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.
Fairholme Capital
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.
--David Benoit
Berkshire Hathaway
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.
--Erik Holm
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.
--Brett Philbin
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.
--Liz Moyer
Icahn Capital
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.
--Paul Ziobro
Harbinger Holdings
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.
--Ian Sherr
Greenlight Capital
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.
--John Letzing