HedgeFundWisdom Free Sample Issue

1
hedge fund wisdom

Table of Contents
p.02 Baupost Group
Hedge Fund Portfolio Updates:
Q1 2012

a quarterly publication by marketfolly.com
Q1 2012 www.hedgefundwisdom.com
Each quarter, hedge funds and institutional managers are
required to disclose their portfolios to the SEC via 13F filing. These
filings disclose long U.S. equity positions, American Depositary
Receipts (ADRs), stock options (puts/calls), as well as convertible
notes. The 13F filing does not disclose positions in other asset classes
(such as commodities, currencies, or debt). It also does not reveal
short sales or cash positions.
Hedge Fund Wisdom, a quarterly publication by
MarketFolly.com, updates and analyzes the latest portfolios of
prominent investment managers. The positions herein represent a
hedge funds first quarter holdings as of March 31st, 2012. Keep in
mind these updates are not reflective of a funds entire overall
portfolio.
Background:
First Quarter Summary:
!"#$%#$&$'(&)*+,,-'

Coogle (CCCC)
Apple (AAL)
Lxpress ScrlpLs (LS8x)
1rlpAdvlsor (18l)
Crown CasLle (CCl)

!"#$%#$&$'.%//*0%,&1%-'

Mlchael kors (kC8S)
Marvell 1echnology (M8vL)
vlacom (vlA.8)
8aldu (8luu)
Careluslon (Cln)
In This Issue:
Next Page: Baupost Groups Updated Portfolio
- Portfolio updates on 25 prominent hedge fund managers
- Equity analysis written by hedge fund analysts that examines
the investment thesis behind 3 stocks hedgies were buying
- Expert commentary on each funds portfolio moves
The table below outlines the most frequent buys & sells this
quarter among the 25 prominent hedge funds profiled in this issue.
p.04 Berkshire Hathaway
p.06 Greenlight Capital
p.08 Lone Pine Capital
p.11 Appaloosa Management
p.14 Pershing Square Capital
p.16 Maverick Capital
p.19 Third Point
p.22 Blue Ridge Capital
p.25 Paulson & Co
p.28 Tiger Management
p.30 Soros Fund Management
p.33 Bridger Management
p.36 Omega Advisors
p.39 Coatue Management
p.41 Fairholme Capital
p.43 Tiger Global Management
p.46 Passport Capital
p.51 Perry Capital
p.54 Glenview Capital
To navigate through the newsletter, simply click on a page
number in the Table of Contents to go to that page.
p.57 Viking Global
p.60 Farallon Capital
p.63 Icahn Capital
Equity Analyses:
p.69 Equinix (EQIX)
p.75 Tempur-Pedic (TPX)
p.80 AutoZone (AZO)
p.65 JANA Partners
p.67 Pennant Capital
FREE SAMPLE ISSUE
2
Baupost Group was recently listed as
one of the top 10 hedge funds by net gains since
inception. Coming in at number four on the list,
its no surprise that investors are always looking
to see where Seth Klarman has been investing.
Baupost Groups first quarter 13F filed with the
SEC shows that they had $2.96 billion allocated
to long US equity positions. Assuming
Bauposts assets under management (AUM) are
around ~$22 billion, this means only just over
13% of their AUM is tied up in US equity
exposure. Given Bauposts distressed focus,
thats just something worth keeping in mind.
Additionally, the firm typically holds around a
~20% cash position as a natural hedge as they
wait for compelling opportunities. Lastly, be
aware that Baupost has a stake in foreign traded
Vivendi as well. As of February 29
th
, Baupost
owned 25.5 million shares in the company. At
that time, the stake was worth over $400
million. But since then, shares have decreased
in value and their stake is now worth around
$323 million (assuming they still hold the entire
position). Comparing this amount to Bauposts
disclosed US positions, this would slot Vivendi
in around their fourth largest disclosed holding,
behind the likes of ViaSat (VSAT), BP (BP), and
Hewlett Packard (HPQ).
In terms of US equity additions and
subtractions, Baupost Group completely exited
three stakes including PDL BioPharma (PDLI),
Genworth Financial (GNW), and Targacept
(TRGT). They also trimmed two previously
sizable positions: Microsoft (MSFT) and BP
(BP). While they still hold these names, theyve
certainly allocated less capital to them
(especially in MSFTs case).
On the buying side of the portfolio,
Baupost continued to purchase shares of Idenix
Pharmaceuticals (IDIX) and NovaGold
Resources (NG) during the first quarter. These
two stocks were flagged in the last issue of
Hedge Fund Wisdom (HFW). Baupost
continued to add to its stake in Idenix by 45%
and NovaGold by 33%. Since the close of the
first quarter, NG shares have fallen even further
below where Klarmans shop was purchasing
them. Given his propensity to scoop up shares
when valuation is cheap, it will be interesting to
see if he picks up even more gold exposure via
this miner.
Apart from these maneuvers, Klarman
left his equity book largely unchanged. The
only other activity was largely selling out of his
previously smaller stakes in Multimedia Games
(MGAM) and Alere (ALR).
For some recent resources on this
legendary investor, head to notes from Seth
Klarmans Margin of Safety as well as an
interview Klarman did with Charlie Rose.
Seth Klarman
Graduated from Harvard Business
School & regarded as one of the best
investors of all time

Author of Margin of Safety

View Seth Klarmans
Recommended Reading List
Baupost Group
View Baupost Groups Updated
Portfolio on the Next Page
Key Takeaways

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n/a

."/,'!"89/%6%/)':&6':;-'
uL 8loharma (uLl)
CenworLh llnanclal (CnW)
1argacepL (18C1)
3
Baupost Group
Next Page: Berkshire Hathaway
First Quarter 2012 Portfolio:
Rank Company Name Ticker Put/Call
% of
Portfolio Activity
Value x
$1000 # of Shares
1 ViaSat Inc. VSAT

17.1% Unchanged $506,205 10,499,992
2 BP plc BP

14.2% Cut -22% $419,441 9,320,900
3 Hewlett-Packard Co HPQ

13.9% Cut -8% $411,068 17,250,000
4 News Corp. NWSA

10.0% Unchanged $296,471 15,041,665
5 Theravance Inc. THRX

9.6% Added 2% $283,799 14,553,800
6 Microsoft Corporation MSFT

7.6% Cut -42% $225,785 7,000,000
7 News Corp. NWS

7.2% Unchanged $212,847 10,658,335
8 Allied Nevada Gold ANV

4.4% Unchanged $130,535 4,012,750
9 Idenix Pharmaceuticals IDIX

2.7% Add 46% $80,758 8,249,000
10 NovaGold Resources NG

2.4% Add 34% $71,800 10,000,000
11 AVEO Pharmaceuticals AVEO

2.1% Unchanged $63,101 5,084,652
12 Enzon Pharmaceuticals ENZN

2.1% Unchanged $61,566 9,000,878
13 THERAVANCE NOTE THRX

1.8% Unchanged $52,211 51,000,000
14 Syneron Medical Ltd. ELOS

1.5% Unchanged $42,880 4,000,000
15 Alliance One Intl AOI

1.1% Unchanged $33,126 8,786,700
16 Central Pacific Financial CPF

0.8% Unchanged $23,310 1,800,000
17 IturanLocation&Control ITRN

0.8% Unchanged $22,655 1,685,666
18 Sycamore Networks Inc. SCMR

0.3% Unchanged $9,418 530,871
19 Multimedia Games Inc. MGAM

0.2% Cut -77% $6,396 583,538
20 Alere Inc. ALR

0.1% Cut -93% $3,582 137,700
21 Genworth Financial Inc. GNW

Sold

-
22 PDL BioPharma, Inc. PDLI

Sold

-
23 Targacept, Inc. TRGT

Sold

-

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4
Berkshire Hathaways portfolio
continues to be dominated by smaller activity by
its new portfolio managers: Todd Combs and
Ted Weschler. Last quarters newsletter
highlighted how Berkshire initiated stakes in
Liberty Media (LMCA) and DaVita (DVA). Both
of these stakes are assumed to be attributed to
Ted Weschler given that they were both past
holdings at his old hedge fund, Peninsula
Capital Advisors. He continued to buy shares of
both for Berkshire in the first quarter, boosting
his holdings in Liberty Media by 76% and
DaVita by 123%. And given the style of portfolio
Weschler ran at his old shop, its not out of the
question to attribute Berkshires new buy of
Viacom (VIA.B) to him as well. But despite
which manager may have initiated each stake,
the main takeaways here are the fact that the
Berkshire crew also started a brand new
position in General Motors (GM) and heavily
added to its stake in The Bank of New York
Mellon (BK).
During Berkshires recent annual
meeting in Omaha, Buffett and Charlie Munger
commented that they are very happy with the
new managers and are pleased with their
returns. Both Combs and Weschler receive a
base salary of $1 million as well as a
performance incentive for 10% of
outperformance versus the S&P 500 (on a
rolling basis of 3 years). Whats also interesting
is that 80% of their performance bonus will be
based on the managers own return, while 20%
is based on the return of the other manager.
Buffett also shed some light as to how much
money each gentleman is managing. They each
started with a portfolio of $1.75 billion, but they
are now managing $2.75 billion each.
In terms of portfolio activity directly
attributable to Buffett, there doesnt seem to be
much apart from adding ever so slightly to his
pre-existing Wells Fargo (WFC) position and
adding to his stake in Walmart (WMT) by 19%.
It is worth noting, however, that Buffett has
once again been granted confidentiality by the
SEC regarding some of his activity. The fine
print of the 13F filing says that, confidential
information has been omitted from the Form
13F and filed separately with the Commission.
Buffett has done this numerous times in the
past, typically when he is building a position
and doesnt want to publicly reveal it before hes
done buying. At Berkshires recent annual
meeting, he did mention that he was
considering a $22 billion deal a few months
ago. He said that in order to get the deal done,
he would have had to sell some stocks to get it
done and he didnt want to do that. It will be
interesting to see what (if anything) Buffett has
been buying in the disclosure next quarter.
On the selling end of the portfolio,
Berkshire reduced its position in Intel (INTC)
by 32%, Verisk Analytics (VRSK) by 35%, and
Dollar General (DG) by 19%.
For recent resources on this legendary
investor, be sure to check out notes from
Buffetts meeting with MBA students, where he
mentioned he had been buying Korean equities
for his personal portfolio. Also check out key
takeaways from Buffetts 2011 annual letter and
a tour of Buffetts office.
Warren Buffett
Mentored by Benjamin Graham in the
ways of value investing

Third richest person in the world
according to Forbes

View Buffetts Recommended
Reading List
Berkshire Hathaway
View Berkshire Hathaways
Updated Portfolio on the Next Page
Key Takeaways
'
2%3'4"$565"#$-'
Ceneral MoLors (CM)
vlacom (vlA.8)

."/,'!"89/%6%/)':&6':;-'
Comdlsco (CuCC.C8)
5
Berkshire Hathaway
Next Page: Greenlight Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 The Coca-Cola Company KO

19.7% Unchanged $14,802,000 200,000,000
2 Wells Fargo & Company WFC

17.9% Added 3% $13,462,596 394,334,928
3 IBM IBM

17.8% Added 1% $13,436,163 64,395,700
4 American Express Co AXP

11.7% Unchanged $8,772,196 151,610,700
5 Procter & Gamble Co. PG

6.5% Cut -5% $4,923,411 73,254,136
6 Kraft Foods Inc. KFT

3.9% Cut -10% $2,965,432 78,017,165
7 Wal-Mart Stores Inc. WMT

3.8% Added 20% $2,858,538 46,708,142
8 ConocoPhillips COP

2.9% Unchanged $2,211,963 29,100,937
9 U.S. Bancorp USB

2.9% Cut 0% $2,187,165 69,039,326
10 Johnson & Johnson JNJ

2.5% Unchanged $1,914,036 29,018,127
11 Moody's Corp. MCO

1.6% Unchanged $1,196,282 28,415,250
12 DIRECTV DTV

1.5% Added 13% $1,134,800 22,999,600
13 The Washington Post WPO

0.9% Unchanged $645,441 1,727,765
14 DaVita, Inc. DVA

0.7% Add 124% $541,020 6,000,000
15 M&T Bank Corp. MTB

0.6% Unchanged $467,591 5,382,040
16 Costco Wholesale Corp COST

0.5% Unchanged $393,469 4,333,363
17 Visa, Inc. V

0.5% Unchanged $338,071 2,865,008
18 CVS Caremark Corp CVS

0.4% Unchanged $318,371 7,106,500
19 USG Corp. USG

0.4% Unchanged $293,642 17,072,192
20 General Dynamics Corp. GD

0.4% Unchanged $284,503 3,877,122
21 Liberty Media LMCA

0.4% Added 76% $264,450 3,000,000
22 General Motors GM

0.3% New $256,500 10,000,000
23 Intel Corporation INTC

0.3% Cut -33% $217,751 7,745,000
24 Torchmark Corp. TMK

0.3% Unchanged $211,156 4,235,818
25 Mastercard Incorporated MA

0.2% Unchanged $170,319 405,000
26 Dollar General Corp DG

0.2% Cut -19% $168,037 3,637,164
27 General Electric Co. GE

0.2% Unchanged $156,102 7,777,900
28 Sanofi-Aventis SNY

0.2% Unchanged $157,467 4,063,675
29 Bank of New York Mellon BK

0.2% Add 213% $135,308 5,607,466
30 United Parcel Service UPS

0.2% Unchanged $115,365 1,429,200
31 Verisk Analytics, Inc. VRSK

0.1% Cut -35% $104,750 2,230,148
32 Viacom Inc 6.85% Pfd VIAB

0.1% New $75,541 1,591,670
33 GlaxoSmithKline plc GSK

0.1% Unchanged $67,837 1,510,500
34 Gannett Co., Inc. GCI

0.0% Unchanged $26,678 1,740,231
35 Ingersoll-Rand Plc IR

0.0% Cut 0% $26,299 636,000
36 Comdisco Holding Co CDCO

Sold

-

6
The first thing worth highlighting with
Greenlight Capitals portfolio is the fact that
Apple (AAPL) now represents almost 16% of their
reported US equity longs. A lot of this seems to
be tied to price appreciation as Einhorns allowed
the position size to grow as well. After all, past
newsletter issues have highlighted that he bought
the bulk of his AAPL at $248 per share. But
despite the fact that shares now trade north of
$500, Einhorn recently reiterated his conviction
in the name at the Ira Sohn Conference in New
York. He said that many people have
miscategorized the company as a hardware play.
Instead, he says its a software company that
happens to sell high margin hardware, calling
their iOS platform sticky as it captured the
customer. While many detractors say that a
trillion dollar market cap for a company is
absurd, Einhorn says its obviously not
prohibited and anything can happen. To combat
another bear argument that everyone already
owns Apple, Einhorn argued that hedge funds
actually have less than 2% of assets. He simply
thinks the company is cheap and will continue to
grow. Dan Loeb of Third Point agrees with him
and his thoughts on the stock are outlined a few
pages down.
At the Ira Sohn event, Einhorn also made
numerous other comments worth highlighting,
including the fact that he said to short Martin
Marietta Materials (MLM), arguing that at a 35
P/E ratio, the stock is overvalued. He thinks
that a one time fiscal stimulus has goosed
earnings. Additionally, he mentioned that
Dicks Sporting Goods (DKS) would suffer due
to Amazon.coms (AMZN) entrance into the
sporting goods category. The Greenlight
manager also had negative comments about
Amazon, saying that the company grows
revenue, but criticzed their weak profit growth.
However, he did not say he was shorting them.
He did say to short US Steel (X) as well as
Zara/Inditex.
In terms of notable first quarter portfolio
activity, Greenlight cut its stakes in Microsoft
(MSFT) and Research in Motion (RIMM) in
half. The hedge fund also completely exited
shares of Yahoo! (YHOO) for the second time as
Dan Loeb continues his activist fight there.
Apart from three smaller new buys, Einhorn
wasnt doing much purchasing at all. This could
be a function of his view on valuations at the
time given that hes a long-term value oriented
investor. Regardless, he was reducing position
sizes across the portfolio, thats for certain.
David Einhorn will be presenting
investment ideas at the Value Investing
Congress in NYC in October and newsletter
readers can receive a discount to the event by
clicking here and using discount code: N12MF3

David Einhorn
Has returned 21.5% annualized

Predicted & profited from the demise
of Lehman Brothers

Author of Fooling Some of the
People All of the Time
Greenlight Capital
Key Takeaways

2%3'4"$565"#$-'
CompuLer Sclences Corp (CSC)
Lxpedla (LxL)
8oundy's (8nu?)
'
."/,'!"89/%6%/)':&6':;-'
Cmnlvlslon 1ech (Cv1l)
8roadrldge llnanclal SoluLlons (88)
?ahoo! (?PCC)
1ravelers (18v)
lurlex harma (lu8x)
llrsL Solar (lSL8) uLs
Lnergy arLners (LL)
View Greenlight Capitals
See what stocks hedge funds have been buying in the latest quarter.
CLICK HERE to subscribe now
7
Greenlight Capital
Next Page: Lone Pine Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Apple Inc. AAPL

15.9% Unchanged $877,445 1,463,700
2 Seagate Technology PLC STX

7.1% Added 1% $391,803 14,538,126
3 General Motors Company GM

6.9% Cut -22% $379,957 14,813,163
4 Gold Miners ETF GDX

6.5% Unchanged $360,125 7,264,971
5 Marvell Technology MRVL

5.2% Added 6% $288,995 18,372,247
6 CareFusion Corporation CFN

4.9% Cut -14% $269,994 10,412,441
7 DELPHI AUTOMOTIVE DLPH

4.6% Unchanged $252,633 8,194,661

4.4% Cut -51% $241,465 7,487,295
9 Ensco plc ESV

3.7% Cut -24% $203,377 3,842,365
10 Dell Inc. DELL

3.6% Cut -15% $198,610 11,964,405
11 Sprint Nextel Corp. S

3.5% Cut -7% $194,555 68,265,000
12 Best Buy Co. Inc. BBY

3.3% Unchanged $182,676 7,714,375
13 NCR Corp. NCR

3.3% Cut -13% $182,093 8,387,490
14 Einstein Noah Restaurant BAGL

2.9% Unchanged $160,143 10,733,469
15 CBS CORP CL B CBS

2.8% Cut -24% $153,568 4,528,681
16 Xerox Corp. XRX

2.3% Cut -9% $124,373 15,392,717
17 Aspen Insurance Holdings AHL

2.1% Cut -9% $114,581 4,101,000
18 HUNTINGTON INGALLS HII

2.0% Cut -15% $110,700 2,750,995
19 HCA HLDGS INC COM HCA

1.9% Cut -26% $103,290 4,175,000
20 Legg Mason Inc. LM

1.7% Unchanged $94,962 3,400,000

1.6% Unchanged $86,387 980,000
22 DST Systems Inc. DST

1.5% Added 39% $85,018 1,567,734
23 Computer Sciences Corp CSC

1.3% New $71,856 2,400,000
24 CA Technologies CA

1.3% Cut 0% $69,878 2,535,472
25 NVR Inc. NVR

0.8% Cut -37% $46,521 64,050
26 Barrick Gold Corporation ABX

0.8% Cut -25% $44,024 1,012,500
27 Compuware Corporation CPWR

0.7% Unchanged $40,979 4,459,027
28 STATE BANK FINANCIAL STBZ

0.7% Unchanged $36,771 2,100,000
29 Expedia Inc. EXPE

0.6% New $33,440 1,000,000
30 Junior Gold Miners ETF GDXJ

0.5% Cut -37% $29,460 1,200,000
31 Research In Motion RIMM

0.4% Cut -45% $23,536 1,600,000
32 Fifth Street Finance Corp. FSC

0.4% Unchanged $19,508 1,998,692
33 BioFuel Energy Corp. BIOF

0.3% Unchanged $17,660 27,168,879
34 Republic Airways RJET

0.3% Unchanged $16,859 3,412,800
35 Tessera Tech TSRA

0.2% Unchanged $11,999 695,580
36 SYMMETRICOM, INC. SYMM

0.2% Unchanged $9,866 1,709,846
37 ROUNDY'S, INC. RNDY

0.1% New $6,013 561,934
38 OmniVision Tech OVTI

Sold

-
39 Broadridge Financial BR

Sold

-
40 Yahoo! Inc. YHOO

Sold

-
41 The Travelers Co TRV

Sold

-
42 Furiex Pharma FURX

Sold

-
43 First Solar, Inc. FSLR PUT

Sold

-
44 Energy Partners Ltd. EPL

Sold

-

8
Steve Mandel spoke at the Ira Sohn
Conference a few days ago where he mentioned
that he had recently gone long department store
Kohls (KSS). He also said he likes the tech
leader companies. Hes obviously referring to
his large positions in Apple (AAPL),
Priceline.com (PCLN), and Google (GOOG). He
would have also been referring to Baidu (BIDU),
except for the fact that Lone Pine completely
exited shares in the first quarter. This name
had previously been lumped in with the others
under the tech leader theme.
Shifting to Lone Pines latest portfolio
disclosure, its quite evident the hedge fund is
playing the El Paso (EP) merger arbitrage as the
company was their top holding at the end of the
first quarter after they boosted their position by
a whopping 382%. The top of their portfolio
was slightly changed as they also took profits in
highfliers like Apple (AAPL) and Priceline.com
(PCLN), cutting each by 41% and 26%
respectively. In terms of new purchases, there
are six worth highlighting due to their size:
AutoZone (AZO), Gap (GPS), Walt Disney
(DIS), Ross Stores (ROST), BE Aerospace
(BEAV) and Estee Lauder (EL) ~ the last of
which was a previously longstanding holding
for the firm. They exited shares in Q4 of 2011,
only to turn around and re-establish their stake
in Q1 of 2012.
Lone Pines portfolio is centered on a few
key themes. The rise of the emerging market
consumer is certainly a big one as theyve been
long casinos like Las Vegas Sands (LVS) with its
Singapore and Cotai exposure, fine retail goods
such as Ralph Lauren (RL) and additionally
theyve disclosed positions in Esprit (traded in
Hong Kong: 0330). Theyve played the rise of
outsourcing via Cognizant Technology
Solutions (CTSH) and Michael Page in the UK.
Its clear they see internet plays as worthwhile,
investing in dominant companies such as
Google (GOOG) and Priceline.com (PCLN).
Lastly, the rise of mobile computing is another
theme you see in their portfolio via Apple
(AAPL), Qualcomm (QCOM), and Crown Castle
(CCI).
On the short side of the portfolio, its
been revealed that Lone Pine has been short
Neopost SA in France. Their thesis there seems
to be that with the profliferation of digital
content, people are printing and mailing items
less and less. As such, theres less demand for
mailing and postage equipment.
Stephen Mandel
Seeks to identify companies with
good management teams that are
trading below intrinsic value

Previously a consumer analyst at
Julian Robertsons hedge fund Tiger
Management
Lone Pine Capital
Key Takeaways

2%3'4"$565"#$-'
AuLoZone (AZC)
Cap (CS)
WalL ulsney (ulS)
8oss SLores (8CS1)
8L Aerospace (8LAv)
LsLee Lauder (LL)
ulLa Salon (uL1A)
8anco SanLander 8rasll (8S88)
Cwens Cornlng (CC)
Wynn 8esorLs (W?nn)
1rlpAdvlsor (18l)
Weyerhaeuser (W?) uLs

."/,'!"89/%6%/)':&6':;-'
neLApp (n1A)
8aldu (8luu)
Wllllams Sonoma (WSM)
lMC 1echnologles (C1l)
Wlllls Croup (WSP)
e8ay (L8A?)
Amerlprlse (AM)
View Lone Pine Capitals Updated
9
Lone Pine Capital
Continued on next page
% of
Portfolio Activity
Value x
$1000 # of Shares
1 El Paso Corp. EP

5.7% Added 382% $934,838 31,635,809
2 Google Inc. GOOG

5.1% Cut -3% $838,301 1,307,312
3 Priceline.com Inc PCLN

4.7% Cut -26% $775,681 1,081,089
4 Apple Inc. AAPL

4.6% Cut -41% $754,800 1,258,944

3.8% Cut -12% $621,237 13,446,688
6 SPDR Gold Shares GLD

3.7% Unchanged $608,081 3,750,348
7 Visa, Inc. V

3.3% Cut -5% $535,294 4,536,386
8 Polo Ralph Lauren RL

3.2% Cut -35% $527,179 3,024,031
9 QUALCOMM Inc QCOM

3.2% Added 21% $522,588 7,678,339
10 Monsanto Co. MON

3.2% Added 10% $519,075 6,507,957
11 NETEASE INC NTES

3.2% Added 20% $520,384 8,956,696
12 Equinix, Inc. EQIX

3.0% Added 14% $498,192 3,164,127
13 Teradata Corporation TDC

3.0% Added 4% $492,599 7,228,162
14 LAS VEGAS SANDS CORP LVS

2.8% Cut -17% $465,345 8,083,114
15 Cognizant Tech Solutions CTSH

2.7% Cut -12% $447,132 5,810,687
16 Crown Castle Intl CCI

2.7% Cut -22% $439,368 8,237,127
17 Express Scripts Inc. ESRX

2.5% Cut -45% $410,378 7,574,345
18 Oceaneering Intl OII

2.5% Cut -4% $404,051 7,497,700
19 AutoZone Inc. AZO

2.4% New $395,781 1,064,500
20 TransDigm Group TDG

2.4% Added 7% $385,696 3,331,859
21 Wyndham Worldwide WYN

1.9% Cut -18% $314,806 6,768,567
22 Gap Inc. GPS

1.8% New $293,055 11,210,965
23 Lululemon Athletica Inc. LULU

1.7% Cut -16% $284,639 3,808,895
24 Green Mountain Coffee GMCR

1.7% Added 115% $280,406 5,986,474
25 New Oriental Education EDU

1.6% Cut -2% $268,180 9,766,210
26 Walt Disney Co. DIS

1.6% New $257,987 5,892,808
27 WABCO Holdings Inc. WBC

1.5% Cut -15% $252,222 4,170,336
28 Fossil, Inc. FOSL

1.5% Cut -37% $248,795 1,885,095
29 MICHAEL KORS KORS

1.5% Added 44% $245,059 5,259,900
30 Ross Stores Inc. ROST

1.4% New $231,081 3,977,296
31 Liberty Media Corp LMCA

1.2% Unchanged $199,507 2,263,262
32 Sensata Technologies ST

1.2% Cut -4% $197,962 5,912,845
33 BE Aerospace Inc. BEAV

1.2% New $197,950 4,259,738
34 Estee Lauder EL

1.2% New $195,956 3,163,643
35 V.F. Corporation VFC

1.2% Cut -3% $192,803 1,320,750
36 W.R. Grace & Co. GRA

1.2% Added 68% $192,562 3,331,525
37 Accretive Health, Inc. AH

1.1% Cut -2% $176,984 8,862,492
38 KINDER MORGAN KMI

1.0% Added 130% $163,856 4,239,475
39 Ulta Salon ULTA

0.8% New $123,568 1,330,266
40 Sears Holdings Corp SHLD PUT 0.7% Added 40% $121,443 1,833,100
41 Banco Santander BSBR

0.7% New $114,806 12,519,785
42 Ctrip.com International CTRP

0.7% Cut -44% $113,401 5,240,339
43 VanceInfo Technologies VIT

0.6% Cut -3% $91,717 7,617,690
44 Owens Corning OC

0.5% New $89,597 2,486,720
45 Wynn Resorts Ltd. WYNN

0.5% New $86,817 695,207

10
Next Page: Appaloosa Management
Continued
Lone Pine Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
46 MedcoHealth MHS CALL 0.5% Unchanged $77,330 1,100,000
47 TRIPADVISOR TRIP

0.4% New $66,546 1,865,613
48 iPath S&P 500 VIX VXX PUT 0.3% Cut -67% $53,698 3,200,000
49 Ariba Inc. ARBA

0.3% New $50,839 1,554,231
50 Weyerhaeuser Co. WY PUT 0.3% New $47,566 2,170,000
51 ISOFTSTONE HOLDINGS ISS

0.3% Unchanged $46,391 5,253,739
52 Intel Corporation INTC PUT 0.2% Unchanged $26,569 945,000
53 Tractor Supply Company TSCO

0.1% New $21,492 237,326
54 7 Days Group Holdings SVN

0.1% Cut -19% $13,888 1,108,375
55 China Lodging Group HTHT

0.1% Cut -44% $11,110 950,364
56 Baidu, Inc. BIDU

Sold

-
57 ARCOS DORADOS ARCO

Sold

-
58 eBay Inc. EBAY

Sold

-
59 Willis Group Holdings WSH

Sold

-
60 Tesla Motors, Inc. TSLA PUT

Sold

-
61 FMC Technologies, Inc. FTI

Sold

-
62 Home Inns & Hotels HMIN

Sold

-
63 Green Mountain Coffee GMCR CALL

Sold

-
64 NetApp, Inc. NTAP

Sold

-
65 Williams-Sonoma Inc. WSM

Sold

-
66 Ameriprise Financial Inc. AMP

Sold

-
67 YANDEX N V YNDX

Sold

-
68 News Corp. NWSA

Sold

-
69 Fossil, Inc. FOSL CALL

Sold

-
70 SolarWinds, Inc. SWI

Sold

-
71 Bed Bath & Beyond, Inc. BBBY PUT

Sold

-
72 NetApp, Inc. NTAP CALL

Sold

-

11
Key Takeaways

2%3'4"$565"#$-'
owershares CCC (CCC)
ClLlgroup (C)
Coogle (CCCC)
Cualcomm (CCCM)
8roadcom (88CM)
lord MoLor (l)
PunLsman (Pun)
8ank of Amerlca (8AC)
uelLa Alr Llnes (uAL)
ParLford llnanclal (PlC)
Ceneral MoLors (CM)
Cwens Cornlng (CC)
LMC (LMC)
Sanulsk (Snuk)
luslon-lC (llC)
1wo Parbors (1WC)
nuance CommunlcaLlons (nuAn)
Su8 S& 300 (S?)

