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Aug 14 Top U.S. hedge fund managers did some shopping for shares of discount retailer Dollar General Corp and drug store operator Walgreen Co in the second quarter.
Daniel Loeb's Third Point added 1 million shares of Dollar General, raising his stake by 33 percent, while Blue Ridge Capital, founded by Tiger Cub John Griffin, nearly doubled its stake in Walgreen when it bought 2.8 million shares. That translated into 4.57 percent of the fund's portfolio.
Walgreen, which purchased a controlling stake in Britain's Alliance Boots, earlier this month decided not to relocate its corporate headquarters to Europe to save on taxes, a strategy known as inversion. It faced complications in pulling off the transaction and heavy political pressure in the United States not to move..
Billionaire activist investor Carl Icahn, Family Dollar Stores' largest shareholder with a 9.4 percent stake, wanted the company to sell itself to rival Dollar General in the face of stiff competition from big-box retailers such as Wal-Mart Stores Inc. But in July, Family Dollar agreed to sell itself to Dollar Tree Inc.
Meanwhile, botox maker Allergan Inc has waged a full throttle defense to avert a hostile takeover by Valeant Pharmaceutical's. Allergan's biggest shareholder, activist investor William Ackman, has called on other shareholders to side with him and ask Allergan to call a special shareholder meeting.
During the second quarter, when Valeant first announced its bid, Allergan's stock price shot higher.
Farallon Capital Management, the hedge fund founded by Tom Steyer, opened a new position in Allergan during the second quarter, buying 612,500 shares. Andrew Feldstein's Blue Mountain Capital also opened a new Allergan position, buying 635,925 shares, which made up nearly 2 percent of the portfolio at the end of the second quarter.
The quarterly disclosures of manager stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are always intriguing to investors trying to divine a pattern in what savvy traders are selling and buying.
But relying on the filings to develop an investment strategy comes with some peril because the disclosures are backward looking and come out 45 days after the end of each quarter.
Still, the filings offer a glimpse into what hedge fund managers saw as opportunities to make money on the long side.
The filings do not disclose short positions, bets that a stock will fall in price. As a result, the public filings do not always present a complete picture of a manager's stock holdings.
The following are some of the hot stocks and sectors in which hedge fund managers either took new positions or exited existing positions in the second quarter.
Philippe Laffont's Coatue Management upped its stake by 9.9 million shares to 10.1 million shares.
Blue Ridge Capital sold its stake in, getting rid of 2.2 million shares.
Covidien is being bought by rival Medtronic in another inversion deal, in which Medtronic wants to move its headquarters to Ireland to take advantage of lower corporate tax rates.
Farallon opened a new position buying 2.2 million shares.
DOLLAR GENERAL CORP
While Loeb's Third Point increased its stake in Dollar General, Farallon closed out its position, selling 3.2 million shares. Tiger Consumer also liquidated its 814,723-share position, which had made up 2 percent of its portfolio.
DOW CHEMICAL CO
Loeb's Third Point, already a big investor in the company, increased his bet dramatically by buying 14.7 million shares, to raise his holdings by 204 percent. The company now ranks as Loeb's biggest U.S. stock holding, at nearly 14 percent of the portfolio.
Barry Rosenstein's Jana Partners cut its stake by 2.9 million shares to 1 million shares.
Putnam Investments raised its holding by 30 percent and bought 1.2 million shares.
GENERAL MOTORS CO
Putnam Investments increased its stake in GM by 13 percent when it bought 849,076 shares.
Stanley Druckenmiller's Duquesne Family Office held its stake in Walgreen's steady at 1.2 million shares, ranking it as the portfolio's third-largest position.
Jana Partners cut its stake by 1 million shares to 11.1 million shares. Third Point added a new position, buying 700,000 shares.
Patrick McCormack's Tiger Consumer Management added a new position, having bought 18,062,145 shares. (Compiled By Jennifer Ablan; Editing by Steve Orlofsky)