's largest position by market value as he
increased his stake somewhat and the stock saw a large gain in price during the quarter.

Businesses' financial data. Two of the largest buys in Robertson's portfolio were Moody's
(MCO) and McGraw-Hill, which has since changed its name to McGraw-Hill Financial
(MHFI) to reflect the sale of the company's education unit to private equity. McGraw-Hill
Financial owns Standard & Poor's and Capital IQ and following the sale is now primarily a
provider of financial and business information. The same is true of Moody's, making this an
interesting investment theme for the billionaire. Moody's reported a 13% increase in
revenue and a 9% rise in net income in the first quarter of 2013 versus a year earlier, but
at a trailing price-to-earnings multiple of 22 it might be a bit expensive for us. ValueAct
Capital, Akre Capital, and Warren Buffetts Berkshire are bullish about MCO though.

And yours, too. The 13F reported that Robertson initiated a position of about 850,000
shares in tax prep company H&R Block (HRB). The stock has nearly doubled in the last year.
This places it at a valuation of more than 20 times its trailing earnings, but analyst
consensus is that the fourth quarter of its fiscal year, which ended in April (unsurprisingly
this is by far H&R Block's biggest quarter and often the only profitable one of its year) will
show nearly 30% EPS growth against last fiscal year's Q4. The forward P/E is 15, which is
quite a bit lower but would require further growth from that point. H&R Block pays a
dividend yield of almost 3%. Billionaire (and Tiger Cub) Andreas Halvorsen's Viking Global
has been a major shareholder in the company.

We're not sure that we'd follow Robertson's lead in selling Apple, but his bearishness on
the stock is certainly something shareholders in the company should be aware of. We'd
avoid Moody's and McGraw-Hill Financial for now- the former seems pricy, and we'd like to
see at least one quarter of results from the latter as it is currently composed (though the
sale of the education unit could lead to improved efficiencies as management is better
able to concentrate on the operations of the financial information business). H&R Block
looks interesting, though of course its attractiveness is dependent on its results from last
quarter and it might not be too wise to trust in sell-side estimates.
Hedge Fund Alpha
60
Julian Robertsons Portfolio:
Value
(x1000) Activity
% in
Portfolio
GOOGLE INC GOOG SH N 27272 19% 3.7%
BLOCK H & R INC HRB SH N 24983 New 3.4%
KINDER MORGAN INC KMI SH N 24867 -4% 3.4%
MASTERCARD INC MA SH N 24231 -8% 3.3%
H C A HOLDINGS INC HCA SH N 23537 -4% 3.2%
MARKET VECTORS E T F TRUST GDXJ SH N 22530 128% 3.0%
VALEANT PHARMACEUTICALS INTL INC VRX SH N 22123 0% 3.0%
MCGRAW HILL FINANCIAL MHFI SH N 21249 New 2.9%
CHARTER COMMUNICATIONS INC CHTR SH N 21159 -18% 2.9%
MOODYS CORP MCO SH N 20997 New 2.8%
FLEETCOR TECHNOLOGIES INC FLT SH N 20801 -10% 2.8%
DOLLAR TREE INC DLTR SH N 20610 10% 2.8%
CHICAGO BRIDGE & IRON CO N V CBI SH N 20350 6% 2.7%
BERKSHIRE HATHAWAY INC DEL BRK-B SH N 20288 -13% 2.7%
MONSANTO CO NEW MON SH N 20281 New 2.7%
DUNKIN BRANDS GROUP INC DNKN SH N 20136 New 2.7%
CITIGROUP INC C SH N 19868 New 2.7%
OCWEN FINANCIAL CORP OCN SH N 19824 -23% 2.7%
VISA INC V SH N 19786 -10% 2.7%
DOLLAR GENERAL CORP NEW DG SH N 19721 New 2.7%
PRICELINE COM INC PCLN SH N 19681 -5% 2.7%
VERISIGN INC VRSN SH N 19664 -6% 2.7%
LIBERTY GLOBAL INC LBTYA SH N 19027 -27% 2.6%
QUALCOMM INC QCOM SH N 18149 -14% 2.5%
WUXI PHARMATECH CAYMAN INC WX SH N 17809 -10% 2.4%
ROYAL CARIBBEAN CRUISES LTD RCL SH N 16411 New 2.2%
SEALED AIR CORP NEW SEE SH N 16361 1296% 2.2%
DAVITA INC DVA SH N 16235 0% 2.2%
RYMAN HOSPITALITY PROPERTIES RHP SH N 15788 -25% 2.1%
THE ADT CORP ADT SH N 15284 -40% 2.1%
CAPITAL ONE FINANCIAL CORP COF SH N 15243 -16% 2.1%
APPLE INC AAPL SH N Sold Out 0.0%
DOLE FOOD INC DOLE SH N Sold Out 0.0%
TRIPADVISOR INC TRIP SH N Sold Out 0.0%
Hedge Fund Alpha
61
John Paulson -
Paulson & Co.
New Positions
Increased Positions
-Sprint (S)
-Aetna (AET)
-Family Dollar (FDO)
-Hess Corp (HES)
Reduced Positions
-Mylan (MYL)
-Delphi (DLPH)
Sold Out
-AngloGold Ashanti (AU)
-Murphy Oil (MUR)

Brief Discussion:
Paulson & Co., the hedge fund which notoriously nailed the popping of the housing
bubble during the financial crisis (making its founder, John Paulson, a billionaire due to
high returns on its short positions) and which has notoriously underperformed the
past couple years, has filed its 13F for the first quarter of 2013 with the SEC. We
maintain a database of quarterly 13F filings from hundreds of hedge funds and other
notable investors as part of our work developing investment strategies (we have
found, for example, that the most popular small cap stocks among hedge funds beat
the S&P 500 by an average of 18 percentage points per year). This database also
allows us to compare filings from individual over managers over time and try to get an
idea of what they are thinking. Here are three trades that Paulson (see Paulson's picks
over time) was making between January and March:

Sprint. Sprint (S) had been one of the fund's largest holdings by market value at the
beginning of the year, but that wasn't enough for Paulson: he bought over 100 million
shares of the telecom company last quarter and owned about 230 million shares at
the beginning of April. Currently Sprint is trading above a proposed takeover price
from SoftBank, though Dish Network (DISH), another potential acquirer, recently
issued debt in order to give it enough cash to fully pursue the transaction and might
outbid SoftBank. Paulson actually got his start in merger arbitrage before moving into
macro when his investment team got the idea to short subprime mortgages.
Generally, acquisition targets trade just below the takeover price, resulting in an
arbitrage opportunity. While returns are low in absolute terms, they can be attractive
on an annualized basis and are generally uncorrelated with the market.

Selling Mylan. According to the 13F, Paulson reduced his stake in Mylan (MYL), a $12
billion market cap manufacturer of generic and specialized pharmaceuticals, to about
18 million shares from about 25 million three months earlier. At current prices, Mylan
trades at 21 times its trailing earnings, though Wall Street analysts are projecting high
growth in earnings per share over the next couple years and as a result the forward
P/E is only 10. However, the company actually reported a 17% decline in earnings last
quarter compared to the first quarter of 2012, with revenue being up but only slightly
so. Billionaire David Shaw's D.E. Shaw had sold 63% of its shares of Mylan during the
fourth quarter of 2012.

Selling Delphi. Paulson was also selling Delphi Automotive (DLPH), and in this case it
was a continuation from the last few months of 2012 when he had sold nearly half the
shares he had owned at the beginning of October. The fund was left with 8.7 million
shares at the beginning of April. Like Mylan, Delphi hasn't been doing too well in
recent quarters and as a result the valuation is a bit high considering its trailing
financial performance; like that company (as well as a number of Delphi's peers in the
auto space), the sell-side is expecting good numbers over the next several years.
Specifically, the auto parts manufacturer is valued at 10 times forward earnings
estimates and a five-year PEG ratio well below 1. Billionaires Paul Singer, Howard
Marks, and Dan Loeb have been selling their Delphi holdings during the first quarter.

We'd stay away from Sprint for now, seeing where the stock is trading close to the
acquisition price; it seems a bit speculative to buy on the theory that Dish and
SoftBank will get into a bidding war here. Mylan and Delphi are similar in that they are
dependent on delivering at least moderate earnings growth going forward to justify
their current valuation, a reversal of recent business trends, and so we would avoid
those stocks as well at least until earnings growth turned positive and looked to be
sustainable for the next couple of years.
Hedge Fund Alpha
62
John Paulsons Portfolio:
Value
(x1000) Activity
% in
Portfolio
SPDR GOLD TRUST GLD SH N 3372810 0% 19.0%
LIFE TECHNOLOGIES CORP LIFE SH N 954824 6% 5.4%
ANGLOGOLD ASHANTI LTD AU SH N 665404 0% 3.8%
REALOGY HLDGS CORP RLGY SH N 649686 0% 3.7%
PLAINS EXPLORATION & PROD CO PXP SH N 607616 0% 3.4%
GRIFOLS S A GRFS SH N 581778 -1% 3.3%
MYLAN INC MYL SH N 523044 -26% 3.0%
M G M RESORTS INTERNATIONAL MGM SH N 491647 -1% 2.8%
EQUINIX INC EQIX SH N 454251 0% 2.6%
METROPCS COMMUNICATIONS INC PCS SH N 395670 14% 2.2%
A M C NETWORKS INC AMCX SH N 374657 0% 2.1%
AETNA INC NEW AET SH N 332280 44% 1.9%
FREEPORT MCMORAN COPPER & GOLD FCX SH N 297900 0% 1.7%
FAMILY DOLLAR STORES INC FDO SH N 295250 New 1.7%
HARTFORD FINANCIAL SVCS GRP INC HIG SH N 282723 -40% 1.6%
MCMORAN EXPLORATION CO MMR SH N 263235 3% 1.5%
CABLEVISION SYSTEMS CORP CVC SH N 249712 37% 1.4%
POPULAR INC BPOP SH N 243767 69% 1.4%
CAESARS ENTMT CORP CZR SH N 196233 0% 1.1%
HESS CORP HES SH N 192887 New 1.1%
BANK OF AMERICA CORP BAC SH N 155803 0% 0.9%
C N O FINANCIAL GROUP INC CNO SH N 154363 -37% 0.9%
MGIC INVT CORP WIS NOTE 2.000% 4/0 MTG SH N 152438 New 0.9%
INTERDIGITAL INC IDCC SH N 143490 0% 0.8%
INTEROIL CORP IOC SH N 142326 New 0.8%
H C A HOLDINGS INC HCA SH N 138748 -51% 0.8%
SCRIPPS NETWORKS INTERACTIVE INC SNI SH N 135114 0% 0.8%
NOVAGOLD RESOURCES INC NG SH N 130439 0% 0.7%
ROCK TENN CO RKT SH N 129906 -13% 0.7%
WELLS FARGO & CO NEW WFC SH N 129132 0% 0.7%
RALCORP HOLDINGS INC NEW RAH SH N Sold Out 0.0%
Hedge Fund Alpha
63
Jim Simons-
Renaissance Tech.
New Positions
Increased Positions
-IBM (IBM)
-Eli Lilly (LLY)
-Google (GOOG)
-EMC Corp (EMC)
Reduced Positions
-Microsoft (MSFT)
-Philip Morris (PM)
Sold Out
-Apple (AAPL)
-Cisco (CSCO)
Brief Discussion:
Renaissance Technologies has been a very successful hedge fund over the course of its
history, and founder Jim Simons is now a multi-billionaire. We have gone through the
funds 13F for the fourth quarter of 2012, compared it to previous filings, and picked out
what we thought were some interesting themes in Renaissances trading activity over the
course of Q1. Read on for our discussion of these stocks the fund was buying or selling:

IBM. Renaissance increased its stake in IBM (IBM) to 2.3 million shares, up from about
410,000 shares at the end of December. The company experienced a 5% decline in
revenue last quarter compared to the first quarter of 2012, and even though it was able to
cut costs to the point where net margins actually increased IBMs earnings were still down
slightly. Currently the stock trades at 14 times trailing earnings, a level which suggests that
the market is looking for at least small increases in earnings per share going forward (and
therefore a reversal of these recent trends). Warren Buffetts Berkshire Hathaway has
been a major shareholder of IBM, and owned over 65 million shares at the beginning of
the year (find Buffett's favorite stocks). IBMs stock price has been up only 5% in the last
year, underperforming broader market indices.

