The Inoculated Investor http://inoculatedinvestor.blogspot.com/

Trends and Themes as Reflected by Fund’s 13F Filings

This past Friday was the 45

day of the third quarter and also the deadline for fundmanagers to file the 13Ds that reflected their holdings as of 6/30/09. Especiallygiven the current market circumstances, 45 days is a LONG time and thus the datacan potentially be relatively stale and not reflective of these managers’ currentportfolios. Heck, in this market data that is 7 days old may not be indicative of amanager’s current investment philosophy.Having said that, it is often instructive to take a look at the changes made duringQ2 to get a sense of what themes managers are focusing on. Of course, we cannotsee their short portfolios so for many of these managers you really only get half thestory. But on the long side, having the data from Q4 2008, Q1 2009 and Q2 2009 alltogether, it is sometimes possible to re-engineer a certain manager’s strategy.Accordingly, I have taken a sample from an eclectic group of managers. Some areconcentrated while others have much smaller positions sizes. Some add andsubtracts positions while others hold very steady. Some are focused on certainsectors and special situations while others are much more diversified. All in all Ithink the following group of managers provides some useful insight into how thepros navigate volatile markets.Here are some high level themes I think should be highlighted:1.Gold is still very a popular investment.2.Some of the banks whose shares had been hit the hardest garnered a lot of interest from these managers. Specifically: Bank of America, RegionsFinancial, SunTrust Banks, and Fifth Third.3.Large cap tech names like Hewlett Packard and Oracle seemed to offercompelling value.4.A number of managers either added or hold a position in McDonald’s.5.2 different managers added shares of both Pepsi Bottling and Pepsiamericas6.Many of these funds run way too much money to buy small and micro capcompanies. However, there seemed to be a trend towards buying some of thebest known blue chips as they had not had the same run up as the lesserquality, more levered companies.7. A number of managers made drastic changes to their portfolios by eithertrimming or completely selling out of existing positions to establish stakes innew companies.

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Paulson and Co.- Manager John Paulson

Paulson and Co. Shares Owned Shares Owned Q4-Q1 Shares Owned Q1-Q2Position Ticker 12/31/2008 3/31/2009Bought(Sold) 6/30/2009 Bought(Sold)

AT&TATT3,000,000 3,000,000 0 3,000,0000BCE IncBCE22,597,600 0 (22,597,600)00Affiliated Computer ServicesACS348,500 348,500 0 0(348,500)Anglogold AshantiAU00042,849,86442,849,864Bank of AmericaBAC000167,990,464167,990,464Boston ScientificBSX99,135,000 99,135,000 0 99,135,0000Brocade CommunicationsBRCD5,000,000 5,000,000 0 0(5,000,000)CB Richard EllisCBRE00013,440,86013,440,860CF Industries CF000500,000500,000Capital One FinancialCOF00017,000,00017,000,000Centennial CommunicationCYCL5,000,000 5,000,000 0 5,000,0000CentexCTX0001,256,4001,256,400Cheniere EnergyCQP7,524,085 7,461,191 (62,894)7,461,1910Data DomainDDUP0002,030,0002,030,000Dr Pepper SnappleDPS1,521,824 1,521,824 0 1,521,8240Embarq CorpEQ2,000,000 2,000,000 0 2,000,0000Fifth Third BancorpFITB0005,000,0005,000,000First Horizon NationalFHN0003,000,0003,000,000Equity Media HoldingsEMDUQ5,352,382 5,352,382 0 0(5,352,382)GenentechDNA3,424,400 0 (3,424,400)00Gold FieldsGFI00023,000,00023,000,000Goldman SachsGS0002,000,0002,000,000HumanaHUM0005,000,0005,000,000Istar FinancialSFI1,473,500 0 (1,473,500)00JP Morgan ChaseJPM0007,000,0007,000,000KimcoKIM000217,259217,259Kinross GoldK28,380,800 30,780,800 2,400,000 30,780,8000Liberty Media CorpLMDIA2,365,000 2,365,000 0 2,000,000(365,000)Market Vectors ETF Trust (Gold)GDX0006,000,0006,000,000Marshall and IlsleyMI00012,000,00012,000,000Merrill LynchMER14,926,700 0 (14,926,700)00Mirant CorpMIR18,394,000 18,203,321 (190,679)18,203,3210 NRG EnergyNRG5,259,700 0 (5,259,700)00 National City CorpNCC85,220,000 0 (85,220,000)00

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Northern TrustNTRS925,000 0 (925,000)00Peoples United FinancialPBCT2,450,000 2,750,000 300,000 2,750,0000Pepsi BottlingPBG0008,371,8008,371,800PepsiamericasPAS0004,185,1004,185,100Philip Morris Int'lPM9,000,200 9,000,200 0 9,000,2000Rohm and HaasROH18,041,111 15,966,114 (2,074,997)0(15,966,114)St Jude MedicalSTJ1,000,000 2,341,400 1,341,400 0(2,341,400)Teva PharmaceuticalTEVA198,730 0 (198,730)0 0Time WarnerTWC1,450,000 0 (1,450,000)0 0Tronox IncTRXAQ2,021,700 0 (2,021,700)0 0USTUST9,895,700 0 (9,895,700)0 0Proshares Ultra Short FinancialsSKF800,000 0 (800,000)2,000,000 2,000,000Wachovia WB83,500,000 0 (83,500,000)0 0Wells FargoWFC237,400 0 (237,400)0 0Petro CanadaPCZ0 10,311,300 10,311,300 13,146,8002,835,500SPDR Gold TrustGLD0 31,500,000 31,500,000 31,500,0000Schering PloughSGP0 9,000,000 9,000,000 55,072,00046,072,000WyethWYE0 30,381,000 30,381,000 48,389,30018,008,300Regions FinancialRF00035,000,00035,000,000Sun MicrosystemsJAVA00074,000,00074,000,000SunTrust BanksSTI0001,500,0001,500,000

Commentary: I have already discussedmy impressions of Paulson’s bet on financialcompaniesso there is no need to rehash that here. Aside from that the main themethat is ever present in his portfolio is his affinity for gold. While he held steady with31.5M shares of GLD, he added 23M shares of Gold Fields (GFI), 6M shares of theMarket Vectors Gold ETF (GDX) and over 42.8M shares of Anglogold Ashanti (AU).When I saw Paulson speak he made it very clear that he was troubled by the actionsof the Fed and the Treasury and he obviously remains quite concerned about thepossibility of inflation and the declining value of the dollar. This is such anoverwhelming thesis among the hedge fund managers I follow that I don’t knowwhether to take it as a contrarian indicator that these people love gold so much orto be really scared about the potential for inflation. Only time will tell. But I continueto hold a large percentage of my investment portfolio in shares of GLD. Two other minor things to note. First, Paulson bought shares of Pepsi Bottling (PBG)and Pepsiamericas (PAS) during Q2. The only reason that stands out to me is thatDan Loeb, the manager of Third Point (discussed more below) also established astake in those companies during the second quarter. Could be some good researchfodder.Finally, Paulson seems unafraid to dip his toe into the real estate-based stocks(other than just that banks that are obviously inextricably tied to real estate). In Q2