Hedge Fund Stock Picks: Whale Hunting of the Kingmakers

May 16, 2012 by Jon C. Ogg

24/7 Wall St. published the full list of positions already for Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A). While there were some surprises out there and 24/7 Wall St. tracked some of the key additions by “whales” like Farallon, Highbridge, Paulson & Co., SAC Capital, Greenlight Capital and others. These positions were the changes seen in the first quarter and has been consolidated from our prior reports.

Apple Inc. (NASDAQ: AAPL) was a large gain by Appaloosa Management, with a gain of more than 500,000 shares up to 685,000 shares worth some $303 million. This of course was worth more in April. Farallon put up a new position of just over 192,000 worth some $116 million. Janus only lowered its stake by 0.5% and Apple is still its largest holding at over $3.8 billion, while Vanguard lifted its stake by about 5% worth over $23 billion.

Caesars Entertainment Corporation (NASDAQ: CZR) was a strange position on the surface, but easy to explain later. Paulson & Co. was shown to have lifted its stake to 12.37 million shares from NO SHARES at the end of 2011. The problem is that Paulson owned Caesars shares already before the IPO but it was not public before the end of 2011.

Computer Sciences Corporation (NYSE: CSC) was a 2.4 million share stake by Greenlight Capital (under David Einhorn) worth $72 million, and that was a new position. With an activism flare, maybe this can light some fire under what has been a dead tech-value stock. Another firm, Highbridge Capital Management LLC, added more than 1 million shares as a new position in the first quarter.

DaVita Inc. (NYSE: DVA) was a key addition of Warren Buffett’s Ted Weschler who grew his stake to 6,000,000 from almost 2.7 million shares. This was a doubling of the stake, but we would note that this stock has slid 10% since the end of the quarter. The overall position may be closer to break-even here, but this has a huge portion of the kidney dialysis market as of today.

Dollar General Corporation (NYSE: DG) was a surprise for us considering that we thought Warren Buffett’s new manager Todd Coombs would have added to this position rather than cutting it. Maybe the valuation premium just became too much. The March 31 stake was 3.63 million shares versus the 4.497 million shares at the end of 2011.

El Paso Corporation (NYSE: EP) saw more than one move higher. Farallon Capital added another 50% or so to end with 22.49 million shares worth $235 million in the first quarter; Paulson & Co. doubled its stake in the first quarter to 8 million shares worth over $118 million.

Encana Corporation (NYSE: ECA) is a standout because it looks small, but it is a good whale watching stock. BP Capital’s T. Boone Pickens initiated a new position of more than 1.13 million shares worth some $22.3 million.

Express Scripts Holding Co. (NASDAQ: ESRX) was a very large gain by Farallon Capital, where the position rose to over 5.65 million shares as of March 31 from only 1.17 million shares at the end of 2011. Paulson & Co. also doubled its stake in the first quarter to 3.24 million shares worth over $87 million shares. With the merger now closed, others have been looking at this despite Walgreen’s issues.

General Motors Co. (NYSE: GM) was another new position of 10 million shares worth more than $250 million. Frankly, we might have guess that Ford would have been chosen. Is it possible that this was a “politically motivated or influenced” as Buffett is such a supporter of Obama? That admittedly seems like a stretch, but if we were looking for auto exposure it would have probably been with Ford.

SIRIUS XM Radio Inc. (NASDAQ: SIRI) saw SAC Capital grow from only over 3 million shares at the end of 2011 to 98.2 million shares worth almost $217 million in the first quarter, SAC wheels and deals in shares all the time, so they could have been in and out of a lot more or less shares before, during, and after that point.

Skyworks Solutions Inc. (NASDAQ: SWKS) scored a new large stake in the first quarter by Maverick Capital. The new holdings came to over 5.8 million shares worth some $161 million at the end of the quarter, likely as an “Apple play.”

United Continental Holdings (NYSE: UAL) was hard not to miss in the whale hunting as well as Appaloosa grew its position by 500% or so up to over 7.9 million shares worth over $146 million.

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JON C. OGG