Monday, May 21, 2018

BCI's Toxic Work Environment?

A little over a month ago, Barry Critchley of the National post reported, 'They’ve treated people like dirt': Equity group layoffs at $135 billion BCIMC raise questions about morale:
The BC Investment Management Corp., one of the country’s largest pension managers, has laid off “about 20” of its investment professionals, a mix of analysts and portfolio managers who largely worked in equities.

The layoffs, most of which took place in February and affected approximately half of the equities group, have according to sources hurt morale at the organization, which manages $135 billion of assets.

“People are very concerned about their jobs,” said one observer.

Part of the problem was the sudden, and seemingly chaotic way in which the layoffs were carried out.

On the day of the layoffs, a source said, emails were sent advising some staff to go to one location and the rest to another, to hear the good or bad news. But some wound up in the wrong room and had to be pulled out and redirected before the news was delivered.

The decision to cut employees was made a few days after the manager’s human resources department issued a note advising assistance was available to those feeling stressed.

For some employees, stress reduction has apparently come from venting their frustration on the website Glassdoor, a job site that contains reviews of employers. “Terminations and re-orgs are now the status quo,” said a recent anonymous post.

The layoffs have left some wondering how replacements will be found given the relative lack of money management talent in Victoria.

BCIMC has stated its plan is to internalize active management on a global basis, and the investment managers needed — who would most likely have to be recruited from Calgary, Toronto or Montreal — may rethink given what’s happened.

“In a nutshell they’ve treated people like dirt,” noted the observer, adding the approach was “different” from that employed by former chief executive Doug Pearce who left in mid-2014. “Doug had a different philosophy, one that was more of a cultural fit with Victoria.”

One pension fund consultant said if such employee cuts were made by a private sector manager, the clients “would have responded and fired the manager. But in bcIMC’s case, the clients are captive.” In all, bcIMC has 31 institutional clients with almost 98 per cent of the assets being either public sector pension funds or from “government bodies.”

“It’s (essentially) part of the government, but has now added this Wall Street mentality. What’s the board doing?” asked the consultant.

The layoffs are the latest in a series of changes that kicked off almost four years back when Gordon Fyfe replaced Pearce as chief executive. Fyfe was the former chief executive of the $90 billion PSP Investments.

Over time, Fyfe has hired a number of former PSP staffers: of the nine members of its executive management team, three came from PSP, five are long-term employees and one came from a fund outside Canada.

“I think they wanted new people, a bit of a housekeeping exercise,” is how the observer described the personnel and structural changes.

The pension fund’s stated goal of becoming “an in-house asset manager that uses sophisticated investment strategies and tools,” has meant a greater allocation to private equity, mortgages, real estate, renewable resources and infrastructure. In 2016 it launched QuadReal, a real estate manager.

For whatever reason, the fund’s three-year plan of internalizing the investment management and cutting ties with external managers has progressed more slowly than expected.

Last fall, Daniel Garant, a former PSP first vice-president, came on board, an arrival that coincided with the departure of Bryan Thomson, senior vice president of public equities.

Garant is now senior vice-president public markets.

We sought comment from bcIMC on staff cuts, severance costs, morale and progress on the plan to internalize investment management.

“I’m respectfully declining your request as BCI does not publicly comment on or discuss personnel matters,” a spokesperson said.
It's Victoria Day in Canada so a lot of people are off. I was reading a Bloomberg article on how the hottest market in the world for luxury real estate is sleepy Victoria, British Columbia:
Victoria was only fifth-hottest based on average price -- up 6 percent to $1.2 million from 2016, with a high of $9 million -- behind Paris; Washington; Orange County, California; and San Diego. But the little city of afternoon teas and lush gardens soared when it came to sales volume and speed, which Christie’s weighted more heavily. The number of sales grew by 29 percent from 2016, while the average time to find a buyer was only 32 days, among the fastest turnover anywhere.
Anyway, the folks at bcIMC aren't sleeping well these days. And judging by the nasty reviews on glassdoor.ca, some are downright pissed at its CEO and senior managers (click on images):





I can go on and on but you get the picture by reading all the reviews, there are a lot of very pissed off former and current employees at bcIMC which is now called BCI.

You can dismiss these reviews as coming from a bunch of disgruntled employees but it's not that simple.

You see, while I like BCI's new website and think it's about time they revamped it, I was shocked and dismayed when I read this article and kept thinking to myself: "Didn't Gordon learn anything from his time at the Caisse and PSP?"

Importantly, if the above is true and on the day of the layoffs emails were sent advising some staff to go to one location and the rest to another, to hear the good or bad news but some wound up in the wrong room and had to be pulled out and redirected before the news was delivered, then this is grossly inhumane and a major screw-up on the organization's part (I can just see the employment lawyers having a field day: "Write down everything that happened in detail, don't leave any detail out).

Quite frankly, these type of things should never be happening at BCI, PSP, the Caisse, or any other large Canadian pension fund. They shouldn't happen anywhere, period.

Sure, there are reorgizations and cutbacks that take place and sometimes you need to make a difficult decisions and cut staff but for god's sake, do it with humanity and empathy, show people the respect and dignity they deserve especially when your cutting their livelihood.

