Big investment funds were mixed on their approach to bank investments during the second quarter, with Wells Fargo & Co. and Bank of America Corp. among the companies whose stocks saw stark opposing bets.
In their filings on investment holdings as of June 30, Bruce Berkowitz's Fairholme Capital Management bolstered its high-profile stake in Bank of America Corp. while John Paulson's Paulson & Co. slashed its BofA holding. And while Warren Buffett's Berkshire Hathaway Inc. and Mr. Paulson added to their Wells Fargo holdings, George Soros's Soros Fund Management LLC fund all but bailed out.
Four times a year, many investors who manage more than $100 million are required to disclose holdings in certain types of securities, including stocks, within 45 days of the end of a given quarter.
The so-called 13F disclosures with the Securities and Exchange Commission give the public a relatively fresh look inside the portfolios of major money managers.
The mutual-fund management company run by Mr. Berkowitz, added to its large holding of Bank of America, though it reduced its stake in investment bank Morgan Stanley.
The BofA stake of 99.65 million shares was increased by seven million shares and was worth $1.09 billion at the end of June. It would be valued about $762.3 million as of Monday's closing prices.
Mr. Berkowitz last week had invited all "skeptics" of BofA to join him on a conference call with the bank's Chief Executive Brian Moynihan where the investor pledged to ask the toughest questions submitted. The stock, which ended last week down 11%, climbed 7.9% Monday but is down 42% this year.
Meanwhile, the fund reported owning 12 million shares of Morgan Stanley, valued at $275.3 million as of June 30, down from roughly 39 million shares as of March 31. The holding would be worth about $215 million as of the end of Monday's trading.
Fairholme has been a stockholder in Morgan Stanley for more than a decade, according to FactSet, owning 4,680 shares back in March 1999.
--David Benoit and Brett Philbin
Paulson & Co.
Billionaire investor Mr. Paulson slashed his holdings in Bank of America and some big gold stakes, but built his holdings in Wells Fargo and Capital One Financial Corp.
Mr. Paulson, one of the biggest names in hedge funds and head of Paulson & Co., has faced a rough month of July, as his shares in financial companies have been battered amid a broad market selloff. According to the filing, Mr. Paulson was active ahead of July in moving around his financial stocks, where he has been among the loudest boosters.
His stake in Bank of America, the nation's biggest bank by assets, plunged to 60.4 million shares at the end of June from 123.6 million shares at the end of March. The Wall Street Journal had reported last month that Mr. Paulson had sold some shares but was again looking to buy.
Still, Mr. Paulson, who gained prominence with his bet against the housing bubble, kept significant investments in financials in the most recent filing, despite paring the Bank of America stake and reducing his holdings in Citigroup Inc. to 33.5 million shares from the equivalent of 41.3 million shares.
Mr. Paulson boosted his investment on Wells Fargo to 33.6 million shares, up 20.5 million shares. His investment in Wells would be valued at $838.2 million as of the end of Monday trading. His holdings in Capital One rose to 21.1 million shares, up by 3.1 million shares, and would be worth $957.9 million.
But Mr. Paulson also appeared to pull back from another bullish bet on gold holdings, paring his stakes in gold companies AngloGold Ashanti Ltd. and Gold Fields Ltd. and selling Kinross Gold Corp. He had held 19 million shares of Kinross last quarter, according to the filings.
Mr. Paulson did report buying a new stake in media company News Corp. of 10.4 million shares, which would be worth about $176 million as of Monday's closing. News Corp. is the owner of The Wall Street Journal and this newswire.
Mr. Buffett's company disclosed a $50.8 million investment in discount retail chain Dollar General Corp. Observers say the purchase likely was made by Todd Combs, the new investment manager tapped to manage a portfolio of about $2 billion to $3 billion as the company prepares for the day the 80-year-old Mr. Buffett will no longer run Berkshire.
The company also showed increased stakes in MasterCard Inc. and Wells Fargo and reduced its holding of Kraft Inc.
An earlier filing revealed Berkshire bought $3.62 billion of equity securities in the second quarter, and sold $200 million-though the earlier disclosure didn't name the companies. That means the new shares revealed in Monday's filing, valued at less than $400 million as of June 30 in total, represent a fraction of the purchases the company made in the quarter.
Berkshire said it had omitted some information on its holdings in the filing, an action some investment managers are permitted to take by the Securities and Exchange Commission when they are building or eliminating a position. Such "confidential treatment" prevents others from piggy-backing on their investment ideas. The filing also excludes Berkshire's overseas holdings.
