Hedge funds shower love on Green Mountain, Yahoo

NEW YORK Wed Nov 14, 2012 7:14pm EST

The Yahoo! offices are pictured in Santa Monica, California April 18, 2011. REUTERS/Mario Anzuoni

The Yahoo! offices are pictured in Santa Monica, California April 18, 2011.

Credit: Reuters/Mario Anzuoni

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NEW YORK (Reuters) - Patrick McCormack, the manager of hedge fund Tiger Consumer Management, decided to bet against rival David Einhorn in the third quarter.

McCormack's $2 billion fund jumped into two stocks that Einhorn, founder of $8 billion Greenlight Capital Management and one of a handful of savvy traders who can move markets with his "short" calls, has said publicly he is shorting, or betting against.

Quarterly regulatory filings for Tiger Consumer show McCormack acquired a 280,000 share stake in Chipotle Mexican Grill Inc and increased his fund's stake in Green Mountain Coffee Roasters Inc by 500,000 shares to 1.5 million shares.

Einhorn, one of the $2 trillion hedge fund industry's most closely watched managers, has given presentations questioning the prospects for both Chipotle and Green Mountain Coffee.

Also taking the opposite side of Einhorn on Green Mountain is Dinakar Singh, whose $4 billion TPG-Axon Capital Management opened a 2.5 million share stake in Green Mountain Coffee.

Tiger Consumer and TPG-Axon disclosed their recent moves in so-called 13-F filings, which all large money managers are required to file with the U.S. Securities and Exchange Commission after the close of each quarter.

John Paulson's Paulson & Co had not released its filing one hour after the SEC's customary deadline. The SEC did say that certain funds affected by Superstorm Sandy could ask for an extension to file. Spokespeople for Paulson did not immediately return emails or calls asking for comment.

The filings give a glimpse into the thinking and strategies of managers and, in this case, indicate that while Einhorn is bearish on the two stocks, McCormack is more bullish.

Other filings reveal that $6 billion Tiger Global Management made a big bet on Yahoo Inc by opening a 25 million share position in the internet company, and Philippe Laffont's $3.5 billion Coatue Management acquired 1.4 million shares in social networking company Facebook Inc.

Viking Global Management also took a recent liking to Facebook, a sign that the company's shares may have fallen so much that managers are seeing value in the stock.

Einhorn, meanwhile, went wild over Yahoo, taking a 5 million share stake in the company.

Overall, the third quarter was a good one for U.S. stocks and hedge funds, with the benchmark S&P 500 rising 5.76 percent and the average hedge fund gaining 3 percent. By contrast, stocks have retreated mightily so far in the fourth quarter, with the S&P 500 falling 5 percent as of November 13.

Since 13-F filings are released roughly 45 days after the end of quarter, it is important to note that what might have appeared as profitable bets by a manager in the third quarter might not be so smart right now in light of the recent market reaction.

Much of the selling in stocks right now is a response to concern about whether a newly re-elected President Obama and a Republican-controlled House of Representatives will be able to reach an agreement to deal with expiring income tax cuts and large pre-planned spending cuts.

For more on how big money managers traded in the third quarter, here is a breakdown by sectors and high-profile stocks:

CONSUMER

Yale University's $19.3 billion endowment acquired 133,000 shares of children's clothing company Carter's Inc. Tiger Consumer added about 500,000 shares to its stake in Monster Beverage Corp, whose stock dropped 24 percent in the third quarter.

TPG-Axon opened a new 1.2 million stake retail chain Dollar General Corp.

Third Point opened a 5 million share position in Kraft Foods Group Inc.

FINANCIALS

Farallon Capital Management nearly doubled it position in credit card company Visa Inc to 1.17 million shares. Alyeska Capital raised it stake in Citigroup Inc to 943,000 shares from 181,400 shares.

Viking Global added a new position in Citigroup, buying nearly 2 million shares. Maverick Capital also jumped on the Citigroup bandwagon, nearly doubling its position to 5 million shares.

Appaloosa Management made lots of move in financials in the second quarter, opening an 8.25 million stake in American International Group Inc and opening a 2.4 million shares position in JPMorgan Chase & Co. Meanwhile, the David Tepper-led fund cut its position in Bank of America Corp by 1.1 million shares.

Billionaire investor George Soros' family office, Soros Fund Management, also opened a new position in AIG, adding 15 million shares, along with put options covering 250,000 shares. A put option allows a trader to sell a security at a specified price.

Soros also added new positions of 1.5 million shares in Citigroup.

HEALTHCARE

Greenlight Capital increased its stake in Aetna Inc to 4.4 million shares, up from 3.1 million at the end of the second quarter. At the same time, the Einhorn-led fund sold out its position in Wellpoint Inc.

Third Point, meanwhile, raised its stake in Wellpoint to 1.25 million shares from 850,000 in the second quarter. But the Dan Loeb hedge fund exited positions in Humana, Aetna and cut its stake in Cigna Inc nearly in half to 1.4 million shares.

Jana Partners opened a new stake in Aetna of 2.3 million shares.

HOUSING

Brigade Capital Management roughly doubled its stake in Beazer Homes USA Inc to 2.5 million shares, but eliminated its 500,000 share position in DR Horton Inc.

INTERNET

Tiger Global raised its stake in Facebook Inc to 11.7 million shares from 2 million shares at the end of the second quarter.

Viking Global Investors opened a 4.1 million position in Facebook.

MEDIA

TPG-Axon cut its largest holding, Sirius XM Radio Inc, by over 55 million shares and reducing its position to 31.8 million.

TECH

Eton Park Capital Management more than cut its stake in Apple Inc, reducing its holding to 250,000 shares.

(Reporting by Svea Herbst-Bayliss, Katya Wachtel, Aaron Pressman, Samuel Forgione and Manuela Badawy.; Compiled by Matthew Goldstein and Jennifer Ablan; Editing by Andre Grenon and Dan Grebler)

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