BCI's Board should also take note. I know Gordon told them that he has free rein to hire and fire people at will. In fact, I'm sure that was one of his stipulations for taking this job, but pay attention to the turnover rate and get some exit interviews from former employees to see how they were treated and to see if they were in fact treated fairly and justly (when I was let go from PSP, the turnover was an astonishing 36%, it was just nuts!).

That by the way is the same advice I have for the boards at all of Canada's large pensions because every time I see this type of butchering, it brings back bad memories. You might have good reasons to lay people off but always treat them with respect and dignity.

As for Gordon, he did excatly what I was expecting him to do, focusing on private markets and hiring people from PSP. No shock there and he might have good reason to carry out some of these cutbacks but the brutal way they were carried out was unjustified and a major screw-up because it sends the wrong message to BCI's employees, not to mention it kills morale.

That's something Mr. Fyfe needs to own as he travels to India and around the world and so does BCI's Board and senior managers:



One last thing, something a friend of mine who almost went to work at bcIMC when Doug Pearce was the CEO shared with me:
I think that Gordon underestimated exactly how small Victoria is.

His predecessor recruited people by telling them that they had to move to Victoria and become part of the community.

When I was approached to join bcIMC, I asked them if I could commute back and forth from Vancouver. The answer was no.

Gordon is breaking that promise (hence, the comment about a Wall Street approach). Funny, he is from Victoria so he should know this. He probably underestimates how badly it will be received.
My friend is right, I think Gordon really underestimated how badly this will be received. I certainly hope he learns from this blunder and that he finds a way to boost morale at BCI (no easy task after such a traumatic event).

Folks, this is Victoria, British Columbia, it might be a stunningly beautiful place to live but nobody in their right mind is going to take a job out there where house prices are surging to the stratosphere and live with the threat of being fired at any time.

Lastly, while I take issue with the way this reorganization was handled, I agree with those who argue that B.C.'s pension investments should stay in the hands of pros:
As finance minister in the last B.C. Liberal government, Mike de Jong relished those briefings with the credit rating agencies where he would be asked “tell us about your pensions.”

The agencies were on the lookout for unfunded liabilities, brought on by politicians granting hefty taxpayer-financed retirement benefits to public sector workers while neglecting to fund those guarantees going forward.

“Happily, that is not the story that we have,” de Jong would tell the analysts. “Our joint custody public sector pension plans are well-managed. They are well-funded and that’s important for people that want to know that the security exists around their retirement future.”

The good news story continues under the current NDP government. When New York-based S&P Global this spring reconfirmed its top-ranked Triple A credit rating for B.C., among the reasons was: “We consider the province’s pension liabilities very manageable and not a risk for B.C.’s finances.”

Here’s Toronto-based DBRS on the same subject: “The province has limited unfunded pension liabilities. As of March 31, these are projected to be $187 million, one-tenth of one per cent of gross domestic product. Unfunded pension liabilities are expected to remain low.”

The most recent edition of the audited financial statements of the province indicate that, far from falling short of obligations, three of the four public pension plans are overfunded.

For the main pension plan for provincial public servants, assets totalled 106 per cent of obligations. The plan for municipal workers weighed in at 104 per cent and the one for college and university employees topped out at 103 per cent.

Only the teachers’ pension plan lagged, with assets matching only 97 per cent of obligations, a shortfall of $372 million. As the plan, like the other three, is joint trusteed, the liability is shared equally between teachers and provincial taxpayers, needing a top up from both.

“The pension story doesn’t attract a lot of attention here in B.C.,” as de Jong noted in one of his briefings near the end of the Liberal term of office, “but it is a very positive one and one that distinguishes us from circumstances that exist in many other jurisdictions around North America.”

While basking in the glory of fiscal responsibility, he ought to have acknowledged the debt to the previous NDP government and the public sector unions. Together in the late 1990s, they engineered the current fully-funded joint trusteeships.

Ironically, the current NDP government was called to account this week over reports that the current plans are significantly invested in the fossil fuel industry.

Holdings include Kinder Morgan, developer of the Trans Mountain pipeline expansion, which the B.C. New Democrats oppose. As noted here recently, the B.C. pensions also have a stake in Cheniere Energy, the U.S.-based rival to B.C.’s hopes of developing a liquefied natural gas industry.

When Premier John Horgan was challenged about his own MLA pension and others in the public sector being partly invested in Kinder Morgan and other fossil fuel companies, he didn’t deny the optics.

“It may raise a few eyebrows,” Horgan conceded to reporters Tuesday. “Often times this looks bizarre to the public.” He also made the point that the plans are managed independently — and managed well — by professionals working for the B.C. Investment Management Corp.

BCIMC is jointly overseen by the unions and government. The unions fill a majority of seats on the seven-member board of directors, which hires the management and shapes the investment policies, so the government could not by itself bring about a change of direction.

There’s been talk of the New Democrats and unions working together to shift toward more progressive investment strategies. However the pension corporation is already active on that score.

“As we believe that companies that manage environmental, social and governance (ESG) matters perform better over the long term, we integrate responsible investing into our approach and processes across all asset classes,” writes CEO Gordon Fyfe in the covering letter to the corporation’s latest report on responsible investing.

Rather than simply divesting as some activists prefer, BCIMC prefers to seek change by engaging directly with companies via its holdings in their shares.

With Rio Tinto and Suncor Energy, BCIMC joined other investors in successfully supporting “proposals that called for additional disclosure relating to the companies’ exposure to climate change risks.” With Anglo American mining, it backed a requirement to report annually on the resiliency of its business model under different climate change scenarios for 2035 and beyond.”

