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US hedge funds stick to consumer companies

Top U.S. hedge fund managers in the first quarter zoned in on the consumer sector, with investments that included eBay, Dollar General and Walgreen.

EBay headquarters in San Jose, Calif.
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EBay headquarters in San Jose, Calif.

Leon Cooperman's Omega Advisors opened a new stake of 1.7 million shares in discount retailer Dollar General, while Barry Rosenstein's Jana Partners increased its stake in drug store operator Walgreen by 4.8 million shares to 12.1 million shares, regulatory filings showed on Thursday.

EBay, which became a darling among top U.S. hedge funds in the fourth quarter just before billionaire activist investor Carl Icahn urged the company to spin off its PayPal payments business, continued to find fans in the first quarter.

Omega increased its stake in eBay to 2.9 million shares from 854,800 shares, and Jana opened a new stake of 3.9 million shares during the first quarter.

Hedge fund Paulson maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, for a third consecutive quarter in Q1, as bullion prices rebounded after notching their biggest annual loss in 32 years in 2013.

New York-based Paulson & Co., led by longtime gold bull John Paulson, owned 10.2 million shares in the ETF worth $1.27 billion on March 31, unchanged from its holdings on Dec. 31, a filing with the U.S. Securities and Exchange Commission showed on Friday.

That represents a gain of around $76 million as the price of gold gained 6.5 percent in the first quarter, following a drop of around 9 percent in the fourth quarter.

Rallying gold prices helped send Paulson's funds to strong gains in February.

In the second quarter of 2013, Paulson slashed its stake by more than half when bullion prices plummeted $225 between April 11 and 15, a record two-day drop for gold.

Investors pay close attention to the quarterly filings by Paulson and other notable hedge fund managers because they provide the best insight into whether the so-called "smart money" has lost faith in gold as a hedge against inflation and economic uncertainty.

George Soros raised his stake in Barrick Gold and gold mining companies ETFs, suggesting the big names in hedge funds took advantage of lower gold prices to increase positions in the precious metal used by many as a hedge.

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 for 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.

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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. And there is also little disclosure on bonds and other securities that do not trade on exchanges.

Upon request, the SEC also permits managers to omit sensitive stock positions from 13F filings. As a result, the public filings don't always present a complete picture of a manager's stock holdings.

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Here are some of the hot stocks and sectors in which hedge fund managers either took new positions or exited from in the first quarter:

Coca-Cola Enterprises

Tiger Global Management, led by Chase Coleman and Feroz Dewan, slashed its stake in soft drink producer and distributor Coca-Cola Enterprises by 14.5 percent to 6.7 million shares.

JPMorgan Chase

Omega Advisors increased its stake in JPMorgan Chase by 1.6 million shares to 1.7 million shares in the first quarter. The bank's shares rose 3.8 percent in the quarter, compared with a 2.2 percent gain in the S&P financial index, which includes all financial shares in the benchmark S&P 500 stock index.

Groupon

Jana Partners increased its stake in Groupon's class A shares by 9.8 million shares to 40.8 million class A shares. Chase Coleman and Feroz Dewan's Tiger Global Management got rid of its entire stake in the operator of a "deal-of-the-day" website.

General Motors

Jana Partners sold nearly all of its stake General Motors, cutting its holding by about 8 million shares to just 7,100 shares. Omega Advisors sold its entire stake of 1.05 million shares. Shares of the automaker fell 15.8 percent in the first quarter.

Since February GM has recalled 2.6 million cars because of defective ignition switches prone to being jostled into accessory mode while the cars are moving. That would shut off engines and disable power steering, power brakes and air bags.

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The problem has been linked to at least 13 deaths.

—By Reuters

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