Hedge Fund Wisdom

hedge fund wisdom
a quarterly publication by
Q3 2010
marketfolly.com
FREE SAMPLE ISSUE
Table of Contents
Background:
Every quarter, hedge funds and institutional managers are
required to disclose their portfolios to the SEC via 13F filing. These
filings only detail long U.S. equity positions, American Depositary
Receipts (ADRs), stock options (puts/calls), as well as convertible
notes. The 13F filing does not disclose positions in other asset
classes (such as commodities, currencies, or debt). It also does not
reveal short sales or cash positions.
Hedge Fund Wisdom, a quarterly publication by
MarketFolly.com, updates and analyzes the latest portfolios of
prominent investment managers. The positions herein represent a
hedge funds second quarter holdings as of Sept. 30th, 2010 but keep
in mind they are not reflective of a funds entire overall portfolio.
Hedge Fund
Portfolio Updates
p.02 Baupost Group
p.04 Berkshire Hathaway
p.06 Greenlight Capital
p.08 Lone Pine Capital
p.11 Appaloosa Management
p.14 Pershing Square Capital
p.16 Maverick Capital
p.19 Third Point LLC
p.21 Blue Ridge Capital
p.24 Paulson & Co
In This Issue:
-
Portfolio updates on 23 prominent hedge fund portfolios (3

new hedge funds added)
In-depth investment write-ups on 2 stocks & quick pitches
on 4 stocks hedge funds were buying in the third quarter
Analysis & commentary on each funds portfolio maneuvers
p.27 Tiger Management

p.29 Soros Fund Management
p.32 Bridger Management
p.35 Omega Advisors
p.39 Shumway Capital Partners
p.42 Fairholme Capital
Third Quarter Summary:
p.44 Tiger Global Management
The table below outlines the most frequent buys & sells in the
third quarter amongst the 23 prominent hedge funds profiled in this
issue.
p.46 Passport Capital

p.51 Perry Capital
p.54 Glenview Capital
p.57 Viking Global
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p.60 Farallon Capital

p.63 Icahn Capital
Hedge Fund Quick Pitches:

p.65 Cisco Systems (CSCO)
p.66 Express Scripts (ESRX)
p.67 Alcon (ACL)
p.68 Sirius XM Radio (SIRI)
To view a specific hedge funds portfolio, simply click on the

funds name in the Table of Contents.
Hedge Fund Favorites:

In-Depth Equity Analysis
p.69 Aon (AON)
p.78 CareFusion (CFN)
Next Page: Baupost Groups Updated Portfolio

Q3 2010
www.hedgefundwisdom.com
This is a free past issue. The current issue is available to purchase at HedgeFundWisdom.com
Seth Klarman
Baupost Group
Graduated from Harvard Business

School & regarded as one of the best
investors of all time
Author of Margin of Safety
View Seth Klarmans
Recommended Reading List
Key Takeaways
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Before
examining Baupost Groups

holdings, keep in mind that only a very small
portion of their overall portfolio is allocated to
equities and convertible notes. At the end of the
third quarter, Klarmans firm held only $1.6
billion in long equities/notes exposure.
Compare this with the firms overall assets
under management of around $22 billion and
its clear their focus is in other asset classes.
Bauposts focus is typically on distressed
assets, which the SEC does not require
disclosure of. The firm invests mainly in bonds
as they are a senior security with a built-in
catalyst and usually offer more safety.
Additionally, Klarman typically keeps a lot of
cash on hand so he can deploy it as
opportunities arise.
In May of this year,
Baupost had around a 30% cash position. And
just recently, Baupost announced that it would
be returning 5% of its capital to investors, citing
lack of opportunities. This should sound some
alarm bells for investors as Klarman is regarded
as one of the greatest managers of this
generation.
If hes not finding many
opportunities, it could be warning sign that
things are overvalued here.
Broadly, Klarman was concerned about
the equities rally of 2009 and delivered this
chilling quote saying, Im more worried about
Q3 2010
the world broadly than Ive ever been in my