More quixotic was backing a proposal that did not pass, calling on the Potash Corporation of Saskatchewan “to assess its human rights responsibilities related to sourcing phosphate rock from Western Sahara.”

The investment corporation joined others in defeating excessive compensation and bonus schemes at Canadian Pacific Railway, Crescent Point Energy and BP. “Our primary focus is on pay for performance,” to quote the responsible investing report.

BCIMC’s performance in managing $135 billion worth of assets — witness the testimonials of the auditors, the actuaries and the credit rating agencies — has made its executives and managers among the highest paid in the public sector.

All that could change if more politically-active folks in the government and the unions decided to remake the board and its investment strategies.

An activist takeover could also risk returns on investments, which is why it would be wiser to keep the job with the professionals and out of the hands of the politicians.
British Columbia's NDP government better stay out of BCI's investment decisions. It's already screwed up with the kinder Morgan pipeline deal and now Bill Morneau is looking at Canadian pension funds to save that deal. It might happen but the terms have to be favorable to Canada's large pensions.

Below, discover Victoria, British Columbia. My aunt and uncle are visiting from Crete and they stopped off there before heading to Seattle to see my nephew. They said they loved Vancouver and particularly loved Victoria. I'm sure it's a beautiful place to visit, not sure I'd want to work there.

Enjoy your Victoria Day and for the folks that were laid off at BCI, close the chapter, focus on your health, move away and find a job somewhere else. It's not going to be easy but that's my best advice.

Friday, May 18, 2018

Top Funds' Activity in Q1 2018

Julia La Roche reports, Here's what the biggest hedge funds have been buying and selling:
The stock trades that the biggest hedge fund managers made in the first quarter have been revealed.

Hedge funds of a certain minimum size are required to disclose their long stock holdings in filings to the SEC known as 13-Fs. Of course, the filings only provide a partial picture since they do not show short positions or wagers on commodities and currencies. What’s more is these filings come out 45 days after the end of each quarter, so it’s possible they could have traded in and out of the positions.

Still, it does provide a partial look into where some of the top money managers have been placing money in the stock market.

Facebook gains friends

Facebook’s stock was featured prominently in the news during the first quarter after the Cambridge Analytica data breach scandal came to light and CEO Mark Zuckerberg was grilled on Capitol Hill. Still, many hedge funds grabbed shares of the social network.

Tiger Global, led by Chase Coleman, added 2,545,238 more shares of Facebook (FB). Coleman’s fund is a “Tiger cub,” or a hedge fund that was seeded by legendary hedge fund manager Julian Robertson of Tiger Management.

Billionaire “Tiger cub” Andreas Halvorsen’s Viking Global also loaded up on Facebook during the first quarter, adding 5.5 million more shares, bringing the entire stake north of 9.3 million shares. Fellow “Tiger cub” billionaire Rob Citrone of Discovery Capital also added to his Facebook stake, buying 806,600 more shares, bringing the fund’s position to 1.37 million shares. Citrone’s Discover Capital also bought calls on 2.3 million Facebook shares. Facebook remained the No. 1 position for Viking and Discovery.

Daniel Loeb, the activist hedge fund manager and CEO of Third Point, added another 600,000 shares to his existing Facebook stake, bringing the total position to 4 million shares at the end of the quarter. David Tepper, the founder of Appaloosa, also boosted his Facebook stake, adding 680,559 more shares to last hold just over 6.2 million at the end of the quarter.

Activist hedge fund manager Barry Rosenstein’s JANA Partners sold its entire stake in Facebook, dropping 473,526 shares in the quarter. Billionaire Stanley Druckenmiller’s family-office hedge fund Duquesne Capital sold its entire Facebook stake of 1.08 million shares.

Dropping Apple

Tepper’s Appaloosa and Larry Robbins’s Glenview Capital both exited their Apple (AAPL) stakes in the first quarter. Philippe Laffont’s Coatue sold just over half of its Apple stake during the quarter.

Bloomberg noted that institutional investors abandoned Apple at a rate not seen since 2008.

Meanwhile, Warren Buffett’s Berkshire Hathaway added nearly 75 million shares of Apple during the first quarter, bringing the entire stake to just over 239.5 million shares, a position valued at more than $44.6 billion as of Tuesday’s close.

Out of Amazon and into Alibaba

E-commerce was another area that saw a bunch of moves among the hedge funds.

Discovery Capital ditched all of its Amazon (AMZN) shares during the first quarter. Viking Global also shed most of its Amazon stake, selling 482,469, or about 93% of the position. Viking last held 35,751 shares of the e-commerce giant.

Meanwhile, Viking initiated a new position in Chinese e-commerce giant Alibaba (BABA), snapping up 2.2 million shares. Citrone’s Discovery Capital also boosted its Alibaba stake.

Lee Ainslie, another “Tiger cub and the founder of Maverick Capital, also added to Alibaba.

Loeb’s Third Point trimmed its Alibaba stake, selling 2 million shares to last hold 4 million of the e-commerce giant. Tepper’s Appaloosa also slightly pared back its Alibaba stake. The position remained a top 5 long equity holding for both Loeb and Tepper.

