Appaloosa Management is a value hedge fund managed by billionaire David Tepper (whose name might sound familiar to any recent attendees of Carnegie Mellon’s Tepper School of Business). The fund has an estimated $16 billion under management. We have gone through Appaloosa’s 13F for the third quarter of 2012 and picked out a few of the fund’s investment themes. Read on for our discussion and compare Appaloosa’s picks to previous filings. AIG. American International Group, Inc. (NYSE:AIG) was Appaloosa’s largest new position in the third quarter, with the fund reporting a position of 8.3 million shares. AIG had been a frequent buy among hedge funds during the second quarter, including fellow billionaire Dan Loeb‘s Third Point, and even after rising 27% year to date AIG trades at about half the book value of its equity. The business is showing signs of improvement, with revenue rising rapidly last quarter compared to the third quarter of 2011, and it trades at 9 times forward earnings estimates. With much of the market still showing poor sentiment against the company, we think it could be a good value stock.
OMG! A hedgie handout (NYPost)
Take your money, please! Tiger Global, the $8.2 billion New York hedge-fund firm run by Chase Coleman and Feroz Dewan, has made so much money that it’s doing the nearly unthinkable — it’s giving some back to investors at year end, The Post has learned. The fund has gained 25.5 percent so far this year. Hedge-fund honchos rarely return capital voluntarily. Recently, Moore Capital’s Louis Bacon gave money back to investors, but it was because the poorly performing fund couldn’t find enough investing opportunities.
India-focused hedge funds achieve 10% returns in Sept (TheHinduBusinessLine)
India-focused hedge funds recorded their best performance since May 2009 in September 2012, logging nearly 10 per cent returns. As of September 2012, the funds have achieved 9.4 per cent returns during the 2012 calendar, a marked improvement vis-à-vis 2011, when the funds saw nearly a quarter of their investments wiped out. During the last three months alone, the Eurekahedge India Hedge Fund Index has witnessed a 10.9 per cent rise. But if the one-year period up to September 2012 is considered, the return amounts to a paltry 0.03 per cent as a result of the debacle last year.
Payments for inside tips were hidden (Salon)
An ex-analyst has testified for the government at a New York insider trading trial that payments for inside information were funneled through the spouse of a corrupt analyst. Ex-analyst Jesse Tortora testified Wednesday in federal court in Manhattan. He says a hedge fund went to great lengths to hide tens of thousands of dollars paid to the wife of a technology analyst for work she never did. Tortora testified at the trial of two hedge fund managers that the wife was paid to hide the efforts of an analyst who was passing along inside information about Dell Inc. Prosecutors say those tips resulted in more than $50 million in illegal profits.
Hedge fund rail against European short-selling bans (HedgeFundsReview)
Buy-side companies vented their frustration with European short-selling rules on equities and credit default swaps (CDS) at the Risk USA conference in New York this week, accusing regulators of changing their minds ‘on a whim’ and making some products untradeable as a result. Investment manager DE Shaw stopped trading sovereign CDS two years ago, according to its chief risk officer, Peter Bernard. This was in part because they were in the crosshairs of European authorities.
Man Group sells Lehman estates exposure for $456 million (Reuters)
Hedge fund manager Man Group (EMG.L) is selling off its legal claims to the estates of defunct U.S. investment bank Lehman Brothers in a $456 million deal that will boost its net cash position and capture attractive gains for investors. Hutchinson Investors, managed by the Baupost Group, has agreed to buy the portfolio at a 32 percent premium to the June 30 valuation and Man may receive a further $5 million if future recoveries from the claims exceed certain thresholds. Man originally acquired the claims in July 2011 from funds managed by its GLG Partners subsidiary for $355 million.
GAIM USA 2013 To Examine Hedge Fund Regulation Under Second Obama Term (SacBee)
Will the second Obama administration mean good times or bad for the hedge fund industry in 2013? How will investors be impacted? Will regulation move the markets? Will the JOBS Act be fully implemented? What next for Dodd-Frank? What changes are coming at the SEC? The Fed? These are just some of the issues that will be discussed and dissected at the first full-on hedge fund regulatory debate of the new Presidential term at GAIM USA 2013, January 21-24, at the Boca Raton Resort & Club, FL.