The omitted purchases could be concentrated on one firm or spread out over multiple companies, but Mr. Buffett has expressed a willingness this year to spend Berkshire's cash on a major acquisition. "Our elephant gun has been reloaded, and my trigger finger is itchy," he wrote in February in his annual shareholder letter.
Investors had also assumed MasterCard was a Combs pick when it was first disclosed three months ago. Berkshire's MasterCard stake rose by 88% to 405,000 shares in the quarter. The holding was valued at $122 million as of June 30.
Both holdings are far smaller than a typical Berkshire investment, and Mr. Buffett said in an interview with Bloomberg Television on July 8 that Mr. Combs had made two investments so far. Of the MasterCard stake, he said "I didn't buy it," all but confirming it was Mr. Combs's pick.
The Wells Fargo stake, in contrast, rose 2.8% to about 350 million shares. The holding, one of the largest positions in Berkshire's equity portfolio, was valued at nearly $10 billion as of June 30.
The Kraft holding fell about 5% to roughly 100 million shares valued at about $3.5 billion.
News about Berkshire's stock picks can move the shares of the newly disclosed holdings as money managers look to mimic the investment success of the "Oracle of Omaha." However, Mr. Buffett has long warned not all the moves in the portfolio are his.
Berkshire also showed it held shares of insurance-services company Verisk Analytics Inc. While it was the first time the holding was revealed in the quarterly filing, Berkshire had been an investor in the firm, along with several insurance companies, before Verisk's initial public offering in 2009.
Soros Fund Management
Mr. Soros's hedge fund reported lower stakes in big banks Citigroup and Wells Fargo and slashed its ownership in Monsanto Co., a former top holding.
Mr. Soros decreased his holdings of Citigroup by nearly 2.9 million shares to 64,600 at the end of the second quarter. The stake is now valued at $2.7 million. Citi exercised a 1-to-10 reverse stock split in May. The fund also cut its stake in Wells Fargo by 3.4 million shares to 77,700, valued at $2.2 million at June 30.
Mr. Soros reduced his stake in Monsanto by 2.6 million shares to 79,400. The position is now valued at $5.8 million.
Among notable omissions this quarter, Mr. Soros reported selling Internet giant Google Inc. during the period. The fund had previously disclosed owning 116,208 shares of Google and call options on 22,500 shares of the company, as of the end of March.
The overall value of Soros's stock holdings fell to $7.1 billion at the end of the second quarter, down from $8.4 billion as of March 31.
In purchases during the quarter, Mr. Soros reported a higher stake in Motorola Solutions Inc., a company that split with Motorola Mobility Holdings Inc. -- the target of a $12.5 billion bid by Google announced earlier Monday -- at the beginning of the year. Mr. Soros's ownership in Motorola Solutions climbed to 5.7 million shares valued at $261 million as of June 30. The position is now the fund's fourth-largest holding. The fund also disclosed call options on 357,300 shares of Motorola Solutions.
In another sign of his reported retreat from gold, Mr. Soros reported selling mining company NovaGold Resources Inc. The fund already had been paring back its stake in the precious metal in the first quarter.
Mr. Soros, who once dubbed gold "the ultimate asset bubble," was one of several big money managers who loaded up on gold, silver and other metals over the past two years amid weakness in the U.S. dollar. In May, however, the Journal reported that Mr. Soros and some other leading investment firms sold gold and other metal stocks.
Monday's report from Mr. Soros comes nearly a month after reports that he decided to turn his hedge fund into a $24.5 billion "family office," in a move that allows it to avoid a new level of regulatory oversight facing many hedge funds. Mr. Soros told clients that his firm, Soros Fund Management LLC, will no longer manage outside investors' money.
Trian Fund Management
Investor Nelson Peltz's Trian Fund Management LP reported increased stakes in Kraft Foods and State Street Corp., plus a new stake in Domino's Pizza Inc.
Trian reported holding 17.3 million shares of Kraft, up from 12.2 million reported at the end of March. The State Street stake increased to 6.14 million shares from 2.33 million.
Trian increased or took new stakes in several companies, including a 6-million share stake in Domino's. It also decreased or reported no holdings in other companies, including no stake reported for MGM Resorts International, in which Trian had held 400,000 shares at the end of March.