Selling Qualcomm. The fund was a seller of Qualcomm (QCOM) between January and
March, reducing its holdings from 5.3 million shares to 1.2 million over the course of this
period. Qualcomms revenue and earnings from continuing operations rose strongly in its
most recent quarter compared to the same period in the previous year, and Wall Street
analysts expect that trend to continue. Going by their expected earnings figures,
Qualcomm is valued at 14 times forward earnings estimates and at a five-year PEG ratio of
0.8. As such while Qualcomm is not a pure value stock its possible that it offers growth at
a reasonable price. Viking Global, managed by billionaire Andreas Halvorsen, has been a
large shareholder in Qualcomm.

Drug manufacturers. According to the 13F, Renaissances two largest holdings by market
value were drug manufacturers: it owned about 11 million shares of Eli Lilly (LLY) and
about 14 million shares of Bristol-Myers Squibb (BMY). Each of these positions was
increased somewhat from three months earlier as well. Both of these stocks are priced a
bit high for a value investor, with forward price-to-earnings multiples of about 20.
However- as is common for pharmaceutical stocks- their performance is mostly
independent of macro factors (Eli Lillys beta is 0.4, while Bristol-Myers Squibbs is 0.1) and
they pay dividend yields of about 3.5%. Given their sizable market capitalizations (over $60
billion in each case) they may be of interest for investors looking for defensive
opportunities or low-risk yields. We would be careful when looking at Bristol-Myers
Squibb, however, as that companys most recent financial results showed steep declines in
both sales and net income from their levels in the first quarter of 2012.

Of course, a number of other large-cap stocks in the healthcare sector offer comparable
dividend yields and betas, so income or defensive investors would be advised to review
other opportunities rather than blindly following Renaissance. As for the other two moves
weve covered here, were not sure we agree with the investment teams line of thinking;
certainly, Qualcomm could easily prove undervalued if it was able to sustain double-digit
growth rates on the bottom line for the next several years and given the more moderate
expectations currently priced into the stock we think that it is worthy of further research.
Hedge Fund Alpha
64
Jim Simons Portfolio:
Value
(x1000) Activity
% in
Portfolio
LILLY ELI & CO LLY SH N 599464 30% 1.5%
BRISTOL MYERS SQUIBB CO BMY SH N 581434 6% 1.4%
INTERNATIONAL BUSINESS MACHS COR IBM SH N 491038 456% 1.2%
COLGATE PALMOLIVE CO CL SH N 490934 31% 1.2%
MCDONALDS CORP MCD SH N 460358 28% 1.1%
NOVO NORDISK A S NVO SH N 424357 13% 1.0%
PHILIP MORRIS INTERNATIONAL INC PM SH N 376393 -13% 0.9%
INTEL CORP INTC SH N 365575 -14% 0.9%
LINEAR TECHNOLOGY CORP LLTC SH N 339716 8% 0.8%
TAIWAN SEMICONDUCTOR MFG CO LTD TSM SH N 339552 44% 0.8%
PEPSICO INC PEP SH N 337409 67% 0.8%
BIOGEN IDEC INC BIIB SH N 311687 -3% 0.8%
HOME DEPOT INC HD SH N 297235 141% 0.7%
CELGENE CORP CELG SH N 286375 109% 0.7%
ALASKA AIRGROUP INC ALK SH N 285185 6% 0.7%
MASTERCARD INC MA SH N 261203 12% 0.6%
HERSHEY CO HSY SH N 243859 34% 0.6%
C F INDUSTRIES HOLDINGS INC CF SH N 209521 8% 0.5%
INTUITIVE SURGICAL INC ISRG SH N 194447 58% 0.5%
E M C CORP MA EMC SH N 188731 New 0.5%
PANERA BREAD CO PNRA SH N 185315 17% 0.4%
LORILLARD INC LO SH N 181571 251% 0.4%
ASTRAZENECA PLC AZN SH N 181277 45% 0.4%
LINKEDIN CORP LNKD SH N 176553 163% 0.4%
SEADRILL LTD SDRL SH N 173107 69% 0.4%
DIAMOND OFFSHORE DRILLING INC DO SH N 171104 61% 0.4%
T J X COMPANIES INC NEW TJX SH N 170264 66% 0.4%
DIRECTV DTV SH N 155475 -34% 0.4%
APPLE INC AAPL SH N Sold Out 0.0%
CISCO SYSTEMS INC CSCO SH N Sold Out 0.0%
GILEAD SCIENCES INC GILD SH N Sold Out 0.0%
Hedge Fund Alpha
65
James Dinan-
York Capital Man.
New Positions
Increased Positions
-Chemtura (CHMT)
-General Motors (GM)
-Heinz (HNZ)
Reduced Positions
-AIG (AIG)
-Sprint (S)
Sold Out
-Petrologistics (PDH)
-Yahoo (YHOO)
Brief Discussion:
James Dinan founded York Capital Management in 1991 and has since become a
billionaire due to the funds strong performance even as its assets under management
have grown. We have gone through Yorks 13F for the end of December and picked out
some trends that might help illuminate what Dinan and his team were thinking last
quarter. Read on for our analysis and review York's previous filings.

Merger arbitrage. The fund took large positions in Heinz (HNZ) and Virgin Media (VMED),
which are currently in the process of being acquired by Warren Buffett's Berkshire
Hathaway (with an assist from a private equity fund) and Liberty Global respectively.
Acquisition targets generally trade at a small discount to the proposed takeover price,
with the return on investing in these stocks depends on whether or not the transaction
closes as opposed to the financial performance of the company (which can be dependent
on the overall economy). Particularly if leverage is used, this discount- if the transaction
does close on time- can result in decent annualized returns which are uncorrelated with
market indices, and so merger arbitrage is often favored by hedge funds.

Breaking companies apart. Two more big buys from Dinan's team were News Corp
(NWSA), which is in the process of splitting into two, and Hess (HES), which plans to spin
out its downstream operations possibly due to pressure from activists at billionaire Paul
Singer's Elliott Management, who recently settled a proxy battle with the company at
least for the time being. Breakups and spinouts often attract attention from value
investors because, in theory, management of the newly independent companies should
be able to improve operations by focusing on their own business rather than the larger
organization as a whole. Currently Hess trades at only 12 times forward earnings
estimates (though this is actually about even, and possibly something of a premium, to
other large E&P companies) and is therefore a potential value stock. News Corp is a bit
more expensive, but the media and entertainment industry has been doing quite well
recently and News Corp is no exception with revenue up 14% last quarter compared to
the same period in the previous fiscal year.

Selling Petrologistics. York dumped all of its shares of Petrologistics (PDH), which had
been one of its largest holdings at the beginning of 2013. The $1.9 billion market cap
company operates a propylene production facility; propylene is an input needed by
chemical and petrochemical companies. Petrologistics recently paid out an abnormally
large dividend; while its payments do fluctuate (with propylene prices, among other
factors) and it is an MLP with somewhat different tax considerations, it has now paid
$1.42 in dividends since going public about a year ago, which is roughly a 10% yield
against the current price. Of course we wouldn't count on the business being similarly
generous going forward, but Petrologistics looks like a prospective dividend stock for
income investors willing to tolerate the accompanying risk.

We've noticed in our analysis of other billionaires' Q1 moves that a number of them have
been buying into News Corp, and with the business doing well and the breakup
impending we think that it is an interesting target for investors to research. We'll also
have to see how Hess does, though many oil and gas stocks are trading at a discount to
that stock and might be more attractive from a value perspective. Even with Dinan
getting out of Petrologistics, it's possible that there is an income opportunity there if the
company can maintain the same level of payments it made in the last year.
Hedge Fund Alpha
66
James Dinans Portfolio:
Value
(x1000) Activity
% in
Portfolio
HEINZ H J CO HNZ SH N 343147 New 7.5%
REALOGY HLDGS CORP RLGY SH N 270886 6% 5.9%
HERTZ GLOBAL HOLDINGS INC HTZ SH N 242565 -6% 5.3%
C B R E GROUP INC CBG SH N 160313 New 3.5%
NEWS CORP NWSA SH N 147907 New 3.2%
CHEMTURA CORP CHMT SH N 102584 73% 2.2%
SPRINT NEXTEL CORP S SH N 101603 -42% 2.2%
HARTFORD FINANCIAL SVCS GRP INC HIG SH N 99453 New 2.2%
MARKET VECTORS E T F TRUST GDX SH CALL 94625 New 2.1%
MANITOWOC CO INC MTW SH N 91011 -22% 2.0%
TYCO INTERNATIONAL LTD SWTZLND TYC SH N 89446 54% 1.9%
SPECTRA ENERGY PARTNERS L P SEP SH N 84627 New 1.8%
AMERISOURCEBERGEN CORP ABC SH N 82398 New 1.8%
VULCAN MATERIALS CO VMC SH N 79957 New 1.7%
VISTEON CORP VC SH N 79659 -23% 1.7%
DIGITALGLOBE INC DGI SH N 77294 582% 1.7%
CANADIAN PACIFIC RAILWAY LTD CP SH N 71831 -18% 1.6%
ANHEUSER BUSCH INBEV SA NV BUD SH N 70547 New 1.5%
NEWCASTLE INVESTMENT CORP NCT SH N 66733 New 1.4%
CARNIVAL CORP CCL SH N 64968 193% 1.4%
BEAM INC BEAM SH N 61950 -3% 1.3%
FORTUNE BRANDS HOME & SECUR INC FBHS SH N 61878 -4% 1.3%
SECTOR SPDR TRUST XLE SH PUT 61069 New 1.3%
LIBERTY GLOBAL INC LBTYK SH N 56400 New 1.2%
NORTHSTAR REALTY FINANCE CORP NRF SH N 49663 New 1.1%
OCWEN FINANCIAL CORP OCN SH N 49006 New 1.1%
COMMONWEALTH REIT CWH SH N 47611 New 1.0%
PETROLOGISTICS LP PDH SH N Sold Out 0.0%
GENERAL GROWTH PPTYS INC NEW GGP SH N Sold Out 0.0%
YAHOO INC YHOO SH N Sold Out 0.0%
Hedge Fund Alpha
67
George Soros -
Soros Fund Man.
New Positions
Increased Positions
-S&P 500 Puts (SPY)
-Google (GOOG)
-Liberty Global (LBTYA)
-MeadWestvaco (MWV)
Reduced Positions
-AIG (AIG)
-Motorola Soln (MSI)
Sold Out
-JP Morgan (JPM)
-General Electric (GE)
Brief Discussion:
Hes a hedge fund kahuna that needs no introduction, so lets take a look at George Soros
and the rest of his investment teams key moves from the first quarter.

