RICH PICKINGS: Getting a glimpse of Wall Street's whales

It's that time of year when big US investment fund bosses must reveal their portfolios. From gold to Facebook to chicken wings, the market moves of Wall Street's whales makes for interesting reading.

It’s Wall Street’s version of whale watching.
One of the great traditions of the US investment scene is the release of the 13F filings. Under US law, every investment fund with more than $100 million must release the details of the portfolio within 45 days of the end of each quarter.

Naturally, this select group – which includes Warren Buffett, George Soros, John Paulson, Carl Ichan and David Einhorn – releases their filings on the last day possible and generally all at the same time. No doubt they have a bit of a laugh at the way the market madly rushes to figure out which holdings they have increased, which they’ve dumped and which they’ve added.

But watching what the Whales of Wall Street have done in the last three months is great fun and a chance to try and pick up some broad trends from these investment gurus.

It’s not just individual stocks that are worth looking at. Often the themes within portfolios or themes across different portfolios are where the real gold is to be found. There’s a fair bit of reading between the lines to be done and of course the gurus themselves don’t explain their moves.

But let’s dive in and look at what the biggest names are doing, plus a few other insightful stock picks.

Buffett greases the new wheels

Warren Buffett’s quarterly stock moves are always the first to be scrutinised and there were a number of key changes noted this quarter.

Buffett reduced his position in a number of household names that have been mainstays of his portfolio, including United Parcel Service (better known as UPS), pharmaceutical groups Johnson & Johnson and Procter & Gamble (NYSE:PG), Kraft Foods, Visa and General Electric.

He added to his holdings in IBM, Bank of New York, Viacom and the old Buffett favourite, Wells Fargo.

But the biggest news was generated by the addition of two oil companies: National Oilwell Varco and Phillips 66. These relatively small additions, and the notable sell-downs, have led many to speculate that Buffett is handing some control (and more capital) to the two young stockpickers he has appointed to his funds: Todd Combs and Ted Weschler.

The two oil stakes were bought by Todd and Ted. The handover is happening.

Paulson goes for gold again

Gold prices have been falling of late, but billionaire investor John Paulson never minds going against the crowd – he’s famous for making billions betting against the US property market in the year before the subprime bust sparked the GFC.

Paulson added to his stake in gold fund SPDR Gold Trust in the June quarter for the first time since 2009. And it was no small move either; his stake increased by more than 23 per cent at a cost somewhere north of $600 million. He also raised his stakes in gold mining companies including NovaGold Resources and Allied Nevada and added another miner NovaCopper to his portfolio.

Paulson is coming off an ugly year in 2011, when some his funds experienced record losses due to what many saw as a poorly timed bet on a US economic recovery – he was a big investor in bank stocks last year.

The increased investment in gold could be a reflection of this pessimism. However, Paulson’s gold fund is also struggling; according to a recent investor update in early August obtained by Bloomberg, Paulson & Co’s Gold Fund has declined 23 per cent this year.

George Soros leads the Facebook likes

It’s been a big week for 82-year-old billionaire George Soros, who like Paulson also increased his stake in SPDR Gold Trust. The famous liberal also revealed last week he is to be married for the third time to a 40-year-old yoga entrepreneur called Tamiko Bolton.

Perhaps a younger fianc has given Soros a more youthful aspect – his 13F filing revealed he has picked up a stake in Facebook.

Despite the social media giant’s frankly awful performance since its IPO in May, a number of billionaires were found to be stock holders at the end of June. Others included Steven Cohen of SAC Capital Advisors and Louis Bacon’s Moore Capital Management.

How long these investors are willing to keep their Facebook stock remains to be seen. But it’s clear that Mark Zuckerberg has some wealthy eyes watching his performance right now.

Tiger on the tech prowl

One of the biggest winners from the Facebook float was New York-based investment firm Tiger Global Management, which was an early Facebook investor and sold around $725 million worth of shares through the IPO.

The firm, controlled by billionaire Chase Coleman and seeded by Julian Robertson, is renowned for its prowess in the tech sector. As well as backing Facebook, it was an early investor in Russian search company Yandex and social networking group LinkedIn.

Last year, it even emerged as an investor in Australian online retailing pioneer Catch of the Day, joining in the $80 million funding round that attracted James Packer.

Tiger’s latest quarterly fillings showed that it still had two million shares in Facebook at the end of June, and that it had invested heavily in LinkedIn, increasing its stake from 300,000 shares to 3.3 million shares in the space of three months. LinkedIn stock is up 60 per cent since the start of the year, in sharp contrast to its tech sector peers.

Tiger also upped its stake in a little tech company called Apple which is believed to have a bright future.

Ken Griffin’s dips his wings down under

Citadel Advisers has $27 billion under management, but the fund manager and its billionaire founder Ken Griffin aren’t really household names down under.

But that’s not to say Citadel doesn’t take an interest in Australia – the company’s 13F showed it has two small investments in the American Depository Receipts of James Packer’s casino group Crown Entertainment and banking giant Westpac.

Citadel’s biggest holding is in Apple, but it too was lured into the Facebook float, emerging with a small stake. But the new addition to its portfolio that caught my eye was a company called Buffalo Wild Wings.

The American sports bar and grill chain – famous for its chicken wings, of course – has seen its shares climb more than 33 per cent in the last 12 months. But Griffin’s timing might be off, as high chicken wing costs are now hurting margins and the shares have fallen slightly.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.

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