."/,'!"89/%6%/)':&6':;-'
8osLon SclenLlflc (8Sx)
View Appaloosa Managements
After largely selling a lot of names for
the past two quarters, David Teppers hedge
fund firm Appaloosa Management waded into
the buying pool in the new year. In fact,
Appaloosa only completely exited one name:
Boston Scientific (BSX). Teppers latest
portfolio activity can be easily summarized with
one word: technology. Last quarters issue
highlighted how Teppers firm had almost
quadrupled its stake in Apple (AAPL). Well, the
hedge fund was out buying even more shares in
the first quarter, boosting its position size by
277%. At the end of the quarter, AAPL was their
second largest disclosed holding. But if you
David Tepper
Has compounded 30% for
investors over 17 years

Takes concentrated positions in
distressed debt & equity

Profiled in the new book: The Alpha
Masters
examine their portfolio closer, youll see that
they technically have even more gross exposure
to AAPL. Appaloosa started a massive new
stake in the PowerShares QQQ (QQQ) during
the first quarter, bringing it all the way up to
their top holding as they allocated over $1.2
billion to the exchange traded fund. Examining
the QQQs top ten holdings, youll see that its
top holding is Apple at 18.57% of the index.
The exact same thing can be said about
Appaloosas gross exposure to Google (GOOG)
as well. While they bought the stock outright in
the quarter (new position), Google is also 5.5%
of the QQQ. Lastly, they gained a lot of
exposure to Qualcomm (QCOM) the same way:
buying the stock outright and then via the
QQQs 3.82% allocation to the company.
So while Tepper was out buying
technology in size during the first quarter, his
purchases in the financial sector werent far
behind. Citigroup (C) garnered the most capital
from the hedge fund in the sector as this new
position is now Appaloosas third largest
disclosed holding. They also decided to allocate
capital to Bank of America (BAC) as well.
The last major takeaway here is that
Appaloosa Management was also out buying
airlines in size during the quarter. They
increased their United Continental (UAL) stake
by 571%, US Airways (LCC) position by 229%,
and started a new stake in Delta Air Lines
(DAL).
For an in-depth look at Appaloosa, David
Tepper is profiled and interviewed in the new
book The Alpha Masters along with numerous
other famous hedge fund managers, so
definitely check it out.
Appaloosa Management
12
% of
Portfolio Activity
Value x
$1000 # of Shares
1 PowerShares QQQ QQQ

31.4% New $1,273,602 18,854,218
2 Apple Inc. AAPL

10.1% Added 277% $410,637 685,000
3 Citigroup, Inc. C

5.5% New $222,747 6,094,305
4 United Continental UAL

4.2% Added 571% $171,313 7,968,035
5 Google Inc. GOOG

2.6% New $103,969 162,137
6 QUALCOMM Incorporated QCOM

2.5% New $102,947 1,513,486
7 Goodyear Tire & Rubber Co. GT

2.4% Added 43% $97,070 8,651,496
8 Broadcom Corp. BRCM

2.3% New $95,009 2,417,523
9 CVR Energy, Inc. CVI

2.1% Cut -36% $85,865 3,209,911
10 Ford Motor Co. F

2.0% New $81,631 6,535,715
11 US Airways Group, Inc. LCC

2.0% Added 229% $80,888 10,657,243
12 Huntsman Corporation HUN

1.8% New $71,980 5,137,764
13 Bank of America Corp BAC

1.8% New $71,358 7,456,408
14 Oracle Corp. ORCL

1.7% Added 92% $68,056 2,333,883
15 Delta Air Lines Inc. DAL

1.7% New $66,795 6,740,189
16 Financial Select Sector XLF

1.6% Added 96% $66,532 4,216,200
17 Valero Energy Corp. VLO

1.6% Added 181% $65,769 2,552,161
18 Hartford Financial HIG

1.5% New $60,199 2,855,744

1.4% New $56,485 2,202,153
20 Masco Corporation MAS

1.4% Added 2755% $55,502 4,151,256
21 Dean Foods Co. DF

1.3% Cut -28% $53,612 4,427,112
22 Owens Corning OC

1.3% New $52,938 1,469,279
23 EMC Corporation EMC

1.2% New $49,011 1,640,261
24 RBS Pfd N RBS-PN

1.2% Cut -13% $47,108 2,915,072

1.0% New $41,378 2,630,524

1.0% Added 72% $40,313 1,250,000
27 RBS Pfd S RBS-PS

0.9% Cut -2% $35,663 2,135,514
28 Calumet Specialty Products CLMT

0.8% Unchanged $34,054 1,288,944
29 SanDisk Corp. SNDK

0.8% New $33,772 681,021
30 FUSION-IO FIO

0.8% New $32,782 1,153,879
31 RBS Pfd T RBS-PT

0.8% Cut -10% $32,775 1,725,014
32 Mueller Water Products MWA

0.8% Unchanged $31,441 9,441,736
33 Two Harbors Investment TWO

0.8% New $30,420 3,000,000
34 RBS Pfd Q RBS-PQ

0.6% Cut -8% $24,943 1,468,102
35 Nuance Communications NUAN

0.6% New $24,093 941,869
36 SPDR S&P 500 SPY

0.5% New $21,682 154,079
37 RBS Pfd M RBS-PM

0.5% Cut -3% $21,457 1,305,196
38 International Paper Co. IP

0.5% Cut -24% $19,350 551,287
39 Macy's, Inc. M

0.5% Cut -37% $18,554 467,001
40 Hartford Financial Warrant HIG/WS

0.4% Unchanged $16,989 1,275,475
41 CF Industries Holdings, Inc. CF

0.3% Added 41% $12,663 69,332
42 Chimera Investment Corp CIM

0.3% New $12,505 4,418,884
43 RBS Pfd L RBS-PL

0.3% Cut -19% $10,872 582,962
44 MPG Office Trust, Inc. MPG

0.3% Unchanged $10,044 4,292,354
45 MFA Financial, Inc. MFA

0.2% New $7,691 1,029,583

13

Continued
Next Page: Pershing Square
% of
Portfolio Activity
Value x
$1000 # of Shares
46 DELPHI DLPH

0.2% Unchanged $7,244 229,236
47 Boyd Gaming Corp. BYD

0.1% New $5,456 695,975
48 DowJonesConstruction ITB

0.1% New $4,734 321,595

0.1% New $4,477 100,000
50 General Motors Warrant GM/WS/A

0.1% Unchanged $2,920 175,561
51 General Motors Warrant GM/WS/B

0.1% Unchanged $1,966 175,561
52 Beazer Homes USA Inc. BZH

0.0% Unchanged $931 286,614
53 Oracle Corp. ORCL CALL 0.0% New $189 20,100
54 Boston Scientific Corp BSX

Sold

-

See the latest hedge fund portfolios in the brand
new issue available at
www.hedgefundwisdom.com
14
View Pershing Squares Updated
Key Takeaways
'
2%3'4"$565"#$-'
n/a
'
."/,'!"89/%6%/)':&6':;-'
!.C. enney (!C) Calls
Bill Ackmans Pershing Square did
practically no buying during the first quarter
and the only notable activity from this hedge
fund came on the selling side. Pershing sold
27% of its stake in Kraft (KFT), which is
interesting considering that theres a catalyst on
the horizon as the company will be splitting up
later into a North American grocer specialist
and an emerging snacks business.
Ackman also cut his stake in Fortune
Brands Home & Security (FBHS) by 36% during
the first quarter. And in a recent 13G filed with
the SEC in early May, Pershing has actually
disclosed that they no longer own a stake in
FBHS at all. This company came to be as a
result of Fortune Brands split into FBHS and
Beam Inc (BEAM). Its worth noting that
Pershing continues to hold a sizable chunk of
BEAM as they clearly favor one split entity over
the other.
The biggest sale Ackman made in the
quarter, though, involved his stake in Family
Dollar (FDO). He drastically reduced his
position by almost 70%. And again, by way of
recent 13G filed with the SEC, Ackman has
actually disclosed that he no longer owns FDO
as of the middle of May.
The Pershing Square founder also
recently gave a presentation at the Ira Sohn
Conference in New York where he touched on
his investment in J.C. Penney (JCP). He says
that the best ideas are often contrarian, just like
his old play of buying GGP right before
bankruptcy and his short of MBIA back in the
day. JCPs recent comps came out worse than
expected but Ackman says the company is still
moving ahead with the turnaround and that the
customer is starting to understand the process.
Ackman tried to focus on the cost savings,
saying JCP spends 31% on SG&A while Kohls
(KSS) spends only about 21%. Comparing ads,
Ackman points to JCP spending 6% of revenue
on ads while KSS only 4.5%. He said, Not a
lean company trying to cut costs, they are
running fat. He also pointed out that at JCP,
employees used 20% of corporate bandwidth
for Netflix and need to re-focus.
In general, Ackmans thesis on J.C.
Penney is that you can invest in a cyclically
depressed national retailer at a discount to fair
value. Here are some excerpts from Ackmans
presentation: Cheap relative to trailing
earnings (adjusted for year end cash and non-
store real estate portfolio Sales productivity
and margins remain depressed creating
material leverage to a recovery Companys
reported pension expense masks true cash flow
JCP owns substantial core and non-core fee
and long-term leasehold real estate interests.
Ackman has also been involved with
Justice Holdings, a specialty purpose
acquisition company (SPAC) that recently took
a stake in Burger King with plans to bring the
company public again.
The brand new book The Alpha Masters
features an in-depth profile of Ackman along
with many other managers this newsletter
covers and its definitely a must-read.

View a profile of Pershing Square

Subject of the book Confidence
Game: How a Hedge Fund Manager
Called Wall Streets Bluff

Bill Ackman
Pershing Square Capital
15
Pershing Square
Next Page: Maverick Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Canadian Pacific Rail CP

22.7% Added 0% $1,834,943 24,159,888
2 J. C. Penney Company JCP

17.2% Added 1% $1,384,454 39,075,771
3 General Growth Properties GGP

15.2% Unchanged $1,227,250 72,233,712
4 Beam, Inc. BEAM

15.1% Unchanged $1,219,342 20,818,545
5 Citigroup, Inc. C

11.8% Added 0% $954,854 26,124,594

7.3% Cut -27% $589,390 15,506,172
7 FortuneBrands Home&Security FBHS

3.6% Cut -36% $294,044 13,323,249
8 Howard Hughes Corporation HHC

2.8% Unchanged $227,889 3,568,017
9 Alexander & Baldwin, Inc. ALEX

2.2% Added 2% $176,594 3,644,870
10 Family Dollar Stores Inc. FDO

2.1% Cut -69% $165,468 2,614,863
11 J. C. Penney Company, Inc. JCP CALL

Sold

-

16
Lee Ainslies Maverick Capital was out
trimming quite a few positions by the end of the
first quarter. One theme thats quite evident is
their desire to reduce financials exposure. They
sold 72% of their massive stake in JPMorgan
Chase (JPM) during the quarter. And even after
that, its still their seventh largest holding. But
they also completely exited shares of US
Bancorp (USB), Wells Fargo (WFC), and sold
almost 90% of their Citigroup (C) stake. The
wave of selling literally affected Mavericks top
Key Takeaways

2%3'4"$565"#$-'
Skyworks SoluLlons (SWkS)
Macy's (M)
rlcellne.com (CLn)
ulrec1v (u1v)
valeanL harmaceuLlcals (v8x)
Creen MounLaln Coffee (CMC8)
lomenLo Lcon (lMx)
LlberLy Clobal (L81?A)
Sears Poldlngs (SPLu)
AeLna (AL1)
P&8 8lock (P88)

."/,'!"89/%6%/)':&6':;-'
uS 8ancorp (uS8)
Wells largo (WlC)
Amazon.com (AMZn)
llrsL Solar (lSL8)
Pome lnns & PoLels (Mln)
Apollo Croup (ACL)
Cornlng (CLW)
1rlna Solar (1SL)
PCA (PCA)
8anco SanLander-Chlle (8SAC)
8oyal 8ank of ScoLland referreds
thirteen disclosed holdings. Last quarter, Tyco
(TYC) and Corning (GLW) were Mavericks top
two disclosed positions. This time around, both
are nowhere to be found in their top 20
holdings. Maverick dumped its GLW position
entirely and sold 82% of its TYC stake after
buying it hand over fist the past two quarters.
After all the selling in the first quarter,
Mavericks top five holdings are now Cigna (CI),
Avago Technologies (AVGO), Qualcomm
(QCOM), Apple (AAPL), and Google (GOOG).
The last two were consensus buys among hedge
funds profiled in this issue (even though
Ainslies firm was reducing their stakes in
each).
The hedge fund had a rough 2011 and
Ainslie addressed this in his year-end letter to
investors, writing: While the environment for
fundamental investing was certainly
unfavorable last year, such factors do not fully
account for our results. Mavericks poor
performance was primarily driven by a handful
of individual mistakes and insufficient risk
constraints. In order to address risk
management, theyve implemented MavRank, a
quantitative system driven by fundamental
inputs that helps make recommendations for
position sizing. The manager also touched on
the investment environment, writing, (Last
year) stocks moved in tandem with one another
to a degree never before seen and were less
responsive to idiosyncratic risks, such as
fundamental factors, than ever before
equities have maintained correlation above the
long-term average for almost six years now,
creating a sustained, unfavorable headwind for
fundamental investors.
View Maverick Capitals Updated
Lee Ainslie
Maverick Capital
14.0% annualized returns since
inception in 1995

Compares a companys enterprise
value to sustainable free cash flow

View a profile of Maverick Capital
17
Maverick Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 CIGNA Corporation CI

4.6% Cut -49% $321,728 6,532,539
2 Avago Technologies AVGO

4.5% Cut -41% $314,147 8,061,247
3 QUALCOMM QCOM

4.5% Cut -11% $311,357 4,574,744
4 Apple Inc. AAPL

4.4% Cut -63% $308,608 514,733
5 Google Inc. GOOG

4.0% Cut -3% $279,786 436,320
6 CareFusion Corp CFN

3.2% Cut -46% $220,962 8,521,463
7 JPMorgan Chase & Co. JPM

3.1% Cut -72% $214,971 4,675,308
8 CVS Caremark CVS

3.1% Cut -16% $213,718 4,770,502
9 Endo Pharma ENDP

3.1% Cut -7% $213,357 5,508,833
10 McKesson Corporation MCK

3.1% Cut -51% $213,615 2,433,806
11 YOUKU.COM INC. YOKU

2.9% Cut -50% $203,918 9,273,198
12 Sara Lee Corp. SLE

2.9% Cut -58% $203,292 9,442,246
13 Pfizer Inc. PFE

2.4% Cut -60% $163,647 7,226,628
14 Skyworks Solutions Inc. SWKS

2.3% New $161,684 5,847,539

2.3% Cut -37% $161,540 3,496,541
16 Macy's, Inc. M

1.9% New $130,824 3,292,818
17 Amdocs Ltd. DOX

1.9% Cut -68% $130,621 4,136,208

1.8% New $126,926 176,900
19 Credicorp Ltd. BAP

1.8% Cut -20% $121,654 922,880
20 DIRECTV DTV

1.7% New $120,108 2,434,300

1.7% Cut -81% $118,646 2,650,118
22 Tyco International Ltd. TYC

1.7% Cut -82% $118,860 2,115,703

1.7% Cut -26% $118,877 4,076,728
24 Valeant Pharma VRX

1.7% New $116,720 2,175,793
25 Avery Dennison Corp AVY

1.7% Cut -63% $115,464 3,832,190

1.6% Cut -16% $113,113 977,138

1.6% New $112,539 2,077,140

1.5% New $107,381 2,292,500
29 GROUPON INC GRPN

1.5% Unchanged $104,729 6,331,120
30 Aeropostale, Inc. ARO

1.5% Cut -65% $102,536 4,742,623
31 SLM Corporation SLM

1.4% Cut -76% $99,771 6,330,638
32 Fomento Econ FMX

1.4% New $98,659 1,199,215
33 News Corp. NWSA

1.4% Cut -74% $96,965 4,919,590
34 Comcast Corporation CMCSA

1.4% Cut -68% $96,943 3,230,372
35 Owens Corning OC

1.1% Cut -73% $75,864 2,105,582
36 Liberty Global Inc. LBTYA

1.1% New $73,202 1,461,709
37 Sears Holdings SHLD

1.0% New $72,395 1,092,755
38 Anheuser-Busch InBev BUD

1.0% Cut -25% $66,289 911,568
39 Citigroup, Inc. C

0.9% Cut -89% $60,266 1,648,854
40 Comcast Corporation CMCSK

0.8% Cut -78% $58,267 1,974,497
41 CognizantTechSolutions CTSH

0.8% Cut -55% $56,579 735,265
42 Aetna Inc. AET

0.8% New $56,652 1,129,430
43 Progressive Corp. PGR

0.8% Cut -86% $56,245 2,426,447
44 Teradata Corporation TDC

0.8% Cut -81% $55,005 807,120
45 Sirona Dental Systems SIRO

0.8% Cut -70% $55,236 1,071,713

18
Next Page: Third Point
Continued
Maverick Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
46 H&R Block, Inc. HRB

0.8% New $53,531 3,250,208
47 DaVita, Inc. DVA

0.8% New $52,805 585,616
48 Citrix Systems, Inc. CTXS

0.7% New $49,682 629,598
49 Family Dollar Stores FDO

0.6% New $42,569 672,712
50 Urban Outfitters Inc. URBN

0.6% Cut -91% $38,553 1,324,400
51 J. C. Penney Co JCP

0.5% Cut -75% $35,044 989,118
52 CARBO Ceramics Inc. CRR

0.5% New $32,186 305,223
53 Six Flags Entertainment SIX

0.4% Cut -51% $29,246 625,315
54 Capital One Financial COF

0.4% Cut -78% $28,781 516,348
55 Ironwood Pharma IRWD

0.4% Cut -50% $27,974 2,101,695
56 HSN, Inc. HSNI

0.3% Cut -60% $20,866 548,679
57 Caribou Coffee Co CBOU

0.3% Add 206% $18,786 1,007,828
58 Sanderson Farms, Inc. SAFM

0.3% Cut -50% $17,558 331,088
59 China Lodging Group HTHT

0.3% Cut -55% $17,086 1,461,549
60 RENREN INC RENN

0.2% New $16,940 3,068,829
61 BANKRATE INC RATE

0.2% Cut -50% $14,869 600,764
62 TriQuint Semi TQNT

0.2% New $14,466 2,097,981
63 SolarWinds, Inc. SWI

0.2% New $13,874 358,968
64 Pacific Biosciences PACB

0.2% Cut -50% $12,118 3,543,333
65 BRIGHTCOVE INC BCOV

0.2% New $11,210 502,252
66 RBSPfd Q RBS-PQ

0.2% Cut -79% $11,180 658,031
67 Signet Jewelers Limited SIG

0.2% Cut -74% $10,678 225,840
68 RBS Pfd M RBS-PM

0.2% Cut -58% $10,634 646,839
69 RBS Pfd S RBS-PS

0.1% Cut -84% $7,671 459,329
70 MEDLEY CAPITAL MCC

0.1% Cut -59% $7,747 687,420
71 Bluefly Inc. BFLY

0.1% Cut -50% $6,853 3,704,101
72 Wet Seal Inc. WTSLA

0.1% Cut -58% $6,059 1,756,106
73 icad Inc. ICAD

0.0% Cut -62% $80 184,141
74 RBS Pfd N RBS-PN

Sold

-
75 Banco Santander-Chile BSAC

Sold

-
76 RBS Pfd T RBS-PT

Sold

-
77 HCA HLDGS HCA

Sold

-
78 Trina Solar Ltd. TSL

Sold

-
79 Par Pharma PRX

Sold

-
80 ETFS Physical Platinum PPLT

Sold

-
81 U.S. Bancorp USB

Sold

-

Sold

-
83 Wells Fargo & Co WFC

Sold

-
84 Amazon.com Inc. AMZN

Sold

-
85 Corning Inc. GLW

Sold

-
86 Apollo Group Inc. APOL

Sold

-

Sold

-
88 First Solar, Inc. FSLR

Sold

-
89 Yingli Green Energy YGE

Sold

-
90 Citigroup Dividend C/PH

Sold

-
91 AMBEV ABV

Sold

-
92 Cardiovascular Systems CSII

Sold

-
93 Las Vegas Sands LVS

Sold

-

19
Third Point continues to lead the activist
charge in Yahoo! (YHOO) and they were out
buying even more shares in the first quarter.
Third Point won their proxy contest and ousted
the CEO. But now the problem still remains:
how do you fix the company?
Loebs firm started a sizable new position
in Apple (AAPL) during the first quarter. He
purchased shares at $445 and wrote his
thoughts on the company in his Q1 letter:
Currently, Apple is trading at 13.4x CY2012
EPS of $45, and 11.6x CY2013 EPS of $52
Adjusting for cash, Apples valuation drops to
11.1x CY2012 EPS and 9.6x C2013, leaving it
inexpensive relative to the S&P 500. He points
to the product halo effect as more users
become entrenched in the companys operating
system as well as growth in China as key drivers
Key Takeaways

2%3'4"$565"#$-'
uelphl (uLP) ~ owned pre-lC
Apple (AAL)
unlLed 1echnologles (u1x)
Coogle (CCCC)
lamlly uollar (luC)
CaplLal Cne (CCl)
Clsco SysLems (CSCC)
Abercromble & llLch (Anl)
Wells largo (WlC)
1eradyne (1L8)
loneer naLural 8esources (xu)
uevon Lnergy (uvn)

."/,'!"89/%6%/)':&6':;-'
8lg LoLs (8lC)
lalns LxploraLlon (x)
LlberLy lnLeracLlve (Lln1A)
Lxpedla (LxL)
Sunoco (Sun)
Skyworks SoluLlons (SWkS)
newell 8ubbermald (nWL)
going forward.
Third Point also started new stakes in
Medco Health and Express Scripts (ESRX)
during the quarter, playing the merger
arbitrage. Express Scripts received regulatory
approval to acquire Medco and the deal went
through. Post-merger, Loeb continues to like
the combined entity, writing, Based on our
analysis of the combined MHS/ESRX entity, we
believe that Express Scripts remains an
attractive investment candidate, combining
15+% EPS growth, the opportunity for
accelerated synergy realization, and a
reasonable forward PE multiple (13x 2013
EPS).
The hedge fund continued to add to its
position in Sara Lee (SLE) during the quarter.
This should come as no surprise given the
catalysts ahead. The company has announced a
special dividend of $3 per share after the tea &
coffee division is spun-off in June. Existing
shareholders of SLE will receive shares in the
new company, which plans to list in the
Netherlands.
When viewing Third Points equity
portfolio on the next page, just remember they
also invest in debt and other asset classes as
well. Third Points actual top five holdings as of
the end of April are: Yahoo (YHOO), gold,
Delphi (DLPH), Apple (AAPL), and
Eksportfinans ASA. Also, Delphi shows up as a
new stake on the next page, but thats only
because the company completed its IPO. In
reality, Third Point owned it beforehand.
Loeb is also profiled in the excellent new
book The Alpha Masters along with numerous
other top managers.
View Third Points Updated
Dan Loeb
Third Point
Offshore fund has returned 18.4%
annualized since inception

Focuses on event-driven and
distressed plays

View his recommended reading list
20
Third Point
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Yahoo! Inc. YHOO

26.42% Add 26% $1,073,016 70,500,400
2 DELPHI DLPH

10.29% New $417,990 13,339,711

5.45% Add 32% $221,221 10,275,000
4 Apple Inc. AAPL

5.34% New $217,037 362,000
5 United Technologies UTX

4.49% New $182,468 2,200,000
6 Google Inc. GOOG

4.42% New $179,547 280,000

3.58% Cut -8% $145,503 9,250,000
8 MedcoHealth Solutions MHS

3.46% New $140,600 2,000,000
9 Family Dollar Stores FDO

3.35% New $136,052 2,150,000

2.95% New $119,841 2,150,000
11 El Paso Corp. EP

2.91% Cut -28% $118,200 4,000,000
12 Cisco Systems, Inc. CSCO

2.60% New $105,750 5,000,000
13 Abercrombie & Fitch ANF

2.26% New $91,778 1,850,000
14 Wells Fargo & Co WFC

2.14% New $87,057 2,550,000
15 Teradyne Inc. TER

2.08% New $84,450 5,000,000
16 Express Scripts ESRX

2.00% New $81,270 1,500,000
17 Pioneer Natural PXD

1.79% New $72,534 650,000
18 Devon Energy Corp DVN

1.75% New $71,120 1,000,000
19 Weatherford WFT

1.71% New $69,414 4,600,000
20 DISH NETWORK DISH

1.62% Cut -50% $65,860 2,000,000
21 Ivanhoe Mines Ltd. IVN

1.26% New $51,155 3,250,000

1.19% Added 10% $48,482 550,000

1.19% New $48,274 550,000
24 Teva Pharmaceutical TEVA

0.89% New $36,048 800,000

0.64% Unchanged $25,939 160,000
26 Goldman Sachs GS

0.61% Cut -33% $24,874 200,000
27 Genworth Financial Inc. GNW

0.51% Cut -29% $20,800 2,500,000
28 RBS Pfd T RBS-PT

0.45% New $18,335 965,000

0.44% New $17,964 358,700
30 Thoratec Corp. THOR

0.42% New $16,855 500,000
31 Mead Johnson Nutrition MJN

0.41% Cut -85% $16,496 200,000

0.26% Adde49% $10,609 244,000
33 RBS Pfd S RBS-PS

0.25% New $10,020 600,000
34 Xerium Technologies Inc. XRM

0.22% Cut -20% $8,733 1,354,000
35 RBS Pfd Q RBS-PQ

0.22% New $9,005 530,000
36 RBS Pfd N RBS-PN

0.10% New $4,040 250,000
37 BioFuel Energy Corp. BIOF

0.09% Unchanged $3,626 5,578,800
38 RBS Pfd M RBS-PM

0.09% New $3,452 210,000
39 McKesson Corporation MCK CALL 0.04% New $1,512 500,000
40 KINDER MORGAN KMI CALL 0.04% New $1,625 2,500,000
41 RBS Pfd P RBS-PP