Selling finance & insurance. At the beginning of 2013, the two largest stock positions by
market value in Soross portfolio were Citigroup (C) and American International Group
(AIG). The investor then slashed both stakes between January and March; his AIG position
decreased in size by about two-thirds and he reported owning only about 540,000 shares
of Citi (down from 8.1 million shares three months earlier). Wed note that none of his top
ten picks according to the 13F were from the finance & insurance sector. AIG had briefly
grabbed the title of most popular stock among hedge funds during the fourth quarter of
2012, but last quarter Apple (AAPL) regained the #1 slot (read more about hedge funds'
favorite stocks).

AIG currently trades at a significant discount to the book value of its equity, at a P/B ratio
of 0.7. Citi is also seeing skepticism from the market in terms of the value of its assets, and
its P/B happens to be 0.7 as well. This is the case even though Citi has nearly doubled in
price over the last year. The banks forward earnings multiple of 10 is in line with that of its
peers, though other large banks have generally been doing better over the last several
quarters in terms of their net income.

Google. Soros was buying Google (GOOG) during the first quarter of 2013 and closed
March with about 340,000 shares in his portfolio, making it the second largest equity
position reported on the 13F. In the first quarter of 2013, Google experienced earnings
growth of 16% versus a year earlier. The company continues to integrate its acquisition of
Motorola Mobility Holdings, which has helped it take a leading role in tablets and
smartphones, and also continues to generate earnings growth from its core advertising-
related businesses such as search. Billionaire Stephen Mandels Lone Pine Capital has been
another major shareholder in Google.

US Airways. The filing showed Soros roughly doubling his holdings of US Airways (LCC) to a
total of 7.8 million shares. US Airways is in the process of buying American Airlines out of
bankruptcy, which will allow greater industry consolidation and potentially higher prices
(particularly, in the minds of analysts, on routes where the combined US Airways-American
will have a high market share). In addition, the traditional poor performance of airlines has
left many of these stocks candidates for value status; US Airways, for example, is valued at
6 times its trailing earnings. The billionaire trimmed his stake in Delta (DAL) during the
quarter, but due to the rise in that stocks price Soross top ten picks now include both
airlines.

We think that the airline industry is worth taking a look at- even with its notoriety for
bankruptcy, stocks are cheap enough that we dont think they should be ignored (though
in the particular case of US Airways wed be somewhat concerned with integration risk).
Were more uncertain about Google: we like the business, but a good deal of future
growth is already priced into the stock and so it might be fairly valued already. Citi and AIG,
Soross sales, are cheap in book terms though many of Citis peers are also potential value
plays and investors who are looking at it should consider other megabanks as well.
Hedge Fund Alpha
68
George Soros Portfolio:
Value
(x1000) Activity
% in
Portfolio
LUCENT TECHNOLOGIES INC. 549463 PRN N 605231 -1% 7.1%
MICRON TECHNOLOGY INC MU PRN N 429480 -49% 5.0%
SPDR S & P 500 E T F TRUST SPY SH PUT 409957 249% 4.8%
WEBMD HEALTH CORP WBMD PRN N 274988 0% 3.2%
DIGITAL RIVER INC DRIV PRN N 266473 1% 3.1%
CHARTER COMMUNICATIONS INC CHTR SH N 234250 16% 2.7%
E Q T CORP EQT SH N 209036 49% 2.4%
CIENA CORP CIEN PRN N 207004 0% 2.4%
JOHNSON & JOHNSON JNJ SH N 206599 -2% 2.4%
HOLOGIC INC FRNT 2.000%12/1 HOLX PRN N 205837 New 2.4%
ADECOAGRO S A AGRO SH N 199260 0% 2.3%
ROVI CORP ROVI PRN N 195750 5% 2.3%
DELTA AIR LINES INC DAL SH N 148877 -6% 1.7%
U S AIRWAYS GROUP INC NEW LCC SH N 133128 99% 1.6%
QUANTUM CORP QTM PRN N 124104 0% 1.4%
NETAPP INC NTAP SH N 121269 -12% 1.4%
CONSTELLATION BRANDS INC STZ SH N 119672 68% 1.4%
SHUTTERFLY INC SFLY SH N 112046 -17% 1.3%
ACACIA RESEARCH CORP ACTG SH N 109450 -9% 1.3%
MOTOROLA SOLUTIONS INC MSI SH N 108127 -35% 1.3%
MARKET VECTORS E T F TRUST GDX SH N 100908 75% 1.2%
WEBMD HEALTH CORP WBMD PRN N 99109 0% 1.2%
MOSAIC COMPANY NEW MOS SH N 97961 181% 1.1%
LIBERTY GLOBAL INC LBTYA SH N 95145 3073% 1.1%
CAESARS ENTMT CORP CZR SH N 90678 114% 1.1%
SANDISK CORP SNDK PRN N 82696 -1% 1.0%
VIRGIN MEDIA INC VMED SH N 82018 958% 1.0%
SPDR GOLD TRUST GLD SH N 81998 -12% 1.0%
CEMEX S A B DE C V CX SH N 76313 229% 0.9%
JPMORGAN CHASE & CO JPM SH N Sold Out 0.0%
GENERAL ELECTRIC CO GE SH N Sold Out 0.0%
C F INDUSTRIES HOLDINGS INC CF SH N Sold Out 0.0%
Hedge Fund Alpha
69
David Tepper-
Appaloosa Man.
New Positions
Increased Positions
-MetLife (MET)
-Transocean (RIG)
-Comcast (CMCSA)
-Prudential (PRU)
Reduced Positions
-Apple (AAPL)
-AIG (AIG)
Sold Out
-Oracle (ORCL)
-Noble Corp (NE)
Brief Discussion:
David Tepper, the manager of Appaloosa Management, is one of the most prophetic
hedgies out there; he oversees close to $16 billion in assets and returned 25% last year
after fees (YTD through Dec. 17th). The fact that Carnegie Mellons business school was
named after Tepper by the age of 55 only adds to the hedge fund managers allure. Late
last year, he said equity markets have "a lot" of upside in 2013 (see the full prediction), so
lets see how hes playing them.

Taking a little off the top. Appaloosa sold some of what had been its four largest holdings
by market value at the beginning of January. The heaviest selling came in its Apple (AAPL)
position, which decreased in size by about 40%, and in American International Group (AIG)
where Tepper and his team sold about 30% of their shares. This is an interesting move
because Tepper has been publicly bullish on stocks- why then sell financial stocks such as
AIG and Citigroup (C)? In addition, both Apple and AIG have been touted as potential value
plays. In the case of AIG, this is because the stock is priced at a significant discount to the
book value of its equity at a P/B ratio of 0.7. That suggests that it has a potential upside as
the enterprise value converges to the value of AIG's assets. Apple trades at 10 times its
trailing earnings, as the market is pricing in continued declines in net income as a result of
falling margins at the consumer technology company. Apple and AIG had been the two
most widely owned stocks among hedge funds at the end of December (find more stocks
hedge funds loved).

Airlines. There wasn't really much change here aside from small sales at United Continental
(UAL) and US Airways (LCC) and a slight increase in his position in Delta (DAL), but airlines
now account for three of Tepper's top ten picks- remarkable considering the industry's
poor reputation as an investment opportunity. Analyst consensus for 2014 implies that all
three stocks are cheap, with forward earnings multiples in the 7-8 range, and there is some
potential for positive developments in the industry as US Airways looks set to buy
American Airlines out of bankruptcy. This consolidation has been suggested as a catalyst
for higher prices, and all three of these stocks are up at least 40% in the last year. We think
that the industry is worth a closer look, though we might de-prioritize US Airways due to
integration risk.

Metlife. Appaloosa did buy a significant number of shares of Metlife (MET) between
January and March, increasing its holdings from 3.4 million shares to 4.6 million. The $47
billion market cap life insurer's revenue grew by 9% in the first quarter of 2013 versus a
year earlier, and the company beat adjusted earnings estimates as it had done in the
previous few quarters as well. Like AIG, it trades at considerably less than the book value
of its equity; in addition, the forward P/E looks low at 8. Renaissance Technologies,
founded by billionaire Jim Simons, owned 5.5 million shares at the end of 2012.

Metlife looks like a prospective target for value investors as well, though analyst targets do
look to be quite a bit higher than what the company has done on a trailing basis. We of
course understand the mindset of any investors who would completely rule out airlines,
and certainly some of any inherent value opportunity there has already been captured, but
the industry is still worthy of further research in our view. The same is true for Apple and
AIG: the former has been struggling recently but has a sizable cash hoard (and has very low
expectations from the market) while we've mentioned AIG's upside potential given where
it is trading relative to book value.
Hedge Fund Alpha
70
David Teppers Portfolio:
Value
(x1000) Activity
% in
Portfolio
CITIGROUP INC C SH N 376905 -7% 8.0%
UNITED CONTINENTAL HOLDINGS INC UAL SH N 272361 -7% 5.8%
GOODYEAR TIRE & RUBBER CO GT SH N 192060 6% 4.1%
U S AIRWAYS GROUP INC NEW LCC SH N 181525 -11% 3.8%
H C A HOLDINGS INC HCA SH N 175746 0% 3.7%
METLIFE INC MET SH N 175031 36% 3.7%
DELTA AIR LINES INC DAL SH N 162196 -5% 3.4%
FORD MOTOR CO DEL F SH N 154118 5% 3.3%
HUNTSMAN CORP HUN SH N 137566 0% 2.9%
HARTFORD FINANCIAL SVCS GRP INC HIG SH N 136855 6% 2.9%
SPDR S & P 500 E T F TRUST SPY SH N 131090 0% 2.8%
BROADCOM CORP BRCM SH N 125506 6% 2.7%
OWENS CORNING NEW OC SH N 106599 14% 2.3%
MICROSOFT CORP MSFT SH N 99715 11% 2.1%
E M C CORP MA EMC SH N 96474 -2% 2.0%
M G M RESORTS INTERNATIONAL MGM SH N 90730 0% 1.9%
MASCO CORP MAS SH N 70875 -14% 1.5%
COMCAST CORP NEW CMCSA SH N 68896 New 1.5%
SANDISK CORP SNDK SH N 67100 26% 1.4%
WHIRLPOOL CORP WHR SH N 66359 0% 1.4%
WEATHERFORD INTL LTD NEW WFT SH N 55445 New 1.2%
PRUDENTIAL FINANCIAL INC PRU SH N 50440 New 1.1%
JPMORGAN CHASE & CO JPM SH N 47460 -57% 1.0%
CELANESE CORP DEL CE SH N 46364 60% 1.0%
MUELLER WATER PRODUCTS INC MWA SH N 43838 -2% 0.9%
DELPHI AUTOMOTIVE PLC DLPH SH N 39315 0% 0.8%
POWERSHARES QQQ TRUST QQQ SH N Sold Out 0.0%
ORACLE CORP ORCL SH N Sold Out 0.0%
Hedge Fund Alpha
71
David Einhorn-
Greenlight Capital
New Positions
Increased Positions
-Apple (AAPL)
-Oil States Intl. (OIS)
-Hess Corp (HES)
Reduced Positions
-Computer Sci. (CSC)
-Dephi (DLPH)

Sold Out
-Ensco (ESV)
-Xerox (XRX)
Brief Discussion:
Billionaire David Einhorn of Greenlight Capital is one of the most closely followed hedge
fund managers in the world. In mid May, his fund filed its 13F with the SEC, disclosing
many of its long equity positions in U.S. stocks as of the end of March. Even though the
information in these is a bit old, we have shown that 13Fs can be used to develop
profitable investment strategies (for example, our small cap hedge fund strategy
generated an average excess return of 18 percentage points per year). In addition,
investors can always treat movements that these managers made during the previous
quarter as initial ideas, going on to further research any which seem interesting on their
own merits. We have gone through Einhorn's most recent 13F compared to previous filings
(see what Greenlight has owned over time) and here are three things we noticed:

Loyal to Apple. We've noticed when looking at a number of billionaires' filings that they
sold Apple (AAPL); this group includes David Tepper's Appaloosa Management and
legendary investor Julian Robertson. Einhorn was buying, however, and by the end of
March his fund owned 2.4 million shares- a position worth over $1 billion at the time. In its
most recent quarter, Apple's earnings dropped by 18% compared to the same period in
the previous fiscal year even as revenue rose by 11% as investor fears of lower margins
came true. Currently, Apple is valued at 10 times its trailing earnings (with cash comprising
a significant share of the market cap). According to our database, Apple actually regained
the title of the most popular stock among hedge funds during the first quarter of 2013.

