UPDATE: FrontPoint Buys Stakes In J.P. Morgan, Seagate

FrontPoint Partners, which late last year became involved in an insider-trading probe related to a clinical drug trial, bought new stakes in Seagate Technology Inc. (STX) and J.P. Morgan Chase & Co. (JPM), according to a securities filing Monday.

FrontPoint reported new stakes of 1.1 million shares of Seagate and about half a million shares of J.P. Morgan during the fourth quarter. Its new stakes in Seagate Technology and J.P. Morgan are valued at about $15.2 million and more than $24 million, respectively, as of Friday's close.

The Greenwich, Conn.-based hedge-fund firm, which is owned by Morgan Stanley (MS), has been wrestling with fallout from the insider-trading probe for the past several months. The firm is also facing the possible departure of high-profile hedge-fund manager Steve Eisman, whose profitable 2007 bet that the housing market would collapse was chronicled in the book "The Big Short." The Wall Street Journal last month reported that Eisman was considering leaving.

In early November, prosecutors accused a French doctor of illegally alerting a fund manager with insider information about a clinical drug trial. FrontPoint has laid off the manager, Joseph F. Skowron III, and the rest of the health-care team. Morgan Stanley and FrontPoint have said they are cooperating with authorities and haven't been accused of wrongdoing.

Because of the probe, FrontPoint shed stakes in many health-care stocks during the fourth quarter. Among the health-care positions eliminated were 1.9 million shares of GlaxoSmithKline PLC (GSK) and 1.3 million shares of Aetna Inc. (AET)

FrontPoint also disclosed it eliminated its positions in MasterCard Inc. (MA) and Visa Inc. (V)

Morgan Stanley said in October it planned to spin off FrontPoint. As part of the agreement, which was expected to close in the fourth quarter, FrontPoint's senior management and portfolio managers would own a majority equity stake. The insider-trading probe sent the plan into disarray.

Many investors who manage more than $100 million are required to disclose most securities holdings within a month and a half of the end of a quarter. The filings give the public a relatively fresh look at the portfolios of well-known investors.

-By Corrie Driebusch, Dow Jones Newswires; 212-416-2143; corrie.driebusch@dowjones.com

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