Cutting cable

Cable providers also saw some action. Laffont’s Coatue and Halvorsen’s Viking Global both bailed on Time Warner (TWX), dumping their entire positions during the first quarter. Loeb’s Third Point sold 2 million shares of Time Warner and instead purchased call options on 2 million shares.

Rosenstein’s JANA Partners, Julian Robertson’s Tiger Management, and Tiger Global closed their stakes in Comcast (CMCSA).

Healthcare moves

And lastly, healthcare stocks, which have been in the news frequently during the first quarter, gained favor among the hedge funds.

Billionaire Leon Cooperman’s Omega Advisors and Julian Robertson’s Tiger Management disclosed new positions in UnitedHealth Group (UNH). Rosenstein’s JANA Partners also snapped up a new position in Anthem (ANTM), while Robertson’s Tiger Management trimmed its stake by about half.

Billionaire Larry Robbins, the founder of Glenview Capital, disclosed a new stake in Express Scripts (ESRX). Robbins pitched Express Scripts as a long idea at the Sohn Conference earlier this month while downplaying the threat that Amazon poses to the healthcare industry, specifically the pharmaceutical sector.

Loeb’s Third Point exited its position in health insurer Aetna (AET), selling 1.85 million shares.

Below is a roundup of the biggest funds’ first quarter moves:

Appaloosa Management (David Tepper)
New: Wells Fargo (WFC)
Boosted: Micron Technologies (MU), Facebook (FB), Allergan (AGN)
Exited: Apple (AAPL)

Baupost Group (Seth Klarman)
New: PG&E (PCG), Tesla (TSLA) (PRN)
Boosted: Pioneer Natural Resources (PXD), 21st Century Fox (FOXA)
Trimmed: Amerisource Bergen (ABC)
Exited: Express Scripts (ESRX)

Coatue Management (Philippe Laffont)
New: Micron Technologies (MU), TAL Education (TAL)
Boosted: Twitter (TWTR)
Trimmed: Apple (AAPL), Nvidia (NVDA), Netflix (NFLX), Snap Inc. (SNAP)
Exited: Bank of America (BAC), Time Warner (TWX), Alphabet (GOOGL)

Discovery Capital (Rob Citrone)
New: iShares MSCI Emerging Markets ETF (EEM)
Boosted: Alibaba (BABA), Facebook (FB)
Exited: Amazon(AMZN), Bank of America (BAC)

Duquesne Capital (Stanley Druckenmiller)
New: Micron Technologies, Alibaba, Netflix
Exited: Facebook, Wells Fargo

Glenview Capital (Larry Robbins)
New: Express Scripts (ESRX), FedEx (FDX), Facebook
Trimmed: Anthem
Exited: Apple (AAPL)

JANA Partners (Barry Rosenstein) 
New: Anthem (ANTM), AutoDesk (ADSK)
Boosted: Pinnacle Foods (PF), Jack In The Box (JACK)
Exited: Facebook (FB), Comcast (CMCSA)

Maverick Capital (Lee Ainslie)
New: Mohawk Industries (MHK)
Boosted: Alphabet (GOOG), Alibaba (BABA), Intel, Lowe’s (LOW)
Trimmed: Molson Coors (TAP)

Marcato Capital (Mick McGuire)
New: Univar (UNVR), Astec Industries (ASTE)
Boosted: InterActiveCorp (IAC)
Exited: Sotheby’s (BID)

Omega Advisors (Leon Cooperman)
New: Thermo Fisher (TMO), UnitedHealth
Boosted: United Continental (UAL), Citigroup (C)
Trimmed: Shire (SHPG)
Exited: Zynga (ZNGA)

Pershing Square Capital (Bill Ackman)
New: United Technologies (UTX)
Trimmed: Restaurant Brands (QSR), Mondelez (MDLZ), ADP (ADP), Howard Hughes (HHC)
Exited: Nike (NKE)

Third Point LLC (Daniel Loeb)
New: United Technologies, Wynn Resorts (WYNN)
Boosted: Facebook, TimeWarner (TWX) (CALL)
Exited: Aetna (AET), TimeWarner (TWX)

Tiger Global (Chase Coleman)
New: Twitter (TWTR)
Boosted: Facebook, Netflix (NFLX)
Exited: Comcast (CMCSA), Alphabet (GOOGL) (GOOG)

Tiger Management (Julian Robertson)
New: Royal Caribbean Cruises (RCL) (CALL), UnitedHealth Group (UNH), Workday (WDAY), eBay (EBAY)
Boosted: JPMorgan Chase (JPM)
Trimmed: Anthem (ANTM)
Exited: Comcast (CMCSA), S&P500 SPDR ETF (SPY) (PUT)

Viking Global (Andreas Halvorsen)
New: Alibaba (BABA)
Boosted: Facebook (FB), Wells Fargo (WFC), Anthem
Trimmed: Amazon (AMZN)
Exited: TimeWarner (TWX)
This week, I will focus on what top funds bought and sold in the first quarter.

Before I begin, please take the time to read some of my recent market comments:
I want you to start thinking macro, macro, macro because in my opinion there are some interesting macro trends going on right now and you really need to pay attention or else you risk losing a lot of money.