Not to Microsoft, though. Greenlight wasn't as optimistic about Apple's longtime rival
Microsoft (MSFT), cutting its stake by nearly 40% to 6.1 million shares. Microsoft trades at
11 times expected earnings for the fiscal year ending in June 2014, though if we were
going to look at the company more closely we'd try to account for the fact that earnings in
that year might be temporarily swelled by the release of Windows 8 and the new version
of Office. We'd note that Microsoft also has a good deal of cash on hand, though not as
much as Apple of course, and pays a dividend yield close to 3% at current prices and
dividend levels. Platinum Asset Management, managed by billionaire Kerr Neilson, has
been another major shareholder of Microsoft.

Some profit taking. Einhorn had been buying Computer Sciences (CSC) in the first several
months of 2012; it is currently up 41% from the end of September, and about 80% from
the end of June. Delphi (DLPH) has more than doubled since the end of 2011, when
Greenlight first reported a large stake. The fund trimmed its holdings of each by about 25%
between January and March. Delphi, a $15 billion market cap auto parts company
specializing in electrical, electronic, and powertrain components, has been seeing weaker
business conditions but Wall Street analysts are projecting high enough earnings growth
that the five-year PEG ratio is only 0.6. Technology outsourcing and services provider
Computer Sciences has been fairly stable in terms of its business, going by recent reports,
and following the rise in price is just at the edge of value territory with trailing and forward
P/Es in the 12-13 range.

We can understand why Greenlight is cashing out a bit at these two stocks- Computer
Sciences has gotten to the point where it isn't a clear value stock anymore, while in the
case of Delphi it seems advisable to look at other auto parts companies or automakers
which might be cheaper. We're also not too excited about Microsoft, and at the very least
it seems to be just getting into value territory by virtue of a favorable product cycle
(though if Windows 8 sales pick up, or the company comes up with a plan to distribute
more cash, it could be worth a look). Apple seems like at least a candidate for value status
in our book, though it would have to slow its decline in earnings and it certainly seems
risky for Einhorn to have increased his exposure to the stock as much as he did.
Hedge Fund Alpha
72
David Einhorns Portfolio:
Value
(x1000) Activity
% in
Portfolio
APPLE INC AAPL SH N 1061370 83% 16.2%
MARVELL TECHNOLOGY GROUP LTD MRVL SH N 547552 0% 8.4%
CIGNA CORP CI SH N 510561 0% 7.8%
AETNA INC NEW AET SH N 332764 0% 5.1%
COMPUTER SCIENCES CORP CSC SH N 291258 -23% 4.4%
N C R CORP NEW NCR SH N 257956 -9% 3.9%
VIRGIN MEDIA INC VMED SH N 240932 0% 3.7%
MARKET VECTORS E T F TRUST GDX SH N 227289 0% 3.5%
OIL STATES INTERNATIONAL INC OIS SH N 220239 New 3.4%
SEAGATE TECHNOLOGY STX SH N 197135 -36% 3.0%
ASPEN INSURANCE HOLDINGS LTD AHL SH N 189612 0% 2.9%
C B S CORP NEW CBS SH N 167420 -33% 2.6%
D S T SYSTEMS INC DEL DST SH N 160002 0% 2.4%
EINSTEIN NOAH RESTAURANT GRP INC BAGL SH N 159178 0% 2.4%
BABCOCK & WILCOX CO NEW BWC SH N 115311 0% 1.8%
OAKTREE CAP GROUP LLC OAK SH N 94480 0% 1.4%
LEGG MASON INC LM SH N 81626 -25% 1.2%
GREEN MOUNTAIN COFFEE ROASTERS I GMCR SH PUT 71994 New 1.1%
BARRICK GOLD CORP ABX SH N 57844 0% 0.9%
VODAFONE GROUP PLC NEW VOD SH N 45440 0% 0.7%
COVENTRY HEALTH CARE INC CVH SH N 38879 0% 0.6%
A E C O M TECHNOLOGY CORP ACM SH N 38479 0% 0.6%
STATE BANK FINANCIAL CORP STBZ SH N 34377 0% 0.5%
SPIRIT AEROSYSTEMS HOLDINGS INC SPR SH N 31390 New 0.5%
WESTERN DIGITAL CORP WDC SH N 30174 0% 0.5%
FIFTH STREET FINANCE CORP FSC SH N 22025 0% 0.3%
IAC INTERACTIVECORP IACI SH N 19512 New 0.3%
E N S C O PLC ESV SH N Sold Out 0.0%
XEROX CORP XRX SH N Sold Out 0.0%
APPLE INC AAPL SH CALL Sold Out 0.0%
Hedge Fund Alpha
73
Dan Loeb-
Third Point
New Positions
Increased Positions
-Intl. Paper (IP)
-Abbvie (ABBV)
-Tiffany & Co (TIF)
Reduced Positions
-AIG (AIG)
-Yahoo (YHOO)
Sold Out
-Tesoro(TSO)
-Morgan Stanley (MS)
Brief Discussion:
Dan Loeb, founder of the New York-based hedge fund Third Point, has built up a stellar
reputation amongst his peers. With an equity portfolio in excess of $5 billion, Loebs
stock picks are worth paying attention to, and his track record in activist investing is one
of the best. Lets take a look at some of the key moves he made last quarter.

Some new picks. Third Point bought 11 million shares of Virgin Media (VMED) during the
quarter, and it also initiated a position of 2.7 million shares in Tiffany (TIF) making two
of its six largest holdings by market value new positions for the fund. According to
Loeb's letter to investors, buying Virgin Media allowed the fund to increase its exposure
to Liberty Global (LBTYA), which plans to buy Virgin in a large cash and stock deal. In
addition, merger arbitrage is a common hedge fund strategy as the returns from buying
shares of the company to be acquired tend to exhibit little correlation with market
returns. Tiffany, meanwhile, recorded a 4% increase in revenue in its most recent
quarterly report (for the quarter ending in January, the fourth of its fiscal year)
compared to a year ago with earnings showing very little change. This isn't necessarily a
bad performance, but we would be a bit concerned about Tiffany from a value
perspective as it is currently valued at over 20 times its trailing earnings and would
need to deliver much higher growth in order to justify the current valuation.

Trimming Delphi. Loeb and his team cut their stake in auto parts manufacturer Delphi
(DLPH) by about 70% and closed March with around 3 million shares in their portfolio.
Wall Street analysts are predicting that the next several years will be good for Delphi:
earnings will grow enough over the next couple of years to place the current valuation
at 10 times consensus for 2014, with the stock's five-year PEG ratio being 0.6. We'd
note that the sell-side is generally bullish on a number of auto related stocks, including
the automakers themselves. In addition, the business has actually been seeing a decline
in both revenue and earnings. Delphi was the largest holding of billionaire Paul Singer's
Elliott Management at the beginning of 2013.

International Paper. The fund added shares of International Paper (IP) during Q1, with
6.6 million shares in its portfolio per the 13F. Loeb's quarterly letter, in addition to
discussing Virgin and Liberty Global, described International Paper as moving into the
very attractive containerboard industry (with a majority of EBITDA coming from that
business segment this year) and also making significant progress in cleaning up its
balance sheet which would allow the company to return more of its cash flow to
shareholders. Currently, the dividend yield is 2.5% with the company making annualized
payments of $1.20 per share; Loeb wrote that he expects these payments to eventually
rise as high as $2.

We actually think that we'd avoid Tiffany and Delphi- their recent financial performance
has not been particularly strong, and their current valuation in terms of trailing earnings
is well above value territory in each case. Delphi does look better in terms of forward
estimates, but even if we were going to place high weight on the sell-side's targets we'd
probably favor other stocks tied to the auto industry first. As for International Paper,
Loeb has an interesting thesis but we might want to wait for further developments in
the company, and in particular wouldn't want to recommend it to income investors
until the company was closer to actually increasing its dividend.
Hedge Fund Alpha
74
Dan Loebs Portfolio:
Value
(x1000) Activity
% in
Portfolio
YAHOO INC YHOO SH N 1458798 -15% 27.5%
INTERNATIONAL PAPER CO IP SH N 307428 340% 5.8%
NEWS CORP NWSA SH N 198315 -7% 3.7%
TIFFANY & CO NEW TIF SH N 187758 New 3.5%
MURPHY OIL CORP MUR SH N 159325 -60% 3.0%
B E AEROSPACE INC BEAV SH N 120560 New 2.3%
ABBVIE INC ABBV SH N 120301 609% 2.3%
DOLLAR GENERAL CORP NEW DG SH N 116334 7% 2.2%
CHENIERE ENERGY INC LNG SH N 112000 0% 2.1%
ANADARKO PETROLEUM CORP APC SH N 104940 New 2.0%
THERMO FISHER SCIENTIFIC INC TMO SH N 99437 New 1.9%
AGRIUM INC AGU SH N 97500 0% 1.8%
CONSTELLATION BRANDS INC STZ SH N 95280 5% 1.8%
EQUINIX INC EQIX SH N 91932 -19% 1.7%
CABOT OIL & GAS CORP COG SH N 84512 New 1.6%
N X P SEMICONDUCTORS N V NXPI SH N 75725 New 1.4%
WESCO INTERNATIONAL INC WCC SH N 72610 -26% 1.4%
SENSATA TECHNOLOGIES HOLDING N V ST SH N 62453 -31% 1.2%
TRANSDIGM GROUP INC TDG SH N 61168 167% 1.2%
LYONDELLBASELL INDUSTRIES N V LYB SH N 60126 -60% 1.1%
ARIAD PHARMACEUTICALS INC ARIA SH N 49720 10% 0.9%
CHIMERA INVESTMENT CORP CIM SH N 47850 New 0.9%
ENPHASE ENERGY INC ENPH SH N 46184 0% 0.9%
LOUISIANA PACIFIC CORP LPX SH N 38880 -40% 0.7%
LIBERTY GLOBAL INC LBTYK SH N 30884 -64% 0.6%
T I B C O SOFTWARE INC TIBX SH N 20215 New 0.4%
TESORO CORP TSO SH N Sold Out 0.0%
MORGAN STANLEY DEAN WITTER & CO MS SH N Sold Out 0.0%
SYMANTEC CORP SYMC SH N Sold Out 0.0%
Hedge Fund Alpha
75
Chase Coleman-
Tiger Global
New Positions
Increased Positions
-Liberty Global (LBTYK)
-News Corp (NWSA)
-Dollar General (DG)
-Carters (CRI)
Reduced Positions
-Priceline (PCLN)
-Amazon (AMZN)
Sold Out
-Yandex (YNDX)
-Yahoo (YHOO)
Brief Discussion:
Tiger Global Management, which counts billionaire and Tiger Cub Chase Coleman among
its investment managers, has filed its 13F for the first quarter of 2013. We track 13Fs from
hundreds of hedge funds and other investors, and have found that they can be useful in
developing investment strategies; for example, the most popular small cap stocks among
hedge funds earn an average excess return of 18 percentage points per year (learn more
about our small cap strategy). A more conventional use of 13Fs, of course, is to use them
as a guide to what top managers are thinking, potentially helping investors come up with
new investment ideas. Read on for a brief discussion of three things which we noticed in
Tiger Global's Q1 filing (which discloses many of its long equity positions as of the end of
March) or compare the fund's picks to previous filings.

Selling tech stocks. Tiger Global, known for being a tech-focused fund, cut its stake in Apple
(AAPL) by about 75% between January and March, down to 260,000 shares. In addition,
the fund sold all of its shares of Yahoo (YHOO) and- at least according to the 13F- Yandex
(YNDX), a Russian Internet portal and search engine. We've noticed a number of top hedge
funds selling Apple shares during the first quarter of the year, and certainly earnings at the
company have been down. If Apple could manage to maintain its current business it would
be cheap at a trailing P/E of 10, but Tiger Global is apparently doubtful that it will do so.
Yandex has been reporting very strong results- revenue and earnings were up over 30%
last quarter compared to the first quarter of 2012- though the market is already pricing in
at least somewhat high growth and as a result the stock trades at a little over 30 times
trailing earnings. Yahoo's stock price has soared 74% over the last year- in part due to
asset sales, in part due to the increased value of its Asian businesses- and so the fund may
merely be taking profits there. Billionaire Dan Loeb's Third Point is a major shareholder in
Yahoo (find Loeb's favorite stocks).

News Corp. A number of hedge funds have been beefing up their stakes in News Corp
(NWSA) ahead of the media and entertainment company's pending breakup, and Tiger
Global was no exception as it closed March with 9 million shares of the stock in its
portfolio. News Corp is coming off a fiscal quarter in which its revenue rose by 14%
compared to the same period in the previous fiscal year, with earnings up at a higher
(though unsustainably so) rate. With earnings multiples in the teens, the stock seems
priced about right for its current business; however, there is the potential for the split of
the company to unlock shareholder value as management of the resulting companies
becomes more able to focus on their own operations. Hedge funds often like to invest in
spinouts under a similar logic (read more about investing in spinouts).

Liberty Media. The fund reported ownership of 5.5 million shares of Liberty Media (LMCA),
making the $15 billion market cap company Tiger Global's new largest holding. Liberty
Media owns baseball's Atlanta Braves and has ownership stakes in a number of other
companies including DirecTV (DTV). The company completed its spinout of Starz in January
of this year, and recently acquired a large stake in Charter Communications; in doing so, it
agreed to limit its ownership of Charter to less than 35% for the next few years and won
four seats on the company's Board of Directors.

We think that investors should be considering News Corp ahead of its breakup, as there is
quite a bit of potential for value creation there and the business seems to have significant
tailwinds behind it as is. Even with Tiger Global dumping Yandex and Apple, there is
enough interesting about either stock- the rapid growth of earnings at Yandex, and Apple
facing quite low expectations in the market- that these companies are at least worth
checking out in our view even if they do no turn out to be good picks at this time.
Hedge Fund Alpha
76
Chase Colemans Portfolio:
Value
(x1000) Activity
% in
Portfolio
GROUPON INC GRPN SH N 397800 0% 6.2%
MASTERCARD INC MA SH N 339830 -6% 5.3%
VISA INC V SH N 326772 -3% 5.1%
LIBERTY GLOBAL INC LBTYK SH N 295109 48% 4.6%
NEWS CORP NWSA SH N 274590 683% 4.3%
DOLLAR GENERAL CORP NEW DG SH N 269591 New 4.2%
GOOGLE INC GOOG SH PUT 238256 New 3.7%
FLEETCOR TECHNOLOGIES INC FLT SH N 237677 19% 3.7%
AMAZON COM INC AMZN SH N 237176 -28% 3.7%
BAIDU INC BIDU SH N 225389 20% 3.5%
MOTOROLA SOLUTIONS INC MSI SH N 185687 93% 2.9%
CARTERS INC CRI SH N 168374 New 2.6%
COLFAX CORP CFX SH N 162890 New 2.5%
MCGRAW HILL COS INC MHP SH N 158844 48% 2.5%
CHARTER COMMUNICATIONS INC CHTR SH N 143768 6% 2.2%
BURGER KING WORLDWIDE INC BKW SH N 137520 0% 2.1%
NETFLIX INC NFLX SH N 123978 New 1.9%
GRACE W R & CO DEL NEW GRA SH N 118978 -46% 1.8%
DOLLAR TREE INC DLTR SH N 106546 New 1.7%
MAKEMYTRIP LIMITED MMYT SH N 99870 0% 1.6%
STRATASYS INC SSYS SH N 96486 New 1.5%
COMCAST CORP NEW CMCSA SH N 93196 New 1.4%
PENNEY J C CO INC JCP SH N 80839 New 1.3%
MCGRAW HILL COS INC MHP SH PUT 78120 New 1.2%
3 D SYSTEMS CORP DEL DDD SH N 77811 132% 1.2%
TAL EDUCATION GROUP XRS SH N 76366 -20% 1.2%
YY INC YY SH N 64820 0% 1.0%
LIBERTY MEDIA CORP LMCA SH N Sold Out 0.0%
YANDEX N V YNDX SH N Sold Out 0.0%
YAHOO INC YHOO SH N Sold Out 0.0%
MOODYS CORP MCO SH N Sold Out 0.0%
Hedge Fund Alpha
77
Carl Icahn-
Icahn Capital
New Positions
Increased Positions
-Transocean (RIG)
-Herbalife (HLF)
-Dell (DELL)
Reduced Positions
NA
Sold Out
-NA
Brief Discussion:
Herbalife. If anyone's been living on another planet for the last six months, let's sum up:
billionaire Bill Ackman of Pershing Square (see Ackman's stock picks) gave a
presentation accusing Herbalife (HLF) of being a pyramid scheme, driving down the
stock price. As it was recovering, Icahn criticized Ackman in the media, eventually
dialing in to a CNBC interview with the hedge fund manager and engaging in a nasty
fight. Since then Icahn has become a major shareholder in Herbalife (though he had
apparently started buying before his confrontation with Ackman) and owned over 16
million shares at the end of March. He has suggested that he may try to take the
multilevel marketer of health and fitness products private at a premium. Now Herbalife
is almost exactly at where it was before Ackman's short call.

Currently Ackman has a number of followers who consider the business overvalued,
with 48% of the float held short. While we're skeptical that Icahn could find the debt
he'd need to take Herbalife private, considering the regulatory risks, the company has
been increasing its earnings over the last year (net income was up 10% last quarter
compared to the first quarter of 2012) and a conventional value analysis might actually
conclude that it is cheap given the trailing P/E of 10.

Energy. Icahn has also been a bit unfriendly with his moves at Transocean (RIG), a $20
billion market cap offshore driller where Icahn has taken a 5% stake (with over 20
million shares in his portfolio at the end of Q1). He has been pushing the company to
pay out a higher dividend to shareholders, and also wants to place some of his own
nominees on the company's Board of Directors as a reaction to what he sees as poor
decisions that management has made over the years. Transocean trades at 9 times
consensus earnings for 2014, as analysts expect the company to significantly increase
earnings per share between now and then (the same is true for many other offshore
drillers). Billionaire Leon Cooperman's Omega Advisors had owned 3.1 million shares at
the end of December (find Cooperman's favorite stocks).

With Icahn's interest in Transocean, he now counts two energy stocks among his largest
holdings given his roughly 60 million shares of shale gas producer Chesapeake (CHK).
Chesapeake- which ran into trouble early last year after the company became
financially stressed as a result of its overexpansion, prompting Icahn's investment- is
another favorite among sell-side analysts, with earnings forecasts over the next several
years implying a forward earnings multiple of 10 and a five-year PEG ratio well below 1.
Revenue grew by over 40% in its most recent quarter compared to the same period in
the previous year.

Obviously Herbalife is still something of a battleground stock, and we'd have to be quite
sure it's safe from regulatory action before investing, but certainly at current prices
we'd strongly advise against being short. We do think that Chesapeake looks
interesting, and would be interested in learning more about the company. As for
Transocean, we're skeptical that Icahn will be able to affect much change (due to its
large size if nothing else) but the stock does look cheap assuming that the business can
at least come close to analyst targets next year. Perhaps it could be a value prospect as
well, particularly if next quarter's results place it on track.
Hedge Fund Alpha
78
Carl Icahns Portfolio:
Click to see Icahns historical filings.
Value
(x1000) Activity
% in
Portfolio
ICAHN ENTERPRISES L P IEP SH N 5329130 0% 31.4%
C V R ENERGY CVI SH N 3675278 0% 21.7%
CHESAPEAKE ENERGY CORP CHK SH N 1218450 0% 7.2%
FOREST LABS INC FRX SH N 1166382 0% 6.9%
NETFLIX INC NFLX SH N 1049534 0% 6.2%
HERBALIFE LTD HLF SH N 612500 New 3.6%
AMERICAN RAILCAR INDUSTRIES INC ARII SH N 554863 0% 3.3%
FEDERAL MOGUL CORP FDML SH N 462488 0% 2.7%
HAIN CELESTIAL GROUP INC HAIN SH N 442217 0% 2.6%
NAVISTAR INTERNATIONAL CORP NAV SH N 409487 0% 2.4%
MENTOR GRAPHICS CORP MENT SH N 290971 0% 1.7%
TAKE TWO INTERACTIVE SOFTWR INC TTWO SH N 194135 0% 1.1%
WEBMD HEALTH CORP WBMD SH N 162956 0% 1.0%
CVR REFNG LP COMUNIT REP LT CVRR SH N 138760 New 0.8%
DELL INC DELL SH N 100310 New 0.6%
NUANCE COMMUNICATIONS INC NUAN SH N 76926 New 0.5%
ENZON PHARMACEUTICALS INC ENZN SH N 22439 0% 0.1%
MOTRICITY INC MOTR SH N 2475 0% 0.0%
Q1 2011
25 Most Popular Stocks
6 Qualcomm (QCOM)
7 JP Morgan (JPM)
8 Bank of America (BAC)
9 Microsoft (MSFT)
10 EBay (EBAY)
11 Visa (V)
12News Corp (NWSA)
13 Pfizer Inc (PFE)
14 Wells Fargo (WFC)
15 Liberty Global (LBTYA)
16 HCA Holdings (HCA)
17 Equinix (EQIX)
18 Amazon (AMZN )
19 Oracle (ORCL)
20 Mondelez (MDLZ)
21 Mastercard (MA)
22 Express Scripts (ESRX)
23 Delta Airlines (DAL)
24 Hertz (HTZ)
25 SPDR Gold (GLD)

of best hedge fund
of what they charge
5 Most Popular Stocks Among Hedge Funds
At Insider Monkey, we track 450 hedge funds, from Warren Buffett to David
Einhorn. Our research has shown that retail investors can be rewarded by
following the smart money. Marketwatch/Insider Monkey Billionaire Hedge Fund
Index (BHFI) returned 24.3% last year, beating the S&P 500 ETF by 8 percentage
points. Hedge funds small-cap picks performed even better (see the details of our
market-beating strategy).

Four times a year, we rank hedge funds top consensus picks, and Apple (AAPL)
has been the most popular stock among hedge funds for a very long time. Last
quarter AIG took the top spot. Latest filings show that hedge funds dumped AIG
and we have a tie at the top of our table.

With 148 hedge funds holding long positions in the latest round of 13F filings
from the SEC, we give the first place to Apple (AAPL).

Google (GOOG) sits at No. 2 on this list, even though there were also 148 hedge
funds with Google positions. Egerton Capital, Cadian Capital, Brookside Capital,
Partner Fund Management, and even billionaire Jeff Vinik were among new
GOOG investors.

AIG, meanwhile, has lost 7 hedge funds and dropped to the third place. Still the
total value of hedge fund positions in AIG is greater than hedge fund positions in
Apple and Google.

Citigroup (C) is a great microcosm of hedge funds penchant for financials this past
quarter, as six additional hedge funds initiated new positions in the stock.

General Motors (GM) is now held by 110 of the hedge funds we track, and the
automaker rounds out our top five. This bullish activity is an extension of what we
observed in Q3 and Q4, when aggregate interest were increasing.

Six new funds bought GM last quarter, and it appears that this interest came at
the expense of Microsoft (MSFT). A whopping 10 of our hedgies dropped the tech
company last quarter, and the stock now sits at number 9.
Hedge Fund Alpha
79
Hedge Fund Alpha
80
Whats Next?
-An analysis of aggregate moves in hedge fund ownership.
We list the most and least popular hedge fund stock picks
by market cap. Hedge funds dont have a large advantage
over retail investors when it comes to large cap stocks.
However, our historical analysis uncovered strategies in
the small-cap space that beat the market as much as 20
percentage points per year. Our premium subscribers will
have access to the list of 15 stocks that satisfy our
proprietary strategys criteria. The stock picks of our
secret strategy in our previous issues beat the market by
6 percentage points between September 4
th
and May 16
th
.
Our premium subscribers will also be able to read in-
depth analyses of 6 of these stocks in the next section.

-The stock picks of our small cap strategy in our previous
issues also beat the market by 29.5 percentage points in
8.5 months. Our premium members will have access to
these stock picks too.

Subscribe Now!
Hedge funds tend to
generate more alpha
when they invest in
underfollowed stocks
because they are more
likely to uncover facts
that arent widely
known by investors.
Imitating these stock
picks has the potential
of delivering
significantly higher
returns.
Hedge Fund Alpha
81
30 Most Popular Large-Cap ($20+ Billion) Stocks:
Between 1999 and 2009 the 30 most popular stocks with $20+ billion in market cap had a monthly alpha of
18 basis points. These stocks outperformed the market by 12 basis points per month. This isnt a mind numbing
performance but it is still better than index funds.
Company Ticker No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Apple Inc. AAPL 148 11905890 148 16867919 0 -4962029
Google Inc. GOOG 148 14573965 137 13095722 11 1478243
American International Group, I AIG 146 15280123 153 16272328 -7 -992205
Citigroup, Inc. C 118 7259560 112 6410918 6 848642
General Motors Company GM 110 5812795 104 4934678 6 878117
QUALCOMM Incorporated QCOM 96 6488733 95 5485562 1 1003171
JPMorgan Chase & Co. JPM 94 5197563 97 5930859 -3 -733296
Bank of America Corporation BAC 93 5001582 101 5467885 -8 -466303
Microsoft Corporation MSFT 89 8608779 99 7142441 -10 1466338
eBay Inc. EBAY 89 4213646 92 3961418 -3 252228
Visa, Inc. V 88 6879571 81 6536830 7 342741
News Corp. NWSA 82 11745968 74 10400599 8 1345369
Pfizer Inc. PFE 81 5805456 78 4790096 3 1015360
Wells Fargo & Company WFC 78 21830527 85 20034552 -7 1795975
Liberty Global Inc. LBTYA 75 4129889 49 2598127 26 1531762
HCA Holdings, Inc. HCA 73 3515251 64 1983396 9 1531855
Equinix, Inc. EQIX 71 5262403 66 5003100 5 259303
Amazon.com Inc. AMZN 70 4113824 64 3905863 6 207961
Oracle Corporation ORCL 69 5218112 68 5794426 1 -576314
Mondelez International, Inc. MDLZ 69 6344101 64 4193003 5 2151098
Mastercard Incorporated MA 68 3845215 75 3683351 -7 161864
Express Scripts Inc. ESRX 68 3225362 81 3434275 -13 -208913
Delta Air Lines Inc. DAL 68 3443601 62 2344889 6 1098712
Hertz Global Holdings, Inc. HTZ 68 2425905 57 1657007 11 768898
SPDR Gold Shares GLD 67 6707363 73 12392038 -6 -5684675
priceline.com Incorporated PCLN 67 6127714 70 5535324 -3 592390
Berkshire Hathaway Inc. BRK-B 67 16262861 71 14936085 -4 1326776
Yahoo! Inc. YHOO 66 4264431 71 4215824 -5 48607
Johnson & Johnson JNJ 65 4815291 71 4229662 -6 585629
CBS Corporation CBS 65 3601784 50 1682587 15 1919197
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
82
30 Most Popular Mid-Cap ($10-$20 Billion) Stocks:
Between 1999 and 2009 the 30 most popular mid-cap ($10 - $20 billion in market cap) stocks had a monthly
alpha of 20 basis points. These stocks outperformed the market by 34 basis points per month. Not outstanding,
but again, its still better than index funds.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Liberty Global Inc. LBTYA 75 4129889 49 2598127 26 1531762
HCA Holdings, Inc. HCA 73 3515251 64 1983396 9 1531855
Equinix, Inc. EQIX 71 5262403 66 5003100 5 259303
Delta Air Lines Inc. DAL 68 3443601 62 2344889 6 1098712
Dollar General Corporation DG 61 4481786 47 3318506 14 1163280
Virgin Media, Inc. VMED 59 5453598 36 1975307 23 3478291
The ADT Corporation ADT 56 1969756 66 2422486 -10 -452730
Liberty Global Inc. LBTYK 56 3878751 28 2560770 28 1317981
Charter Communications Inc. CHTR 54 4668948 42 3014162 12 1654786
SanDisk Corp. SNDK 54 1967391 50 1557306 4 410085
Aetna Inc. AET 54 2735555 47 2195514 7 540041
Liberty Interactive, Inc. LINTA 51 2192527 54 2308907 -3 -116380
Sprint Nextel Corp. S 51 3421561 55 2550797 -4 870764
Michael Kors Holdings Ltd. KORS 49 3071660 42 1972362 7 1099298
Delphi Automotive PLC DLPH 49 3806839 42 4370241 7 -563402
Netflix, Inc. NFLX 48 2724836 35 1387567 13 1337269
The McGraw-Hill Companies, IncMHP 48 1595786 34 739142 14 856644.3
Transocean Ltd. RIG 48 2445475 41 1246495 7 1198980
United Continental Holdings, IncUAL 46 1544620 38 1078711 8 465909
Life Technologies Corporation LIFE 45 2888004 33 2004741 12 883263
Tyco International Ltd. TYC 45 1889933 44 1704124 1 185809
Hartford Financial Services Grou HIG 44 1938829 47 1842269 -3 96560
Melco Crown Entertainment Ltd MPEL 44 1131452 42 919892 2 211560
Liberty Capital Group LMCA 43 3767910 59 3693305 -16 74605
NetApp, Inc. NTAP 42 2626188 52 3180064 -10 -553876
Cardinal Health, Inc. CAH 42 665017 32 712702 10 -47685
Cigna Corp. CI 42 1839380 41 1803844 1 35536
CF Industries Holdings, Inc. CF 41 1161025 44 1485972 -3 -324947
Ingersoll-Rand Plc IR 41 2514934 33 1814211 8 700723
Eastman Chemical Co. EMN 40 1425100 48 1763252 -8 -338152
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
83
30 Most Popular Smid-Cap ($4-$10 Billion) Stocks:
Between 1999 and 2009 the 30 most popular smid-cap ($4 - $10 billion in market cap) stocks had a monthly
alpha of 11 basis points. These stocks outperformed the market by 31 basis points per month. The alpha of
these stocks is lower than the stocks outperformance because the stocks are riskier.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Hertz Global Holdings, Inc. HTZ 68 2425905 57 1657007 11 768898
Constellation Brands Inc. STZ 57 2850918 39 1065366 18 1785552
United Rentals, Inc. URI 50 1095155 53 975910 -3 119245
Lennar Corp. LEN 48 835193 49 974280 -1 -139087
Lamar Advertising Co. LAMR 47 2068392 38 1906105 9 162287
Owens Corning OC 47 1603935 41 1370233 6 233702
MetroPCS Communications, Inc. PCS 46 1381750 46 710451.6 0 671298.9
W.R. Grace & Co. GRA 46 2104019 42 1812467 4 291552
Cheniere Energy, Inc. LNG 46 1852283 34 1161509 12 690774
CIT Group Inc. CIT 46 1611567 44 1637554 2 -25987
Mohawk Industries Inc. MHK 45 1163277 35 904999 10 258278
Plains Exploration & Production PXP 43 2378196 41 1957457 2 420739
Tesoro Corporation TSO 42 1071166 34 681342 8 389824
Ulta Salon, Cosmetics & Fragranc ULTA 41 1696804 28 1435358 13 261446
Chicago Bridge & Iron Company CBI 41 1688498 38 1023091 3 665407
TripAdvisor Inc. TRIP 41 1793900 48 1682892 -7 111008
NXP Semiconductors NV NXPI 41 707657 24 264220 17 443437
Whirlpool Corp. WHR 41 1424932 32 1279646 9 145286
VeriSign, Inc. VRSN 40 4236177 56 3784141 -16 452036
Genworth Financial Inc. GNW 39 724305 38 715628 1 8677
Lear Corp. LEA 39 1126266 41 956282 -2 169984
Universal Health Services Inc. UHS 39 795666 33 574339 6 221327
PVH Corp. PVH 39 1229974 33 1336941 6 -106967
TransDigm Group Incorporated TDG 39 2369099 35 2031499 4 337600
Marvell Technology Group Ltd. MRVL 38 1094223 35 824098 3 270125
Advance Auto Parts Inc. AAP 38 1030754 39 1062698 -1 -31944
Monster Beverage Corporation MNST 38 668238 28 724484 10 -56246
Copart, Inc. CPRT 37 852579 23 548525 14 304054
Community Health Systems, Inc.CYH 37 1059663 19 525420 18 534243
Tenet Healthcare Corp. THC 37 1258559 28 868807 9 389752
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
84
30 Most Popular Small-Cap ($1-$4 Billion) Stocks:
Between 1999 and 2009 the 30 most popular small-cap ($1 - $4 billion in market cap) stocks had a monthly
alpha of 74 basis points. These stocks outperformed the market by 105 basis points per month. These
results make a lot of sense because we expect hedge funds to have an edge in stocks that are underfollowed.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Visteon Corp. VC 48 1304577 43 1283687 5 20890
US Airways Group, Inc. LCC 47 1270371 37 953167 10 317204
CommonWealth REIT CWH 41 1193352 13 225842 28 967510
Newcastle Investment Corp. NCT 39 580598 22 198580 17 382018
Carter's, Inc. CRI 39 1872588 34 1627941 5 244647
Fortinet Inc. FTNT 39 473237 29 341723 10 131514
Dean Foods Company DF 38 629348 29 379309 9 250039
Brookdale Senior Living Inc. BKD 37 914306 35 799776 2 114530
Gardner Denver Inc. GDI 37 1161227 51 813878 -14 347349
GNC Holdings Inc. GNC 37 1012064 31 665722 6 346342
Coinstar, Inc. CSTR 36 668051 32 385966 4 282085
Dana Holding Corporation DAN 36 483805 35 427615 1 56190
J. C. Penney Company, Inc. JCP 36 1109294 33 1218461 3 -109167
Radian Group Inc. RDN 35 507165 14 84802 21 422363
Tronox Incorporated TROX 35 299148 29 262088 6 37060
SUPERVALU Inc. SVU 34 357911 23 127274 11 230637
Medivation, Inc. MDVN 34 986979 31 990485 3 -3506
DigitalGlobe, Inc. DGI 33 719372 26 328113 7 391259
Avis Budget Group, Inc. CAR 33 791935 25 439307 8 352628
Abercrombie & Fitch Co. ANF 33 587101 37 868618 -4 -281517
Spirit AeroSystems Holdings Inc SPR 32 938391 28 658805 4 279586
Shutterfly, Inc. SFLY 31 459796 19 392397 12 67399
SemGroup Corporation SEMG 31 885376 34 610767 -3 274609
Louisiana-Pacific Corp. LPX 31 659344 28 611587 3 47757
E*TRADE Financial Corporation ETFC 31 638395 35 826271 -4 -187876
PHH Corporation PHH 30 451927 33 499218 -3 -47291
Emeritus Corp. ESC 30 181271 16 63791 14 117480
Deckers Outdoor Corp. DECK 30 528648 28 466327 2 62321
Polycom, Inc. PLCM 30 298781 25 280354 5 18427
Swift Transportation Company SWFT 30 309571 26 185305 4 124266
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
85
35 More Most Popular Small-Cap ($1-$5 Billion) Stocks:
Between 1999 and 2009 the 15 most popular small-cap stocks had a monthly alpha of 120 basis points. These
stocks outperformed the market by 143 basis points per month. We already listed the 15 most popular small
cap stocks on page 3. In this table you can find 35 more small cap stocks that are popular among hedge funds.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Brookdale Senior Living Inc. BKD 37 914306 35 799776 2 114530
Gardner Denver Inc. GDI 37 1161227 51 813878 -14 347349
GNC Holdings Inc. GNC 37 1012064 31 665722 6 346342
Copart, Inc. CPRT 37 852579 23 548525 14 304054
Tenet Healthcare Corp. THC 37 1258559 28 868807 9 389752
Ocwen Financial Corp. OCN 37 637018 39 720595 -2 -83577
Coinstar, Inc. CSTR 36 668051 32 385966 4 282085
Dana Holding Corporation DAN 36 483805 35 427615 1 56190
J. C. Penney Company, Inc. JCP 36 1109294 33 1218461 3 -109167
Radian Group Inc. RDN 35 507165 14 84802 21 422363
Tronox Incorporated TROX 35 299148 29 262088 6 37060
Axiall Corporation AXLL 35 589359 3 32552 32 556807
SUPERVALU Inc. SVU 34 357911 23 127274 11 230637
Medivation, Inc. MDVN 34 986979 31 990485 3 -3506
NCR Corp. NCR 34 1224966 28 1188618 6 36348
DigitalGlobe, Inc. DGI 33 719372 26 328113 7 391259
Avis Budget Group, Inc. CAR 33 791935 25 439307 8 352628
Abercrombie & Fitch Co. ANF 33 587101 37 868618 -4 -281517
Assured Guaranty Ltd. AGO 33 1452362 28 1003333 5 449029
WABCO Holdings Inc. WBC 33 1603596 32 1553622 1 49974
Nabors Industries Ltd. NBR 33 291473 22 241087 11 50386
Market Vectors Gold Miners ETF GDX 33 1002569 36 1102451 -3 -99882
Spirit AeroSystems Holdings Inc SPR 32 938391 28 658805 4 279586
Hillshire Brands Company HSH 32 1023769 35 1154558 -3 -130789
Shutterfly, Inc. SFLY 31 459796 19 392397 12 67399
SemGroup Corporation SEMG 31 885376 34 610767 -3 274609
Louisiana-Pacific Corp. LPX 31 659344 28 611587 3 47757
E*TRADE Financial Corporation ETFC 31 638395 35 826271 -4 -187876
Penn National Gaming Inc. PENN 31 856972 31 512436 0 344536
Sealed Air Corporation SEE 31 375556 28 301380 3 74176
Foot Locker, Inc. FL 31 663843 30 442160 1 221683
PHH Corporation PHH 30 451927 33 499218 -3 -47291
Emeritus Corp. ESC 30 181271 16 63791 14 117480
Deckers Outdoor Corp. DECK 30 528648 28 466327 2 62321
Polycom, Inc. PLCM 30 298781 25 280354 5 18427
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
86
30 Least Popular Large-Cap ($20+ Billion) Stocks:
Between 1999 and 2009 the 30 least popular ($20+ billion in market cap) stocks had a monthly
alpha of -3 basis points. These stocks outperformed the market by 4 basis points per month. It doesnt
make sense to have a position in these stocks as a group.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Nissan Motor Co., Ltd. NSANY 1 4052 1 3586 0 466
Westpac Banking Corporation WBK 1 1160 2 1087 -1 73
France Telecom FTE 2 1416 2 883 0 533
Mizuho Financial Group, Inc. MFG 4 4310 5 4630 -1 -320
NTT DOCOMO, Inc. DCM 4 42369 6 42943 -2 -574
Ecopetrol SA EC 4 153551 3 230969 1 -77418
Luxottica Group SpA LUX 5 83669 7 72512 -2 11157
Carnival plc CUK 5 14144 4 7863 1 6281
Prudential plc PUK 5 19066 7 16658 -2 2408
Sasol Ltd. SSL 6 4313 8 16708 -2 -12395
China Telecom Corp. Ltd. CHA 6 8121 5 9812 1 -1691
Honda Motor Co., Ltd. HMC 6 30939 11 22784 -5 8155
Eni SpA E 6 16305 7 17893 -1 -1588
WPP plc WPPGY 7 31736 8 20164 -1 11572
TELUS Corporation TU 7 76801 5 65501 2 11300
Wipro Ltd. WIT 7 10255 6 4261 1 5994
Telefonica Brasil, S.A. VIV 7 29014 5 29756 2 -742
Chunghwa Telecom Co. Ltd. CHT 7 22765 7 16065 0 6700
National Grid plc NGG 7 52787 9 44625 -2 8162
Banco Bilbao Vizcaya Argentaria, BBVA 7 14777 5 21205 2 -6428
Nomura Holdings, Inc. NMR 8 13770 5 11181 3 2589
Thomson Reuters Corporation TRI 8 144687 11 121497 -3 23190
ING Groep NV ING 8 47232 9 38249 -1 8983
Canon Inc. CAJ 8 58195 5 21838 3 36357
Mitsubishi UFJ Financial Group, IMTU 8 82663 13 48397 -5 34266
China Petroleum & Chemical Co SNP 8 25701 8 24188 0 1513
Total SA TOT 8 306709 10 493965 -2 -187256
PetroChina Co. Ltd. PTR 8 58779 10 54580 -2 4199
BHP Billiton plc BBL 9 104090 6 75652 3 28438
China Life Insurance Co. Ltd. LFC 9 39243 7 38153 2 1090
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
87
30 Least Popular Mid-Cap ($10-$20 Billion) Stocks:
Between 1999 and 2009 the 30 least popular stocks had a monthly alpha of 42 basis points. These stocks
outperformed the market by 63 basis points per month. We believe this is just a statistical fluke because
there doesnt seem to be a theoretical explanation. These results also dont fit the pattern we observe
in smaller and larger cap stocks.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000)
Kyocera Corp. KYO 1 23027 2 41181 -1 -18154
Cencosud S.A. CNCO 1 546 0 0 1 546
Reed Elsevier plc RUK 1 231 0 0 1 231
Kubota Corporation KUB 2 357 4 1250 -2 -893
Shinhan Financial Group Compan SHG 2 681 2 1252 0 -571
Banco de Chile BCH 2 16155 2 16974 0 -819
ORIX Corp. IX 3 3442 3 3102 0 340
Reed Elsevier NV ENL 3 3332 1 1725 2 1607
CPFL Energia S.A. CPL 3 15929 6 14171 -3 1758
CRH plc CRH 4 5062 6 5981 -2 -919
Pearson plc PSO 4 16673 5 8680 -1 7993
ONEOK Partners, L.P. OKS 4 13331 6 22441 -2 -9110
Shaw Communications, Inc. SJR 4 44901 5 40109 -1 4792
Huaneng Power International InHNP 5 3781 5 3258 0 523
Telecom Italia SpA TI 6 7057 6 30177 0 -23120
Smith & Nephew plc SNN 6 77623 7 64844 -1 12779
Fresenius Medical Care AG & Co FMS 6 25543 7 14312 -1 11231
Philippine Long Distance Teleph PHI 7 142967 8 124284 -1 18683
Turkcell Iletisim Hizmetleri AS TKC 7 8419 5 2654 2 5765
Empresa Nacional de Electricidad EOC 7 18357 8 14826 -1 3531
Ultrapar Holdings Inc. UGP 7 104710 6 85614 1 19096
Bancolombia S.A. CIB 7 45833 5 14359 2 31474
LAN Airlines S.A. LFL 7 17115 7 9349 0 7766
AEGON N.V. AEG 8 22450 8 22871 0 -421
Hormel Foods Corp. HRL 8 87202 8 64045 0 23157
LG Display Co., Ltd. LPL 8 20127 10 38029 -2 -17902
BRF - Brasil Foods S.A. BRFS 9 88881 5 34951 4 53930
Panasonic Corporation PC 9 17307 5 12197 4 5110
Korea Electric Power Corp. KEP 9 64773 10 53917 -1 10856
Sun Life Financial Inc. SLF 9 18870 9 58617 0 -39747
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
88
30 Least Popular Smid-Cap ($4-$10 Billion) Stocks:
Between 1999 and 2009 the 30 least popular smid-cap stocks had a monthly alpha of -6 basis points. These
stocks outperformed the market by 4 basis points per month. It doesnt make sense to have a position in
these stocks as a group.
Total Value
(x1000) No of HFs
Total Value
(x1000) No of HFs
Total Value
(x1000) Market Cap
China Southern Airlines Co. Ltd. ZNH 1 4012 1 3841 0 171 5623.46
China Eastern Airlines Corp. Ltd. CEA 1 5125 1 4484 0 641 4889.49
Net Servi NETC 1 241 1 186 0 55 4883.75
CorpBanca S.A. BCA 1 571 1 334 0 237 4744.69
Western Gas Equity Partners, LP WGP 2 16908 2 18826 0 -1918 7481.13
Veolia Environnement S.A. VE 2 1024 4 5394 -2 -4370 6630.54
Aviva plc AV 2 1018 1 62 1 956 4167.2
Terra Nitrogen Company, L.P. TNH 2 12277 2 14344 0 -2067 4070.37
Yanzhou Coal Mining Co. Ltd. YZC 3 868 7 5028 -4 -4160 6733.29
Western Gas Partners LP WES 3 12273 5 14613 -2 -2340 6217.85
Valhi, Inc. VHI 3 2819 5 6600 -2 -3781 5442.88
Aluminum Corporation Of China ACH 3 1024 5 1354 -2 -330 5263.74
Central Fund of Canada Limited CEF 3 24594 1 20536 2 4058 4928.31
Nidec Corp. NJ 4 4976 4 6688 0 -1712 8704.5
Cheniere Energy Partners LP. CQP 4 6793 5 24571 -1 -17778 5449.64
Brookfield Infrastructure Partne BIP 4 16820 7 17520 -3 -700 5407.18
AmeriGas Partners LP APU 4 10020 4 8643 0 1377 4170.4
Spectra Energy Partners, LP SEP 4 87924 4 2233 0 85691 4161.26
United States Natural Gas UNG 5 53847 6 103739 -1 -49892 9526.55
Enbridge Energy Partners LP EEP 5 18258 6 8832 -1 9426 9139.35
The Governor and Company of T IRE 5 6251 4 2784 1 3467 6381.21
Icahn Enterprises, L.P. IEP 5 5346020 3 4442457 2 903563 5888.72
Braskem S.A. BAK 5 3741 7 6577 -2 -2836 5397.45
Compania Cervecerias Unidas S. CCU 5 15955 5 15650 0 305 5267.99
Regency Energy Partners LP RGP 5 39532 4 35915 1 3617 4287.43
El Paso Pipeline Partners, L.P. EPB 6 8797 8 16825 -2 -8028 9657.53
Sunoco Logistics Partners L.P. SXL 6 69980 6 69395 0 585 6788.52
Gartner Inc. IT 6 178223 11 227058 -5 -48835 6310.47
Etablissements Delhaize Freres DEG 6 25849 6 19779 0 6070 5563.81
Pepco Holdings, Inc. POM 6 21566 7 19772 -1 1794 4923.5
Q1 2013 Q4 2012 CHANGE
Hedge Fund Alpha
89
NEW 30 Most Popular Stocks ($1-$10 Billion) Among
Best Performing Hedge Funds:
One of our subscribers asked for the list of most popular small-cap stocks among the best performing
hedge funds. We ranked hedge funds based on the performance of their third quarter picks during the
fourth quarter. The list below shows the 30 most popular small-cap stocks among these top 100 hedge
funds.
Total
Value
(x1000)
Market
Cap
Hertz Global Holdings, Inc. HTZ 23 1038628 8,885
United Rentals, Inc. URI 20 582565 5,113
Constellation Brands Inc. STZ 17 978334 8,749
Lear Corp. LEA 15 325714 5,251
Cheniere Energy, Inc. LNG 14 716432 6,762
NYSE Euronext, Inc. NYX 13 412500 9,390
CIT Group Inc. CIT 13 526612 8,743
Owens Corning OC 13 221249 4,684
Plains Exploration & Production Company PXP 12 278561 6,124
Copart, Inc. CPRT 12 98878 4,297
MetroPCS Communications, Inc. PCS 12 141269 4,010
US Airways Group, Inc. LCC 12 616286 2,764
Lamar Advertising Co. LAMR 11 605280 4,550
Cymer Inc. CYMI 11 238473 3,023
BMC Software Inc. BMC 10 863238 6,620
Genworth Financial Inc. GNW 10 86457 4,927
Gardner Denver Inc. GDI 10 487151 3,692
Louisiana-Pacific Corp. LPX 10 349705 3,009
Visteon Corp. VC 10 404369 2,996
Avis Budget Group, Inc. CAR 10 374033 2,985
McMoRan Exploration Co. MMR 10 284697 2,661
CommonWealth REIT CWH 10 287752 2,655
Tenet Healthcare Corp. THC 9 825264 4,962
Coventry Health Care Inc. CVH 9 611551 6,330
Community Health Systems, Inc. CYH 9 498840 4,367
Whirlpool Corp. WHR 9 340472 9,310
TripAdvisor Inc. TRIP 9 333196 7,506
Assured Guaranty Ltd. AGO 9 304139 4,004
Lennar Corp. LEN 9 295299 7,978
Swift Transportation Company SWFT 9 200641 1,981
Hedge Fund Alpha
90
NEW 60 Most Concentrated Hedge Fund Positions:
This is another new list we prepared for this issue. We believe you can find a lot of good investment ideas
among these stocks. Hedge funds will have more influence on the management in these companies. This
may not always be a good thing (i.e. in turnaround companies) but we believe these companies are more
likely to spinoff units, buy back shares when they are trading at a deep discount, or sell themselves to
unlock value.
Total
Value
(x1000) Market Cap
Percent
Owned by
HFs
Icahn Enterprises, L.P. IEP 5 5346020 5,889 90.8
Nationstar Mortgage Holdings In NSM 21 2891166 3,338 86.6
CVR Energy, Inc. CVI 15 3761944 4,482 83.9
Harbinger Group Inc. HRG 11 871879 1,183 73.7
Loral Space & Communications, LORL 28 887053 1,316 67.4
Spectrum Brands Holdings, Inc. SPB 21 1893628 2,948 64.2
VeriSign, Inc. VRSN 40 4236177 7,212 58.7
Sears Holdings Corporation SHLD 19 3052540 5,316 57.4
Navistar International Corporati NAV 20 1541298 2,769 55.7
Carter's, Inc. CRI 39 1872588 3,399 55.1
Resolute Forest Products Inc. RFP 20 794045 1,533 51.8
Equinix, Inc. EQIX 71 5262403 10,556 49.9
US Airways Group, Inc. LCC 47 1270371 2,764 46.0
Lamar Advertising Co. LAMR 47 2068392 4,550 45.5
Six Flags Entertainment Corpora SIX 29 1645664 3,641 45.2
Lions Gate Entertainment Corp. LGF 24 1444570 3,213 45.0
CommonWealth REIT CWH 41 1193352 2,655 45.0
Charter Communications Inc. CHTR 54 4668948 10,541 44.3
Visteon Corp. VC 48 1304577 2,996 43.5
ViaSat Inc. VSAT 8 914637 2,158 42.4
DineEquity, Inc. DIN 21 551309 1,319 41.8
Pandora Media, Inc. P 28 1015510 2,448 41.5
Virgin Media, Inc. VMED 59 5453598 13,190 41.3
Coinstar, Inc. CSTR 36 668051 1,631 41.0
SemGroup Corporation SEMG 31 885376 2,170 40.8
The Washington Post Company WPO 19 1347119 3,317 40.6
Tempur Pedic International Inc. TPX 22 1190975 2,967 40.1
EXCO Resources Inc. XCO 17 617590 1,551 39.8
Plains Exploration & Production PXP 43 2378196 6,124 38.8
Texas Industries Inc. TXI 16 673842 1,776 37.9
Hedge Fund Alpha
91
60 Most Concentrated Hedge Fund Positions (Page 2):
This is another new list we prepared for this issue. We believe you can find a lot of good investment ideas
among these stocks. Hedge funds will have more influence on the management in these companies. This
may not always be a good thing (i.e. in turnaround companies) but we believe these companies are more
likely to spinoff units, buy back shares when they are trading at a deep discount, or sell themselves to
unlock value.
Total
Value
(x1000) Market Cap
Percent
Owned by
HFs
Take-Two Interactive Software I TTWO 26 557874 1,480 37.7
Assured Guaranty Ltd. AGO 33 1452362 4,004 36.3
WABCO Holdings Inc. WBC 33 1603596 4,434 36.2
PHH Corporation PHH 30 451927 1,253 36.1
W.R. Grace & Co. GRA 46 2104019 5,859 35.9
Synageva BioPharma Corp. GEVA 7 527267 1,495 35.3
MetroPCS Communications, Inc. PCS 46 1381750 4,010 34.5
Spirit AeroSystems Holdings Inc SPR 32 938391 2,728 34.4
Owens Corning OC 47 1603935 4,684 34.2
PMC-Sierra Inc. PMCS 19 469447 1,380 34.0
Level 3 Communications Inc. LVLT 19 1508841 4,440 34.0
Sohu.com Inc. SOHU 15 640111 1,893 33.8
DigitalGlobe, Inc. DGI 33 719372 2,130 33.8
Sally Beauty Holdings Inc. SBH 27 1740337 5,165 33.7
J. C. Penney Company, Inc. JCP 36 1109294 3,320 33.4
SUPERVALU Inc. SVU 34 357911 1,076 33.3
The Wendy's Company WEN 15 741592 2,230 33.3
SandRidge Energy, Inc. SD 28 863884.4 2,603 33.2
Health Net, Inc. HNT 20 744986 2,268 32.8
McMoRan Exploration Co. MMR 26 872171 2,661 32.8
WebMD Health Corp. WBMD 15 397458 1,213 32.8
Ulta Salon, Cosmetics & Fragranc ULTA 41 1696804 5,184 32.7
The St. Joe Company JOE 14 641834 1,961 32.7
Constellation Brands Inc. STZ 57 2850918 8,749 32.6
Rockwood Holdings, Inc. ROC 34 1677702 5,170 32.4
AutoNation Inc. AN 20 1710903 5,293 32.3
Spirit Realty Capital, Inc SRC 19 518552 1,612 32.2
Advent Software, Inc. ADVS 9 447692 1,412 31.7
Gardner Denver Inc. GDI 37 1161227 3,692 31.5
Ryman Hospitality Properties, In RHP 25 749200 2,412 31.1
Q1 2011
15 Stocks Dumped by
Hedge Funds
1 Facebook (FB)
2Abbott Labs (ABT)
3 Liberty Capital (LMCA)
4Ford (F)
5 Express Scripts (ESRX)
6 Kohls (KSS)
7 Freeport-McMoran (FCX)
8 SPDR S&P 500 (SPY)
9 PNC Financial (PNC)
10 NetApp (NTAP)
11 ADT Corp (ADT)
12 Microsoft (MSFT)
13 iShares MSCI Emerging
Markets ETF (EEM)
14 Petroleo Brasileiro (PBR)
15 Kraft Foods Group (KRFT)