Focus on Asia – Gottex spells out reasons to be cheerful about Asian hedge funds (InvestmentEurope)
Investment Europe recently spoke with the Asia-based investment team at hedge fund allocator Gottex about their views on the region’s hedge fund market, end-client appetite, and South Korea’s move to boost its own alternatives industry. Ronnie Wu (pictured), you were the head of Penjing Asset Management in Asia, which has been bought by Swiss-headquartered diversified asset manager Gottex. You are still with the combined firm. Have you invested in, or seeded, South Korean managers while at Penjing?
Texas Fund Poised to Dismiss GAM, Mesirow to Curb Costs (BusinessWeek)
The Texas Permanent School Fund, a $25 billion trust that supports public education, is poised to shift $666 million away from GAM Holding AG (GAM) and Mesirow Financial Inc. as a cost-cutting move. The step, recommended by the fund’s finance committee at a Nov. 14 meeting in Austin, would follow agreements with both investment managers to curb fees. The shift would occur over several months, starting after contracts expire in February. …The money invested in hedge funds by GAM and Mesirow managers would be directed to units of Blackstone Group LP (BX) and Grosvenor Capital Management LP, under the panel’s proposal to be considered today by the state Education Board, which oversees the fund. The shift would be made as in-house staff is doubling to 39 to help trim $23.7 million in costs over five years, Chief Investment Officer Holland Timmins said in a report.
Apple Stock Hit by Panic Selling: ‘Someone Yelled Fire’ (Yahoo)
Forget the “fiscal cliff.” The real panic on Wall Street is over Apple’s stock. Nearly every mutual and hedge fund has piled into Apple Inc. (NASDAQ:AAPL) during its spectacular rise over the past few years. Now, these same funds are scrambling for the exits as the stock goes through an equally spectacular decline. Apple plunged to a six-month low Thursday as funds rushed to take profits on the stock before it’s too late. Shares are now off 25 percent since late September-shortly after the iPhone 5 launch and a month before the iPad Mini introduction. The stock, once up 74 percent on the year, is still up 30 percent for 2012. That’s why Wall Street is getting out while it can.
Pumper & dumper (NYPost)
Hedge fund billionaire John Paulson dumped a sizable chunk of his stake in South African gold mining company AngloGold Ashanti just months after recommending it to investors as one of his top investment picks. Paulson unloaded 13 percent of his huge stake in AngloGold Ashanti — which has long counted him as a major shareholder — in the third quarter. He now owns 28.4 million shares, down from 32.7 million at the end of the second quarter, when he owned 8.54 percent of the company, according to regulatory filings. Paulson — who made headlines recently for his $100 million donation to New York’s Central Park Conservancy — made his billions from shorting the subprime housing market in 2007.
Gramercy Says It’s Not Seeking Alternate Argentine Bond Payments (BusinessWeek)
Gramercy Advisors LLC is not in talks with the Argentine government to collect interest payments on restructured debt outside the U.S. and avoid seizures from holders of defaulted bonds, the hedge fund said. Argentine newspapers La Nacion and Ambito Financiero each reported, without saying where they got the information, that Argentina may make payments overseas after a U.S. appeals court ruled Oct. 26 that the country can’t discriminate against holders of defaulted bonds in favor of those who own securities it restructured following a record sovereign default in 2001.
Paulson cuts Hartford, Delphi Automotive stakes -filing (Reuters)
Billionaire hedge fund manager John Paulson cut his third and fourth biggest portfolio holdings and made a bigger bet on a gold mining firm, according to a regulatory filing released on Thursday. New York-based hedge fund Paulson & Co cut Delphi Automotive Plc to 25 million shares from 32 million shares and reduced Hartford Financial Services Group Inc to 19 million shares from 31 million shares. Earlier in the year, Paulson pressured Hartford to take dramatic steps to boost the share price, which has risen 25 percent this year.
Lamestream Business Media Still Biased Against Yahoo! vs. Facebook (Forbes)
Yesterday after the stock market closed, hedge funds had to deposit their quarterly reports of their holdings with the Securities and Exchange Commission. A Reuters story trumpeted that “Top hedge funds pick up Facebook amid third quarter crash.” The 11 paragraph article spends the first 8 paragraphs discussing some hedge funds who bought Facebook Inc (NASDAQ:FB) in the quarter. …For most of these funds, managing multi-billions of dollars in AUM, buying a million shares of Facebook is not a big deal. It is probably at the bottom of the list in that fund’s over 100 largest positions.
