substantial holding increases, page-3

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Hedge Fund Passport Capital Favors Natural Resources
by: Market Folly June 20, 2010 | about: AAPL / CF / LBRYF.PK / MCK / TEVA Font Size: PrintEmail Recommend 0 Share this page
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an article to John Burbank's hedge fund firm Passport Capital is out with its May performance update and first quarter investor letter. Per the documents, we see that Passport now manages $3 billion and its Global Strategy Fund was up 0.6% for May in a month where the market indices tumbled 8%. Overall, the hedge fund fared much better than other hedge funds who were down big. Year to date for 2010, Passport is up 5.1%. Since inception, Burbank's fund has returned an impressive 23.6% annualized. Those returns, however, do come with some wild volatility. Passport Global was up 219.7% in 2007 and down 50.9% in 2008. Still though, if you can stomach the ride, the cumulative body of work is hard to argue with. Note that John Burbank will be presenting investment ideas at the upcoming Value Investing Congress.

Turning to Passport's most recent exposure levels, we see it is overall 93% long and -44% short. This gives them 49% net long exposure and it's certainly much higher than what we've seen from other hedge funds. The vast majority of funds have had very low net long exposure. This is even more surprising when you consider that Passport had high exposure yet still managed to generate a positive return in a month where the markets were down severely. Burbank did note that this increase in exposure is not a shift in their market outlook, but rather due to appreciation of their basic materials positions.

Here are John Burbank's top 10 public longs:

Riversdale Mining [AU:RIV]

Apple Computer (AAPL)

Financial Technologies [IS: FTECH]

McKesson (MCK)

Teva Pharmaceutical (TEVA)

Labrador Iron Mines [CN:LIM] (LBRYF.PK)

CF Industries (CF)

Pantaloon [IS:PF]

TIG Holding Ltd [BZ:TARP]

Jordan Phosphate Mines [JR:JOPH]

As you can see, Passport has a lot of international exposure and also favors natural resource plays. Of its equity holdings though, two look very familiar: Teva Pharmaceutical and Apple. These two are some of the most widely held stocks amongst hedge funds. Embedded below is the May performance attribution sheet from Passport Capital: