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 3 New Stock Picks 5 In-depth Analysis of New Stock Picks 35 22 Billionaire Fund Managers 79 Most Popular Stocks Among Hedge Funds 86 Least 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 StrategyWe 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 15th. 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 15th and May 16th, 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.

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Hedge Fund Alpha2

Performance Update: Secret StrategyHistorically 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 4th and May 16th. 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 4th and February 15th


Hedge Fund Alpha3

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) 2. CommonWealth REIT (CWH) 3. Starz (STRZA) 4. Radian Group Inc. (RDN) 5. Constellation Brands Inc. (STZ) 6. Community Health Systems (CYH) 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 Alpha4

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 Alpha5 Analysis of Small Cap Strategys Picks:

1. United Rentals (URI)

Current Price: $58.68Price 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 Alpha6 1. United Rentals (URI): Popularity over the last 4 quarters

Company Name Ticker SH/PRN OptionValue (x1000) Activity

% in Portfolio Fund

UNITED RENTALS INC URI PRN N 115107 0% 0.2% Citadel Investment GroupUNITED RENTALS INC URI SH N 103090 -14% 1.5% Point State CapitalUNITED RENTALS INC URI PRN N 93624 0% 3.6% Alpine AssociatesUNITED RENTALS INC URI SH N 85314 -37% 1.0% Highbridge Capital ManagementUNITED RENTALS INC URI SH N 77113 0% 2.4% PAR Capital ManagementUNITED RENTALS INC URI SH N 76407 25% 0.1% Citadel Investment GroupUNITED RENTALS INC URI SH N 62251 975% 0.3% SAC Capital AdvisorsUNITED RENTALS INC URI SH N 55330 58% 1.4% Egerton Capital LimitedUNITED RENTALS INC URI SH N 55100 -25% 1.9% Odey Asset Management GroupUNITED 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!



2. Visteon Corp (VC)

Current Price: $65.77Price 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. 1) Special Situations: No

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 Alpha8 2. Visteon (VC): Popularity over the last 4 quarters




% in Portfolio Fund

VISTEON CORP VC SH N 150134 3% 0.7% SAC Capital AdvisorsVISTEON CORP VC SH N 133124 22% 2.8% JANA PartnersVISTEON CORP VC SH N 121589 0% 14.1% Centerbridge PartnersVISTEON CORP VC SH N 117716 -3% 42.2% Solus Alternative Asset ManagementVISTEON CORP VC SH N 104830 13% 1.0% Highfields Capital ManagementVISTEON CORP VC SH N 80696 1% 7.5% Silver Point CapitalVISTEON CORP VC SH N 79659 -23% 1.7% York Capital ManagementVISTEON CORP VC SH N 63095 10% 1.3% Eton Park CapitalVISTEON CORP VC SH N 60844 -18% 10.5% Alden Global CapitalVISTEON CORP VC SH N 60036 -60% 1.8% Owl Creek Asset Management



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%.

Current Price: $48.67Price when first recommended: $48.12 (May 16, 2013) Dividends Paid: 0 No of HFs: 47


Hedge Fund Alpha103. Lamar Advertising (LAMR): Popularity over the last 4 quarters




% in Portfolio Fund

LAMAR ADVERTISING CO LAMR SH N 404143 -18% 5.5% SPO Advisory CorpLAMAR ADVERTISING CO LAMR SH N 283221 0% 9.0% Perry CapitalLAMAR ADVERTISING CO LAMR SH N 214372 -19% 1.0% Southeastern Asset ManagementLAMAR ADVERTISING CO LAMR SH N 156915 -53% 3.0% Luxor Capital GroupLAMAR ADVERTISING CO LAMR SH N 89295 602% 0.4% SAC Capital AdvisorsLAMAR ADVERTISING CO LAMR SH N 71287 -31% 0.8% Glenview CapitalLAMAR ADVERTISING CO LAMR SH N 70801 New 2.8% Tiger Consumer ManagementLAMAR ADVERTISING CO LAMR SH N 70478 1% 4.5% Southpoint Capital AdvisorsLAMAR ADVERTISING CO LAMR SH N 61768 -77% 6.0% Abrams Capital ManagementLAMAR ADVERTISING CO LAMR SH N 57938 -16% 1.3% Brookside Capital


Hedge Fund Alpha11Analysis of Small Cap Strategys Picks:

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. 4) Options: Jan 2014 $20 calls are $1.74. Jan 2014 $21 calls are $1.47. Jan 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%.

Current Price: $19.01Price when first recommended: $14.50 (Feb 15, 2013) Dividends Paid: 0 No of HFs: 47


Hedge Fund Alpha124. US Airways (LCC): Popularity over the last 4 quarters




% 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 LPU S AIRWAYS LCC PRN N 171520 -13% 8.3% Whitebox AdvisorsU S AIRWAYS LCC SH N 133128 99% 1.6% Soros Fund ManagementU S AIRWAYS LCC SH N 101961 200% 17.5% Alden Global CapitalU S AIRWAYS LCC SH PUT 60564 New 1.3% Empyrean Capital PartnersU S AIRWAYS LCC SH CALL 42564 New 2.8% Lakewood Capital ManagementU S AIRWAYS LCC PRN N 36925 0% 0.4% Highbridge Capital ManagementU S AIRWAYS LCC SH N 27016 -56% 5.6% Standard Pacific CapitalU S AIRWAYS LCC SH N 26464 New 0.2% Columbus Circle Investors



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 2) Short Interest: 1.90% of float short. 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%.



Hedge Fund Alpha145. WR Grace & Co (GRA) : Popularity over the last 4 quarters




% in Portfolio Fund

WR GRACE & CO GRA SH N 278819 1% 4.1% Iridian Asset ManagementWR GRACE & CO GRA SH N 232530 28% 2.9% Blue Ridge CapitalWR GRACE & CO GRA SH N 194639 15% 5.2% Chilton Investment CompanyWR GRACE & CO GRA SH N 140986 -10% 8.3% Hound PartnersWR GRACE & CO GRA SH N 132388 40% 0.5% OZ ManagementWR GRACE & CO GRA SH N 118978 -46% 1.8% Tiger Global Management LLCWR GRACE & CO GRA SH N 115791 New 0.6% Lone Pine CapitalWR GRACE & CO GRA SH N 107915 15% 5.7% Gates Capital ManagementWR GRACE & CO GRA SH N 100763 0% 7.4% Marble Arch InvestmentsWR GRACE & CO GRA SH N 96888 0% 7.5% H Partners Management



6. MetroPCS Communications (PCS)

Was acquired by T-Mobile USA, completed on May 1st.

Current Price: NAPrice when first recommended: $10.35 (Feb 15, 2013) Dividends Paid: 0 No of HFs: 46



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. 1) Special Situations: No 2) Short Interest: 6.7% of float short. 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. 4) Options: Jan 2014 $45 calls are $3.80. Jan 2014 $46 calls are $2.80. Jan 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%.



Hedge Fund Alpha177. Owens Corning (OC): Popularity over the last 4 quarters




% in Portfolio Fund

OWENS CORNING OC SH N 325561 -8% 35.8% Wayzata Investment PartnersOWENS CORNING OC SH N 282122 7% 3.5% Blue Ridge CapitalOWENS CORNING OC SH N 125190 80% 2.4% Pennant Capital ManagementOWENS CORNING OC SH N 106599 14% 2.3% Appaloosa Management LPOWENS CORNING OC SH N 106365 -1% 0.5% SAC Capital AdvisorsOWENS CORNING OC SH N 74604 179% 3.2% Valinor Management LLCOWENS CORNING OC SH N 61972 New 1.9% Samlyn CapitalOWENS CORNING OC SH N 53861 71% 1.8% Ascend CapitalOWENS CORNING OC SH N 52245 9% 2.3% Sigma Capital ManagementOWENS CORNING OC SH N 45917 -50% 0.7% Iridian Asset Management



8. CommonWealth REIT (CWH)

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 2) Short Interest: 6.8% of float short. 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.




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%.



Hedge Fund Alpha208. CommonWealth REIT (CWH) : Popularity over the last 4 quarters




% in Portfolio Fund

COMMONWEALTH REIT CWH SH N 145860 New 4.6% Perry CapitalCOMMONWEALTH REIT CWH SH N 125148 -12% 2.4% Luxor Capital GroupCOMMONWEALTH REIT CWH SH N 121743 New 3.6% Corvex CapitalCOMMONWEALTH REIT CWH SH CALL 96492 New 1.8% Fir TreeCOMMONWEALTH REIT CWH SH N 96169 New 2.8% Owl Creek Asset ManagementCOMMONWEALTH REIT CWH SH N 84324 New 0.8% Highfields Capital ManagementCOMMONWEALTH REIT CWH SH N 67320 New 0.8% Senator Investment GroupCOMMONWEALTH REIT CWH SH N 51658 New 0.2% OZ ManagementCOMMONWEALTH REIT CWH SH N 47611 New 1.0% York Capital ManagementCOMMONWEALTH REIT CWH SH N 44880 New 0.9% Empyrean Capital Partners



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 2) Short Interest: 0.9% of float short. 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%.



Hedge Fund Alpha229. Newcastle Investment (NCT) : Popularity over the last 4 quarters




% in Portfolio Fund

NEWCASTLE INVESTMENT CNCT SH N 69751 207% 0.3% SAC Capital AdvisorsNEWCASTLE INVESTMENT CNCT SH N 66733 New 1.4% York Capital ManagementNEWCASTLE INVESTMENT CNCT SH N 62185 New 2.4% Osterweis Capital ManagementNEWCASTLE INVESTMENT CNCT SH N 52291 77% 1.8% Ascend CapitalNEWCASTLE INVESTMENT CNCT SH N 45381 1254% 0.7% Omega AdvisorsNEWCASTLE INVESTMENT CNCT SH N 36288 105% 0.6% Two Sigma AdvisorsNEWCASTLE INVESTMENT CNCT SH N 34092 390% 0.1% Renaissance TechnologiesNEWCASTLE INVESTMENT CNCT SH N 29601 New 2.1% Hutchin Hill CapitalNEWCASTLE INVESTMENT CNCT SH N 21225 7% 5.0% Locust Wood Capital AdvisersNEWCASTLE INVESTMENT CNCT SH N 18431 -21% 0.3% Moore Global Investments



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. 1) Special Situations: No 2) Short Interest: 1.4% of float short. 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. 4) Options: Jan 2014 $20 calls are $2.67. Jan 2014 $21 calls are $1.85. Jan 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%.



Hedge Fund Alpha2410. Fortinet (FTNT): Popularity over the last 4 quarters




% in Portfolio Fund

FORTINET INC FTNT SH N 57378 115% 1.5% Eminence CapitalFORTINET INC FTNT SH N 56282 New 1.8% Hoplite Capital ManagementFORTINET INC FTNT SH N 49960 New 0.6% Maverick CapitalFORTINET INC FTNT SH N 46946 36% 2.2% Tremblant CapitalFORTINET INC FTNT SH N 38862 2% 0.1% Citadel Investment GroupFORTINET INC FTNT SH N 22980 New 2.4% Jericho Capital Asset ManagementFORTINET INC FTNT SH N 21653 New 0.6% Sandler Capital ManagementFORTINET INC FTNT SH N 17168 New 1.7% Empire Capital ManagementFORTINET INC FTNT SH N 16736 -81% 0.4% Brookside CapitalFORTINET INC FTNT SH N 13439 53% 0.2% Balyasny Asset Management



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. 1) Special Situations: No 2) Short Interest: 3.8% of float short. 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%.



Hedge Fund Alpha2611. Carters (CRI): Popularity over the last 4 quarters




% in Portfolio Fund

CARTERS INC CRI SH N 196372 -8% 1.2% Viking GlobalCARTERS INC CRI SH N 186844 9% 6.0% Hoplite Capital ManagementCARTERS INC CRI SH N 170378 0% 18.6% Matrix Capital ManagementCARTERS INC CRI SH N 168374 New 2.6% Tiger Global Management LLCCARTERS INC CRI SH N 158298 10% 9.3% Hound PartnersCARTERS INC CRI SH N 129293 179% 0.6% SAC Capital AdvisorsCARTERS INC CRI SH N 97880 -1% 0.3% Royce & AssociatesCARTERS INC CRI SH N 84050 196% 1.8% Alkeon Capital ManagementCARTERS INC CRI SH N 64592 0% 3.8% Polaris Capital ManagementCARTERS INC CRI SH N 63267 -38% 0.6% Highfields Capital Management



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. 2) Short Interest: 2.9% of float short. 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. 4) Options: Jan 2014 $11 calls are $1.40. Jan 2014 $12 calls are $1.07. Jan 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%.



Hedge Fund Alpha2812. Genworth Financial (GNW): Popularity over the last 4 quarters




% in Portfolio Fund

GENWORTH FINANCIAL INCGNW SH N 131676 -52% 1.2% Highfields Capital ManagementGENWORTH FINANCIAL INCGNW SH N 90000 131% 0.5% Paulson & CoGENWORTH FINANCIAL INCGNW SH N 83826 -31% 2.1% ESL InvestmentsGENWORTH FINANCIAL INCGNW SH N 81224 34% 1.4% Legg Mason Capital ManagementGENWORTH FINANCIAL INCGNW SH N 58065 286% 0.1% Renaissance TechnologiesGENWORTH FINANCIAL INCGNW SH N 38532 -24% 0.3% Arrowstreet CapitalGENWORTH FINANCIAL INCGNW SH N 22153 New 1.0% ZWEIG DIMENNA PARTNERSGENWORTH FINANCIAL INCGNW SH N 22063 29% 2.2% Fine Capital PartnersGENWORTH FINANCIAL INCGNW SH N 19882 -13% 2.7% Saba CapitalGENWORTH FINANCIAL INCGNW SH N 16500 371% 0.3% Moore Global Investments



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. 2) Short Interest: 13.7% of float short. 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%.