of best hedge fund
of what they charge
Bonus Mid-Cap Strategy
This is another strategy we have been working on. It invests in stocks
smaller than $10 billion in market cap and uses a proprietary methodology
to pick 30 stocks. In our back tests it outperformed the S&P 500 index by
1.9 percentage points per month and its monthly alpha was 1.5
percentage points. We wont disclose other details about this strategy but
we will share its stock picks temporarily as a bonus to our premium
members. This strategy returned 6.9% since its inception three months
ago and underperformed the S&P 500 index by 2.3 percentage points:

VeriSign, Inc. VRSN
Harry Winston Diamond Corporation HWD
Gardner Denver Inc. GDI
Werner Enterprises Inc. WERN
Allscripts Healthcare Solutions, Inc. MDRX
MB Financial Inc. MBFI
Lumber Liquidators Holdings, Inc. LL
Aeropostale, Inc. ARO
Mellanox Technologies, Ltd. MLNX
Federated Investors, Inc. FII
Gannett Co., Inc. GCI
Sally Beauty Holdings Inc. SBH
Illumina Inc. ILMN
PAREXEL International Corporation PRXL
Carpenter Technology Corp. CRS
REGAL ENTERTAINMENT GROUP RGC
Prosperity Bancshares Inc. PB
Cliffs Natural Resources Inc. CLF
Tupperware Brands Corporation TUP
Fidelity National Financial, Inc. FNF
Fortune Brands Home & Security, Inc. FBHS
Tiffany & Co. TIF
NYSE Euronext, Inc. NYX
GrafTech International Ltd. GTI
Titan International Inc. TWI
Arch Coal Inc. ACI
Fusion-io, Inc. FIO
Alpha Natural Resources, Inc. ANR
DeVry, Inc. DV
Bally Technologies, Inc. BYI

Hedge Fund Alpha
92

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Hedge Fund Alpha

The Best Stock Picks of The Best Hedge Funds

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