0.03% New $1,304 80,000
42 QUESTCOR PHARMA QCOR PUT 0.01% New $484 510,000
43 Qihoo 360 Technology QIHU PUT 0.01% New $458 228,900

21
Third Point
Next Page: Blue Ridge Capital
Continued
% of
Portfolio Activity
Value x
$1000 # of Shares
44 Potash Corp POT

Sold

-
45 Newell Rubbermaid Inc. NWL

Sold

-
46 HOLLYFRONTIER HFC

Sold

-
47 Gilead Sciences Inc. GILD

Sold

-
48 Liberty Media Interactive LINTA

Sold

-
49 Crexus Investment Corp. CXS

Sold

-
50 MGIC Investment Corp. MTG

Sold

-
51 Gardner Denver Inc. GDI

Sold

-
52 ABRAXAS PETROLEUM AXAS

Sold

-
53 MEMC Electronic WFR

Sold

-

Sold

-
55 Big Lots Inc. BIG

Sold

-
56 Plains Exploration PXP

Sold

-
57 Celanese Corp. CE

Sold

-
58 FMC Corp. FMC

Sold

-
59 Williams Companies, Inc. WMB

Sold

-
60 GrafTech Intl GTI

Sold

-
61 WPX ENERGY INC WPX

Sold

-
62 SUNCOKE ENERGY SXC

Sold

-
63 ETRADE Financial ETFC

Sold

-
64 EAGLE ROCK ENERGY EROCW

Sold

-
65 Skyworks Solutions Inc. SWKS

Sold

-
66 Sunoco Inc. SUN

Sold

-
67 YPF S.A. YPF

Sold

-
68 Yahoo! Inc. YHOO CALL

Sold

-

Sold

-
70 Diamond Foods, Inc. DMND PUT

Sold

-

22
Blue Ridge Capital made a few
significant sells during the first quarter. They
liquidated their longstanding position in
Valeant Pharmaceuticals (VRX), previously
their sixth largest holding. They also completely
exited shares of Level 3 Communications
(LVLT). While they expected the company to
further its market position after the acquisition
of Global Crossing, shares of LVLT largely
havent done much. Additionally, they trimmed
their previously largest holding, Range
Resources, by 25% during the quarter. They
still own it, though, as its now their tenth
largest disclosed stake. The last stock worth
highlighting on the selling side is NovaGold
Resources (NG). Blue Ridge cut its position in
half, which is intriguing when you consider that
Seth Klarmans Baupost Group was buying
during the quarter. Not to mention, shares have
slid even lower since the close of the quarter.
On the buying side of the equation, Blue
Ridge ratcheted up their position in Apple
Key Takeaways

2%3'4"$565"#$-'
1rlpAdvlsor (18l)
MarLln MarleLLa (MLM)
Mlchael kors (kC8S)

."/,'!"89/%6%/)':&6':;-'
Level 3 CommunlcaLlons (LvL1)
MarkeL vecLors Cold Mlners (Cux)
LchoSLar (SA1S)
lllumlna (lLMn)
ennyMac MorLgage (M1)
Amerlcan CaplLal Agency (ACnC)
n8C Lnergy (n8C)
uunkln 8rands (unkn)
kk8 (kk8)
(AAPL) in a big way, almost doubling their
position size. Theyve long been a holder of the
stock, but they sold almost 70% of their
position in the fourth quarter. They quickly
changed their mind on that decision, bringing it
back up to their top holding in the first quarter.
The hedge fund also started three new stakes
worth highlighting. TripAdvisor (TRIP) was
spun-off from Expedia (EXPE) in the fourth
quarter and John Griffins firm likes the newly
separate company as they bought over 4.5
million TRIP shares. Michael Kors (KORS)
completed its initial public offering (IPO) in the
fourth quarter, but Blue Ridge waited until the
first quarter to initiate a position in the name.
Lastly, Martin Marietta (MLM) garnered new
capital from the hedge fund as well. Regarding
MLM, Tom Russo of Gardner, Russo, &
Gardner recently made comments about the
investment thesis on the company with
Columbia Business School: (Its) business,
stone quarrying, tends toward natural
monopolies. It is very expensive to haul stone
on a truck and stone isnt valuable enough to
allow it to recoup shipping costs. Within 25
miles is about the only distance that you can
draw from to get stone so if you own a quarry
in an urban region, you have a very valuable
asset.
As youll notice from their portfolio on
the next page, Blue Ridge is one of the better
hedge funds to track via 13F due to the lower
amount of turnover. Many of the positions
remain unchanged from the prior quarter.
John Griffins firm typically categorizes its
investments into either a) time arbitrage (long-
term investors) or b) catalyst driven.
View Blue Ridge Capitals Updated
Blue Ridge Capital
John Griffin
Classifies investments as catalyst
driven or time arbitrage & previously
was Julian Robertsons right-hand
man

View his recommended reading list

23
Blue Ridge Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Apple Inc. AAPL

7.2% Added 92% $431,976 720,500

6.6% Unchanged $397,495 554,000

5.8% Unchanged $352,751 1,741,896
4 Monsanto Co. MON

5.7% Unchanged $345,760 4,335,000
5 Google Inc. GOOG

5.5% Added 4% $333,445 520,000

4.7% Added 43% $282,087 6,135,000
7 Netflix, Inc. NFLX

4.5% Unchanged $272,070 2,365,000

4.4% Unchanged $263,655 7,875,000
9 Thermo Fisher Scientific TMO

4.4% Unchanged $262,731 4,660,000
10 Range Resources Corp RRC

4.1% Cut -25% $249,404 4,289,720

4.1% Added 1% $244,641 4,885,000
12 Lowe's Companies Inc. LOW

3.7% Unchanged $222,672 7,096,000

3.1% Added 14% $186,787 7,550,000
14 DOLLAR TREE STORES DLTR

3.0% Unchanged $181,421 1,920,000
15 TRIPADVISOR TRIP

2.8% New $166,757 4,675,000
16 Polo Ralph Lauren Corp. RL

2.7% Unchanged $162,999 935,000
17 VeriSign Inc. VRSN

2.5% Added 86% $148,031 3,860,000

2.4% Add 122% $145,114 2,970,000
19 SIRIUS XM Radio Inc. SIRI

2.4% Added 12% $143,197 61,990,000
20 MARTIN MARIETTA MLM

2.3% New $138,721 1,620,000
21 Delta Air Lines Inc. DAL

2.0% Unchanged $122,946 12,400,000
22 BlackRock, Inc. BLK

2.0% Unchanged $117,818 575,000

1.8% Added 27% $105,538 1,745,000

1.7% New $103,663 2,225,000
25 TD AMERITRADE AMTD

1.6% Unchanged $96,825 4,905,000
26 United Continental UAL

1.4% Unchanged $86,982 4,045,678
27 Baidu, Inc. BIDU

1.4% Unchanged $82,724 567,500

1.3% Added 76% $81,141 2,220,000

1.3% Added 3% $79,164 3,600,000
30 MGIC Investment Corp. MTG

0.8% Unchanged $49,107 9,900,600
31 Xinyuan Real Estate XIN

0.8% Unchanged $47,723 13,752,933
32 YANDEX N V YNDX

0.7% Unchanged $44,067 1,640,000
33 NovaGold Resources Inc. NG

0.4% Cut -50% $25,830 3,597,500
34 Tesla Motors, Inc. TSLA

0.4% Unchanged $21,413 575,000
35 Ivanhoe Energy Inc. IVAN

0.3% Unchanged $16,784 15,985,000
36 JPMorgan Chase Warrants JPM/WS

0.2% Unchanged $12,484 933,000
37 AIG When Issued AIG/WS

0.2% Unchanged $12,236 1,150,000
38 PACIFIC BIOSCIENCES PACB

0.1% Unchanged $2,975 870,000
39 Northeast Bancorp NBN

0.0% Cut -27% $1,440 114,300

24
Next Page: Paulson & Co
Continued
Blue Ridge Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
40 Level 3 Communications LVLT

Sold

-
41 PennyMac Mortgage PMT

Sold

-
42 American Capital Agency AGNC

Sold

-
43 Gold Miners ETF GDX

Sold

-
44 NRG Energy, Inc. NRG

Sold

-
45 DUNKIN' BRANDS GROUP DNKN

Sold

-
46 Kohlberg Kravis Roberts KKR

Sold

-
47 GOLUB CAPITAL GBDC

Sold

-
48 Ivanhoe Mines Ltd. IVN

Sold

-
49 EchoStar Corp. SATS

Sold

-
50 Greenlight Capital Re GLRE

Sold

-
51 Valeant Pharmaceuticals VRX

Sold

-
52 Dynegy Inc. DYN

Sold

-
53 East West Bancorp EWBC

Sold

-

Sold

-
55 Illumina Inc. ILMN

Sold

-

25
John Paulson is profiled and
interviewed in the new book, The Alpha
Masters, a true must-read due to the unparalled
access to numerous top managers the book
provides. He also recently made an appearance
at the Ira Sohn Conference in New York City
where he presented three long ideas. The first
of which, Caesars (CZR), was one he just started
a position in during the first quarter. His thesis
on buying the equity of this highly leveraged
name is that hes treating it essentially as a
stock with a high option value. He says that
common stock is only 7% of valuation and gets
the upside as the company is turning around.
Paulson argues the key to CZR could not only be
gaming properties but social gaming, which
could be worth $6-9, and online gaming could
be worth $24 per share. The key is growth and
he says the company is already seeing revenue
per available room (RevPAR) growth. Paulson
Key Takeaways

2%3'4"$565"#$-'
Caesars (CZ8)
Covldlen (CCv)
novellus (nvLS)
AboveneL (A8v1)
1homas & 8eLLs (1n8)
vlacom (vlA.8)
CuesL SofLware (CSl1)

."/,'!"89/%6%/)':&6':;-'
1ransocean (8lC)
C8 8lchard Lllls (C8C)
harmasseL ~ boughL ouL
SouLhern unlon ~ boughL ouL
Whlrlpool (WP8)
Mosalc (MCS)
8eazer Pomes (8ZMu)
vall 8esorLs (M1n)
lelCor Lodglng (lCP-A)
points to CZR having no debt due until 2015
and he likes hotels because the rates increase
with inflation. He argued the stock could have
10x upside.
His second idea at the conference was
AngloGold Ashanti (AU), a position hes held
for a while now and one thats currently his
third largest disclosed long. Paulson says this
play is pure gold upside and noted its been
selling off much more than the price of gold as
the correlation has broken down. While bears
say to just buy the SPDR Gold Trust exchange
traded fund (GLD), Paulson says youre
essentially paying more by doing that. He
argues youre buying the company at only $133
per proven reserves.
Paulsons last idea at the Ira Sohn
Conference was an arbitrage play (his
specialty). Hes playing the CVR Energy (CVI)
takeover by Carl Icahn and is tendering his
shares into the offer. So if you buy shares at
$30.35 and tender to the offer at $30, youre
only paying $0.35 for contingent cash payment
rights (CCP). So if Icahn turns around and
shops the company and sells it for $36.15, the
CCP could be worth $6.15, which is a 17.6x
return on the $0.35 paid initially.
Touching on some of Paulsons first
quarter portfolio activity, he was mainly out
adding to risk arbitrage positions for takeovers
(El Paso, Medco Health, AboveNet, etc). And
after selling over 80% of his position in
Transocean (RIG) in the fourth quarter, John
Paulson completely liquidated the rest of his
shares as RIG continued to trade lower.

View Paulson & Cos Updated
Paulson & Co
John Paulson
Predicted & profited from the
subprime crisis; manages $35bn

Featured in the book The Greatest
Trade Ever

View an in-depth look at Paulsons
gold fund
This is a free past issue. The brand new issue is available at
www.hedgefundwisdom.com
26
Paulson & Co
% of
Portfolio Activity
Value x
$1000 # of Shares

18.7% Unchanged $2,806,452 17,310,952
2 DELPHI DLPH

9.6% Cut -12% $1,438,898 45,534,758
3 AngloGold Ashanti Ltd. AU

8.2% Cut -3% $1,224,358 33,162,460

5.3% Added 0% $789,882 37,470,676
5 Mylan, Inc. MYL

3.8% Added 16% $574,605 24,503,400
6 MGM Resorts MGM

3.4% Added 1% $512,782 37,649,200
7 Anadarko Petroleum Corp APC

3.1% Cut -38% $468,657 5,982,345

3.0% Cut -14% $457,068 8,200,000
9 Motorola Mobility MMI

2.9% Unchanged $431,640 11,000,000
10 Baxter International Inc. BAX

2.2% Added 89% $322,812 5,400,000
11 CNO FINL GROUP NOTE CNO

2.1% Unchanged $312,462 199,976,000

1.9% Add 100% $281,200 4,000,000
13 Gold Fields Ltd. GFI

1.8% Cut -20% $262,121 18,857,600
14 AMC NETWORKS AMCX

1.7% Unchanged $256,623 5,750,000
15 JPMorgan Chase Warrant JPM/WS

1.7% Cut 0% $247,042 18,463,500
16 XL Group plc XL

1.6% Cut -34% $244,915 11,291,600
17 Life Technologies Corp LIFE

1.6% Added 2% $243,016 4,977,792
18 El Paso Corp. EP

1.6% Add 100% $236,400 8,000,000
19 NovaGold Resources Inc. NG

1.5% Added 39% $229,292 31,937,018
20 CNO Financial Group, Inc. CNO

1.2% Cut -1% $181,129 23,281,369
21 CAESARS Entertainment CZR

1.2% New $182,376 12,372,835
22 Goodrich Corp. GR

1.2% Unchanged $179,084 1,427,649
23 American Capital, Ltd. ACAS

1.1% Cut -43% $157,790 18,199,543
24 Bank of America Warrant BAC/WS/A

1.0% Added 0% $147,085 31,631,200
25 Scripps Networks SNI

1.0% Cut -23% $146,070 3,000,000
26 InterDigital, Inc. IDCC

0.9% Added 36% $139,440 4,000,000
27 SunTrust Banks, Inc. STI

0.9% Cut -52% $136,606 5,651,894
28 Popular Inc. BPOP

0.9% Unchanged $134,830 65,770,600
29 Rock-Tenn Co. RKT

0.9% Cut -37% $135,120 2,000,000
30 AngloGold Converts AU/PA

0.9% Unchanged $131,092 3,043,000
31 MetLife, Inc. MET

0.9% Cut -21% $129,402 1,829,782

0.8% Unchanged $119,183 3,491,000
33 Ralcorp Holdings Inc. RAH

0.7% Unchanged $111,135 1,500,000
34 Covidien plc COV

0.7% New $98,424 1,800,000
35 Novellus Systems, Inc. NVLS

0.7% New $99,820 2,000,000

0.6% Unchanged $94,920 1,500,000
37 Capital One Warrants COF/WS

0.6% Unchanged $91,109 3,992,520
38 GRIFOLS, S.A. GRFS

0.6% Cut -1% $86,396 11,205,745
39 AboveNet, Inc. ABVT

0.6% New $82,800 1,000,000
40 Randgold Resources Ltd. GOLD

0.6% Cut -1% $81,866 930,502
41 Howard Hughes Corp HHC

0.5% Cut -25% $75,367 1,180,000
42 Thomas & Betts Corp. TNB

0.5% New $71,910 1,000,000
43 GENON ENERGY INC GEN

0.4% Add 565% $65,670 31,571,989
44 Boise Inc. BZ

0.4% Cut 0% $57,604 7,016,300
45 IAMGOLD Corp. IAG

0.3% Added 40% $51,590 3,881,900

0.3% New $47,460 1,000,000
47 Quest Software Inc. QSFT

0.3% New $46,540 2,000,000
48 AbitibiBowater Inc. ABH

0.3% Cut -30% $47,124 3,300,000
49 Gaylord Entertainment Co. GET

0.3% New $41,888 1,360,000

0.3% Cut -1% $39,784 915,000

27
Continued
Paulson & Co
% of
Portfolio Activity
Value x
$1000 # of Shares

0.3% New $39,584 1,600,000
52 United Rentals, Inc. URI

0.2% Unchanged $35,809 834,900
53 Agnico-Eagle Mines Ltd. AEM

0.2% Cut -1% $33,934 1,016,600
54 Allied Nevada Gold Corp. ANV

0.2% New $32,807 1,008,521
55 Walter Energy, Inc. WLT

0.2% Unchanged $29,605 500,000
56 POST HOLDINGS INC POST

0.2% New $27,342 830,300
57 Medicis Pharmaceutical MRX

0.2% Unchanged $25,614 681,400
58 International Tower Hill THM

0.2% Cut -1% $21,894 5,103,500
59 STATE BANK FINANCIAL STBZ

0.2% Cut -35% $22,101 1,262,200
60 FelCor Lodging Trust Inc. FCH

0.1% Unchanged $20,520 5,700,000
61 Prestige Brands Holdings PBH

0.1% New $17,480 1,000,000
62 Tenet Healthcare Corp. THC

0.1% Cut -73% $14,337 2,700,000
63 RBS Pfd N RBS-PN

0.1% Added 10% $13,259 820,490
64 Bank of America Warrant BAC/WS/B

0.1% Unchanged $13,694 13,041,600
65 RBS Pfd M RBS-PM

0.1% Unchanged $13,728 835,051
66 RBS Pfd P RBS-PP

0.1% Unchanged $9,820 602,433
67 RBS Pfd Q RBS-PQ

0.1% Unchanged $10,493 617,578
68 STRATEGIC HOTELS SGCHZ

0.1% Cut -71% $10,791 1,640,000
69 RBS Pfd R RBS-PR

0.1% Unchanged $10,171 623,968
70 RBS Pfd S RBS-PS

0.1% Unchanged $8,526 510,524
71 RBS Pfd T RBS-PT

0.1% Unchanged $7,717 406,180
72 Beazer Homes USA Inc. BZH

0.1% Cut -53% $7,480 2,301,483
73 News Corp. NWS

0.0% Cut -94% $5,994 300,000
74 SuperMedia Inc. SPMD

0.0% Unchanged $6,232 2,607,504

0.0% Unchanged $6,362 141,193
76 Dex One Corporation DEXO

0.0% Unchanged $5,220 3,676,394
77 FAIRPOINT COMM FRP

0.0% Cut -52% $4,136 1,100,000
78 CHEMTURA CORP CHMT

0.0% Added 32% $4,964 292,325
79 Sunstone Hotel Investors SHO

0.0% Cut -87% $2,401 246,458
80 Hartford Financial Wrrnt HIG/WS

0.0% Unchanged $928 70,000
81 Quad/Graphics, Inc. QUAD

0.0% Cut -86% $2,085 150,000

0.0% New $1,507 70,000
83 Transocean Ltd. RIG

Sold

-
84 FelCor Lodging Trust FCH-PA

Sold

-
85 CB Richard Ellis Group CBG

Sold

-
86 PHARMASSET VRUS

Sold

-
87 Southern Union SUG

Sold

-
88 Whirlpool Corp. WHR

Sold

-
89 Mosaic Co. MOS

Sold

-
90 PMI GROUP INC PPMIQ

Sold

-
91 Transatlantic Holdings TRH

Sold

-
92 Veeco Instruments VECO

Sold

-
93 Beazer Homes USA BZMD

Sold

-
94 Vail Resorts Inc. MTN

Sold

-

Next Page: Tiger Management
28
The upper echelon of Tiger
Managements portfolio saw some interesting
changes during the first quarter. The most
notable change would be the fact that Julian
Robertsons firm sold completely out of its
previously large stake in Valeant
Pharmaceuticals (VRX). His former number
two right-hand man, John Griffin, also sold out
of VRX in the quarter. Given that Robertson
often talks with his former employees, this
similar movement is probably not a
coincidence.
After selling out of Netflix (NFLX) in the
fourth quarter (after shares plummeted), Tiger
Management re-entered a NFLX position just
one quarter later. NFLX currently trades
around $74. The lowest Tiger could have paid
was $72 and the highest $129 based on NFLXs
trading during the quarter. Needless to say, its
been a wild ride. Tiger also started a bevy of
positions, including: HCA (HCA), Starbucks
(SBUX), Sherwin Williams (SHW) and VeriSign
(VRSN). SHW shares have been on a monster
Key Takeaways

2%3'4"$565"#$-'
PCA (PCA)
SLarbucks (S8ux)
Sherwln Wllllams (SPW)
verlSlgn (v8Sn)
Lxpress-1 LxpedlLed SoluLlons (xC)
neLfllx (nlLx)
Sanulsk (Snuk)
Callldus SofLware (CALu)
8emark Medla (MA8k)

."/,'!"89/%6%/)':&6':;-'
ClLlgroup (C)
ulglLal Clobe (uCl)
Sonoco roducLs (SCn)
run this year as numerous other hedge funds
got involved. Robertsons firm also added to
existing positions in Apple (AAPL) and
Mastercard (MA), boosting their holdings by
almost 30% each. AAPL remains Tigers top
holding, while MA jumped up from 7
th
largest
position to 3
rd
largest. And after buying
baskets of gold miners and junior miners last
quarter, they continued to buy shares of GDX
and GDXJ.
Robertson recently gave a rare interview
to Columbia Business School where he shared
some of his latest thoughts. He mentioned he
likes WuXi PharmaTech (WX), saying that, I
love WuXi which is a Chinese-based
employment agency for PHDs, primarily in the
drug industry the companys earnings are
certainly increasing beautifully at about 20% a
year and it still sells at 10x earnings.
Robertson actually sold 25% of his WX position
during the first quarter, but its still his seventh
largest disclosed position.
The Tiger Management founder also
shared some wisdom as to how he approaches
investing: I believe that the best way to
manage money is to go long and short stocks.
My theory is that if the 50 best stocks you can
come up with dont outperform the 50 worst
stocks you can come up with, you should be in
another business For my shorts, I look for a
bad management team, and a wildly overvalued
company in an industry that is declining or
misunderstood. In the interview, he also
reiterated his bullish stance on shares of Apple
(AAPL) and Google (GOOG).

View Tiger Managements
Tiger Management
Julian Robertson
Mentored the Tiger Cub hedge funds
& seeded other talented up & coming
managers

Featured in the book A Tiger in the
Land of Bulls and Bears

View a profile of Tiger Management
29
Tiger Management
Next Page: Soros Fund Management
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Apple Inc. AAPL

15.1% Added 29% $53,174 88,690
2 The Goldman Sachs Group GS

8.9% Added 9% $31,225 251,065

6.3% Added 29% $22,286 52,994

5.8% Unchanged $20,412 407,595
5 Google Inc. GOOG

5.7% Cut -13% $20,226 31,542
6 Visa, Inc. V

5.7% Added 21% $20,007 169,552
7 WuXi PharmaTech WX

4.4% Cut -25% $15,607 1,083,818

4.2% Unchanged $14,703 216,030
9 PNC Financial Services PNC

3.6% Added 49% $12,711 197,100

3.6% Added 57% $12,659 370,800

3.6% New $12,533 506,600
12 Starbucks Corp. SBUX

3.5% New $12,212 218,500
13 Sherwin-Williams Co. SHW

3.2% New $11,171 102,800

3.0% New $10,700 279,000
15 Express-1 Expedited XPO

2.8% New $9,996 595,000
16 Market Vectors Gold Miners GDX

2.8% Added 28% $9,824 198,300

2.6% New $9,238 80,300
18 LCA-Vision Inc. LCAV

2.5% Unchanged $8,620 1,372,577
19 Cablevision Systems Corporation CVC

2.3% Unchanged $8,011 545,700

2.0% New $6,992 141,000
21 AutoNavi Holdings Limited AMAP

1.9% Unchanged $6,536 520,759
22 JuniorGoldMiners ETF GDXJ

1.8% Added 29% $6,439 262,300
23 Callidus Software Inc. CALD

1.7% New $5,896 754,900
24 Ryanair Holdings plc RYAAY

1.3% Unchanged $4,463 123,022
25 Suncor Energy Inc. SU

0.6% Unchanged $2,240 68,500
26 REMARK MEDIA MARK

0.4% New $1,530 254,183
27 Cardiome Pharma Corp. CRME

0.3% Unchanged $1,125 1,596,106
28 Sealed Air Corporation SEE

0.3% Unchanged $938 48,600
29 Nexen Inc. NXY

0.2% Unchanged $513 27,950
30 Carnival Corporation CCL

0.1% Unchanged $319 9,950

0.1% Unchanged $231 100,000

Sold

-

Sold

-
34 DigitalGlobe, Inc. DGI

Sold

-
35 Sonoco Products Co. SON

Sold

-

30
As you can see above, convertible notes
are the name of the game for Soros Fund
Management. George Soros hedge fund turned
family office holds six of its top ten positions in
the form of notes instead of equity. Micron
Technology (MU) notes continues to be their
top holding. Their second largest position,
however, is now SPDR S&P 500 (SPY) put
options as a hedge to the overall portfolio as
they boosted their notional exposure by 150%.
They also initiated another put option position
in the quarter: PowerShares QQQ (QQQ) puts
as they seek to hedge their large technology
exposure. And speaking of technology, SanDisk
(SNDK) notes are Soros third largest holding.
They clearly prefer playing convertibles here
instead of equity as they sold their SNDK
common stock during the quarter. SanDisk has
Key Takeaways

2%3'4"$565"#$-'
owerShares CCC (CCC) uLs
LucenL 1echnologles (Lu) noLe
ulglLal 8lver (u8lv) noLe
Pologlc (PCLx) noLe
CuanLum Corp (C1M) noLe
Cv8 Lnergy (Cvl)
Sun1rusL 8anks (S1l)
Chevron (Cvx)
Macy's (M)