In particular, pay attention to the US dollar (UUP) and emerging market equities (EEM) which have been selling off strongly this year and have been volatile (click on images):



As shown above, the US dollar ETF is at its 200-week moving average and it might rally a bit more here but I think it will pull back before resuming its uptrend. If I'm right, this will give some breathing room for emerging market stocks to rally off their 50-week moving average, but use any rally to go underweight or initiate a short position.

The sell-off in US long bonds (TLT) has also hit emerging market stocks hard as the yield on the 10-year Treasury note hit 3.1% this week, a five-month high (click on image):


Now, I realize some people are convinced yields on the 10-year are headed to 4% or higher. I'm not one of them and still maintain this is nothing more than a bond teddy bear market and going forward US long bonds (TLT) will offer the best risk-adjusted returns of all asset classes.

One of my blog readers out in Vancouver who tracks me closely shared this with me earlier today: "I hope you don’t mind me saying that sometimes I think you’re crazy in pounding the table for TLT in the face of its declines; but then I remember that you did the same with biotech a couple of years ago, arguing that we should buy as it continued to decline, and you were proven to be exactly right."

He's right, I was pounding the table on biotech stocks (XBI) right before the US elections when I covered America's Brexit or biotech moment, but nobody was paying attention to me back then, much to their demise (click on chart):


I still like biotech shares but my focus is on individual names which swing both ways, not the ETF.

All this to say, call me crazy for liking US long bonds but in the end, I will be proven right as we head into year-end. Yields on the 10-year Treasury note will be considerably lower, especially if we get some crisis in emerging markets or Europe.

Even if we don't, the US and global economy are cooling, and this will weigh on inflation expectations, propelling US long bond prices (TLT) higher.

Anyway, enough macro, let's get into what top funds bought and sold during the first quarter. You will notice from the article above, a lot of these big hedge funds buy and sell the same stocks, namely, large-cap tech stocks.

Why is that? Well, because they're too big, they need liquidity, and consequently, their biggest positions are by definition going to be concentrated in big tech stocks that swing.

Go back to read my comment at the end of Q1 when I wondered whether a quant style crash finally arrived. In that comment, I looked at daily and weekly charts of Amazon (AMZN), Facebook (FB), Twitter (TWTR) and Tesla (TSLA) using very simple 50, 100 and 200-day and week moving averages.

I had a strong suspicion that big hedge funds were buying the dip on Facebook, Amazon, and Twitter back then and I was right.

Good for them, they made money but let me show you something else. Go to barchart.com and click on stocks at the top of the page and then on percent change. Your screen should look like this (click on image):


Once you click on percent change, change the setting from "today" to "year to date" and your screen should look like this (click on image):


If you're a stock junkie like me, you're scrolling on this site every single day, trying to see what are the biggest gainers, losers and which stocks are making new 52-week highs and lows.

One thing you will notice, a lot of these stocks aren't well-known and none of the big hedge funds are buying them either because they're too small in terms of capitalization or they don't have the expertise in a certain sector (like biotech).

I bring this to your attention because a) the data is free b) the best-performing stocks aren't FANG stocks and c) there is so much more to the stock market than ETFs (it's not the stock market, for me, it's always a market of stocks).

But picking stocks, especially no-name stocks, isn't for everyone, that's why everyone wants to know what David Tepper, Warren Buffett and the billionaire "big boys" are buying.

I get it, I look at their portfolios too but unlike you, I can screen each of their positions rigorously and tell you what I like and don't like going forward.

For example, a couple of weeks ago, I told you not to sell in May and go away, and told you that Buffett bought 75 million shares of Apple in Q1 but I was pounding the table to buy those shares right before earnings when the stock fell below its 200-day moving average (click on image):


But I also told you not to follow Buffett blindly and to wait for another nice buying opportunity. Shares of Apple have since sold off a bit and that's normal as traders sell the Buffett news.

I also told you about another big holding of Buffett's, Kraft Heinz (KHC), a stock which has been clobbered this year (click on image):


It's not the only consumer staple stock to get whipped hard this year. Check out shares of Campbell Soup Company (CPB) which are down 12% today and just getting killed thus far this year (click on image):


I remember a day back at the height of the crisis in 2008 when every single stock in the S&P 500 was down except for Campbell Soup. It's not getting any love now but if markets go haywire, I'm sure it and Kraft Heinz will benefit.

Anyway, back to Buffett and Berkshire. If you go to Berkshire Hathaway's top holdings and then click twice on the fourth column (Change (%)), you will see Berkshire has a concentrated portfolio of 48 positions and see where it increased its stakes (click on image):


Yes, Buffett bought 75 million shares of Apple but he also doubled his stake in Teva Pharmaceuticals (TEVA), one of my core longs which had nothing to do with Buffett and everything to do with David Abrams who bought 20 millions shares before Buffett's lieutenants bought stakes (click on image):


Now, Abrams got hurt when the stock flushed and hit a 52-week low of $10.85 in November and that's when Buffett's lieutenants initiated a position (and so did yours truly).

What I find interesting is if you look at Teva's top institutional holders, you will see Berkshire and Abrams but also J.P. Morgan which significantly increased its stake (and so did Bill Miller but he's not a top holder).

Why am I bringing this up? Because Buffett, Bezos and Diamond are trying to reduce healthcare costs in America and I think they're cooking something up here.

Now, don't go buying shares of Teva based on a hunch or because Berkshire and J.P. Morgan increased their stake in Q1, I'm just telling you from all of Buffett's top picks, this is the one I find most interesting going forward (and it wasn't Buffett but his lieutenant Todd Combs who bought it).