Current Price: $61.03Price when first recommended: $38.83 (Aug 31, 2012) Dividends Paid: $0.45 No of HFs: 39


Hedge Fund Alpha3013. Lear Corp (LEA): Popularity over the last 4 quarters




% in Portfolio Fund

LEAR CORP LEA SH N 310182 107% 42.8% Marcato Capital ManagementLEAR CORP LEA SH N 122154 -25% 5.3% Valinor Management LLCLEAR CORP LEA SH N 106044 -26% 0.2% Citadel Investment GroupLEAR CORP LEA SH N 80613 -5% 0.3% Adage Capital ManagementLEAR CORP LEA SH N 74881 44% 0.2% D E ShawLEAR CORP LEA PRN N 73658 766% 2.2% Corvex CapitalLEAR CORP LEA SH N 43937 2% 6.4% Redwood Capital ManagementLEAR CORP LEA SH N 43013 -16% 0.1% Renaissance TechnologiesLEAR CORP LEA SH N 34487 5% 0.7% York Capital ManagementLEAR CORP LEA SH N 32373 -11% 4.0% North Run Capital



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 2) Short Interest: 6.3% of float short. 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%.



Hedge Fund Alpha3214. Dean Foods (DF): Popularity over the last 4 quarters




% in Portfolio Fund

DEAN FOODS CO NEW DF SH N 76655 4% 0.3% Adage Capital ManagementDEAN FOODS CO NEW DF SH N 62544 112% 15.2% Sheffield Asset ManagementDEAN FOODS CO NEW DF SH N 60736 New 0.8% Scout Capital ManagementDEAN FOODS CO NEW DF SH N 45417 New 0.2% OZ ManagementDEAN FOODS CO NEW DF SH N 44471 33% 2.6% Hound PartnersDEAN FOODS CO NEW DF SH N 40040 3% 0.6% HBK InvestmentsDEAN FOODS CO NEW DF SH N 30870 95% 1.0% Ascend CapitalDEAN 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 LPDEAN FOODS CO NEW DF SH N 27739 New 0.3% Highfields Capital Management



15. Community Health Systems (CYH)

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. 1) Special Situations: No 2) Short Interest: 2.8% of float short. 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%.



Hedge Fund Alpha3415. Community Health Systems (CYH): Popularity over the last 4 quarters




% in Portfolio Fund

COMMUNITY HEALTH SYS I CYH SH N 427229 5% 4.5% Glenview CapitalCOMMUNITY HEALTH SYS I CYH SH N 116439 New 1.5% Maverick CapitalCOMMUNITY HEALTH SYS I CYH SH N 79426 New 0.5% Viking GlobalCOMMUNITY HEALTH SYS I CYH SH N 58939 3% 0.2% AQR Capital ManagementCOMMUNITY HEALTH SYS I CYH SH N 54626 -65% 2.7% TPG-AXON Management LPCOMMUNITY HEALTH SYS I CYH SH N 37228 181% 0.3% Arrowstreet CapitalCOMMUNITY HEALTH SYS I CYH SH N 29382 New 1.8% Deerfield ManagementCOMMUNITY HEALTH SYS I CYH SH N 27249 New 0.4% Point State CapitalCOMMUNITY HEALTH SYS I CYH SH N 22511 New 0.7% Corvex CapitalCOMMUNITY HEALTH SYS I CYH SH N 20776 -61% 0.8% Clough Capital Partners


Hedge Fund Alpha35

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 Alpha36

Warren Buffetts Portfolio: Company Name Ticker SH/PRN Option

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. This issue is licensed to the Insider Monkey account owner associated with [email protected]

Hedge Fund Alpha37

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 Alpha38

Steve Cohens Portfolio:

Click to see the entire portfolio and historical filings.

Company Name Ticker SH/PRN OptionValue

(x1000) Activity% in

PortfolioSPDR 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 Alpha39

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 Alpha40

Stanley Druckenmillers Portfolio:

Click to see the entire portfolio and historical filings here.

Company Name Ticker SH/PRN OptionValue

(x1000) Activity% in

PortfolioSPDR 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 Alpha41

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 Alpha42

T. Boone Pickens Portfolio:



% 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 Alpha43

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 Alpha44

Stephen Mandels Portfolio:



% 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 Alpha45

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 Alpha46

Ray Dalios Portfolio:



% 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%WHOLE FOODS MARKET INC WFM SH N 12955 295% 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 Alpha47

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 h

insider monkey hf newsletter - may 2013

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