."/,'!"89/%6%/)':&6':;-'
Sanulsk (Snuk)
uendreon (unun)
Mead !ohnson nuLrlLlon (M!n)
vlacom (vlA.8)
uS SLeel (x)
nll Poldlngs (nlPu)
LchoSLar (SA1S)
Coogle (CCCC)
Walgreen (WAC)
had a very volatile past few weeks after the
company posted weak guidance that generated
sufficient investor concern. Over the past few
months, SNDK shares are down 32% but Soros
at least exited their common stock before the
carnage.
Two brand new stakes for George Soros
firm worth highlighting are Lucent
Technologies (LU) notes as well as Digital River
(DRIV) notes. In a 13G filed with the SEC
recently, Soros disclosed they have continued to
buy Digital River convertible bonds and now
own 4,162,494 shares via these notes. The
filing also discloses that they own two separate
sets of notes. The majority of their position is
in the 2.00% convertible bonds due 2030 with a
conversion price of 49.13 (these mature on
November 1
st
, 2030). The second set of notes
they have a much smaller stake in is the 1.25%
convertible bonds due 2024 with a conversion
price of 44.06.
Of the equity holdings Soros does own,
youll see a common theme: event-
driven/catalysts. They own Sara Lee (SLE) in
size as the company is completing a spin-off
soon. They also own CVR Energy (CVI), which
received a takeover offer from activist investor
Carl Icahn. Additionally, Soros also bought
more Express Scripts (ESRX), who just
purchased Medco Health.
Given that Soros family office owns so
many positions and has higher turnover, the
newsletter will only focus on their sizable
positions. Be sure to head to MarketFolly to
read a portfolio managers take on the potential
rationale as to why Soros owns Comverse
Technology (CMVT) by clicking here.
View Soros Fund Managements
Soros Fund Mgmt
George Soros
Famously broke the Bank of England
with a huge bet against the British
Pound

Renowned global macro hedge fund

Author of The Alchemy of Finance
31
Soros Fund Mgmt
Continued on Next Page
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Micron Technology Note MU

12.1% Added 2% $829,819 804,915,000
2 SPDR S&P 500 SPY PUT 7.5% Added 150% $509,336 3,619,500
3 SANDISK CORP NOTE SNDK

6.3% Added 22% $429,357 428,286,000
4 PowerShares QQQ QQQ PUT 4.3% New $294,856 4,365,000
5 JDS UNIPHASE NOTE JDSU

4.2% Added 23% $289,672 288,770,000
6 ADECOAGRO S.A. AGRO

4.0% Unchanged $274,402 25,384,049
7 CIENA CORP NOTE CIEN

3.4% Added 11% $231,583 236,109,000

2.3% Adde697% $159,234 7,395,910
9 Lucent Technologies Note LU

2.3% New $155,499 157,467,000
10 DIGITAL RIV INC NOTE DRIV

2.2% New $152,149 157,226,000
11 Cadence Design Note CDNS

2.0% Added 28% $139,294 139,556,000
12 Motorola Solutions, Inc. MSI

2.0% Cut -45% $139,011 2,734,816
13 HOLOGIC INC NOTE HOLX

2.0% New $134,847 135,100,000
14 Westport Innovations WPRT

1.8% Cut -9% $120,820 2,952,606
15 QUANTUM CORP NOTE QTM

1.7% New $112,992 111,735,000
16 Comverse Technology CMVT

1.6% Added 10% $111,065 16,166,666
17 Acacia Research Corp ACTG

1.6% Add 532% $105,666 2,531,518
18 Orbital Sciences NOTE ORB

1.5% Added 11% $102,794 101,966,000

1.5% New $100,195 3,745,600
20 ARRIS GROUP NOTE ARRS

1.4% Added 1% $96,848 94,027,000
21 InterOil Corporation IOC

1.2% Cut -64% $80,758 1,570,858
22 ROVI CORP NOTE ROVI

1.2% Added 81% $80,513 76,679,000
23 SunTrust Banks, Inc. STI

1.1% New $77,054 3,188,000
24 CERADYNE INC NOTE CRDN

1.1% Unchanged $75,098 74,585,000
25 Chevron Corp. CVX

1.1% New $73,137 682,000

1.0% Added 87% $68,052 2,066,597
27 Charter Communications CHTR

1.0% Add 209% $67,778 1,068,203
28 Elan Corp. plc ELN

0.9% Add 1014% $58,540 3,900,000
29 Macy's, Inc. M

0.8% New $57,410 1,445,000
30 Exar Corp. EXAR

0.8% Unchanged $56,000 6,666,666

0.8% Add 274% $51,812 319,550

0.8% Added 33% $52,013 960,000
33 Consumer Staples SPDR XLP

0.6% New $37,624 1,104,000
34 Health Care SPDR XLV PUT 0.6% New $37,590 1,000,000
35 Tesoro Corporation TSO

0.5% New $34,194 1,274,000
36 Extreme Networks Inc. EXTR

0.5% Added 7% $33,691 8,796,666
37 IXIA NOTE XXIA

0.5% Cut -14% $33,655 32,361,000
38 RF MICRO NOTE RFMD

0.5% New $33,256 33,310,000
39 Salesforce.com CRM

0.5% New $30,902 200,000
40 SPDR Metals&Mining XME CALL 0.4% New $29,820 600,000

0.4% New $27,882 606,400
42 LINEAR TECH NOTE LLTC

0.4% Cut -80% $27,771 26,000,000
43 Russell 2000 Index IWM PUT 0.4% Cut -50% $26,761 323,000
44 Marathon Petroleum MPC

0.4% New $25,149 580,000

0.4% New $24,998 457,000

32
Next Page: Bridger Management
Continued
Soros Fund Mgmt
% of
Portfolio Activity
Value x
$1000 # of Shares
46 MERCURY COMPUTER MRCY

0.4% Cut -17% $25,110 1,895,120
47 General Electric Co. GE

0.4% New $25,128 1,252,000
48 DIRECTV DTV

0.4% Added 8% $25,387 514,529
49 Apple Inc. AAPL

0.4% Cut -58% $23,982 40,000
50 HOLLYFRONTIER CORP HFC

0.3% New $22,923 713,000
51 GENERAL MOTORS B GM/PB

0.3% Unchanged $23,164 550,700
52 MicroStrategy Inc. MSTR

0.3% New $23,213 165,805

0.3% New $23,090 896,000
54 Fifth Third Bancorp FITB

0.3% New $21,313 1,517,500
55 XYLEM INC. XYL

0.3% Add 329% $20,693 745,688
56 Gilead Sciences Inc. GILD CALL 0.3% New $19,544 400,000
57 TRIPADVISOR TRIP

0.3% Added 45% $18,995 532,510
58 Loral Space & Comm LORL

0.3% Added 3% $18,150 228,011
59 Pfizer Inc. PFE

0.3% Add 3381% $18,015 795,000

0.3% New $17,112 307,000

0.3% New $17,141 666,200
62 Churchill Downs Inc. CHDN

0.3% Added 69% $17,082 305,576
63 DaVita, Inc. DVA

0.2% Cut -42% $15,780 175,000
64 Goldman Sachs Group GS

0.2% New $14,924 120,000

0.2% New $15,351 420,000
66 Bancolombia S.A. CIB

0.2% New $14,766 228,361

0.2% Cut -63% $15,056 441,000
68 SPDR HOMEBUILDERS XHB PUT 0.2% New $14,931 700,000
69 Regions Financial Corp. RF

0.2% New $15,098 2,291,000
70 Newmont Mining Corp. NEM CALL 0.2% New $14,612 285,000

0.2% Added 11% $13,722 361,000
72 Spreadtrum Comm SPRD

0.2% New $13,943 845,000
73 Visteon Corp VC

0.2% Unchanged $13,247 249,950
74 MedcoHealth Solutions MHS CALL 0.2% New $13,294 189,100
75 Owens Corning OC

0.2% Added 74% $13,151 365,000

0.2% Add 846% $12,069 473,100
77 Bluefly Inc. BFLY

0.2% Unchanged $11,988 6,480,070
78 Aspen Technology Inc. AZPN

0.2% Add 100% $12,318 600,000

0.2% Cut -3% $12,492 141,712

0.2% Unchanged $11,576 451,300
81 DELPHI AUTOMOTIVE DLPH

0.2% Cut -29% $11,629 368,000
82 ClickSoftware Tech CKSW

0.2% Added 8% $11,886 937,399
83 Pepsico, Inc. PEP

0.2% Added 13% $11,180 168,500
84 iShares Xinhua China FXI CALL 0.2% Added 20% $10,989 300,000
85 E-House (China) EJ

0.2% Cut -37% $11,003 1,897,000
86 Energy Select Sector XLE CALL 0.2% New $10,760 150,000

0.2% Added 3% $11,042 330,210
88 Ariad Pharmaceuticals ARIA

0.2% New $10,148 635,000
89 CIENA Corp. CIEN

0.2% Add 333% $10,524 650,000
90 CF Industries Holdings CF PUT 0.2% New $10,502 57,500

33
Robert Mignones top holdings remain
largely unchanged from the last quarter. His
top position continues to be United Rentals
(URI) and last quarters newsletter highlighted
the company in the equity analysis section as a
secular tailwinds story so be sure to login and
download it if you want to see the bull and bear
case on URI. His hedge fund did trim the
position 36% during the quarter but as
mentioned above, it still remains his largest
disclosed allocation. Bridger Management also
trimmed its stakes in tech giants Apple (AAPL)
and Google (GOOG) by 14% and 21% each. It
appears as though they zigged while other hedge
funds zagged. After all, both names were
consensus buys among hedge funds during the
Key Takeaways

2%3'4"$565"#$-'
1rlpAdvlsor (18l)
Charles 8lver Labs (C8L)
MonsanLo (MCn)
Cemex (Cx)
MeLLlfe (ML1)
Arcos uorados (A8CC)
8ublcon Mlnerals (88?)
8esponse CeneLlcs (8Cux)
lnnacle LnLerLalnmenL (nk)

."/,'!"89/%6%/)':&6':;-'
ennyMac MorLgage (M1)
MAkC Surglcal (MAkC)
lnhlblLex (lnPx)
Cardlome harma (C8ML)
ClLlgroup (C) Calls
Coldman Sachs (CS) Calls
Sallx harma (SLx)
MA harma (MA)
quarter.
The largest brand new stake for Bridger
is in TripAdvisor (TRIP). This company was
spun-off from Expedia (EXPE) at the end of the
fourth quarter and Bridger obviously sees a
positive path ahead for TRIP. Apart from that,
the only new stakes of any real size are
Bridgers new positions in Charles River Labs
(CRL), Wright Medical Group (WMGI),
Monsanto (MON), and Cemex (CX).
On the selling side of the portfolio, its
definitely worth highlighting Mignones sale of
45% of his position in CareFusion (CFN).
Long-time Hedge Fund Wisdom readers will
recall this company was highlighted in 2010 in
the second issue ever published. CFN was
spun-off from Cardinal Health (CAH) and past
issues have flagged large stakes held by Bridger
as well as David Einhorns Greenlight Capital,
Lee Ainslies Maverick Capital, and Andreas
Halvorsens Viking Global. All of these funds
sold CFN shares during the quarter though they
all continue to be some of the companys largest
holders. This activity is worth drawing
attention to though, as it is the second
consecutive quarter in which Bridger has
substantially reduced its position size.
Last quarters newsletter noted that
Pharmasset was being acquired by Gilead
Sciences (GILD) and wondered whether or not
Mignones firm would continue to hold a stake
in the combined entity. Well they did, however
they sold almost 70% of the position by
quarters end.

View Bridger Managements
Bridger Management
Roberto Mignone
Typically focuses on the healthcare
sector

Known for his sleuthing abilities on
the short side
34
Bridger Management
% of
Portfolio Activity
Value x
$1000 # of Shares

7.1% Cut -36% $101,857 2,374,848
2 Morgan Stanley MS

7.0% Unchanged $100,808 5,132,800
3 Apple Inc. AAPL

6.8% Cut -14% $97,727 163,000
4 Google Inc. GOOG

6.6% Cut -21% $95,545 149,000
5 Assured Guaranty Ltd. AGO

5.5% Unchanged $79,558 4,815,837
6 Hyatt Hotels Corporation H

5.2% Unchanged $75,512 1,767,610
7 TRIPADVISOR TRIP

5.0% New $71,340 2,000,000
8 General Motors GM

4.9% Cut -25% $69,896 2,725,000
9 DIRECTV DTV

4.3% Cut -35% $62,168 1,260,000
10 Abbott Laboratories ABT

3.4% Unchanged $49,645 810,000
11 HCA HCA

3.3% Cut -41% $47,625 1,925,000
12 Cott Corporation COT

3.0% Unchanged $43,612 6,617,855
13 Acorda Therapeutics ACOR

2.8% Added 11% $39,825 1,500,000

2.7% Cut -45% $38,895 1,500,000
15 Allergan Inc. AGN

2.6% Unchanged $37,294 390,800
16 Avis Budget Group CAR

2.5% Cut -29% $36,436 2,575,000
17 Starwood Hotels&Resorts HOT

2.4% Cut -22% $35,102 622,273
18 MGM Resorts MGM

2.2% Add 32% $31,871 2,340,000
19 Charles River Labs CRL

2.0% New $28,357 785,730
20 Ironwood Pharma IRWD

1.7% Unchanged $25,014 1,879,375

1.5% Cut -69% $21,987 450,000
22 Wright Medical Group WMGI

1.5% New $20,933 1,083,487
23 Pharmacyclics Inc. PCYC

1.4% Cut -17% $20,820 750,000
24 Monsanto Co. MON

1.4% New $20,339 255,000
25 CEMEX, S.A.B. de C.V. CX

1.3% New $19,369 2,496,000
26 Onyx Pharmaceuticals ONXX

1.3% Cut -53% $18,840 500,000

1.3% New $18,675 500,000
28 Popular Inc. BPOP

1.2% Added 14% $17,494 8,533,715
29 iStar Financial Inc. SFI

0.9% Unchanged $12,997 1,792,712
30 Casella Waste Systems CWST

0.8% Unchanged $11,174 1,793,507
31 hiSoft Technology Intl HSFT

0.8% Unchanged $11,070 737,000

0.7% New $10,673 590,000
33 Seattle Genetics Inc. SGEN

0.7% Unchanged $10,190 500,000
34 Boston Beer Co. Inc. SAM

0.7% Unchanged $9,718 91,000
35 Amicus Therapeutics FOLD

0.6% Added 74% $9,011 1,706,568

0.6% Unchanged $8,838 1,900,700
37 Rubicon Minerals Corp RBY

0.5% New $6,773 2,070,000
38 Response Genetics, Inc RGDX

0.4% New $6,000 3,000,000
39 Pinnacle Entertainment PNK

0.4% New $5,879 510,795
40 Anthera Pharmaceuticals ANTH

0.3% Unchanged $3,619 1,637,428
41 VERASTEM, INC. VSTM

0.2% New $2,186 200,000
42 Allison Transmission ALSN

0.1% New $1,791 75,000
43 BPZ Resources, Inc. BPZ

0.1% Cut -36% $1,112 275,830
44 BPZ Resources, Inc. BPZ CALL 0.1% New $913 226,700
45 BPZ Resources Notes BPZ

0.1% Cut -37% $666 728,330

35
Bridger Management
Next Page: Omega Advisors
Continued
% of
Portfolio Activity
Value x
$1000 # of Shares
46 DexCom, Inc. DXCM

0.0% New $465 44,554
47 CurrencyShares Euro FXE PUT 0.0% Cut -99% $478 3,600
48 SPDR S&P 500 SPY PUT 0.0% New $465 3,300
49 Fortuna Silver Mines FSM

0.0% New $376 83,489
50 iShares Brazil Index EWZ

0.0% New $278 4,300
51 iShares Brazil Index EWZ PUT 0.0% New $349 5,400
52 MAP Pharmaceuticals MAPP

Sold

-
53 PHARMASSET VRUS

Sold

-
54 Salix Pharmaceuticals SLXP

Sold

-
55 Goldman Sachs GS CALL

Sold

-
56 Banco Santander-Chile BSAC

Sold

-
57 Citigroup, Inc. C CALL

Sold

-
58 Cardiome Pharma Corp. CRME

Sold

-
59 SPDR S&P 500 SPY CALL

Sold

-
60 PennyMac Mortgage PMT

Sold

-
61 PHARMASSET VRUS PUT

Sold

-
62 MAKO Surgical Corp. MAKO

Sold

-
63 INHIBITEX INC INHX

Sold

-

36
Leon Coopermans Omega Advisors
apparently decided that the first quarter was the
right time to get into financials as they acquired
new stakes in a plethora of too big to fail
institutions such as Bank of America (BAC),
Citigroup (C), Wells Fargo (WFC), and
American International Group (AIG). While
these decently sized stakes are noted, the largest
new position for Coopermans firm is in
beleaguered wireless provider Sprint Nextel (S).
This has turned a few heads as the company
struggles to compete with the larger players like
AT&T (T) and Verizon (VZ).
The upper echelon of Omegas portfolio
is largely energy heavy. Six of their top eleven
holdings are focused on this sector: Atlas
Pipeline Partners (APL), Linn Energy (LINE),
Key Takeaways

2%3'4"$565"#$-'
SprlnL nexLel (S)
Ccwen llnanclal (CCn)
Coogle (CCCC)
ClLlgroup (C)
8ank of Amerlca (8AC)
Wells largo (WlC)
Amerlcan lnLernaLlonal Croup (AlC)
8lacksLone Croup (8x)
klnder Morgan (kMl)
8ange 8esources (88C)
verlSlgn (v8Sn)

."/,'!"89/%6%/)':&6':;-'
Aon Corp (ACn)
LchoSLar (SA1S)
M8lA (M8l)
loresL Cll (lS1)
Cablevlslon (CvC)
e8ay (L8A?)
Leon Cooperman
View Omega Advisors Updated
Has returned 16% annualized
over 18 years

Prior to founding Omega, he spent 25
years at Goldman Sachs and was
Chief Executive Officer of Goldmans
Asset Management division
El Paso (EP), Transocean (RIG), and Atlas
Energy (ATLS). Apart from these energy plays,
Coopermans largest disclosed US equity long is
SLM Corp (SLM) and he also holds large stakes
in Apple (AAPL), WellPoint (WLP), and
Unitedhealth (UNH). He essentially doubled
his stakes in the last two during the first
quarter.
At the Skybridge Alternatives Conference
in Las Vegas a couple of weeks ago, Cooperman
reiterated his stance that US government bonds
are fundamentally overvalued. He thinks that
at a 2% return, bonds are risky and that in two
or three years in the future everyone will be
worrying about inflation and interest rates will
be higher. He highlighted his holdings in AIG,
Capital One (COF), and Western Union (WU) in
his talk ~ all brand new holdings during the
quarter. He also mentioned (as he always
seems to) shares of E*Trade Financial (ETFC).
Hes long pitched the company as an ideal
takeover target as they get their loan losses
under control and improve their retail
brokerage business. Its just interesting that he
chose to mention that name considering he sold
30% of his stake during the quarter. In a
separate television interview, Cooperman also
dismissed the idea of investing in high yield
bonds as they are fully priced. He prefers to
invest in cheap stocks that will yield more than
bonds and are good companies that will grow
over time. Commenting on his large stake in
AAPL, he thinks the company is worth well over
$600 (and it did reach $630 during the first
quarter before selling off to current levels in the
low $5xxs).

Omega Advisors
37
Omega Advisors
% of
Portfolio Activity
Value x
$1000 # of Shares
1 SLM Corporation SLM

5.4% Cut -3% $269,610 17,107,224
2 Atlas Pipeline Partners LP APL

3.8% Cut 0% $189,740 5,362,918
3 Linn Energy, LLC LINE

3.7% Added 21% $185,188 4,854,200
4 Apple Inc. AAPL

3.5% Added 23% $175,647 293,004
5 El Paso Corp. EP

3.3% Added 7% $163,116 5,520,000

3.1% Added 11% $154,432 2,823,245
7 WellPoint Inc. WLP

3.1% Added 118% $154,110 2,088,207
8 KKR FINANCIAL CORP. KFN

2.8% Unchanged $142,118 15,430,867
9 Unitedhealth Group, Inc. UNH

2.7% Added 93% $133,873 2,271,348

2.5% Added 3% $126,476 1,859,400
11 Atlas Energy, L.P. ATLS

2.5% Unchanged $125,118 3,791,447
12 The McGraw-Hill Companies MHP

2.5% Cut -12% $123,855 2,555,300
13 ENERGY XXI EXXI

2.5% Cut -10% $122,642 3,396,343
14 Citrix Systems, Inc. CTXS

2.3% Cut -7% $115,114 1,458,799
15 XL Group plc XL

2.2% Added 6% $110,848 5,110,537
16 ALTISOURCE PORTFOLIO ASPS

2.2% Added 3% $108,697 1,792,500
17 Boston Scientific Corporation BSX

2.1% Added 4% $102,632 17,162,600

2.0% Added 153% $102,115 2,220,864
19 Williams Companies, Inc. WMB

2.0% Added 7% $99,366 3,225,108

1.8% New $91,486 32,100,400
21 ETRADE Financial Corp ETFC

1.7% Cut -30% $87,169 7,960,609
22 Lincoln National Corp. LNC

1.7% Unchanged $86,076 3,265,416
23 CVS Caremark Corporation CVS

1.7% Unchanged $84,683 1,890,255

1.7% Cut -44% $84,167 519,100
25 Broadridge Financial BR

1.7% Added 7% $82,514 3,451,014
26 Kohlberg Kravis Roberts & Co. KKR

1.7% Added 4% $82,719 5,577,787

1.6% Added 10% $78,894 2,112,285

1.6% Added 22% $78,775 2,392,200
29 Charming Shoppes Inc. CHRS

1.5% Added 6% $75,572 12,808,764
30 Ocwen Financial Corp. OCN

1.5% New $74,328 4,755,440
31 Google Inc. GOOG

1.4% New $70,440 109,850
32 NYSE Euronext, Inc. NYX

1.4% Added 11% $69,524 2,316,700
33 Denbury Resources Inc. DNR

1.4% Unchanged $67,946 3,727,127

1.4% Add 303% $67,427 860,700
35 Sunoco Inc. SUN

1.3% Cut -44% $67,224 1,762,100
36 United Continental Holdings UAL

1.3% Unchanged $65,765 3,058,836

1.3% New $65,512 1,792,400

1.2% New $61,950 6,473,400
39 Halliburton Company HAL

1.2% Add 606% $61,836 1,863,100

1.1% New $52,535 1,538,800
41 ACE Limited ACE

1.0% Unchanged $51,481 703,293
42 AIG AIG

0.9% New $45,166 1,465,000
43 The Blackstone Group BX

0.9% New $44,606 2,798,400
44 Given Imaging Ltd. GIVN

0.9% Cut -7% $44,415 2,371,337
45 KINDER MORGAN, INC KMI

0.9% New $42,890 1,109,700

38
Omega Advisors
Continued
Next Page: Coatue Management
% of
Portfolio Activity
Value x
$1000 # of Shares
46 Loral Space & Comm LORL

0.8% Unchanged $41,058 515,800
47 ATLAS RESOURCES ARP

0.8% New $40,596 1,537,102

0.7% New $33,820 581,700

0.7% New $32,658 851,800
50 McMoRan Exploration Co. MMR

0.7% Added 61% $32,451 3,032,800
51 Phillips-Van Heusen Corp. PVH

0.6% Unchanged $31,471 352,300

0.5% New $27,058 1,004,000
53 Regal Entertainment Group RGC

0.5% Cut -50% $25,829 1,899,225
54 Western Union Co. WU

0.5% New $25,949 1,474,353
55 Gannett Co., Inc. GCI

0.5% New $23,234 1,515,600

0.5% New $22,823 449,000
57 Vodafone Group plc VOD

0.4% Unchanged $22,226 803,256
58 Domtar Corporation UFS

0.4% Cut -12% $19,076 200,000

0.4% New $18,161 1,008,364
60 SPDR S&P 500 SPY

0.4% Unchanged $17,970 127,700
61 THL Credit, Inc. TCRD

0.3% Unchanged $17,009 1,322,607

0.3% New $15,187 240,000
63 Ford Motor Co. F

0.3% New $12,490 1,000,000
64 Validus Holdings VR

0.2% Add 3637% $11,798 381,200

0.2% New $9,332 4,040,000
66 Capital One Financial Corp. COF

0.2% New $9,755 175,000
67 Home Loan Servicing HLSS

0.1% New $6,549 469,817
68 Lam Research Corporation LRCX

0.1% New $6,608 148,100
69 Center Bancorp Inc. CNBC

0.1% Unchanged $5,466 545,000

0.1% New $5,121 360,414
71 Crown Holdings Inc. CCK

0.1% New $4,972 135,000
72 Dean Foods Co. DF

Sold

-
73 Discovery Communications DISCK

Sold

-
74 NRG Energy, Inc. NRG

Sold

-
75 eBay Inc. EBAY

Sold

-

Sold

-

Sold

-

Sold

-
79 TEKELEC INC TKLC

Sold

-
80 Teekay Corporation TK

Sold

-
81 Best Buy Co. Inc. BBY

Sold

-
82 Cablevision Systems CVC

Sold

-
83 NutriSystem Inc. NTRI

Sold

-
84 Forest Oil Corp. FST

Sold

-

Sold

-
86 Ruby Tuesday, Inc. RT

Sold

-
87 Office Depot, Inc. ODP

Sold

-

Sold

-
89 iShares InvestGradeCorpBond LQD

Sold

-
90 Warnaco Group Inc. WRC

Sold

-

Sold

-
92 Aon Corporation AON

Sold

-
93 EchoStar Corp. SATS

Sold

-
94 Valassis Communications VCI

Sold

-
95 GMX Resources Inc. GMXR

Sold

-
96 MBIA Inc. MBI

Sold

-

39
Coatue Managements founder Philippe
Laffont spoke at the Ira Sohn Conference in
New York and talked about the thesis behind
two of his largest new bets. His second largest
disclosed position is a new stake in Equinix
(EQIX). He said that data centers are the new
core and that they have a huge share of the
internets backbone. Laffont likes the
companys prime locations they secured
through request for proposals (RFPs) because
the company secured these spots before
everyone else even knew how important theyd
be. He points to EQIXs 50% return on equity
with minimal leverage and he thinks the stock
triples or more.
Laffonts second pick is his fourth largest
disclosed holding: Virgin Media (VMED). Of
this stake, he says that everyone needs faster
internet (50-100Mbps, up from 10-20 in the
Key Takeaways

2%3'4"$565"#$-'
Lqulnlx (LClx)
vlrgln Medla (vMLu)
LlberLy Clobal (L81?A)
8roadcom (88CM)
lnformaLlca (lnlA)
neLfllx (nlLx)
Slrlus xM 8adlo (Sl8l)
uunkln 8rands (unkn)
Amerlcan 1ower (AM1)

."/,'!"89/%6%/)':&6':;-'
Wynn 8esorLs (W?nn)
luslon-lC (llC)
neL App (n1A)
CulnSLreeL (CnS1)
Creen MounLaln Coffee (CMC8)
CognlzanL 1ech SoluLlons (C1SP)
Wllllams Sonoma (WSM)
past). As the proliferation of HD video
continues, this plays right into the companys
wheelhouse as they own the fastest cable
broadband network in the UK. Whats also
interesting he says is that the company is really
buying back shares (10% this year alone, 25% in
the last few years). So, they have the capacity to
literally buy back all of their shares over the
next 5 years.
The Coatue founder also made his first-
ever television appearance after the event
where he touched on his firms concentrated
portfolio approach. He said that,
concentration is a problem over the short-run,
but it sort of goes away over the long run. We
try to invest over the long run and are willing to
take the volatility. The less concentrated you
are, the more your returns will look like the
S&P. If you want to try to outperform, you have
to focus on your best ideas. It is something we
transmitted to investors from day one. They
understand the risk. It puts a premium on
being right. Laffont also touched on the
Facebook IPO, saying he would like to get as
many shares as possible as he really likes the
management team. Its reasonable to assume
that given Coatues prime broker relationships
and status as a well-known tech fund that they
received plenty of IPO shares. Laffont also
mentioned LinkedIn (LNKD), which he also has
a small position in, saying he thinks it could be
a completely different company in 10 years.
Lastly, he commented on his top holding: Apple
(AAPL). The hedgie first got involved with the
name back in 2003 and thinks the iPhone 5 and
potential Apple TV are good catalysts. At 5-10%
of the market, he thinks they can take much
bigger market share.
View Coatue Managements
Coatue Management
Philippe Laffont
Manages a long/short fund focused
on technology, media, & telecom