The other reason I'm bringing this up is that I remember "BOOYAH" Jim Cramer, CNBC's resident claptrap, telling his Mad Money viewers "Don't touch it! I'd rather you own Teva sandals":



Shares of Teva were trading near their low at the time, and when I heard Jimbo spew his wisdom, I doubled my position. He was totally wrong! (he's gotten better but still stinks and I can't watch his show without getting highly irritated)

People really need to learn to trade on their own. Stop watching Mad Money and just go out there and risk your own capital. Learn how to look at charts using stockcharts.com, plotting one-year daily charts and 5-year weekly charts and start by using 50, 100, and 200 day and week moving averages and look for MACD crossovers (you can do this for free on stockcharts.com).

Then you can look at the portfolios of gurus or any stock Jim Cramer or others are recommending and make a more informed decision.

At the top of this comment, you'll see a picture of David Tepper. Zero Hedge had a comment on Friday on how Tepper trounced his competition, gaining 7% YTD.

I always thought Tepper's Appaloosa  was a L/S Equity fund but apparently it's a multi-strategy fund and he made money shorting bonds this year (I put a link to his fund under multi-strategy funds below).

Anyway, have look at Appaloosa's top holdings and you'll see he increased his stakes in Micron technologies (MU), Facebook (FB) and Alphabet-Google (GOOG) but he also did a lot of other under the radar moves (click on image):


Now, I don't have time to go over every single position but let's look at  Micron Technologies (MU) because Coatue also bought a new stake in the company and is one of the top institutional holders (click on image):


When I look at the daily chart, I'm hardly enthused but the weekly chart doesn't convince me either to buy shares here (click on images):



Also, in my recent comment on whether we're setting up for a summer rally, I ended by stating: "I'm not willing to bet on chip stocks (SMH) at this time and fear that a global slowdown will crush a lot of them going into year-end."

I would be shorting chip stocks going into year-end but I'm not the one charging 2 and 25 on billions like David Tepper and other hedge fund gurus. Just be careful, never follow anyone blindly based on what they supposedly bought and sold last quarter.

Are there any other things I saw going over some top funds? I noticed quant superstar Two Sigma made a great call increasing its stake on Best Buy (BBY) while Citadel lost big increasing its stake on Esperion Therapeutics (ESPR) right before the stock got crushed (click on images):



You might be tempted to "sell the rip" on Best Buy shares and "buy the dip" on Esperion Therapeutics but there is no secret sauce to making money trading stocks. Sometimes you have to buy the dips, other times the rips, and sometimes you need to stay put and do nothing.

I hope you enjoyed this comment, it's a bit long but the scary thing is I only scratched the surface. For a stock junkie like me, I love going over stocks, charts and peeking into portfolios of top funds to see if they added on weakness or sold on strength.

Those of you who want to track my current market ideas on stocks can do so by following me on StockTwits here. I try to post daily but sometimes I just don't post at all because I'm way too busy trading, reading and blogging.

Here are some of the stocks moving up and down on my watch list on Friday, May 18th 2018 (click on images):



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Anyway, have fun looking at the first quarter activity of top funds listed below. The links take you straight to their top holdings and then click on the fourth column head, % chg, to see where they decreased (click once on % chg column head) and increased their holdings (click twice on % chg column head).

Top multi-strategy and event driven hedge funds

As the name implies, these hedge funds invest across a wide variety of hedge fund strategies like L/S Equity, L/S credit, global macro, convertible arbitrage, risk arbitrage, volatility arbitrage, merger arbitrage, distressed debt and statistical pair trading.

Unlike fund of hedge funds, the fees are lower because there is a single manager managing the portfolio, allocating across various alpha strategies as opportunities arise. Below are links to the holdings of some top multi-strategy hedge funds I track closely:

1) Appaloosa LP

2) Citadel Advisors

3) Balyasny Asset Management

4) Farallon Capital Management

5) Peak6 Investments

6) Kingdon Capital Management

7) Millennium Management

8) Eton Park Capital Management

9) HBK Investments

10) Highbridge Capital Management

11) Highland Capital Management

12) Pentwater Capital Management

13) Och-Ziff Capital Management

14) Pine River Capital Capital Management

15) Carlson Capital Management

16) Magnetar Capital

17) Mount Kellett Capital Management 

18) Whitebox Advisors

19) QVT Financial 

20) Paloma Partners

21) Weiss Multi-Strategy Advisors

22) York Capital Management

Top Global Macro Hedge Funds and Family Offices

These hedge funds gained notoriety because of George Soros, arguably the best and most famous hedge fund manager. Global macros typically invest across fixed income, currency, commodity and equity markets.

George Soros, Carl Icahn, Stanley Druckenmiller, Julian Robertson and now Steve Cohen have converted their hedge funds into family offices to manage their own money and basically only answer to themselves (that is my definition of true investment success).