whole career. As such, theres not much in
terms of equity portfolio adjustment for
Klarman in the third quarter. Most notably, he
acquired brand new positions in Alere (ALR)
and Regeneron Pharmaceutical (REGN) and
doubled his position in Liberty Media Starz
(LSTZA). On the selling side of things, Baupost
Group reduced its stake in Domtar (UFS) by
56% and sold completely out of ADC
Telecommunications (ADCT).
Baupost Groups five largest positions
continue to be Viasat (VSAT), Theravance
(THRX), News Corp (NWSA), Breitburn Energy
(BBEP), and Capitalsource (CSE), in that order.
Regarding areas Klarman currently sees
opportunity,
hes
mentioned
private
commercial real estate as an area worth
examining. Dont confuse this with public
REITs as he feels those are overvalued. Aside
from that, its clear Klarman isnt seeing too
many opportunities.
Lastly, Baupost Group has also bought
insurance in the form of tail risk hedges.
Rather than shorting to hedge, Baupost
typically will purchase out of the money puts on
somewhat extreme events that have a slim
chance of occurring. But in the event they do
occur, Baupost is protected. Currently, the firm
is concerned about inflation and holds far out of
the money puts on Treasury bonds. They will
make money on this hedge if interest rates
skyrocket north of 10%.
This insurance
approach coupled with Klarmans typically
large cash position defines Bauposts style of
hedging. For his recent thoughts, head to an
interview with Seth Klarman.
View Baupost Groups Updated
Portfolio on the Next Page
Baupost Group
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Third Quarter 2010 Portfolio:
Company Name
VIASAT, INC.
THERAVANCE
NEWS CORP CL A
Breitburn Energy Partners LP
ENZON PHARMACEUTICALS
CAPITALSOURCE INC
LIBERTY STARZ
DOMTAR CORP NEW
ALERE INC
Ticker
VSAT
THRX
NWSA
BBEP
ENZN
CSE
LSTZA
UFS
ALR
THERAVANCE NOTE 3.0% 1/1

SOLAR CAPITAL LTD.
ALLIANCE ONE INTL
REGENERON PHARMA
ITURAN LOCATION&CONTRL
SYNERON MEDICAL LTD.
MULTIMEDIA GAMES, INC.
AUDIOVOX CORPORATION
ENERGY XXI (BERMUDA)
ADC TELECOM
CAPITALSOURCE INC - NOTE
THRX
SLRC
AOI
REGN
ITRN
ELOS
MGAM
VOXX
EXXI
ADCT
CSE
Put/
Call
% of
Portfolio
25.03%
15.83%
15.07%
7.92%
7.07%
6.56%
3.93%
3.13%
2.81%
2.69%
2.29%
2.21%
1.66%
1.50%
0.90%
0.58%
0.44%
0.37%
Activity
Added 0.79%
Unchanged
Unchanged
Cut -13.63%
Added 2.03%
Unchanged
Added 136.85%
Cut -56.16%
New
Unchanged
Cut -12.17%
Unchanged
New
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Sold
Sold
Value x
$1000
$413,217
$261,300
$248,793
$130,822
$116,727
$108,287
$64,930
$51,664
$46,395
# of
Shares
10,051,492
13,000,000
19,050,000
7,160,500
10,382,698
20,278,400
1,000,000
800,000
1,500,000
$44,370
$37,887
$36,520
$27,400
$24,783
$14,880
$9,620
$7,254
$6,124
51,000,000
1,766,300
8,800,000
1,000,000
1,721,066
1,500,000
2,600,000
1,060,576
265,000
-
Next Page: Berkshire Hathaway

Q3 2010
Berkshire Hathaway
View Buffetts Recommended

Reading List
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ach quarter, investors are anxious to

check in on the Oracle of Omaha, Warren
Buffett. This time around, selling was the name
of the game in Buffetts portfolio. Berkshire
Hathaway sold completely out of five positions
that had each been less than a 1% position in
their portfolio (listed above).
However,
Buffetts company also sold 98% of their stake
in Comcast (CMCSK), 88% of their IngersollRand (IR) position and over 52% of their
holdings in Nike (NKE).
Given the size of the various adjustments
to Berkshires portfolio, one could hypothesize
that these are largely attributed to manager Lou
Simpson (the manager of GEICOs portfolio, a
Berkshire subsidiary). In the past, Buffett has
mentioned that when he buys something, hes
typically looking to spend $1 billion on a
purchase due to Berkshires large size.
Other positions Berkshire trimmed in the
quarter include Nalco Holding (NLC), Fiserv
(FISV), Moodys (MCO) and Procter & Gamble
(PG).
MarketFolly.com has opined that
Berkshire is happy to trim its MCO position
whenever shares trade north of $25 and
especially when trading higher than $27. And
while Berkshire started a brand new position in
Bank of New York (BK) in the quarter, it is a
relatively small stake at only 0.11% of their
overall portfolio. The only other purchases
Q3 2010
Mentored by Benjamin Graham in

the ways of value investing
Third richest person in the world
according to Forbes
Key Takeaways
Warren Buffett
made in the third quarter include adding to

their Wells Fargo (WFC) stake by 5% and
boosting their Johnson & Johnson (JNJ)
position by 3%. Youll recall that last quarter
Buffett boosted his JNJ stake by 73%, taking
advantage of the sell-off in shares at the time.
Potentially the most exciting news out of
Berkshire recently does not pertain to their
portfolio at all, but rather who will manage it.
It was recently announced that Todd Combs
would join Berkshire Hathaway next year to
manage a portion of their assets. Its believed
that he will take over the allocation currently
managed by Lou Simpson (who is set to retire).
Prior to joining Berkshire, Combs ran a hedge
fund focused mainly on the financial sector,
Castle Point Capital. This hire makes sense
given Berkshires concentrated ownership of
financials including large stakes in Wells Fargo
(WFC), American Express (AXP), US Bancorp
(USB), M&T Bank (MTB), etc. Investors are
anxious to learn more about Mr. Combs and to
see what, if any, investments he will make once
he takes over his portion of Berkshires
portfolio.
Lastly, keep in mind that Berkshire holds
other positions that the SEC doesnt require
disclosure of, including positions in foreign
markets. This means that some of Berkshires
portfolio positions are not disclosed herein.
However, its known they own the likes of BYD,
POSCO, and Tesco in foreign markets.
View Berkshire Hathaways