One of his mantras is dare to be
different

40
Coatue Management
Next Page: Fairholme Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Apple Inc. AAPL

17.9% Added 15% $884,133 1,474,661

11.6% New $572,763 3,637,747
3 Google Inc. GOOG

9.8% Cut -3% $482,636 752,660
4 Virgin Media, Inc. VMED

7.0% New $345,193 13,818,739

6.4% Added 5% $318,343 443,684
6 QUALCOMM Inc QCOM

6.0% Cut -3% $297,414 4,369,879

5.3% New $262,615 5,243,914

3.4% New $165,834 4,219,683
9 Informatica Corp INFA

3.3% New $164,018 3,100,535
10 Intuit Inc. INTU

3.3% Added 51% $160,768 2,672,352

3.2% Cut -28% $160,302 791,574
12 Chipotle Mexican Grill CMG

3.2% Added 18% $159,320 381,148

2.9% New $144,308 1,254,415

2.7% New $133,587 57,829,793
15 DUNKIN' BRANDS DNKN

2.4% New $116,250 3,864,679
16 Baidu, Inc. BIDU

2.1% Cut -62% $103,775 711,909
17 American Tower Corp. AMT

2.1% New $102,145 1,620,840
18 LINKEDIN CORP LNKD

1.4% Cut 0% $68,786 674,444
19 Check Point Software CHKP

1.2% Cut -16% $59,789 936,552
20 J. C. Penney Company JCP

0.9% New $43,830 1,237,083

0.8% Add 239% $37,541 2,553,791
22 Molycorp, Inc. MCP

0.7% Unchanged $36,541 1,080,136
23 Red Hat, Inc. RHT

0.7% Cut -51% $32,599 544,328
24 NII Holdings Inc. NIHD CALL 0.6% New $31,662 1,729,200

0.6% Unchanged $30,904 1,876,360

0.3% Unchanged $13,100 509,122
27 Digital River Inc. DRIV

0.1% Cut -57% $4,624 247,130
28 AOL, Inc. AOL

0.1% Cut -89% $3,713 195,700
29 NutriSystem Inc. NTRI

0.1% Cut -58% $3,435 305,875
30 STEC, Inc. STEC

0.1% Cut -85% $2,725 288,641
31 INVENSENSE INC INVN

0.1% New $3,077 170,000
32 GROUPON INC GRPN

0.0% Unchanged $919 50,000
33 Nokia Corporation NOK CALL 0.0% New $386 70,300
34 Logitech International SA LOGI

0.0% Cut -98% $178 22,800
35 Atmel Corporation ATML

Sold

-
36 Silicon Laboratories, Inc. SLAB

Sold

-

Sold

-
38 FUSION-IO, INC FIO

Sold

-

Sold

-
40 QuinStreet, Inc. QNST

Sold

-

Sold

-
42 Research In Motion Limited RIMM CALL

Sold

-
43 Williams-Sonoma Inc. WSM

Sold

-
44 CognizantTechnologySolutions CTSH

Sold

-

41
Bruce Berkowitzs Fairholme is the
definition of a concentrated portfolio. His latest
first quarter disclosure shows a massive 36.3%
of reported assets tied up in AIG (AIG). Given
that he has so much money invested in the
name, its obviously worth drawing attention to
the information Berkowitz has revealed
regarding his train of thought. He frames the
company as one that trades at less than one-half
tangible book value, has a fortress balance
sheet, has a shareholder equity-to-assets ratio of
15%, and has a leading position in its market.
Berkowitz feels that a 10% return on owners
equity equals a 20% implied annual return on
investment. The Fairholme man has experience
with insurance companies and found one
trading at attractive prices so its directly within
his circle of competence. In terms of margin of
safety, he feels that AIG is a situation where you
pay $25 and receive $45 worth of assets. Given
the volatility in the stock, he certainly has
courage of conviction. With his contrarian
approach, its no surprise that Fairholmes
slogan is ignore the crowd. Many successful
investors have reiterated the fact that your
highest conviction picks should garner the most
capital. Theres no secret as to what Berkowitzs
top pick is.
Turning to his third largest position, its
Key Takeaways

2%3'4"$565"#$-'
Crchard Supply (CSP) ~ spun-off SPLu
Mercury Ceneral (MC?)

."/,'!"89/%6%/)':&6':;-'
Coldman Sachs (CS)
also worth piecing together Berkowitzs
rationale for owning Bank of America (BAC) as
well. Theres an obvious theme in Fairholmes
portfolio: out of favor plays. Berkowitz has
revealed his thesis on BAC as well and his main
reasons for owning shares are as follows: it
trades at less than one third book value, its core
businesses generate 1% return on assets and
10% return on equity, it has a fortress balance
sheet, and it has the largest US retail deposit
market share (serving one in every two US
households). Berkowitz also seemingly
highlights the companys status as too big to
fail as a positive, saying that Bank of America is
essential to global economic security.
Fairholmes manager sees a 20% implied
annual return on his investment in Bank of
America. He says that is a reasonable return
when you consider that youre buying BAC for
less than half of book value. Berkowitz likes the
various economic trends unfolding which he
thinks will benefit the big bank: an improving
job market, a stabilizing housing market, and
overall improving fundamentals in the financial
sector. At $7 per share, he argues that youre
buying something worth $20+. Summarizing
his BAC thesis, he writes, Its earnings power
has been disguised by the intense provisioning
for loan losses. But when the provisioning gets
back to a normal level, youll start to see that
incredible earnings power come down to the
bottom line. And its as simple as that.
For Berkowitzs advice on becoming a
better money manager, head to his basic
checklist for investing.
View Fairholme Capitals Updated
Fairholme Capital
Bruce Berkowitz
Named Morningstars Fund Manager
of the Decade

Manages over $10 billion and runs a
highly concentrated portfolio, making
him ideal to track
42
Next Page: Tiger Global
Fairholme Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 AIG AIG

36.3% Cut -1% $2,819,861 91,464,833
2 Sears Holdings Corp SHLD

14.3% Added 4% $1,113,893 16,813,480

12.7% Cut -1% $984,165 102,838,555
4 CIT Group, Inc. CIT

9.8% Cut -1% $763,869 18,522,529
5 The St. Joe Company JOE

6.1% Cut -2% $474,185 25,715,428
6 Leucadia National Corp. LUK

6.1% Cut -1% $474,524 18,180,980
7 MBIA Inc. MBI

5.8% Cut -1% $453,303 46,255,370
8 AIG Warrant AIG/WS

3.4% Added 0% $261,240 24,575,760
9 Berkshire Hathaway Inc. BRK-A

2.5% Cut -61% $191,749 1,573
10 Berkshire Hathaway Inc. BRK-B

1.0% Cut -65% $78,474 967,019
11 Jefferies Group Inc. JEF

0.7% Add 111% $50,817 2,697,300

0.6% Added 15% $45,495 9,783,828

0.2% Cut -81% $14,598 399,400
14 Orchard Supply Hardware OSH

0.2% New $14,792 716,322
15 Wells Fargo Warrants WFC-WT

0.2% Added 58% $13,045 1,296,695
16 JPMorgan Chase Warrant JPM/WS

0.1% Unchanged $6,485 484,700
17 Mercury General Corp MCY

0.0% New $3,101 70,900

0.0% Unchanged $1,072 31,400

0.0% Unchanged $854 51,700
20 Regions Financial Corp. RF

0.0% Unchanged $138 20,900
21 Goldman Sachs Group GS

Sold

-

43
The first position worth pointing out in
Tiger Globals portfolio is one that wont appear
on the next page because the company just
completed its initial public offering (IPO):
Facebook (FB). Tiger has previously owned a
private stake in Facebook as they purchased 1%
of the company at a $24 billion valuation. And
given that FB shares now trade with a market
capitalization of $104 billion, Tiger has made a
pretty penny on their investment. Chase
Colemans early stage tech investments in
private companies have paid off handsomely as
many of these budding companies have come
public. As such, it should come as no surprise
that Coleman was named one of the top 25
highest earning hedge fund managers of 2011.
Turning to Tiger Globals first quarter
portfolio activity, its very evident that they
favored trimming positions more than anything.
While they still hold sizable positions in their
top seven holdings, they only added to one of
those positions: Google (GOOG). This was par
for the course in hedge fund land during the
Key Takeaways

2%3'4"$565"#$-'
ueckers (uLCk)
lronLler CommunlcaLlons (l18)
AncesLry.com (ACCM)
88 uonnelley (88u)
Supervalu (Svu)
Crown CasLle (CCl)
locus Medla (lMCn)

."/,'!"89/%6%/)':&6':;-'
ColnsLar (CS18)
Peckmann (PLk)
Lndurance SpeclalLy Poldlngs (LnP)
rlcellne.com (CLn) Calls
Mlchael kors (kC8S)
lAC lnLeracLlve (lACl)
Chase Coleman
View Tiger Globals Updated
Mentored and seeded by Julian
Robertson of Tiger Management

From 2001-2007, he returned 47% on
average

Descendant of Peter Stuyvesant, the
man who built the wall in Wall St
quarter as GOOG was a consensus buy. Tigers
top two holdings of Yandex (YNDX) and Apple
(AAPL) were both trimmed 25% and they also
cut their stake in high-flier Priceline.com
(PCLN) by 36%. PCLN was featured in the
equity analysis section of the most recent issue
of Hedge Fund Wisdom (Q4 2011) if you
havent had a chance to read the rationale
behind owning that company. The most
notable sales from Tiger during the quarter,
though, were their reductions in their stakes in
Baidu (BIDU), Viacom (VIA.B), and Liberty
Media (LMCA). They trimmed each by 64%,
70%, and 50% respectively.
In terms of purchases, they were few and
far between in Tigers book. Whats interesting
is that instead of adding to many existing
positions, they favored starting stakes in brand
new companies. And even more intriguing is
that instead of a tech oriented company, Tigers
largest new buy is in that of Deckers (DECK),
the purveyor of the trendy and fuzzy UGG
boots.
As you look through Chase Colemans
portfolio on the next page, youll notice a few
key themes. Hes playing the dominant
internet plays (i.e. search engines) via Yandex,
Google, and Baidu. He also has a lot of capital
allocated to travel with a focus on international
exposure via Priceline, MakeMyTrip, and
HomeAway. Coleman also likes the big duopoly
in payment processing (Mastercard & Visa) as
the world continues its secular shift from using
physical currency to paying with plastic (debit
& credit cards). The important aspect of these
two is that they bear no credit risk; they merely
process the payments and take a cut.

Tiger Global
44
Tiger Global
% of
Portfolio Activity
Value x
$1000 # of Shares
1 YANDEX N V YNDX

18.1% Cut -25% $1,074,800 40,000,000
2 Apple Inc. AAPL

12.4% Cut -24% $734,449 1,225,000
3 Google Inc. GOOG

10.1% Added 29% $598,918 934,000

9.5% Cut -36% $563,238 785,000

6.8% Cut -15% $404,396 8,075,000
6 Visa, Inc. V

5.4% Cut -10% $319,190 2,705,000

5.3% Cut -4% $311,620 741,000
8 Liberty Global Inc. LBTYK

3.0% Cut -10% $179,094 3,739,703
9 MakeMyTrip Limited MMYT

2.8% Unchanged $165,037 7,184,866
10 Live Nation Entertainment LYV

2.6% Cut -3% $151,265 16,092,048
11 Baidu, Inc. BIDU

2.1% Cut -64% $126,820 870,000
12 HOMEAWAY INC AWAY

2.0% Unchanged $118,846 4,691,881
13 Deckers Outdoor Corp. DECK

2.0% New $118,219 1,875,000
14 Energy Select Sector SPDR XLE CALL 1.9% Cut -3% $111,213 1,550,000
15 Frontier Communications FTR

1.7% New $100,080 24,000,000

1.4% Cut -50% $84,086 953,898

1.2% Cut -70% $73,088 1,540,000
18 Genpact Ltd. G

1.2% Unchanged $68,440 4,198,790
19 Ancestry.com Inc. ACOM

0.8% New $45,480 2,000,000
20 R.R. Donnelley & Sons Co RRD

0.8% New $44,604 3,600,000
21 SUPERVALU Inc. SVU

0.7% New $42,825 7,500,000
22 RenaissanceRe Holdings RNR

0.6% Added 54% $37,865 500,000

0.6% Cut -80% $36,857 182,000
24 CompaniaCerveceriasUnidas CU

0.6% Cut -6% $36,290 461,179
25 Crown Castle International CCI

0.6% New $35,471 665,000
26 Polypore International Inc. PPO

0.6% Unchanged $35,160 1,000,000
27 Focus Media Holding Ltd. FMCN

0.6% New $35,168 1,400,000
28 UBIQUITI NETWORKS UBNT

0.6% Added 175% $34,793 1,100,000
29 Qihoo 360 Technology QIHU

0.6% New $33,114 1,354,343
30 LINKEDIN CORP LNKD

0.5% Unchanged $30,597 300,000

0.5% New $30,345 525,000
32 Sony Corporation SNE CALL 0.5% Added 27% $27,001 1,300,000
33 C&J ENERGY CJES

0.4% Unchanged $22,238 1,250,000
34 Northern Oil and Gas NOG

0.4% New $20,740 1,000,000
35 Northern Oil and Gas NOG PUT 0.4% New $20,740 1,000,000
36 KIT digital, Inc. KITD

0.3% New $16,390 2,276,400

0.3% Added 110% $16,781 927,645
38 hhgregg, Inc. HGG

0.2% Added 10% $12,506 1,098,932
39 BITAUTO HOLDINGS BITA

0.2% Cut -37% $8,834 1,666,761
40 TAL Education Group XRS

0.2% Unchanged $8,880 800,000
41 YELP INC YELP

0.1% New $4,034 150,000

45
Tiger Global
Next Page: Passport Capital
Continued
% of
Portfolio Activity
Value x
$1000 # of Shares
42 Sears Holdings SHLD

Sold

-
43 Coinstar Inc. CSTR

Sold

-
44 Heckmann Corp HEK

Sold

-
45 Endurance Specialty ENH

Sold

-
46 Validus Holdings, Ltd. VR

Sold

-
47 Priceline.com Inc PCLN CALL

Sold

-

Sold

-
49 IAC/InterActiveCorp. IACI

Sold

-
50 Sears Holdings Corp SHLD PUT

Sold

-
51 Axis Capital Holdings Ltd. AXS

Sold

-
52 Harry Winston Diamond HWD

Sold

-
53 Everest Re Group Ltd. RE

Sold

-

Want to know what hedge funds were buying in the most recent quarter?
CLICK HERE to receive the brand new issue
46
John Burbanks Passport Capital
purchased a huge (in terms of notional value)
put option position on the S&P 500 during the
first quarter. Given that movement, it wont
surprise you either to learn that Passports main
Global Fund has actually been net short.
Burbank is decisively bearish and has high
conviction in his stance because he feels a
recession is coming in the United States in the
second half of the year. As the market has
drifted lower lately, Burbank has to love the
action. He addressed his bearishness in his first
quarter letter to investors, writing, For several
years now, we have said that we would raise our
risk budget when we felt it was prudent. In
large part this would generally require three
things to occur: 1) a lower correlation regime
that could benefit idiosyncratic stock selection;
Key Takeaways

2%3'4"$565"#$-'
Su8 S& 300 (S?) uLs
ueere (uL) uLs
uS naLural Cas (unC) uLs
reLlum (vC)
MaLerlals SelecL SecLor (xL8) uLs
neLfllx (nlLx) uLs
Wynn (W?nn)
SL !ude (S1!) uLs
MeLhanex (MLCP)
S& MeLals and Mlnlng (xML) uLs
SoluLla (SCA)

."/,'!"89/%6%/)':&6':;-'
Adecoagro (AC8C)
llgrlm's rlde (C)
uS SLeel (x)
Cl lndusLrles (Cl)
Mead !ohnson nuLrlLlon (M!n)
Mosalc (MCS)
Alpha naLural 8esources (An8)
MonsanLo (MCn)
John Burbank
View Passport Capitals Updated
Has returned 22% annualized

Makes plays based on macro themes;
has thought markets to be overvalued
for many years now

Received his MBA from Stanford &
undergraduate degree from Duke
2) the potential for a less-skewed distribution
between stock winners and losers; and 3)
conviction in our macro bottom-up view. Since
the March 2009 equity low, the S&P has rallied
122%. The Russell 2000 has rallied over 152%
in that time. Given our forwardlooking
economic assessment, this is the first time in a
long while where we believe the best
opportunity to derive idiosyncratic alpha is in
security selection on the short side.
Burbank feels that central bank liquidity
has fueled violent rallies and that the easy
money has already been made. So while he
obviously has long positions (detailed on the
next page), take these with a grain of salt given
his net positioning to the short side. He also
has stated that he favors Saudi equities on the
long side. Realistically, three Saudi plays are in
his top ten holdings that wont be listed on the
next page: Yanbu National Petroleum (YANSAB
AB), Etihad Etisalat (EEC AB), and Saudi Basic
Industries (SABIC AB).
Vivus (VVUS) in the US continues to be
Passports top long investment. Of this stake,
Burbank writes that, Vivus announced that the
FDA delayed their decision date on whether to
approve the obesity pill Qnexa by three months
to July 17
th
. We believe this delay is for more
drug-labeling discussion and does not change
our view that a pre-approval trial is unlikely to
be required. We continue to believe that a
positive outcome this summer coupled with
M&A activity prior to launch of the drug in the
second half of the year would create an ideal
situation to maximize profits.

Passport Capital
47
Passport Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 SPDR S&P 500 SPY PUT 27.1% New $798,586 5,675,000
2 Cytec Industries Inc. CYT

6.0% Cut -1% $176,710 2,906,900
3 iShares Russell 2000 IWM PUT 5.9% Add 386% $173,157 2,090,000
4 VIVUS Inc. VVUS

5.6% Added 72% $165,213 7,388,793
5 SPDR Gold Shares GLD PUT 3.9% Added 545% $115,119 710,000

3.6% Cut -37% $104,459 2,409,100
7 Deere & Company DE PUT 2.8% New $80,900 1,000,000
8 Google Inc. GOOG

2.1% Added 393% $62,008 96,700

2.1% Cut -27% $60,973 3,194,000
10 US Natural Gas Fund LP XUNGX PUT 2.0% New $57,312 3,600,000
11 Apple Inc. AAPL

1.9% Added 257% $54,859 91,500
12 PRETIUM RES INCCOM PVG

1.8% New $53,317 3,730,336
13 Materials Select Sector XLB PUT 1.6% New $46,952 1,270,000
14 Netflix, Inc. NFLX PUT 1.6% New $46,016 400,000

1.5% New $44,058 352,800
16 St. Jude Medical Inc. STJ PUT 1.5% New $44,310 1,000,000
17 Methanex Corp. MEOH

1.4% New $42,037 1,295,400
18 SPDR Metals & Mining XME PUT 1.4% New $40,257 810,000
19 Thoratec Corp. THOR

1.3% Cut -44% $37,634 1,116,400

1.3% Added 29% $37,339 2,665,200
21 Accuray Incorporated ARAY

1.2% Unchanged $35,300 5,000,000
22 Solutia Inc. SOA

1.1% New $33,075 1,183,800
23 Praxair Inc. PX

1.1% Add 304% $32,638 284,700
24 Georgia Gulf Corp. GGC

1.1% New $32,742 938,700
25 Mercadolibre, Inc. MELI

1.0% Cut -8% $28,672 293,200

1.0% Cut -3% $27,904 1,127,900
27 Timken Co. TKR

0.8% Added 77% $24,873 490,200

0.7% New $21,669 107,000
29 GoldMiners ETF GDX PUT 0.7% New $20,819 420,000
30 QUALCOMM QCOM

0.6% Added 297% $18,601 273,300

0.6% Added 142% $17,889 282,700

0.5% Added 8% $16,001 98,700
33 Airgas Inc. ARG

0.5% New $15,632 175,700
34 VMware, Inc. VMW

0.5% Added 511% $15,732 140,000
35 Thomas & Betts Corp. TNB

0.5% New $15,310 212,900
36 Owens-Illinois, Inc. OI

0.5% Unchanged $15,257 653,700
37 LyondellBasell Industries LYB

0.5% New $15,356 351,800
38 Superior Energy Services SPN

0.5% Cut -10% $14,972 568,000

0.5% Added 109% $13,427 239,000

0.5% New $13,475 124,000
41 Ecolab Inc. ECL

0.5% Unchanged $13,202 213,900
42 Procter & Gamble Co. PG

0.4% New $12,817 190,700
43 Boise Inc. BZ

0.4% Cut -21% $11,772 1,433,900
44 Sina Corp. SINA

0.3% Added 135% $10,049 154,600
45 Teck Resources Limited TCK

0.3% Cut -44% $9,949 279,000

48
Continued
Passport Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
46 OCEAN RIG ORIG

0.3% Cut -59% $9,482 561,070
47 CHEMTURA CORP CHMT

0.3% Cut -58% $7,974 469,600
48 eBay Inc. EBAY

0.3% New $7,380 200,000
49 PACIFIC DRILLING PACD

0.2% Unchanged $7,205 711,911
50 News Corp. NWSA

0.2% New $7,096 360,000
51 Nevsun Resources Ltd. NSU

0.2% Cut -62% $6,926 1,877,700
52 Cliffs Natural Resources CLF

0.2% Cut -43% $6,774 97,800
53 Watson Pharmaceuticals WPI

0.2% New $6,706 100,000

0.2% Cut -33% $6,595 114,100
55 Southern Copper Corp. SCCO

0.2% Cut -74% $6,466 203,899
56 Abbott Laboratories ABT

0.2% New $6,129 100,000
57 Alcoa, Inc. AA

0.2% Cut -33% $6,120 610,800

0.2% New $6,108 125,000

0.2% Cut -45% $5,553 82,200
60 WebMD Health Corp. WBMD

0.2% Cut -71% $5,671 221,700
61 Dendreon Corp. DNDN

0.2% New $5,328 500,000
62 Walter Energy, Inc. WLT

0.2% Cut -76% $5,181 87,500
63 Keegan Resources Inc. KGN

0.2% Cut -30% $5,050 1,332,900
64 Idenix Pharmaceuticals IDIX

0.2% New $4,895 500,000

0.2% New $4,851 105,000
66 Allot Communications ALLT

0.1% New $4,135 177,850

0.1% New $4,209 80,000
68 Las Vegas Sands LVS

0.1% Added 16% $4,260 74,000
69 Amylin Pharmaceuticals AMLN

0.1% New $3,744 150,000

0.1% New $3,903 94,400
71 Deckers Outdoor Corp. DECK

0.1% New $3,531 56,000
72 Deckers Outdoor Corp. DECK PUT 0.1% New $3,468 55,000
73 Targacept, Inc. TRGT CALL 0.1% New $3,210 627,000
74 China Ming Yang Wind MY

0.1% Unchanged $2,800 1,186,500
75 Western Refining Inc. WNR

0.1% Unchanged $2,823 150,000
76 NIELSEN HOLDINGS NLSN

0.1% Cut -5% $3,014 100,000
77 Anheuser-Busch InBev BUD

0.1% Cut -22% $2,712 37,300
78 SPX Corporation SPW

0.1% New $2,671 34,450
79 CARBO Ceramics Inc. CRR

0.1% Unchanged $2,710 25,700

0.1% New $2,709 50,000
81 Qihoo 360 Technology Co QIHU

0.1% Cut -53% $2,738 112,000
82 Halozyme Therapeutics HALO

0.1% New $2,552 200,000
83 Caterpillar Inc. CAT

0.1% New $2,482 23,300
84 Momenta Pharma MNTA

0.1% New $2,298 150,000
85 MONSTER BEVERAGE MNST

0.1% Cut -15% $2,422 39,000
86 Key Energy Services Inc. KEG

0.1% Unchanged $2,322 150,300
87 PioneerNatural Resources PXD

0.1% New $2,388 21,400
88 Union Pacific Corporation UNP

0.1% New $2,488 23,150
89 Masimo Corporation MASI

0.1% New $2,338 100,000
90 National Oilwell Varco NOV

0.1% Unchanged $2,177 27,400

49
Continued
Passport Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
91 HSN, Inc. HSNI

0.1% Added 93% $2,206 58,000
92 zipRealty Inc. ZIPR

0.1% Unchanged $2,081 1,519,058
93 TUDOU TUDO

0.1% Added 31% $1,636 55,400
94 PulteGroup, Inc. PHM PUT 0.1% New $1,416 160,000
95 MSC Industrial Direct MSM

0.0% New $1,249 15,000
96 Baker Hughes BHI

0.0% Cut -35% $1,158 27,600
97 Research In Motion RIMM CALL 0.0% Added 143% $1,250 85,000
98 Giant Interactive Group GA

0.0% Unchanged $929 189,500
99 Albemarle Corp. ALB

0.0% Unchanged $888 13,900
100 Celldex Therapeutics CLDX CALL 0.0% New $509 100,000
101 SandRidge Energy SD

0.0% Unchanged $392 50,000
102 Halliburton Company HAL

0.0% Unchanged $7 200
103 NCI Building Systems NCS

0.0% New $78 6,800
104 MISSION NEWENERGY MNELF

0.0% Unchanged $4 8,233
105 Watts Water Technologies WTS

0.0% New $77 1,900
106 ITC Holdings Corp. ITC

0.0% Unchanged $77 1,000
107 Tetra Tech Inc. TTEK

0.0% Unchanged $116 4,400
108 Pike Electric Corporation PIKE

0.0% New $83 10,100
109 Johnson Controls Inc. JCI

0.0% Unchanged $62 1,900
110 The Andersons, Inc. ANDE

0.0% Unchanged $107 2,200
111 Pentair, Inc. PNR

0.0% Cut -21% $90 1,900
112 Rentech, Inc. RTK

0.0% New $83 39,800
113 Cosan Ltd. CZZ

0.0% Cut -95% $79 5,300
114 AVX Corp. AVX

0.0% Unchanged $80 6,000
115 MYR Group, Inc. MYRG

0.0% Cut -50% $57 3,200
116 AO Smith Corp. AOS

0.0% New $76 1,700
117 Acuity Brands, Inc. AYI

0.0% New $82 1,300
118 Barrick Gold Corp ABX

Sold

-
119 Shutterfly, Inc. SFLY

Sold

-
120 The Home Depot HD PUT

Sold

-

Sold

-
122 Pilgrim's Pride Corp PPC

Sold

-
123 20+ Year Treasury TLT CALL

Sold

-
124 NextEra Energy, Inc. NEE

Sold

-
125 Arcelor Mittal MT

Sold

-
126 United States Steel Corp. X

Sold

-
127 Monsanto Co. MON CALL

Sold

-
128 Rowan Companies Inc. RDC

Sold

-
129 CF Industries Holdings CF

Sold

-
130 Mead Johnson Nutrition MJN

Sold

-
131 First Solar, Inc. FSLR

Sold

-
132 AK Steel Holding Corp AKS

Sold

-
133 Mosaic Co. MOS

Sold

-
134 Alpha Natural Resources ANR

Sold

-
135 Trina Solar Ltd. TSL

Sold

-

50
Continued
Passport Capital
Next Page: Perry Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
136 Wells Fargo & Company WFC PUT