Hedge Fund Chief Sees China in Transition (TheAtlantic)
China is in a historic period of transition and is evolving to become a more open society, according to David Rubenstein, co-founder of the global private equity fund The Carlyle Group. Rubenstein said China’s fast growing population, along with the political transition set to take place under new president Xi Jinping, marks a turning point for a nation that in the past has tried to remain insular. “It’s impossible to take 1.3 billion people and keep them closed to the rest of the world,” Rubenstein said Thursday at the Washington Ideas Forum. “You’re not going to be able to go back to the system you had before.”
Ex-Rubicon Managers Ready Hedge Fund With Brummer (Finalternatives)
Their legal troubles behind them, Rubicon Fund Management’s former chief investment officers are moving forward with plans to launch a hedge fund, now backed by Sweden’s Brummer & Partners. Santiago Alarco and Tim Attias are founding a global macro hedge fund. The still-unnamed London-based firm is sponsored by Brummer, which will take a stake in the firm and invest in its maiden hedge fund. Precise terms were not disclosed, although the investment in the hedge fund will come from Brummer’s multi-strategy fund.
Billionaire George Soros’s Latest Stock Picks (InsiderMonkey)
George Soros is best known for the fortune he made shorting the British pound in 1992, but he currently invests a considerable amount of money in equities and so is required to report many of his long positions in 13F filings. We’ve gone through the 13F for the third quarter of the year and compared Soros’s holdings at the end of September to three months earlier. Read on for our impression of his moves and compare them to what he’s bought and sold before. AIG. American International Group, Inc. (NYSE::AIG) became Soros’s largest 13F equity holding during the third quarter with a position of over 15 million shares being reported in the filing. A number of value investors have been getting into the insurer over the course of the year, and at a P/B ratio of 0.5 it certainly looks cheap compared to the book value of its equity. We also like its earnings multiples- it trades at 9 times forward earnings estimates- and revenue was up strongly in the third quarter compared to the same period in 2011. Fellow billionaire Dan Loeb had initiated a position during the second quarter of 2012 and we think that it still looks like a good buy for investors.
Duke Energy CEO Jim Rogers still facing issues as tough year nears an end (BizJournals)
In late 2011, Jim Rogers seemed almost golden. He was about to close his last big merger deal. He was poised to take a corporate chairmanship tailored to his penchants for energy policy and reshaping the utility-business model. He was ready to bask in the spotlight of a national convention he’d helped bring to Charlotte. But by late 2012, it’s evident things have not gone so well. “It has been a year of challenges,” the Duke Energy Corp. chief executive concedes. “Nothing in life is perfect.” Dan Fogel, associate director of the Wake Forest University Business School’s Center for Energy, …
BP to Pay $525 Million Penalty to Settle SEC Charges of Securities Fraud During Deepwater Horizon Oil Spill (SEC)
The Securities and Exchange Commission today charged BP p.l.c. with misleading investors while its Deepwater Horizon oil rig was gushing into the Gulf of Mexico by significantly understating the flow rate in multiple reports filed with the SEC. The SEC alleges that the global oil and gas company headquartered in London made fraudulent public statements indicating a flow rate estimate of 5,000 barrels of oil per day. BP reported this figure despite its own internal data indicating that potential flow rates could be as high as 146,000 barrels of oil per day…
Billionaire Julian Robertson’s Fund Slashes Goldman Sachs and JPMorgan, Buys Gold in Q3 (InsiderMonkey)
Julian Robertson is quite the legend in the hedge fund space. Robertson stopped managing money for clients a decade ago, but is still widely followed in the media and his comments attract a lot of attention. Robertson returned 31.7% per year after fees between 1980 and 1998, beating the S&P 500’s 12.7% annual return by a huge margin. Robertson has bred many hedge fund managers, dubbed Tiger cubs that have studied under Robertson before venturing off to start their own funds, some of which were seeded by Robertson himself. Robertson’s fund, now managed by a diversified investment team, appears to be making the move from big name investment banks to gold. Tiger Management downsized its Goldman Sachs Group, Inc. (NYSE:GS) position by 80% and JPMorgan Chase & Co. (NYSE:JPM) position by over 15%. The fund’s steep sell-off of Goldman shares could be attributed to the uncertainty of Goldman’s business model going forward. The ultimate impact from the Volcker rule remains to be seen.