1) Soros Fund Management

2) Icahn Associates

3) Duquesne Family Office (Stanley Druckenmiller)

4) Bridgewater Associates

5) Pointstate Capital Partners 

6) Caxton Associates (Bruce Kovner)

7) Tudor Investment Corporation (Paul Tudor Jones)

8) Tiger Management (Julian Robertson)

9) Discovery Capital Management (Rob Citrone)

10 Moore Capital Management

11) Point72 Asset Management (Steve Cohen)

12) Bill and Melinda Gates Foundation Trust (Michael Larson, the man behind Gates)

13) Joho Capital (Robert Karr, a super succesful Tiger Cub who shut his fund in 2014)

Top Quant and Market Neutral Hedge Funds

These funds use sophisticated mathematical algorithms to make their returns, typically using high-frequency models so they churn their portfolios often. A few of them have outstanding long-term track records and many believe quants are taking over the world. They typically only hire PhDs in mathematics, physics and computer science to develop their algorithms. Market neutral funds will engage in pair trading to remove market beta.

1) Alyeska Investment Group

2) Renaissance Technologies

3) DE Shaw & Co.

4) Two Sigma Investments

5) Cubist Systematic Strategies (a quant division of Point72)

6) Numeric Investors

7) Analytic Investors

8) AQR Capital Management

9) SABA Capital Management

10) Quantitative Investment Management

11) Oxford Asset Management

12) PDT Partners

13) Princeton Alpha Management

14) Angelo Gordon

15) Quantitative Systematic Strategies

Top Deep Value,
Activist, Event Driven and Distressed Debt Funds

These are among the top long-only funds that everyone tracks. They include funds run by legendary investors like Warren Buffet, Seth Klarman, Ron Baron and Ken Fisher. Activist investors like to make investments in companies where management lacks the proper incentives to maximize shareholder value. They differ from traditional L/S hedge funds by having a more concentrated portfolio. Distressed debt funds typically invest in debt of a company but sometimes take equity positions.

1) Abrams Capital Management (the one-man wealth machine)

2) Berkshire Hathaway

3) Baron Partners Fund (click here to view other Baron funds)

4) BHR Capital

5) Fisher Asset Management

6) Baupost Group

7) Fairfax Financial Holdings

8) Fairholme Capital

9) Trian Fund Management

10) Gotham Asset Management

11) Fir Tree Partners

12) Elliott Associates

13) Jana Partners

14) Gabelli Funds

15) Highfields Capital Management 

16) Eminence Capital

17) Pershing Square Capital Management

18) New Mountain Vantage  Advisers

19) Atlantic Investment Management

20) Scout Capital Management

21) Third Point

22) Marcato Capital Management

23) Glenview Capital Management

24) Apollo Management

25) Avenue Capital

26) Armistice Capital

27) Blue Harbor Group

28) Brigade Capital Management

29) Caspian Capital

30) Kerrisdale Advisers

31) Knighthead Capital Management

32) Relational Investors

33) Roystone Capital Management

34) Scopia Capital Management

35) Schneider Capital Management

36) ValueAct Capital

37) Vulcan Value Partners

38) Okumus Fund Management

39) Eagle Capital Management

40) Sasco Capital

41) Lyrical Asset Management

42) Gabelli Funds

43) Brave Warrior Advisors

44) Matrix Asset Advisors

45) Jet Capital

46) Conatus Capital Management

47) Starboard Value

48) Pzena Investment Management

Top Long/Short Hedge Funds

These hedge funds go long shares they think will rise in value and short those they think will fall. Along with global macro funds, they command the bulk of hedge fund assets. There are many L/S funds but here is a small sample of some well-known funds.

1) Adage Capital Management

2) Viking Global Investors

3) Greenlight Capital

4) Maverick Capital

5) Pointstate Capital Partners 

6) Marathon Asset Management

7) Tiger Global Management (Chase Coleman)

8) Coatue Management

9) Omega Advisors (Leon Cooperman)

10) Artis Capital Management

11) Fox Point Capital Management

12) Jabre Capital Partners

13) Lone Pine Capital

14) Paulson & Co.

15) Bronson Point Management

16) Hoplite Capital Management

17) LSV Asset Management

18) Hussman Strategic Advisors

19) Cantillon Capital Management

20) Brookside Capital Management

21) Blue Ridge Capital

22) Iridian Asset Management

23) Clough Capital Partners

24) GLG Partners LP

25) Cadence Capital Management

26) Karsh Capital Management

27) New Mountain Vantage

28) Penserra Capital Management 


29) Silver Point Capital

30) Steadfast Capital Management

31) Brookside Capital Management

32) PAR Capital Capital Management

33) Gilder, Gagnon, Howe & Co

34) Brahman Capital

35) Bridger Management 

36) Kensico Capital Management

37) Kynikos Associates

38) Soroban Capital Partners

39) Passport Capital

40) Pennant Capital Management

41) Mason Capital Management

42) Tide Point Capital Management

43) Sirios Capital Management 

44) Hayman Capital Management

45) Highside Capital Management

46) Tremblant Capital Group

47) Decade Capital Management

48) T. Boone Pickens BP Capital 

49) Bloom Tree Partners

50) Cadian Capital Management

51) Matrix Capital Management

52) Senvest Partners


53) Falcon Edge Capital Management

54) Park West Asset Management

55) Melvin Capital Partners

56) Owl Creek Asset Management

57) Portolan Capital Management

58) Proxima Capital Management

59) Tourbillon Capital Partners

60) Impala Asset Management

61) Valinor Management

62) Marshall Wace

63) Light Street Capital Management

64) Honeycomb Asset Management

65) Rock Springs Capital Management

66) Whale Rock Capital

67) Suvretta Capital Management

68) York Capital Management

69) Zweig-Dimenna Associates

Top Sector and Specialized Funds

I like tracking activity funds that specialize in real estate, biotech, healthcare, retail and other sectors like mid, small and micro caps. Here are some funds worth tracking closely.