Sold

-

Sold

-

Sold

-

Sold

-
140 Suncor Energy Inc. SU CALL

Sold

-
141 Kronos Worldwide Inc. KRO

Sold

-
142 Quanta Services, Inc. PWR

Sold

-
143 Dole Food Company Inc. DOLE

Sold

-
144 Monsanto Co. MON

Sold

-
145 Alkermes, Inc. ALKS

Sold

-
146 Tiffany & Co. TIF

Sold

-
147 Hexcel Corp. HXL

Sold

-
148 Vale S.A. VALE

Sold

-
149 Acorda Therapeutics ACOR

Sold

-
150 AmericanCapitalAgency AGNC

Sold

-

51
Richard Perrys firm started a massive
new stake in pharmacy benefit manager Express
Scripts (ESRX) during the quarter. They
originally initiated the position as a way to play
the merger between ESRX and Medco Health.
But upon the conclusion of the deal, they
continue to see opportunity in the combined
entity. Perry Partners outlined their thesis
behind ESRX in their first quarter letter to
investors, writing, At the levels we bought
stock, our analysis suggests the market is
underestimating the earnings power of the
combined company. We believe that over time
the company will realize close to $1.4 billion in
cost synergies, well in excess of the $1 billion
management is currently guiding towards. In
addition, the company should be able to resume
share repurchases within 18 months once it
pays down much of the leverage raised to
finance the merger. The current valuation of
Key Takeaways

2%3'4"$565"#$-'
Avon roducLs (Av)
Su8 S& 300 (S?)
Agnlco-Lagle Mlnes (ALM)
Allled nevada Cold (Anv)
1eva harma (1LvA) Calls
lShares 8ussell 2000 (lWM) uLs

."/,'!"89/%6%/)':&6':;-'
PerLz (P1Z)
uollar 1hrlfLy (u1C)
MoLorola MoblllLy (MMl)
Coodrlch (C8)
8lLe Ald (8Au)
88S referred (88S-8)
88S referred (88S-)
SouLhern unlon ~ boughL ouL

11.5x 2013 combined earnings does not reflect
that of a market leading healthcare company
which expects to grow earnings by more than
15% over the next three years. The deal closed
on April 2, 2012 and we continue to find the
risk/reward compelling.
The hedge fund firm also initiated new
holdings in two gold miners: Agnico-Eagle
Mines (AEM) and Allied Nevada Gold (ANV).
They believe that AEM will be able to create
value from its assets and can further increase its
dividend yield. Perry feels that ANV is
undertaking a massive expansion project where
it attempts to expand production six-fold and
so the stock should re-rate over time. They
also hypothesize that the company could be a
takeover target as two of the worlds largest
gold miners also reside in ANVs home state of
Nevada. Perry has hedged the exposure to
these individual equity plays with a basket of
senior gold mining companies.
The last interesting takeaway from
Perrys portfolio is the fact that they completely
exited their risk arbitrage plays in Motorola
Mobility (MMI) and Goodrich (GR). This is a
bit peculiar considering both are being taken
over in the near future and have an impending
catalyst. Given Perrys propensity to invest in
event-driven plays, perhaps they found more
compelling places to allocate capital for the
time being. Lastly, while the next page shows a
new stake in Avon Products (AVP) from the
first quarter, note that Perry has actually
significantly reduced their position recently.
View Perry Capitals Updated
Perry Capital
Richard Perry
Average return of over 15% since
inception; only 1 losing year in 22
years (2008)

Seeks to deliver strong returns with
low correlations to equity markets

52
Perry Capital
% of
Portfolio Activity
Value x
$1000 # of Shares

12.85% New $267,107 4,930,000

9.82% Added 12% $204,241 3,240,886
3 Yahoo! Inc. YHOO

9.53% Added 23% $198,022 13,010,675
4 DELPHI DLPH

9.06% Cut -20% $188,397 5,961,919
5 BP plc BP CALL 6.49% Cut -22% $135,000 3,000,000
6 Avon Products Inc. AVP

5.12% New $106,480 5,500,000
7 Universal American Corp UAM

3.99% Unchanged $82,943 7,694,185
8 Anadarko Petroleum Co APC CALL 3.91% Added 7% $81,239 1,037,000
9 SPDR S&P 500 SPY

3.87% New $80,547 572,026
10 RBS Pfd M RBS-PM

3.69% Cut -3% $76,745 4,668,176
11 Agnico-Eagle Mines Ltd. AEM

3.32% New $68,938 2,065,258

3.26% Cut -59% $67,848 866,067
13 RBS Pfd S RBS-PS

3.20% Unchanged $66,576 3,986,560
14 BP plc BP

3.08% Cut -53% $64,067 1,423,700
15 Allied Nevada Gold Corp. ANV

2.60% New $53,971 1,659,100
16 Teva Pharmaceutical TEVA CALL 2.26% New $46,980 1,042,600
17 RBS Pfd T RBS-PT

2.24% Cut -29% $46,672 2,456,395
18 RBS Pfd Q RBS-PQ

2.16% Unchanged $44,941 2,645,164
19 iShares Russell 2000 Index IWM PUT 1.82% New $37,753 455,900
20 Johnson & Johnson JNJ

1.48% Unchanged $30,741 466,051
21 RBS Pfd N RBS-PN

1.27% Cut -10% $26,348 1,630,451
22 North American Energy NOA

1.08% Unchanged $22,532 4,598,466
23 United Community Banks UCBI

0.95% Cut 0% $19,822 2,033,030

0.51% New $10,668 236,755
25 Kinross Gold Corporation KGC

0.47% New $9,790 1,000,000
26 SanofiContingentValueRight GCVRZ

0.37% Cut 0% $7,628 5,650,572
27 CAESARS ENTERTAINMENT CZR

0.29% New $5,938 402,839
28 Bristol-Myers Squibb Co BMY CALL 0.06% New $1,350 40,000

0.04% New $755 35,700
30 BioMarin Pharmaceutical Inc. BMRN

0.04% New $784 22,900
31 Edwards Lifesciences Corp. EW

0.04% New $778 10,700
32 Northrop Grumman Co NOC

0.04% New $745 12,200
33 General Motors Warrants GM/WS/A

0.04% Cut -1% $761 45,743
34 Becton, Dickinson and Co BDX

0.04% New $745 9,600
35 Arrow Electronics, Inc. ARW

0.04% New $739 17,600
36 Hyatt Hotels Corporation H

0.04% New $786 18,400
37 McGraw-Hill Companies MHP

0.04% New $771 15,900
38 Intel Corporation INTC

0.04% New $745 26,500
39 iShares Silver Trust SLV CALL 0.04% New $785 25,000
40 International Flavors IFF

0.04% New $809 13,800
41 General Mills Inc. GIS

0.04% New $753 19,100
42 Bristol-Myers Squibb BMY

0.04% New $749 22,200
43 Fidelity National Financial FNF

0.04% New $759 42,100
44 Wal-Mart Stores Inc. WMT

0.04% New $808 13,200
45 Dollar General Corporation DG

0.04% New $762 16,500

53
Perry Capital
Next Page: Glenview Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
46 Essex Property Trust Inc. ESS

0.04% New $758 5,000
47 Microchip Technology Inc. MCHP

0.04% New $755 20,300
48 AFLAC Inc. AFL

0.03% New $676 14,700
49 Silver Wheaton Corp. SLW

0.03% New $608 18,300

0.03% New $574 4,600
51 Atmel Corporation ATML

0.03% New $586 59,400
52 Titanium Metals Corp TIE

0.03% New $542 40,000
53 Southern Copper SCCO

0.03% New $545 17,200
54 Pfizer Inc. PFE

0.03% New $657 29,000
55 NVIDIA Corporation NVDA

0.03% New $636 41,300
56 United Therapeutics UTHR

0.03% New $721 15,300
57 Smithfield Foods SFD

0.03% New $661 30,000
58 Morgan Stanley MS

0.03% New $568 28,900
59 Pepsico, Inc. PEP

0.03% New $531 8,000
60 SPDR Gold Shares GLD CALL 0.02% New $405 2,500
61 Sohu.com Inc. SOHU

0.02% New $513 9,300
62 Human Genome Sciences HGSI

0.02% New $494 59,900
63 Paychex Inc. PAYX

0.02% New $496 16,000
64 General Motors Warrants GM/WS/B

0.02% Cut -1% $512 45,743

0.01% New $304 1,500
66 MBIA Inc. MBI

0.01% New $299 30,500
67 CARPENTER TECH CRS

0.01% New $245 4,700
68 ADTRAN Inc. ADTN

0.01% New $299 9,600
69 Cypress Semiconductor CY

0.01% New $234 15,000
70 The Cooper Companies Inc. COO

Sold

-
71 RBS Pfd R RBS-PR

Sold

-
72 HERTZ GLOBAL HOLDING HTZ

Sold

-
73 Dollar Thrifty Automotive DTG

Sold

-
74 MedcoHealth Solutions Inc. MHS

Sold

-
75 Motorola Mobility Holdings MMI

Sold

-
76 Walgreen Co. WAG CALL

Sold

-
77 iShares Emerging Markets EEM PUT

Sold

-
78 Goodrich Corp. GR

Sold

-
79 RBS Pfd P RBS-PP

Sold

-
80 The Cooper Companies Inc. COO CALL

Sold

-
81 AFLAC Inc. AFL PUT

Sold

-
82 Rite Aid Corp. RAD

Sold

-
83 Yahoo! Inc. YHOO CALL

Sold

-
84 Southern Union Co. SUG

Sold

-

Sold

-

54
At the Ira Sohn Conference in New
York, Larry Robbins recently shared his
thoughts on what hes investing in. He basically
said to go long hospitals and life sciences and to
short treasuries, utilities, and the defense
sector. Hes not alone in the short treasuries
camp as Leon Cooperman has been blasting the
asset class for some time now. Robbins laid out
his long thesis for hospitals by pointing out that
EBITDA has grown every year for them as they
offer 9% CAGR, 1% admission growth, and 2%
leverage. He says hospitals benefit from
Medicaid eligibility as it reduces bad debt
expense. The Glenview manager pointed out
that half of hospitals are non-profit and just get
by. HCA Holdings (HCA) is one of his top
longs and runs a private network of hospitals.
Robbins points out that its unlikely that the
government could unilaterally take a for profit
hospitals profits from reimbursement. At price
Key Takeaways

2%3'4"$565"#$-'
1eneL PealLhcare (1PC)
Mckesson (MCk) Calls
AeLna (AL1)
L*1rade llnanclal (L1lC)
ClLlgroup (C)
Apple (AAL)
lngersoll 8and (l8)
Posplra (PS)

."/,'!"89/%6%/)':&6':;-'
CuesL ulagnosLlcs (uCx)
vlacom (vlA.8)
CvS Caremark (CvS)
88 uonnelley (88u)
lamlly uollar (luC)
SeagaLe 1echnology (S1x)
LaboraLory Corp (LP)
to earnings ratio averages of 8.1x for the sector,
he likes this play. In other health sector plays,
Robbins started a brand new stake in Tenet
Healthcare (THC) in March. He also over
doubled his position in Health Management
Associates (HMA).
Robbins recently also provided a short
idea that is worth highlighting considering the
rarity in which hedge fund managers reveal
them. He says to short the utility play ITC
Holdings (ITC), a transmission company. He
argues theyre essentially overcharging
customers as the users overpay by anywhere
between $260 million to $550 million. Robbins
says theres no accounting issues but the
company is just getting a sweetheart deal that
regulators wont let go on forever. He says that
if you cut the companys return on equity by 194
basis points, earnings get hit by 18%. While the
consensus EPS is $4.00, he thinks it could
really be $2.00.
Glenview Capitals largest disclosed
position continues to be Life Technologies
(LIFE), a company that sells equipment and
consumables to pharma & biotech companies,
hospitals, etc. Most of their revenue is high
margin and recurring, which is attractive. The
bull case on this stock centers on its purchase of
Ion Torrent (they make a genetic sequencer).
Once free cashflow from this ramps up in a few
years, LIFE could potentially be worth much
more. Overall, the company should benefit
from an aging population and strong trends in
genetic technology. The potential risk with this
company is that it derives over 40% of its
revenue from the government and education
sectors, so budget cuts could potentially put this
in jeopardy.
View Glenview Capitals Updated
Glenview Capital
Larry Robbins
Known for taking concentrated
positions in large caps

Previously a trader at Leon
Coopermans Omega Advisors

55
Glenview Capital
% of
Portfolio Activity
Value x
$1000 # of Shares

10.4% Cut -15% $573,927 11,755,972

5.9% Cut -15% $327,068 6,131,756
3 Flextronics International FLEX

5.6% Added 17% $312,029 43,217,244
4 AIG AIG

5.2% Added 29% $289,354 9,385,465

4.7% Added 0% $262,138 4,649,487

4.6% Added 88% $253,498 5,147,161
7 Fidelity National Info FIS

4.6% Added 4% $252,817 7,633,374
8 Cardinal Health, Inc. CAH

4.5% Added 141% $248,206 5,757,505
9 BMC Software Inc. BMC

4.1% Added 3% $224,765 5,596,736
10 Xerox Corp. XRX

3.6% Cut -2% $201,364 24,936,694

3.5% Cut -11% $192,235 7,770,229
12 Aon Corporation AON

3.2% Unchanged $176,132 3,590,138
13 Time Warner Cable Inc. TWC

2.9% Added 30% $162,857 1,998,240
14 URS Corporation URS

2.8% Added 1% $152,529 3,587,234
15 Lincare Holdings Inc. LNCR

2.5% Cut -1% $140,704 5,436,790

2.5% Cut -66% $138,778 1,581,152
17 Tenet Healthcare Corp. THC

2.4% New $134,905 25,405,900
18 Lowe's Companies Inc. LOW

2.2% Cut -13% $123,622 3,939,500

2.1% Cut -53% $117,987 2,100,152
20 McKesson Corporation MCK CALL 1.6% New $87,770 1,000,000
21 The Babcock & Wilcox Co BWC

1.5% Added 27% $81,223 3,154,277
22 Health Management Assoc HMA

1.4% Added 118% $75,763 11,274,276
23 Take-Two Interactive TTWO

1.4% Cut -12% $75,686 4,919,489

1.3% Added 23% $72,849 1,454,647

1.3% Cut -57% $72,207 1,145,780
26 Sealed Air Corporation SEE

1.3% Cut -22% $71,356 3,695,310
27 Target Corp. TGT

1.2% Cut -56% $66,583 1,142,658
28 Meritor, Inc. MTOR

1.1% Cut -3% $61,714 7,647,279

1.0% Cut -18% $52,823 2,059,371
30 Aetna Inc. AET

0.9% New $51,493 1,026,583
31 Lifepoint Hospitals Inc. LPNT

0.9% Add 154% $49,649 1,258,860
32 ETRADE Financial Corp ETFC

0.9% New $49,172 4,490,565

0.8% Added 45% $45,618 16,006,206

0.8% New $42,493 1,162,600
35 Clearwire Corporation CLWR

0.7% Unchanged $39,807 17,459,027
36 Apple Inc. AAPL

0.5% New $28,838 48,100

0.5% New $27,568 666,700
38 Mueller Water Products MWA

0.5% Added 16% $25,563 7,676,685
39 Hospira Inc. HSP

0.4% New $24,561 656,900
40 State Street Corp. STT

0.4% Cut -14% $23,558 517,755
41 Rovi Corporation ROVI

0.4% New $23,143 711,000

0.4% Cut -64% $21,506 396,936
43 Apollo Group Inc. APOL

0.4% New $21,221 549,200
44 Time Warner Inc. TWX

0.3% New $14,349 380,100
45 TRIPADVISOR TRIP

0.2% New $11,967 335,500

56
Continued
Glenview Capital
Next Page: Viking Global
% of
Portfolio Activity
Value x
$1000 # of Shares

0.2% New $11,472 544,200
47 HartfordFinancial Warrant HIG/WS

0.1% Unchanged $7,016 526,750
48 UNWIRED PLANET INC UPIP

0.1% Unchanged $5,829 2,568,031
49 RBS Pfd S RBS-PS

0.1% Unchanged $4,178 250,000
50 Citigroup Warrant C/WS/A

0.1% Unchanged $3,682 8,561,020
51 RBS Pfd N RBS-PN

0.0% Unchanged $933 57,565
52 RBS Pfd P RBS-PP

0.0% Unchanged $535 32,819
53 First American Financial FAF

0.0% New $760 45,700
54 RBS Pfd R RBS-PR

0.0% Unchanged $330 20,000
55 Quest Diagnostics Inc. DGX

Sold

-

Sold

-
57 Fiserv, Inc. FISV

Sold

-
58 R.R. Donnelley & Sons RRD

Sold

-
59 CVS Caremark Corp CVS

Sold

-

Sold

-

Sold

-

Sold

-

Sold

-
64 Laboratory Corp LH

Sold

-
65 Textron Inc. TXT

Sold

-

57
The first thing worth highlighting in
regards to Viking Global pertains not to its
portfolio, but rather to its personnel. In March,
Jim Parsons (portfolio manager and
management committee member) left the firm
apparently due to differences regarding the
direction Viking was heading. He was
Key Takeaways

2%3'4"$565"#$-'
Coogle (CCCC)
1rlpAdvlsor (18l)
Wynn (W?nn)
Schlumberger (SL8)
SLerlcycle (S8CL)
WaLson harma (Wl)
Crown CasLle (CCl)
Pome uepoL (Pu)
noble (nL)
8erkshlre PaLhaway (88k-8)
Coldman Sachs (CS)
lllumlna (lLMn)
1hermo llsher SclenLlflc (1MC)

."/,'!"89/%6%/)':&6':;-'
Clgna (Cl)
CaplLal Cne (CCl)
Cllead Sclences (ClLu)
ledLx (lux)
MeLLlfe (ML1)
e8ay (L8A?)
Chevron (Cvx)
u8 PorLon (uPl)
1aLa MoLors (11M)
Assured CuaranLy (ACC)
loneer naLural 8esources (xu)
lnhlblLex (lnPx)
CheckolnL SofLware (CPk)
responsible for around 15% of their portfolio
(mainly in the technology, media, and telecom
sector as well as financials). Viking closed its
flagship fund to new investments back in
October as its larger size was starting to affect
its investment strategy.
The main reason for pointing out this
personnel change is because high-level
departures have become somewhat of a trend at
Viking, to the point that its a bit concerning.
Before Parsons, another investment committee
member, Dris Upitis, left in 2011. Additionally,
David Ott, former CIO and one of the founders
of the firm, left the year prior. While its
obviously reassuring that the founder Andreas
Halvorsen is still heading the Viking ship, its
also a bit disconcerting that so many key
members that have helped Viking succeed in
the past are now gone (after all, Halvorsen said
that Parsons made significant contributions).
Vikings Global Equities III fund finished 2011
up 7.69%. After all the departures, Tom Purcell
and Dan Sundheim are now tagged as co-chief
investment officers.
Turning to Vikings latest portfolio
activity, the massive addition to their pre-
existing stake in Cisco Systems (CSCO) is the
headline here. Its now their top holding as
they boosted the position by over 330% during
the quarter. The hedge fund also began a brand
new stake in Google (GOOG), as it ended the
quarter as their second largest disclosed
position. They also initiated a sizable stake in
TripAdvisor (TRIP), the online travel website
that was spun-off from Expedia (EXPE) a few
months ago.

Andreas Halvorsen
Viking Global
View Viking Globals Updated
Has returned an average of 13%
annually over the past decade

Has been directing more capital to
Vikings best ideas & is taking a
more concentrated portfolio approach
than in the past
58
Viking Global
% of
Portfolio Activity
Value x
$1000 # of Shares

5.6% Added 335% $682,950 32,290,800
2 Google Inc. GOOG

5.5% New $675,482 1,053,400
3 Invesco Ltd. IVZ

5.4% Cut -5% $662,942 24,857,253
4 LyondellBasell Industries LYB

5.1% Added 16% $621,366 14,235,209

4.8% Added 21% $583,987 1,388,662
6 Priceline.com Incorporated PCLN

3.9% Added 15% $476,036 663,466

3.7% Added 25% $450,348 8,387,949
8 U.S. Bancorp USB

3.4% Cut -39% $415,071 13,102,000
9 Biogen Idec Inc. BIIB

3.3% Added 118% $405,151 3,215,487

3.2% Added 0% $389,853 23,670,511
11 TRIPADVISOR TRIP

3.0% New $372,444 10,441,404

2.5% Added 324% $308,841 8,449,838

2.5% New $307,179 2,459,800
14 Albemarle Corp. ALB

2.1% Added 26% $262,355 4,104,428
15 News Corp. NWSA

1.9% Added 143% $233,232 11,833,200
16 Humana Inc. HUM

1.9% Added 21% $232,992 2,519,381
17 Schlumberger Limited SLB

1.9% New $227,819 3,257,817

1.8% Cut -61% $223,313 3,281,127
19 Cardinal Health, Inc. CAH

1.8% Added 409% $222,448 5,160,026
20 Universal Health Services UHS

1.6% Added 3% $192,404 4,590,894
21 Stericycle, Inc. SRCL

1.6% New $189,643 2,267,373
22 Estee Lauder Companies EL

1.5% Added 24% $185,344 2,992,318
23 Prudential Financial, Inc. PRU

1.3% Cut -35% $162,963 2,570,800
24 Carter's, Inc. CRI

1.3% Added 32% $161,583 3,246,600
25 HOST HOTELS & RESORT HST

1.3% Cut 0% $152,820 9,306,978
26 Texas Instruments Inc. TXN

1.3% Added 1% $153,248 4,559,614

1.2% Cut -44% $150,849 5,817,571
28 Watson Pharmaceuticals WPI

1.2% New $149,584 2,230,600

1.2% New $143,984 2,699,368
30 The Home Depot, Inc. HD

1.1% New $134,967 2,682,721
31 Noble Corp. NE

1.1% New $134,007 3,576,400
32 DaVita, Inc. DVA

1.1% Cut -59% $133,009 1,475,102
33 Marsh & McLennan Co MMC

1.1% Added 141% $133,617 4,074,959
34 Berkshire Hathaway BRK-B

1.0% New $127,478 1,570,900
35 EOG Resources, Inc. EOG

0.9% Added 40% $110,161 991,549
36 Goldman Sachs GS

0.9% New $108,674 873,800

0.9% New $108,818 2,068,400
38 Apple Inc. AAPL

0.9% Cut -87% $103,902 173,300

0.8% Cut -38% $102,448 942,751

0.8% New $99,419 1,763,385

0.7% Cut -56% $90,563 1,437,061
42 Baidu, Inc. BIDU

0.7% Cut -86% $88,307 605,800

0.7% Cut -47% $85,470 1,723,546

0.6% Cut -53% $78,124 1,699,100
45 ACE Limited ACE

0.6% New $77,104 1,053,335

59
Viking Global
Continued
Next: Farallon Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
46 LAS VEGAS SANDS LVS

0.6% New $77,057 1,338,500
47 Agrium Inc. AGU

0.6% New $76,168 881,885
48 MEDNAX, Inc. MD

0.6% Cut -22% $74,478 1,001,463
49 Banco Santander (Brasil) BSBR

0.6% New $72,995 7,960,200
50 Linear Technology Corp. LLTC

0.6% Cut -8% $68,084 2,020,300
51 Health Management Assoc HMA

0.5% Cut -10% $66,354 9,874,124

0.5% New $61,546 1,815,000
53 St. Jude Medical Inc. STJ

0.5% Added 59% $57,297 1,293,100
54 Cobalt International CIE

0.5% New $56,135 1,869,300
55 AmerisourceBergen ABC

0.5% Added 729% $55,889 1,408,500
56 Visa, Inc. V

0.5% New $54,586 462,600
57 AMERIGROUP Corp AGP

0.4% New $52,222 776,200
58 EQT Corporation EQT

0.4% New $46,585 966,300
59 Monsanto Co. MON

0.4% Cut -50% $44,234 554,600
60 First Horizon National FHN

0.4% New $44,166 4,255,000

0.3% New $42,155 3,008,961
62 Cognizant Tech Solutions CTSH

0.3% New $35,690 463,817
63 Penn West Energy Trust PWE

0.3% Cut -78% $35,084 1,792,785
64 Hartford Financial Services HIG

0.2% New $29,769 1,412,219
65 WellCare Health Plans WCG

0.2% New $23,569 327,900
66 Aetna Inc. AET

0.2% New $23,676 472,020
67 Oncothyreon Inc ONTY

0.1% Added 5% $14,223 3,262,215
68 BioMarin Pharmaceutical BMRN

0.1% New $14,793 431,923

0.1% New $10,506 162,922
70 Coach Inc. COH

0.0% New $231 3,000

Sold

-
72 Capital One Financial Corp. COF

Sold

-

Sold

-
74 INHIBITEX INC INHX

Sold

-
75 Pioneer Natural Resources PXD

Sold

-
76 FedEx Corporation FDX

Sold

-

Sold

-

Sold

-
79 eBay Inc. EBAY

Sold

-

Sold

-
81 Alexion Pharmaceuticals ALXN

Sold

-

Sold

-
83 Axis Capital Holdings AXS

Sold

-
84 Chevron Corp. CVX

Sold

-
85 DR Horton Inc. DHI

Sold

-
86 GRIFOLS, S.A. GRFS

Sold

-
87 Occidental Petroleum OXY

Sold

-
88 Tata Motors Ltd. TTM

Sold

-

60
Thomas Steyers Farallon Capital was
recently named one of the top 10 hedge funds by
net gains since inception. They came in at
number nine on the list with a $12.2 billion net
gain since inception in 1992. Theyre the
arbitrage focused hedge fund the newsletter
tracks to keep an eye on what deals they see as
most likely to close that offer a compelling
spread. Their top holding at the end of the
quarter was El Paso (EP) as the company will be
taken over by Kinder Morgan (KMI). Farallon
added to its EP position by 54% during the
Key Takeaways

2%3'4"$565"#$-'
Apple (AAL)
rlcellne.com (CLn)
C8S (C8S)
Lqulnlx (LClx)
Warnaco (W8C)
rogress Lnergy (Cn)
WebMu (W8Mu)
Copa Poldlngs (CA)
Careluslon (Cln)
vCA AnLech (WCCl)
1elus (1u)

."/,'!"89/%6%/)':&6':;-'
Lxxon Mobll (xCM) uLs
Chevron (Cvx) uLs
Sl Corp (SCnL)
LlnkLone (L1Cn)
Advanced Analoglc (AA1l)
CeoLye (CLC?)
PCA Poldlngs (PCA)
Wells largo (WlC)
Shanda lnLeracLlve (SnuA)
unlLed 8enLals (u8l)
n?SL LuronexL (n?x)

quarter and it now represents over 13.7% of
their reported holdings. The deal offers EP
shareholders numerous options for payment
including Kinder Morgan stock, warrants, and
cash in various arrangements.
Steyers firm boosted its holdings in
Medco Health Solutions during the quarter as
they were betting on the takeover by Express
Scripts (ESRX) coming to fruition. They
substantially increased their sharecount by over
380%. Their wager paid off as the deal recently
closed and Medco is now part of Express Scripts
(ESRX). It will be interesting to see if Farallon
will continue to own shares in the combined
entity or if they were simply playing the deal
spread and will move on to their next play.
Perry Partners, profiled earlier in this issue, was
also playing the deal but has determined that
the new entity is also a compelling investment
opportunity.
Four of Farallons top five holdings are
risk arbitrage plays (theyre also waiting for
Motorola Mobility (MMI) to be acquired by
Google (GOOG) and for Goodrich (GR) to be
acquired by United Technologies (UTX)). Their
fifth largest holding is intriguing in the form of
Owens-Illinois (OI) shares. Some analysts
believe the company is an ideal takeover target.
The company manufactures and sells glass
containers for beverages. It is a simple business
that offers scale and has very little competition.
However, there has been somewhat of a secular
decline in the use of glass as beverage makers
increasingly elect to package their products in
plastic and aluminum containers.