Other new stakes that showed up in the quarter ended in June include CoreLogic Inc. at 1.35 million shares and Consol Energy Inc. at 699,700 shares.
Since the end of the second quarter, Trian has increased its stake in Legg Mason Inc. by 24%, or 2.7 million shares. That additional stake wasn't reflected in the filing, which reports Trian's holdings at the end of June of 11.3 million shares.
Mr. Peltz swapped a previous investment in oil for one in gold in the quarter. He reported no holdings of the U.S. Oil Fund exchanged-traded fund, in which he held 30,000 shares at the end of March. But he did report a new stake 13,600 share stake in the SPDR Gold Trust.
Billionaire investor Carl Icahn reported a new stake in Vector Group Ltd., which makes Liggett and other cigarettes and owns the prominent New York-area real estate brokerage Douglas Elliman Realty LLC.
Mr. Icahn also reported a passive 7.6% stake in the energy company El Paso Corp. and appeared to exit from positions in a number of pharmaceutical and energy companies, as well as toy maker Mattel Corp.
Mr. Icahn, who omitted some information on his holdings as allowable under SEC regulations, also appeared to sell one of his largest holdings, drug maker Biogen Idec Inc. As recently as June 22, Mr. Icahn reported owning 8.2 million Biogen shares valued at nearly $750 million.
Icahn funds owned about 14 million shares of Vector Group, making it the largest shareholder in the Miami-based company.
The filings indicated Icahn-controlled funds sold their prior stakes in a number of companies, including: biotech company Amgen Inc.; biopharmaceutical company Regeneron Pharmaceuticals Inc.; and Cyberonics Inc., which makes implantable devices to treat epilepsy.
Mr. Icahn also no longer reported stakes in power company NRG Energy Inc., oil and natural gas producer Chesapeake Energy Corp. and natural gas company Southern Union Co.
Philip Falcone's fund firm reported more shares of energy companies than it previously had in its portfolio, while also saying it no longer had stakes in a major exchange-traded fund that tracks gold.
The New York-based fund also said it no longer held shares in New York Times Co.
Harbinger, which gained fame for betting against subprime-backed mortgage bonds, reported an increased exposure to energy companies. In particular, the fund said it had 150,000 shares of petroleum refiner CVR Energy Inc.and 250,000 shares of Southern Union.
Harbinger also said it now had a position in BlackBerry smartphone maker Research In Motion Ltd. During the second quarter, RIM sank to recent lows as it struggled to keep its smartphones relevant amid continued popularity of Apple Inc.'s iPhone and devices running Google's Android operating system.
Harbinger also no longer reported holdings in SPDR Gold Trust, which has been bouncing near all-time highs as investors continue to look at the precious metal as a hedge against economic uncertainties both in the U.S. and abroad.
The value of Harbinger's reported equity assets rose more than 87% from the previous quarter to nearly $2 billion.
Hedge-fund manager David Einhorn reported holdings Monday that signal his enduring faith in Microsoft Corp., even as he has shed a stake in Microsoft partner Yahoo Inc.
Mr. Einhorn's Greenlight Capital Inc. reported a stake in Microsoft that totaled roughly 14.8 million shares as of June 30-compared to about 9.1 million shares at the end of the prior quarter. Shares of Microsoft have fallen 8.6% in the year so far.
Mr. Einhorn has expressed his appreciation for Microsoft in the past, telling an audience at an investment conference in May that the Redmond, Wash., company isn't receiving proper attention from investors. Microsoft has continued to pull in significant profits from its traditional Windows and Office software businesses, even as it shows a loss for its newer online services unit.
However, Mr. Einhorn recently shed his stake in Microsoft partner Yahoo. Microsoft is powering the search and advertising results on Yahoo websites, in a revenue-sharing arrangement. Mr. Einhorn's disclosure to investors that he'd dropped his Yahoo stake was reported last month. Greenlight Capital had reported holding 8.5 million shares of Yahoo for the period ended March 31.
Mr. Einhorn also on Monday reported a larger stake in Microsoft rival Apple. Greenlight Capital reported having roughly 1.1 million shares of Apple as of June 30, compared to a holding of 837,500 shares at the end of the prior period.
Mr. Einhorn appears to have placed another bet on consumer spending with Best Buy Inc. Greenlight Capital reported holding roughly 6.9 million shares of the electronics retailer as of June 30, compared to about 6 million shares at the end of the prior period.