1) Armistice Capital

2) Baker Brothers Advisors

3) Palo Alto Investors

4) Broadfin Capital

5) Healthcor Management

6) Orbimed Advisors

7) Deerfield Management

8) BB Biotech AG

9) Birchview Capital

10) Ghost Tree Capital

11) Sectoral Asset Management

12) Oracle Investment Management

13) Perceptive Advisors

14) Consonance Capital Management

15) Camber Capital Management

16) Redmile Group

17) RTW Investments

18) Bridger Capital Management

19) Boxer Capital

20) Bridgeway Capital Management

21) Cohen & Steers

22) Cardinal Capital Management

23) Munder Capital Management

24) Diamondhill Capital Management 

25) Cortina Asset Management

26) Geneva Capital Management

27) Criterion Capital Management

28) Daruma Capital Management

29) 12 West Capital Management

30) RA Capital Management

31) Sarissa Capital Management

32) Rock Springs Capital Management

33) Senzar Asset Management

34) Southeastern Asset Management

35) Sphera Funds

36) Tang Capital Management

37) Thomson Horstmann & Bryant

38) Venbio Select Advisors

39) Ecor1 Capital

40) Opaleye Management

41) NEA Management Company

42) Great Point Partners

43) Tekla Capital Management

Mutual Funds and Asset Managers

Mutual funds and large asset managers are not hedge funds but their sheer size makes them important players. Some asset managers have excellent track records. Below, are a few funds investors track closely.

1) Fidelity

2) Blackrock Fund Advisors

3) Wellington Management

4) AQR Capital Management

5) Sands Capital Management

6) Brookfield Asset Management

7) Dodge & Cox

8) Eaton Vance Management

9) Grantham, Mayo, Van Otterloo & Co.

10) Geode Capital Management

11) Goldman Sachs Group

12) JP Morgan Chase & Co.

13) Morgan Stanley

14) Manulife Asset Management

15) RCM Capital Management

16) UBS Asset Management

17) Barclays Global Investor

18) Epoch Investment Partners

19) Thornburg Investment Management

20) Legg Mason (Bill Miller)

21) Kornitzer Capital Management

22) Batterymarch Financial Management

23) Tocqueville Asset Management

24) Neuberger Berman

25) Winslow Capital Management

26) Herndon Capital Management

27) Artisan Partners

28) Great West Life Insurance Management

29) Lazard Asset Management 

30) Janus Capital Management

31) Franklin Resources

32) Capital Research Global Investors

33) T. Rowe Price

34) First Eagle Investment Management

35) Frontier Capital Management

36) Akre Capital Management

37) Brandywine Global

38) Brown Capital Management

39) Victory Capital Management

Canadian Asset Managers

Here are a few Canadian funds I track closely:

1) Addenda Capital

2) Letko, Brosseau and Associates

3) Fiera Capital Corporation

4) West Face Capital

5) Hexavest

6) 1832 Asset Management

7) Jarislowsky, Fraser

8) Connor, Clark & Lunn Investment Management

9) TD Asset Management

10) CIBC Asset Management

11) Beutel, Goodman & Co

12) Greystone Managed Investments

13) Mackenzie Financial Corporation

14) Great West Life Assurance Co

15) Guardian Capital

16) Scotia Capital

17) AGF Investments

18) Montrusco Bolton

19) CI Investments

20) Venator Capital Management

Pension Funds, Endowment Funds, and Sovereign Wealth Funds

Last but not least, I the track activity of some pension funds, endowment and sovereign wealth funds. I like to focus on funds that invest in top hedge funds and have internal alpha managers. Below, a sample of pension and endowment funds I track closely:

1) Alberta Investment Management Corporation (AIMco)

2) Ontario Teachers' Pension Plan

3) Canada Pension Plan Investment Board

4) Caisse de dépôt et placement du Québec

5) OMERS Administration Corp.

6) British Columbia Investment Management Corporation (bcIMC)

7) Public Sector Pension Investment Board (PSP Investments)

8) PGGM Investments

9) APG All Pensions Group

10) California Public Employees Retirement System (CalPERS)

11) California State Teachers Retirement System (CalSTRS)

12) New York State Common Fund

13) New York State Teachers Retirement System

14) State Board of Administration of Florida Retirement System

15) State of Wisconsin Investment Board

16) State of New Jersey Common Pension Fund

17) Public Employees Retirement System of Ohio

18) STRS Ohio

19) Teacher Retirement System of Texas

20) Virginia Retirement Systems

21) TIAA CREF investment Management

22) Harvard Management Co.

23) Norges Bank

24) Nordea Investment Management

25) Korea Investment Corp.

26) Singapore Temasek Holdings 

27) Yale Endowment Fund

Below, CNBC’s Leslie Picker reports on new investments from big investors such as Warren Buffett, Bill Ackman and Leon Cooperman.

And as David Tepper gets set to buy the Carolina Panthers from team founder Jerry Richardson for a record $2.2 billion, I quite enjoyed this interview below at Carnegie Mellon, his alma mater. I like his no bs style when talking to these students, it's refreshing.