Thomas Steyer
Farallon Capital
View Farallon Capitals Updated
Typically focuses on risk arbitrage
strategies

Founded Farallon in 1986 & invests
in equities, private investments, debt,
etc.

61
Farallon Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 El Paso Corp. EP

13.72% Added 54% $664,592 22,490,420

10.14% Add 382% $491,046 6,985,000

8.97% Cut -6% $434,191 11,065,000
4 Goodrich Corp. GR

7.25% Cut -18% $351,232 2,800,000
5 Owens-Illinois, Inc. OI

3.38% Cut -31% $163,660 7,012,000
6 Hudson Pacific Properties HPP

3.20% Unchanged $154,838 10,233,860
7 Oracle Corp. ORCL

3.09% Cut -8% $149,503 5,127,000
8 Visa, Inc. V

3.04% Added 27% $147,245 1,247,837
9 State Street Corp. STT

2.53% Cut -18% $122,395 2,690,000
10 Google Inc. GOOG

2.47% Cut -3% $119,527 186,400

2.40% Added 32% $116,397 1,005,500
12 Apple Inc. AAPL

2.38% New $115,458 192,600

2.13% Added 16% $103,038 1,635,000

2.09% Cut -13% $101,031 940,000
15 Target Corp. TGT

2.01% Cut -21% $97,151 1,667,256

1.66% New $80,360 112,000

1.60% Added 4% $77,543 1,140,000
18 General Dynamics Corp. GD

1.58% Cut -22% $76,682 1,045,000

1.58% New $76,298 2,250,000
20 News Corp. NWSA

1.54% Cut -51% $74,724 3,795,000

1.50% Cut -8% $72,778 1,140,000

1.48% Cut -3% $71,586 970,000
23 Progressive Waste Solutions BIN

1.46% Unchanged $70,527 3,253,100

1.46% New $70,695 449,000
25 Knology, Inc. KNOL

1.35% Unchanged $65,291 3,587,394
26 Comcast Corporation CMCSA

1.25% Cut -53% $60,620 2,020,000
27 Pall Corp. PLL

1.12% Cut -4% $54,224 909,336
28 Warnaco Group Inc. WRC

1.12% New $54,312 930,000

1.08% Cut -44% $52,495 1,585,000

1.06% Cut -59% $51,116 1,585,000
31 Town Sports International CLUB

1.06% Unchanged $51,279 4,060,082
32 Progress Energy Inc. PGN

0.83% New $40,098 755,000
33 BP plc BP

0.79% Cut -53% $38,025 845,000
34 FEI Co. FEIC

0.70% Unchanged $34,005 692,428

0.54% Unchanged $26,381 540,364
36 Yahoo! Inc. YHOO

0.50% Added 69% $23,987 1,576,000
37 eBay Inc. EBAY

0.49% Added 29% $23,637 640,745

0.48% New $23,150 905,000
39 Copa Holdings SA CPA

0.43% New $20,592 260,000
40 CareFusion Corp CFN

0.42% New $20,433 788,000
41 VCA Antech Inc. WOOF

0.38% New $18,568 800,000
42 Tenet Healthcare THC

0.29% Cut -35% $14,087 2,652,900
43 Baxter International BAX

0.27% Cut -76% $12,912 216,000
44 CVS Caremark CVS

0.27% Cut -24% $13,097 292,336
45 EnCana Corp. ECA

0.27% Unchanged $13,119 667,636

62
Continued
Farallon Capital
Next: Icahn Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
46 Fuel Systems Solutions FSYS

0.26% Added 8% $12,738 486,945
47 TELUS Corporation TU

0.23% New $11,365 200,000

0.21% New $10,259 195,000
49 Westport Innovations WPRT

0.20% Unchanged $9,583 234,200
50 Potash Corp POT

0.17% Unchanged $8,473 185,455
51 Fresh Del Monte Produce FDP

0.16% Added 19% $7,964 348,682
52 Schlumberger Limited SLB

0.16% New $7,636 109,200
53 NOVADAQ TECH NVDQ

0.15% New $7,350 1,103,800
54 Chiquita Brands CQB

0.14% Unchanged $6,652 756,727
55 Tata Motors Ltd. TTM

0.13% Cut -39% $6,244 231,514
56 SanofiContingentValueRight GCVRZ

0.13% Unchanged $6,143 4,550,000
57 LOOPNET INC COM STK LOOP

0.11% New $5,540 295,000
58 Ultra Petroleum Corp. UPL

0.11% New $5,354 236,600
59 LPL INVESTMENT LPLA

0.10% Unchanged $5,054 133,206
60 FLIR Systems, Inc. FLIR

0.08% Unchanged $4,105 162,182
61 Dole Food Company Inc. DOLE

0.07% Unchanged $3,629 363,636
62 Horsehead Holding Corp. ZINC

0.05% Unchanged $2,427 213,100
63 Beacon Roofing Supply BECN

0.05% Cut -79% $2,339 90,790
64 TUDOU HOLDINGS TUDO

0.04% New $1,852 62,700
65 DELPHI DLPH

0.03% Unchanged $1,497 47,368
66 DigitalGlobe, Inc. DGI

0.02% New $1,067 80,000
67 SAVIENT PHARMA SVNT

0.01% Unchanged $654 300,000
68 Cninsure Inc. CISG

0.01% Unchanged $500 80,000

0.01% New $323 29,887
70 Exxon Mobil Corp. XOM PUT

Sold

-
71 Chevron Corp. CVX PUT

Sold

-
72 PHARMASSET, INC. COM VRUS

Sold

-
73 SI CORPORATION SONE

Sold

-
74 Linktone Ltd. LTON

Sold

-
75 ADVANCED ANALOGIC AATI

Sold

-
76 GeoEye, Inc. GEOY

Sold

-
77 BLUE COAT SYS BCSI

Sold

-

Sold

-

Sold

-
80 PHARMASSET, INC. COM VRUS PUT

Sold

-
81 SHANDA INTERACTIVE SNDA

Sold

-

Sold

-
83 NYSE Euronext, Inc. NYX

Sold

-

63
When Carl Icahn finally succeeded in
splitting the old Motorola entity up into
Motorola Mobility (MMI) and Motorola
Solutions (MSI), the newsletter pondered
whether he would continue to hold both
companies. Well, he did hold both for a brief
while at least. Icahns latest portfolio disclosure
shows he has disposed of his position in
Motorola Solutions (MSI). And with Motorola
Mobility set to be acquired by Google (GOOG),
Icahn will soon have no trace of Motorola left in
his portfolio at all.
Last quarters issue highlighted Icahns
rapid acquisition of CVR Energy (CVI) shares.
In the first quarter, he boosted his position by
229% and has made a bid for the entire
company. His tender offer comes in at $30 per
share and CVI currently trades at a slight
premium to that offer. The reason shares are
trading above his offer is because hes
sweetened his bid by adding a contingent cash
payment agreement which essentially provides
shareholders the right to any amount above the
$30 hes offering if hes able to flip the company
to another buyer for an even higher price within
the next nine months. And as detailed earlier in
this newsletter, John Paulson has taken up
Icahn on the offer as he has tendered his CVI
shares into the $30 offer and is content to take
the contingent value right. Paulson has done so
mainly because of the extremely skewed
risk/reward the opportunity provides. The
Key Takeaways

2%3'4"$565"#$-'
n/a

."/,'!"89/%6%/)':&6':;-'
MoLorola SoluLlons (MSl)
Ll aso (L)

Paulson & Co founder says that you essentially
pay around 35-40 cents for the contingent value
right and if Icahns able to sell the company for
even higher, youll make a high multiple on that
initial capital outlay. Its essentially treated as
an option because theres defined risk and a
timetable of nine months (expiration). Paulson
clearly likes those odds.
The only other portfolio activity from
Icahn during the quarter was that he added to
his position in WebMD Health (WBMD) by
18%. As to what Icahn might see in the
company: WebMD is the most visited health
related website in the US. The stock has
suffered as its primary ad buyers (pharma
companies and the like) have cut their ad
spending. If WebMD is able to turn around
these revenue declines and cut costs, then the
stock would obviously be trading higher. The
company tried to sell itself in the past
unsuccessfully so it raises the question as to
whether there are any natural buyers out there.
For the most part in the first quarter,
Icahns overall portfolio was largely unchanged.
He was named one of the top 25 highest
earning hedge fund managers of 2011, sliding in
at the number two position on the list with $2.5
billion.
View Icahn Capitals Updated
Icahn Capital
Carl Icahn
Known as a rabblerouser and a
corporate raider

Typically takes controlling stakes &
uses activism to generate shareholder
value

*** This is a free past issue. The brand new issue is available at
www.hedgefundwisdom.com ***
64
Icahn Capital
Next: JANA Partners
% of
Portfolio Activity
Value x
$1000 # of Shares
1 Icahn Enterprises IEP

41.0% Added 17% $4,008,551 92,812,051
2 Federal-Mogul Corp. FDML

13.5% Unchanged $1,314,590 76,385,255

10.4% Cut -14% $1,020,240 26,000,000
4 Forest Labs FRX

9.4% Unchanged $914,487 26,361,686
5 Amylin Pharma AMLN

3.7% Unchanged $358,973 14,381,925

3.4% Add 229% $336,628 12,584,227
7 Hain Celestial Group HAIN

3.2% Unchanged $312,390 7,130,563
8 Navistar International NAV

3.0% Unchanged $293,320 7,251,426
9 American Railcar ARII

2.9% Unchanged $278,568 11,848,898
10 Mentor Graphics Corp. MENT

2.5% Unchanged $239,547 16,120,289
11 Oshkosh Corporation OSK

2.1% Unchanged $200,774 8,665,260

1.8% Added 18% $171,400 6,700,525
13 Commercial Metals CMC

1.6% Cut -9% $154,958 10,455,991
14 Take-Two Interactive TTWO

1.2% Unchanged $112,397 7,305,626
15 Enzon Pharma ENZN

0.4% Unchanged $40,389 5,904,863
16 Dynegy Inc. DYN

0.1% Unchanged $10,104 18,042,212
17 Motricity, Inc. MOTR

0.1% Unchanged $7,460 6,782,039
18 Motorola Solutions MSI

Sold

-
19 El Paso Corp. EP

Sold

-

65
Jana Partners made a splash in the
market when they revealed a large stake in
beleaguered bookseller Barnes & Noble (BKS).
Their portfolio on the next page shows they
owned 5.5 million shares of the last remaining
bookstore giant at the end of the first quarter.
Note that since then, they continued buying into
the second quarter and own around 6 million
shares. While Barry Rosensteins firm are
typically activist investors, they intriguingly did
not pursue activist measures on BKS, instead
electing to play a passive role while the likes of
JANA Partners
Key Takeaways

2%3'4"$565"#$-'
ulrec1v (u1v)
CovenLry PealLhCare (CvP)
Pess (PLS)
vlsLeon (vC)
8arnes & noble (8kS)
Coca Cola LnLerprlses (CCL)
Avls 8udgeL (CA8)
SLrayer LducaLlon (S18A)
uarllng (uA8)
Carnlval (CCL)
norfolk SouLhern (nSC)
loresL Cll (lS1)

."/,'!"89/%6%/)':&6':;-'
CyLec (C?1)
8ock 1enn (8k1)
Llfe 1echnologles (LllL)
Sunoco (Sun)
1rlpAdvlsor (18l)
MarrloLL vacaLlons (vAC)
PCA Poldlngs (PCA)
Coogle (CCCC)
8MC SofLware (8MC)
uelphl (uLP)
View JANA Partners Updated
larger shareholders Len Riggio and John
Malones Liberty lead the charge. Even bigger
news pertaining to Barnes & Noble hit literally
days after JANA publicly revealed its stake
when Microsoft announced it had invested in
BKS e-reading platform, Nook. JANA thinks a
sum of the parts valuation on BKS yields $11
per share for the retail and college bookstore
segment and $26 per share for the Nook
segment, yielding a total of $37 per share, or
around 230% upside from where they
established their stake. While shares of BKS
initially traded north of $25 per share on the
news of Microsofts investment, theyve settled
back down around the $17 range. It seems
though that JANAs entire investment thesis
hinges on the Nook. They note that the biggest
risk to their investment in BKS is the future of
the e-reader segment and the execution of
monetizing it. You can read JANAs entire
thesis on BKS here.
At the Skybridge Alternatives Conference
in Las Vegas a few weeks ago, Rosenstein
commented that hes been involved in activist
investing since the 1980s and he thinks todays
environment is the best hes seen for it. The
hedge fund manager also talked about his firms
lack of exposure to financials, pointing out that
he thinks the sector is too hard to analyze.
Rosenstein will be presenting his newest
investment ideas at the Value Investing
Congress in New York City in October along
with David Einhorn and numerous other hedge
fund managers. Newsletter readers can receive
a huge discount to the event by clicking here
and entering discount code: N12MF3
Barry Rosenstein
Has returned 14.3% annualized since
inception in 2001

Value-oriented fund with an event-
driven strategy which invests in
companies considering or
implementing change.
66
JANA Partners
Next: Pennant Capital
% of
Portfolio Activity
Value x
$1000 # of Shares

11.5% Cut -61% $279,851 6,454,131
2 El Paso Corp. EP

6.6% Added 7% $160,739 5,439,559
3 DIRECTV DTV

6.5% New $157,959 3,201,441
4 Expedia Inc. EXPE

5.4% Added 29% $131,782 3,940,857
5 Energizer Holdings Inc. ENR

5.4% Added 78% $131,691 1,775,288

5.3% Added 12% $128,722 1,460,256
7 McGraw-Hill Co MHP

5.3% Cut -70% $128,205 2,645,031
8 Apple Inc. AAPL

4.9% Cut -23% $119,479 199,281
9 Coventry Health Care Inc. CVH

4.7% New $115,017 3,233,532

4.7% Added 123% $113,749 2,237,823
11 Anadarko Petroleum APC

4.1% Added 3% $99,880 1,274,954
12 Hess Corporation HES

4.1% New $99,612 1,689,767
13 Visteon Corp VC

3.2% New $77,133 1,455,335
14 Barnes & Noble, Inc. BKS

3.0% New $73,844 5,573,111
15 Coca-Cola Enterprises Inc. CCE

3.0% New $73,361 2,565,073

2.6% Cut -15% $63,142 3,307,615
17 Avis Budget Group, Inc. CAR

2.3% New $55,511 3,923,050
18 Comverse Technology Inc. CMVT

2.1% Added 22% $51,462 7,490,821
19 Strayer Education Inc. STRA

2.0% New $48,450 513,900

1.9% Cut -39% $45,830 398,383
21 SEMGROUP CORP A SEMX

1.7% Cut -27% $41,625 1,428,453
22 Darling International Inc. DAR

1.6% New $38,624 2,217,233
23 Carnival Corporation CCL

1.6% New $38,042 1,185,851
24 Norfolk Southern Corp. NSC

1.5% New $36,426 553,332

1.2% Added 43% $27,903 172,115
26 Forest Oil Corp. FST

1.0% New $24,842 2,049,704
27 Anadarko Petroleum Corp APC CALL 0.9% New $22,562 288,000
28 Convergys Corporation CVG

0.7% Added 6% $16,636 1,246,168

0.6% New $15,283 1,075,491
30 Opko Health, Inc. OPK

0.5% Added 34% $12,682 2,681,193
31 Marathon Petroleum MPC CALL

Sold

-

Sold

-

Sold

-
34 Cytec Industries Inc. CYT

Sold

-
35 Savient Pharmaceuticals SVNT

Sold

-
36 Sunoco Inc. SUN

Sold

-

Sold

-
38 TRIPADVISOR TRIP

Sold

-
39 MARRIOTT VACATIONS VAC

Sold

-

Sold

-
41 Google Inc. GOOG

Sold

-
42 BMC Software Inc. BMC

Sold

-
43 EXELIS INC XLS

Sold

-
44 DELPHI DLPH

Sold

-

67
Pennant Capital was largely out
trimming position sizes during the first quarter
of the year as they sold shares of seven of their
top ten positions. That being said, none of the
position sizes were reduced by meaningful size.
Of their top holdings, Apple (AAPL) was the
position that saw the most selling and even then
they only sliced off 23% of their position. For
the most part, it looks as though Pennant was
just managing exposure levels.
The hedge fund did do some buying
during the quarter, mainly via starting new
positions in Priceline.com (PCLN), WABCO
(WBC), and Canadian Natural Resources
(CNQ), the latter being a much smaller position
relative to the other two. If you missed the
write-up on Priceline from last quarters issue of
Hedge Fund Wisdom, be sure to login and check
it out as numerous top hedge funds now own
stakes.
Pennants addition of WABCO is
intriguing so its worth examining the potential
thesis there further. The company is
headquartered in Europe and as such shares
have slipped as the crisis on that continent
continues. WABCO stands for the
Westinghouse Air Brake Company and, as its
Key Takeaways

2%3'4"$565"#$-'
rlcellne.com (CLn)
WA8CC (W8C)
Canadlan naLural 8esources (CnC)

."/,'!"89/%6%/)':&6':;-'
SprlnL nexLel (S)
Abercromble & llLch (Anl)
SymeLra llnanclal (S?A)
8abcock & Wllcox (8WC)
Wlllls Croup (WSP)
name implies, focuses on the production of
braking supplies for vehicles. The company has
high market share with a dominant competitive
position and strong returns on capital (ROIC
average more than 20%). The problem is that
truck production and demand for brakes is
highly cyclical. However, the company also
sells replacement parts for its brakes to help
pad the gap when new orders are slow to roll in.
The reason this position is worth highlighting is
because due to its cyclical nature, Pennant
would be more likely to hold this investment for
some time. As is often the case with cyclical
plays, it can take some time for improvements
in the business to translate into material share
price gains.
During the first quarter when Pennant
was buying, shares of WBC traded as low as $45
and as high as $63. Currently, WBC has sold
off with the market and shares sit around $51.
Various value firms were out buying WBC in
size back in the third quarter of 2011 as the
markets (and WBC shares in particular) were
decimated. Given that shares have now fallen
back down to the average level of trading price
from the first quarter when Pennant was
buying, it seems logical to draw attention to this
name.
Pennants top ten holdings remain
largely unchanged from the quarter prior.
Their lower level of turnover makes them an
ideal fund to track.
View Pennant Capitals Updated
Pennant Capital
Alan Fournier
Pursues a long/short equity strategy

Before founding Pennant in 2001, he
was responsible for the global equity
portfolio for David Teppers

68
Pennant Capital
% of
Portfolio Activity
Value x
$1000 # of Shares
1 DaVita, Inc. DVA

6.3% Cut -6% $279,543 3,100,181

6.2% Cut -15% $274,754 2,373,482

6.0% Cut -9% $266,256 8,039,144

5.7% Cut -15% $253,441 3,723,781

4.8% Added 2% $210,101 2,846,892
6 Dollar General Corporation DG

4.6% Cut -4% $204,505 4,426,516
7 Apple Inc. AAPL

4.4% Cut -23% $194,227 323,955
8 NVR Inc. NVR

4.2% Added 19% $187,475 258,113
9 TRIPADVISOR INC COM TRIP

4.1% Cut -15% $182,661 5,120,850

4.1% Added 17% $181,442 2,867,281
11 HUNTINGTON INGALLS HII

4.0% Added 23% $174,943 4,347,499
12 Terex Corp. TEX

3.9% Cut -2% $171,526 7,623,370

3.7% Cut -4% $162,857 4,864,316
14 Coca-Cola Enterprises Inc. CCE

3.4% Cut -1% $149,409 5,224,106
15 WESCO International Inc. WCC

3.1% Cut 0% $137,884 2,111,224

3.1% Cut 0% $137,495 1,279,263

2.9% New $129,868 181,000
18 Unitedhealth Group, Inc. UNH

2.9% Cut -1% $127,035 2,155,331

2.7% Added 13% $120,291 3,291,122

2.5% New $110,163 1,821,471

2.3% Cut -1% $101,589 1,747,316
22 Google Inc. GOOG

2.0% Cut -1% $88,805 138,489
23 PHH CORP PHH

1.9% Unchanged $85,249 5,510,629
24 Pfizer Inc. PFE

1.9% Unchanged $82,803 3,656,574
25 Hologic Inc. HOLX

1.6% Cut -15% $70,404 3,267,027
26 Old Republic Intl ORI

1.2% Cut -1% $52,495 4,975,868
27 AEROFLEX HOLDING ARX

0.9% Added 6% $39,377 3,534,708
28 Middleby Corp. MIDD

0.8% Cut -10% $34,685 342,809
29 Universal Stainless & Alloy USAP

0.7% Unchanged $29,296 685,770
30 Petroleo Brasileiro PBR-A

0.6% Cut -7% $27,349 1,070,000

0.6% Cut -13% $26,028 1,010,000
32 Quest Diagnostics Inc. DGX

0.6% Cut -4% $25,072 410,000
33 Fluor Corporation FLR

0.6% Cut -7% $24,616 410,000
34 PHH CORP NOTE PHH

0.5% Unchanged $23,931 23,900,000
35 Foster Wheeler AG FWLT

0.4% Added 40% $15,818 695,000

0.4% Cut -20% $15,720 400,000
37 Canadian Natural CNQ

0.2% New $10,784 325,000
38 Amgen Inc. AMGN

0.2% Added 13% $9,176 135,000
39 Human Genome Sciences HGSI

0.1% Add 374% $3,626 440,000

Sold

-
41 Abercrombie & Fitch Co. ANF

Sold

-
42 Symetra Financial Corp SYA

Sold

-
43 The Babcock & Wilcox Co BWC

Sold

-
44 Willis Group Holdings WSH

Sold

-

Next: Equity Analysis Section
69
Equity Analysis:
Investment Thesis Summaries
Overview
These analytical summaries examine why a hedge fund was buying a specific stock and what
their potential investment thesis could be. Written by hedge fund analysts, this section highlights
stocks that saw large hedge fund buying in the quarter. When presenting an investment idea to a fund
manager, an analyst outlines numerous aspects of a thesis. This section aims to briefly summarize the
following bullet points:

- Company background
- The business model & current situation
- The investment thesis
- The bull case versus the bear case
- Market valuation
- Potential catalysts (if any)
- Hedge fund activity in the stock

This quarters issue features a write-up on a company seeing robust secular growth trends and
REIT-ification optionality versus threat of low-price competition from wholesalers and fear of
overcapacity:

- Equinix (EQIX)

Also included is an investment thesis summary of a company with a superior product but
competition might be catching up:

- Tempur-Pedic (TPX)

Lastly, this issue features analysis of a company combating industry slowdown with company-
specific growth levers (but its trading at the top of its historical valuation range):

- Autozone (AZO)

Next: Analysis of Equinix (EQIX)
3 new stocks are analyzed in the new issue
which was just released. See what stocks by
subscribing here
70
Equinix (EQIX)
Investment Thesis
Summary

Secular Growth Trends
Hedge Fund Activity
Philippe Laffonts Coatue Management and John Thalers JAT Capital both started significant
new positions in Equinix (EQIX). Two Sigma, Scout Capital, Hoplite Capital, and Farallon Capital
also started new positions. Lone Pine Capital and Och-Ziff increased their exposure. The stock traded
in the range of $101 - $157 during the quarter, and its currently at $148.
Company Background
EQIX was founded in 1998 by ex-DEC managers who believed that the proliferation of internet
networks and rapid growth in the infrastructure would need hubs to bring the networks together in
order to efficiently exchange data. The company has become a leader in IT infrastructure collocation
and network interconnections. EQIX has the most data centers globally in strategic high-density
locations in order to provide close proximity to the largest number of end-users as well as companies
that are outsourcing their IT.

Data centers offer access to locations with technology, power, and security required to host
other companies servers. Collocation qualifies as property-generated revenue, which is relevant to
the REIT structure. In addition to collocation, EQIX offers interconnections and managed
infrastructure as value-added services. Interconnection refers to connecting one network to another
so that they can exchange data.

If an internet user is using a network like AT&T, but he needs to access data from a company
that is relying on Sprints network, then data needs to get exchanged, or hop from one network to the
other. In a data transmission, data may require a number of hops if the intermediaries or facilitators
dont have both networks physically located in the same area. The more hops involved in a
transmission, the greater the delay. As data consumption increases exponentially and clients need
ever faster access to data, e.g., high-frequency traders or video viewing, the growing need for localized
ecosystems with as many networks and companies at the same place as possible is filled by companies
like EQIX.

EQIX operates state-of-the art facilities with all the power, cooling, and security required. The
company has targeted specific verticals with low latency needs, and worked on bringing many
customers in the same locations, so that they could all benefit from faster data transfers. A great
example is the financial industry, where brokers, data providers, and traders can all be hosted in
machines that are very close to each other and can thus exchange data without the delay of rerouting
them through different networks and data exchange providers.
A Look at the Industry
This section features write-ups by hedge fund analysts
71

execution is very different because they need to
focus on clustering and network effects, such as
EQIXs strategy of deep coverage by vertical.
Separately, since collocation revenue qualifies as
rental-property revenue, wholesalers have
converted into REITs because of the tax
efficiency of the structure: as long as 90% of
annual taxable income is distributed to
shareholders, the corporation doesnt pay taxes.
Therefore, another barrier to competing with
someone like EQIX is that value-added services
do not qualify as sales generated from property
ownership, which can put a REIT structure at
risk (REITs have to generate at least 75% of their
sales directly from property ownership).

The wholesalers are DuPont Fabros
(DFT), Digital Realty (DLR), and CoreSite Realty
(COR). The retailers used to be EQIX, Rackspace
(RAX), Savvis (SVVS), Terremark (TMRK), and
Telecity (TCY LN), but some of these companies
have been recently absorbed by larger
telecommunications corporations that wanted
access to this high-growth industry. The
remaining independents are EQIX, RAX, and
TCY.

Industry Background (Continued)
Equinix (EQIX)
The US hosting services industry is an
$11bn market and consists of collocation and
managed services. Collocation is provided by
wholesale and retail data center operators.
Wholesale data centers tend to provide an empty
box, whereas retail providers bundle managed
infrastructure and other value-added services.

Larger companies tend to opt for
wholesale services, where they commit to 10-
year contracts and larger spaces but at a much
lower cost of ~$30 per month per sq.ft. Smaller
companies choose 2-5 year contracts and
managed services, but may end up paying more
than double. Occasionally, when companies
become sustainable, they transition from retail
to wholesale collocation. The cost differential
and similarity of the offering seemingly makes
wholesale collocators and a company like EQIX
direct competitors, and EQIX wouldnt compare
favorably.

However, the big difference is that
wholesalers cater primarily to standalone
networks, i.e., customers who dont benefit
particularly from interconnections. EQIXs
model instead is to provide both collocation and
network interconnections, which creates
powerful network effects and adds value to
customers. Therefore, the threat from wholesale
collocators to compete on pricing or capture
market share is not as big as it would seem.
EQIX has built highly interconnected
ecosystems: for example, a high-frequency
trader derives substantial benefits from being in
close proximity to various networks and in the
same location as brokers and exchanges.

Even though wholesale providers could
theoretically expand their service offerings,
A Look at the Industry
72

21x EBITDA, in April 2011. TMRKs higher
multiple can be justified by its high mix of value-
added services and focus on cloud services,
which accelerated VZs expansion in that high-
growth space.

Valuation
Equinix (EQIX)
Of the wholesalers, DLR is the largest
player with a $7.5bn market cap and an $11.4bn
EV, and it trades at 18x EV/EBITDA. DFT has a
$1.6bn market cap and a $3.0bn EV, and it
trades at 16x EV/EBITDA. COR has a $0.5bn
market cap and a $1.0bn EV, and it trades at 15x
EV/EBITDA. It was owned by Carlyle and IPOd
as a REIT in November 2011. All these
wholesalers are REITs, so a more appropriate
valuation metric is adjusted funds from
operation, which is effectively equity cashflows.
However, for comparability purposes, well stick
to using EV/EBITDA, which is a good proxy for
relative valuations.

Of the retailers, EQIX is the largest with a
trades at 13x EV/EBITDA. RAX is much more
focused on managed IT services (customer
service is a big company differentiator), it has a
trades at 19x EV/EBITDA. The high multiple
can be justified by the companys focus on cloud
services, faster growth, and lower capital
intensity (services vs collocation). TCY is
predominantly a European player, it has a
trades at 16x EV/EBITDA. Its premium can be
justified because of its smaller size, which makes
incremental growth easier to achieve, and
takeover premium (EQIX is deemed too large).

SVVS was acquired by CenturyLink (CTL)
for $2.4bn, which valued SVVS at 13x EBITDA,
in July 2011. TMRK was acquired by Verizon
(VZ) for $1.7bn, which valued the company at
Of the
retailers,
EQIX is the
largest with
a $7 billion
market cap,
a $9.2 billion
EV, and it
trades at 13x
EV/EBITDA.
73

Valuation
Bull Case, Bear Case & Summary
On the trading side, TCY is the closest comparable to EQIX, and on the transaction side, SVVS
is the most relevant. TCY trades at 16x EV/EBITDA and SVVS was acquired for 13x EBITDA.
Historically, EQIX seems to trade around 10-15x EBITDA. Therefore, the current 13x multiple seems
fair, though it likely already incorporates at least in part investors expectation that the company
will eventually convert into a REIT. At this valuation, the company needs to deliver consistently
strong results quarter after quarter. Any slip up in customer churn or pricing could cause investors to
get concerned about the opportunity.

The upside from a REIT conversion can be assessed by comparing EQIX to the wholesalers,
who trade at 15-18x EBITDA. Assuming a mid-range multiple of 16.5x would imply upside of 35%. At
DLRs multiple, EQIX would have a 50% upside. EQIX is projected to grow faster than the REIT
wholesalers in the next few years as it can utilize its strong cashflow and has many opportunities to
expand. This would justify a premium multiple, but the uncertainty in the timing of the conversion is
an offset.

It is more difficult to assess the probability and timing of a potential conversion. In order to
qualify for a REIT, EQIX needs to generate at least 75% of rental-type sales and dividend at least 90%
of its taxable income to shareholders every year. On the former, EQIXs sales mix is currently very
close to the 75% minimum requirement, which doesnt give it a lot of room for any change in the mix
and limits its expansion opportunities into more service-based revenue. On the latter, it currently has
high CAPEX plans for the next few years, so converting at this point might be premature because it
would limit its capital flexibility.

There are tradeoffs to the REIT structure, and it may be that EQIXs business model may not
have matured enough yet to pursue a conversion. The timeframe from starting the process, preparing
the company, and eventually converting into a REIT is estimated at 2 years based on the recent
experience at American Tower (AMT). Since EQIX is currently just evaluating the option, it could be
a 3-5 year event.

Equinix (EQIX)

74

Next: Analysis of Tempur-Pedic (TPX)
Equinix (EQIX)
The Bull Case
EQIX is the leading pure-play retail
data center provider. It has successfully
created deep ecosystems across a number of
verticals, which create network effects that
translate into barriers to entry, growth
opportunities, and pricing power. EQIX is a
way to play the growth in digital data
consumption, driven by a secular growth trend
in cloud and media. In addition, EQIX has the
option to convert into a REIT structure, which
will provide tax efficiency and a large number
of substantial incremental stockholders.
Compared to its historical multiple, EQIX
trades at a reasonable valuation, but compared
to REITs in the same industry (wholesale data
centers) it could have an upside of 30-50%.

Summary

EQIX is a leader in a market fueled by strong secular growth trends and it trades at a
reasonable multiple. Substantial upside can come from market outgrowth or from the conversion into
a tax-efficient REIT structure. On the other hand, the REIT structure has been under evaluation for
years, and it takes years to implement. EQIXs business and strategy may not be compatible with the
REIT structure. Also, it faces increasing competition from wholesale data center providers, who offer
a much cheaper alternative.

The Bear Case
The company has been exploring a
REIT conversion for years, so it may not
happen in the near term. In the meantime it
is at least fully valued. Even though 95% of its
sales are considered recurring, they are
subject to ~3 year contracts as opposed to 10
years for REITs, which have much more stable
cashflows. There are competitive threats from
the REIT wholesalers, who offer substantial
cost-savings, and from large companies
building their own infrastructure, e.g.,
Amazon and Google building their own data
centers. Another key risk that investors are
keenly aware of is the threat of a supply glut
coming from over-expansion. New facilities
need to be added at a very measured pace in
order to avoid the post-internet bubble
situation, when there was an overcapacity of
network facilities that led to depressed prices
and company liquidations.

*** Since this analysis was published, EQIX is up over 45% ***
75
Tempur-Pedic (TPX)
TPX is headquartered in Lexington, KY, has annual sales of $1.4bn, and a market capitalization
of $2.9bn. It is the largest manufacturer, marketer, and distributor of specialty bedding (no springs
or coils) with ~25% market share. It makes high-end mattresses that are more comfortable because
they use temperature-sensitive high-density visco-elastic (memory foam) material that conforms to
your body. Its beds and pillows relieve pressure and align the neck and spine, thus alleviating back
pain. The beds are typically priced at more than $1K. The primary competitor is Select Comfort
(SCSS), which makes its own specialty bed, the Sleep Number bed, which allows a couple of set the
firmness on their side of the bed individually.

The National Aeronautics and Space Administration (NASA) developed a visco-elastic
pressure-relieving material to cushion astronauts from the G-force experienced during lift-off, a
material that became available to the public in the 1980s. A Swedish company developed a
commercial material in the early 1990s and produced the first Tempur-Pedic mattress. The owners of
the Swedish company gave the rights to a company that was formed in the US to introduce the
mattress to the market. This company, along with other international distributors of the mattresses
merged in the late 1990s. In late 2002, the private equity firms TA Associates and Friedman,
Fleischer and Lowe bought the holding company for ~$400mm, and then took it public in December
2003. Mattress companies have been the target of private equity firms because the bedding market is
quite stable and the industry has very low capital investment requirements. The high cashflow
generation means that the companies can support high loads of debt, repay them quickly, and buy
back shares. However, in the case of Tempur-Pedic, the investment was made to support expansion
because of the large market opportunity with a superior and differentiated product.

TPXs strategy is to be very focused on customer needs and innovate its bedding in order to
always offer the most comfortable sleeping surfaces possible. More than 2/3 of its sales come from
mattresses, 90% of which are sold through the retail channel (furniture stores) and the rest are sold
direct, through chiropractors, or 3
rd
-party distributors. Retail sales carry a 50% gross margin, while
direct sales have an 80% margin. 2/3 of the sales are domestic with a 50% gross and 20% operating
margin; the international sales have 5-10% higher margins and are growing faster due to the lower
penetration. The other 1/3 of sales comes from pillows, adjustable bed bases, and other products,
which can have even higher margins.

TPX IPO'd in mid-Dec 2003 at $14 and hit a pre-crisis peak of $37 in late 2007. It troughed
below $5 in March 2009, and in mid-April 2012 hit its all-time high of $86. During 1Q12, the stock
traded in the range of $53 to $84. Since disappointing investors on its earnings call on April 19, it has
dropped 45% to $46. After it IPO'd, TPX had $600mm in annual sales and was trading at ~10x
EV/EBITDA. By late 2007, when the stock price hit a high, the sales run-rate had almost doubled.
But by mid-2009 it had dropped close to its IPO levels. Since the financial crisis, it has doubled.
Company Background
John Thalers JAT Capital bought Tempur-Pedic (TPX) in Q1, allocating 10% of its reported
assets, making it its largest disclosed position. Conatus Capital also bought a new stake.
Hedge Fund Activity
Growth Story
76
Tempur-Pedic (TPX)

Growth Story
The US mattress market is a $6bn
industry, and the international market is
double the size. Traditional mattresses are
made with coils or springs and account for 90%
of the units but 75% of the sales because of
their lower average sales price (ASP). Specialty
mattresses dont use coils or springs but rather
rely on specialty materials. They account for
the rest of the units and sales, with an ASP
usually 3.5x that of a traditional mattress.
Historically, the industry has been
dominated by 4 large players who control
>50% of the market: Select Comfort, Sealy,
Simmons, and Serta. The first two are public
and the last two are private companies. They
are referred to as the 4Ss.
Select Comfort (SCSS) has $750mm
sales and a $1.4bn market cap. SCSS is TPXs
main competitor in specialty bedding and is
considered a rapidly rising major player in the
segment with its Sleep Number bed. The
company was formed in 1987 from an employee
who left Comfortair, a company that invented
adjustable air-supported sleep systems. As it is
smaller and has lower brand awareness, it is
considered to have the highest growth
potential.
Sealy (ZZ) used to be the leading
mattress manufacturer, but it has recently been
overtaken as its sales have been on a decline. It
has been unable to compete in the high-growth
specialty bedding segment. It is the maker of
the PosturPedic brand and has $1.2bn sales,
but its market cap is only $165mm, 1/10
th
of
what it was in 2007. It was bought by KKR (the
companys 3
rd
private equity owner) from Bain
Capital for $1.5bn in 2004, but since the IPO in
2006 the stock price has declined ~90%. The
company was founded in the late 1800s.
Simmons is a private company, has a
135-year history in the industry, and is the
maker of the BeautyRest and NaturalCare
Industry Background
Valuation
brands. Serta has an 80-year history, is the
private company that makes the PerfectSleeper
bed, and is known for its counting-sheep
commercials.
The vast majority of sales in the industry
occur through the retail channel, which is
highly fragmented (local furniture stores).
Stores have a certain number of slots on the
floor, which refer to the spaces where a bed set
can be shown. Usually, more than half of the
slots go to the dominant players (the 4Ss),
where one of them usually takes a majority
share; the rest go to specialty beds and smaller
brands.
Given that many specialty beds cost
upwards of $1K, they are a highly discretionary
item. As incomes rise and customers learn the
benefits of specialty bedding, this segment
increases penetration. However, during tough
economic conditions, sales can be more volatile
because of the higher price point. For example,
the mattress industry unit sales declined 8% in
2008, whereas specialty units dropped by more
than twice that. Pricing had to adjust
substantially the following year for the sector to
stabilize, with specialty mattress ASPs down
~15% (traditional ASPs were down half that).
Customers usually purchase a new bed
every 7-10 years. The fact that customers are
out of the market for such a long period of time
allows the industry to have some pricing power,
since price increases are difficult to notice and
interpret. Further confusing customers and
making historical as well as cross-brand
comparisons more difficult is the proliferation
of SKUs (some companies offering more than
100 different beds). As a result, the industry
has been successful at raising prices by a few
percentage points annually.

77

Tempur-Pedic (TPX)
In 1Q, the stock traded in the range of $53 - $84, and its currently at $46. Analysts expect the
mattress industry to grow at a rate of only a few percent over the next few years, but specialty bedding
is forecasted to grow 2-3x as fast. TPX also has international growth opportunities, where its
penetration is significantly lower than in the US. It is estimated that TPX will be able to grow top line
at a 15% clip for at least a few years. EPS should grow at >20% based on operating leverage and free
cashflow deployment in the form of share buybacks.

TPX has a market cap of $2.9bn and net debt of $0.4bn for an EV of $3.4bn. It trades at 8.3x
2011 EBITDA and 7.6x consensus 2012 EBITDA. Historically, it has traded in the 6-12x LTM EBITDA
range, with an average of ~9x, which would imply a <10% upside. On a P/E basis, it trades at 14x
2011 EPS, 12x 2012 EPS, and 10x 2013 EPS. Historically, it has usually traded in the 10-30x range,
averaging 20x. However, as the company is transitioning from a high-growth, low-hanging-fruit story
to a more mature company where growth comes from tougher incremental penetration and its facing
increasing competition from other established layers, the multiple will probably have to compress. A
mid-to-lower range 15-17.5x multiple sounds reasonable, which would imply 7-25% upside.

The two publicly-traded peers are SCSS and ZZ, with SCSS being a more direct comparable to
TPX. SCSS has a market cap of $1.4bn and an EV of $1.2bn. It trades at an EV/EBITDA of 11x LTM
and almost 9x 2012, and a P/E of 21x LTM, 17x 2012 and 14x 2013. It is smaller than TPX $750mm
sales, so it is considered to have higher growth potential as it catches up with a very similar strategy
and business model.

ZZ is a bigger player in traditional mattresses and is highly levered following the LBO
recapitalization by KKR in 2004. It has a market cap of $165mm and an EV of $850mm. It is trading
at an EV/EBITDA of 7x LTM and 2012 as analysts dont project any growth, and a P/E of ~40x for
both LTM and 2012. As a highly levered company that is close to breakeven in terms of profitability,
small changes in growth or efficiency can have a dramatic impact on the P/E ratio, which is expected
to drop to 16x of 2013 earnings. Despite being the worst-positioned company, ZZ has the highest
2013 EPS multiple because it is more of a turnaround story with low margins and the opportunity to
compete more aggressively in the premium segment of the market.

Compared to its peers especially SCSS TPX seems to have 15% upside to SCSS 2012
EV/EBITDA multiple and 40% to SCSS 2013 EPS multiple. Assuming that SCSS deserves a premium
multiple for its higher growth prospects still indicates that a ~20% might be reasonable. In early May,
TPX was trading at $60 (30% higher than the current price level), and before its earnings in mid/late-
April it was trading above $80 (80% higher).

Valuation
Current Situation
Growth Story

78

Tempur-Pedic (TPX)
Following its 1Q earnings call after the market close on April 19
th
, TPX shares lost 20% from
$84 to $67. The company reported robust growth of 18% in sales, which was in line with analyst
expectations, as were its earnings. However, the impression is that the industry grew faster than TPX,
which was a big blow to the stock. Also, the company reaffirmed its 2012 guidance of $3.80-3.95 on
$1.6bn of sales, which fell short of consensus of $4.06 EPS and $1.7bn sales. Analysts became less
sanguine about the stocks growth prospects because of intensifying competition in the specialty
bedding segment and the potential of cannibalization from the introduction of lower-priced beds.

More intense competition in specialty beds will translate into slower growth for TPX and
potentially lower prices and margins. Also, TPX has been focused on the higher end of the premium
segment with very few low-priced offerings. In order to continue growing, it has to expand its product
line into lower-priced products. These products may satisfy some of TPXs current customers, thus
resulting in a down-mix shift.

On May 7, TPX made a surprise announcement that it will be offering its Cloud Supreme
mattress on sale from mid-May to July. Offering sales discounts is very uncharacteristic of TPX and
goes against its strategy, which is why the market reacted so negatively. The stock lost almost 20%
within a couple of days as the move was interpreted as a red flag that could signal deeper fundamental
issues and slowing growth.

Current Situation
Growth Story

79

The company's growth cycle has matured, so it doesn't deserve the historically high valuation
multiples that reflected much higher growth. The risk is that SCSS has a lot of ground to cover in
terms of increasing its brand awareness and distribution before it can catch up to TPX, which means
that SCSS may capture most of the incremental segment growth. In addition, the high growth of the
segment has attracted significant competition. Therefore, growth may be more difficult to achieve
than expected. Whats more, TPX has leading margins, but as competition intensifies it may have to
give back some of its pricing power. If EPS growth doesnt materialize at >20% for the next couple of
years, there is downside to the stock.

Hedge funds have been attracted to TPX because of its strong balance sheet, shareholder-friendly
management, robust growth, and solid execution. It has all the ingredients to continue growing
earnings at a rapid pace. However, competition is intensifying and what has made TPX successful
can also be viewed as a source of risk to the relatively rich valuation: growth can slow down with more
players, and margins can compress. The stock price took a big hit following disappointing guidance
and concerns that the company needs to resort to discounts in order to boost sales.
Summary
Tempur-Pedic (TPX)

TPX is the premier specialty-bedding manufacturer and is taking market share from traditional
mattresses. The combination of operating leverage and focus on cost cutting, in conjunction with
aggressive share buybacks, creates a very positive earnings trajectory. TPX went through an
aggressive expansion phase in the mid-2000s, so it currently has substantial excess capacity and it
wont need any material CAPX in the medium term. It generates a ~7% free cashflow yield, which
gets allocated primarily to share repurchases. The company has already bought back ~ 1/3 of
outstanding shares since 2005.

Management is shareholder-friendly and has been delivering solid results since the financial
crisis. Looking forward, specialty bedding should continue in its high growth trajectory and TPX
should remain the leader in this segment because of its high-quality product, solid execution and
successful introduction of new products, and penetration opportunities (expanding distribution and
capturing more retail slots, both domestically and internationally).

The Bull Case
Next: Analysis of AutoZone (AZO)
Growth Story

The Bear Case
*** Since publication, shares of TPX are down over 20% (and were once down
as much as 54%) on the concerns highlighted above ***
80
AZO is the largest retailer of automotive parts and accessories. It was
founded in 1979 as part of a wholesale grocer by one of the grocers founders,
at which time it was known as Auto Shack. Within 5 years it grew from 1 store
to almost 200. At that time, the grocers management believed that the entire
company was undervalued, so they approached and eventually completed a
management buyout with KKR in 1984.

By 1987, it was evident that the auto parts business was the most
promising division, so KKR with management decided to spin it out and sell
the grocer. That was the year of the name change to AutoZone. With KKRs
assistance, AZO grew very rapidly by investing in new technologies, leveraging
infrastructure, and building out its store network. AZO IPOd in 1991 at a $1bn
valuation. KKR retained 2/3 ownership following the IPO and eventually
exited in 1996. In 1998, Eddie Lampert / RBS Partners became a significant
shareholder. Currently, AZO has ~4,900 retail stores.

Company Background
Steve Mandels Lone Pine Capital established a
new $400 million position in AutoZone (AZO) during
the quarter. Scout Capital and Hoplite Capital also
started new positions in the name. Whats interesting
is that many hedge funds are becoming interested in
the stock just as large stakeholder Eddie Lampert and
his RBS Partners have been selling shares.

Industry Background
AutoZone (AZO)
Hedge Fund Activity

81
Industry Background
The auto parts aftermarket has two segments: the Do It Yourself (DIY) segment, which caters to
car owners looking to repair and maintain their vehicles without the help of professionals; and the Do
It For Me (DIFM) or commercial segment, which caters to individuals who pay service shops for
repairs and maintenance. Through commercial sales programs, retailers deliver auto parts to local
garages, auto dealers, and service stations. DIY is a $44bn market and has been growing at a 4%
annual rate. DIFM is a larger and highly-fragmented market growing at a slightly slower pace.

The main driver-dynamics in the industry are: the increasing age of vehicles on the road
increases the demand for replacement parts as older vehicles break down more frequently (especially
relevant are cars 7 years or older as they come out of warranty), the decreasing number of miles driven
is negative for demand because of the slower wear and tear of the cars, increasing gas prices can make
customers more budget conscious about maintenance, as well as eventually shift their focus to the
purchase of new cars that are much more fuel efficient.

The auto parts aftermarket has been benefiting from a tailwind in the aftermath of the financial
crisis. During the crisis, demand dropped as customers postponed maintenance and brought their
auto spending to halt. However, even though miles driven declined, car maintenance isnt entirely
discretionary and can only get pushed out to a certain extent, generating pent-up demand, which was
manifested in the following years. As new car sales dropped dramatically, the average age of cars has
been steadily increasing. The result has been strong same-store-sales growth at auto parts retailers.

However, as the economy improves, the DIY market is at risk of slowing down. It is also
expected that the growth of the DIFM market will eventually outpace DIY growth as cars become
increasingly complicated. This is why retailers are shifting resources towards the commercial / DIFM
market, where their market share is much lower and they can grow much faster by increasing their
penetration. The Big 3 have 1/3 of the DIY market but only 10% of the DIFM market. AZO, the
largest retailer, still has a <2% market share in DIFM. This presents a growth opportunity for retailers
as they add commercial capabilities to more of their stores. As DIY slows down, retailers will
increasingly shift focus to DIFM.

There are three big retailers in the auto parts aftermarket (the Big 3): AutoZone, Advance
Auto Parts, and OReilly Auto Parts. AZO is the largest player in the industry with $8bn in sales (up
from $6bn in 2007) and it is the most profitable with a 21% EBITDA margin. It has a $14.5bn market
cap and a $17.9bn EV, and it trades at 10x EBITDA and 17.5x EPS.

AutoZone (AZO)

82
Valuation
Advance Auto Parts (AAP) is the 2
nd
largest auto aftermarket distributor with ~3,650 stores.
AAP generates slightly more than $6bn in sales (up from slightly less than $5bn in 2007) and is the
least profitable with a 13% EBITDA margin. It started in 1929 as a general merchandiser with the
name Advance Stores, but refocused on auto parts in the late 1980s and switched its name.

AAP executed a DIFM expansion strategy earlier than AZO, achieved organic growth but
sacrificed incremental margins, and now it is cutting expenses in order to improve profitability.
However, the strategy has resulted in lower margins because of the investments in a larger headcount
and in lost market share in the core DIY segment, perhaps because of lost management focus. The
companys same-store-sales have lagged the industry for the past couple of years.

As a result, even though AAP is the 2
nd
largest in terms of distribution network, it has only a
$4.9bn market cap and $5.1bn EV (valued at less than half of ORLY), and it trades at 6x EBITDA and
12x EPS. AAP trades at the lowest multiple of the Big 3 because of its lagging growth, both on same-
store-sales and because it has allowed the 3
rd
player, ORLY, to catch up with a much more successful
acquisition-based growth strategy. Its competitors have continued to invest and may be taking market
share, while AAP has been focused more on improving margins.

OReilly Auto Parts (ORLY) has ~3,800 stores and generates slightly less than $6bn in sales (up
from $2.5bn in sales in 2007) with a 17% EBITDA margin. It used to be significantly smaller than
AAP but caught up through aggressive growth and acquisitions, as AAP shifted towards organic
growth in more recent years. ORLY started in 1957, when a parent and son team disagreed with the
restructuring of the auto supply company they were working at, which would have retired the father
and relocated the son, so they decided to start their own auto parts business in a market they knew
well. The company became publicly traded in 1993. ORLY has an $11.8bn market cap and a $12.0bn
EV, and it trades at 11x EBITDA and 23x EPS. ORLY trades at a high premium because it has been
successfully growing through acquisitions that generate synergies, it has made significant investments
that should reduce its inventory capital requirements going forward, and it is expected to generate
incremental excess cashflow to support further share buybacks.

Two other competitors that arent part of the Big 3 are Genuine Parts Company (GPC) and
CarQuest. CarQuest is a private company slightly smaller than AAP and ORLY in terms of
distribution. GPC generates the same amount of sales from auto parts as AAP and ORLY, but it is a
more diversified company. It distributes replacement parts for cars, as well as parts for industrial
machinery and office supplies. The auto parts segment accounts for half the companys sales.

AutoZone (AZO)

83
Valuation
AZO has traded historically at 7-10x EBITDA and 13-18x P/E. It is currently trading at 10x
EBITDA and 17.5x P/E, the top end of its range. This reflects bullish investor expectations as the
companys strategy has been to take advantage of the tailwinds in the DIY market (rapidly increasing
average age of cars on the road as car owners delayed new car purchasers) and invest into marketing
and in its commercial segment. As a result, AZOs commercial sales have been growing at a >20% rate
and its earnings have been beating consensus for 12 quarters straight. Sell-side analysts have the most
conviction in this stock out of the Big 3 because of its strong execution, leading industry metrics,
recent investments, and superior organic growth profile. Nevertheless, based on its historical
valuation range, AZO seems fairly valued.

Compared to the public peers, AZO is usually valued at a premium forward P/E multiple to
AAP and a discount to what at least used to be a smaller and faster-growing ORLY. Historically, AZO
has traded at a 10-20% discount to ORLY and a similar premium to AAP. AZO currently trades at
almost 15x 2012 EPS. AAPs lagging same-store-sales trends are reflected in relatively flat EPS in
2012, so it trades at 12x 2012 EPS. ORLYs faster growth is reflected in a premium multiple of 20x
2012 EPS. The trading multiples indicate that there could be some upside in AZOs shares if it can
deliver consistent growth through its commercial segment, but the market seems to be a bit skeptical.

AutoZone (AZO)

84
The auto parts aftermarket retailers have been benefiting from tailwinds in the aftermath of the
financial crisis, but these tailwinds are already slowing down and could reverse as the economy
improves and pent-up demand for new cars starts reducing the average age of cars on the road.
Nevertheless, AZO is well-positioned to continue its rapid earnings growth due to its recent
investments into beefing up its commercial segment, where its market share has been lagging. In an
increasingly challenging environment, AZO still has a favorable growth profile, but its valuation is
already at the top of its historical range.
Summary
AZOs and other aftermarket auto
retailers performance has benefited from the
recent crisis and continued uncertainty that has
translated into fewer new car purchases and
more older cars on the roads. This in turn drives
sales of auto parts and maintenance services.
However, there is a point at which technological
advances in fuel efficiency start making more
economic sense as opposed to maintaining an
old car. New car purchases are already on an
upwards trajectory. In conjunction with high oil
prices, demand for aftermarket auto parts may
shrink going forward. Valuations seem extended
as stocks are trading at the higher end of their
historical valuation ranges.

On May 17
th
, AAP held a disappointing
earnings call (weak same-store-sales growth and
outlook), and the stock has dropped 25% since
then, while ORLY and AZO have lost <10%.
Investors have interpreted AAPs weakness to be
company-specific, but weakening same-store-
sales could be a DIY-segment issue industry-
wide. More optimistic investors have attributed
the organic growth issues to the warm winter
weather.
The Bull Case
AZO has generated high and consistent
returns on capital and growth. Given macro
uncertainty, it is unlikely that new car purchases
will spike anytime soon, so the modest
improvement in the new car market shouldnt
have as large of a negative impact as investors
fear. Even though the aging trend of cars on the
road will slow down, AZO has more growth
levers than peers because it is underpenetrated
in the commercial segment, which accounts for
only 15% of its sales, compared to 35-40% for
peers. In addition, management has been
driving high EPS growth through free cashflow
deployment into share buybacks. AZO is a
shareholder-friendly market leader, with
demonstrated robust execution and strong
performance metrics, trading at reasonable
valuation levels that indicate upside potential.
Consensus has consistently under-appreciated
AZOs growth potential, so the forward P/E
multiple may prove artificially high and may
expand further.

AutoZone (AZO)

The Bear Case
This concludes the Q1 2012 edition of Hedge Fund Wisdom
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85

Q1 2012 www.hedgefundwisdom.com May 21, 2012
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