Updated Portfolio on the Next Page
Berkshire Hathaway
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
Company Name
COCA COLA CO THE
WELLS FARGO & CO
AMER EXPRESS INC
PROCTER GAMBLE CO
KRAFT FOODS INC
JOHNSON & JOHNSON
WAL MART STORES
WESCO FINANCIAL
CONOCOPHILLIPS
US BANCORP
MOODY'S CORP
WASHINGTN POST CO B
M&T BANK CORP
NIKE INC CL B
COSTCO
U S G CP
FISERV, INC.
NESTLE
NALCO HOLDING CO.
TORCHMARK CP
LOWES COMPANIES
BECTON DICKINSON
SANOFI-AVENTIS SA
GEN ELECTRIC CO
UNITED PARCEL SVC
BANK OF AMERICA CP
GLAXOSMITHKLINE
BANK OF NY MELLON
INGERSOLL RAND LTD
EXXON MOBIL CP
GANNETT CO INC
COMDISCO HLDG CO
COMCAST
REPUBLIC SVCS INC
NRG ENERGY INC
IRON MOUNTAIN
HOME DEPOT INC
CARMAX INC
Ticker
KO
WFC
AXP
PG
KFT
JNJ
WMT
WSC
COP
USB
MCO
WPO
MTB
NKE
COST
USG
FISV
NSRGY
NLC
TMK
LOW
BDX
SNY
GE
UPS
BAC
GSK
BK
IR
XOM
GCI
CDCO
CMCSK
RSG
NRG
IRM
HD
KMX
Put/Call
% of Portfolio
24.10%
17.40%
13.12%
9.48%
6.69%
5.44%
4.30%
4.21%
3.44%
3.07%
1.49%
1.42%
0.90%
0.60%
0.58%
0.46%
0.43%
0.38%
0.32%
0.31%
0.30%
0.29%
0.28%
0.26%
0.20%
0.13%
0.12%
0.11%
0.05%
0.05%
0.04%
0.03%
0.01%
Activity
Unchanged
Added 5.10%
Unchanged
Cut -1.67%
Unchanged
Added 3.16%
Unchanged
Unchanged
Unchanged
Unchanged
Cut -6.20%
Unchanged
Unchanged
Cut -52.32%
Unchanged
Unchanged
Cut -11.12%
Unchanged
Cut -32.87%
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
New
Cut -88.71%
Unchanged
Unchanged
Unchanged
Cut -98.44%
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$11,704,001
$8,448,907
$6,372,197
$4,603,660
$3,246,922
$2,641,018
$2,089,268
$2,042,561
$1,671,766
$1,492,632
$721,267
$690,087
$438,814
$291,944
$279,459
$225,182
$210,479
$182,189
$154,847
$150,062
$144,885
$140,041
$135,117
$126,391
$95,313
$65,512
$59,695
$52,070
$22,712
$26,063
$21,283
$13,846
$3,179
# of Shares
200,000,000
336,408,845
151,610,700
76,766,036
105,214,584
42,624,563
39,037,142
5,703,087
29,109,637
69,039,426
28,873,756
1,727,765
5,363,821
3,642,929
4,333,363
17,072,192
3,910,800
3,400,000
6,142,300
2,823,879
6,500,000
1,889,889
4,063,675
7,777,900
1,429,200
5,000,000
1,510,500
1,992,759
636,600
421,800
1,740,231
1,538,377
186,897
-
Next Page: Greenlight Capital

Q3 2010
Greenlight Capital
David Einhorn
Has returned 22% annualized
Predicted & profited from the demise
of Lehman Brothers
Author of Fooling Some of the
People All of the Time
Key Takeaways
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hile Buffett was selling last quarter,

David Einhorns Greenlight Capital was largely
buying. He started brand new stakes in the
equities listed above but he was also adding
heavily to existing positions. Einhorn boosted
his stake in Apple (AAPL) by 168%, a position
originally flagged in Hedge Fund Wisdoms
previous issue. Greenlight Capital also more
than doubled its stake in Symmetricom (SYMM).
Additionally, the hedge fund boosted stakes in
NVR (NVR), Transatlantic Holdings (TRH), and
Ensco (ESV). Ensco was singled out as a hedge
fund favorite in the second quarter and an indepth analysis of the company was featured in
HFWs issue last quarter.
This quarters issue will also feature an indepth analysis of another company Einhorn was
buying last quarter: CareFusion (CFN). He
increased his stake by 53% in Q3 and numerous
other prominent managers in this issue added
shares as well.
Einhorn didnt do much selling this past
quarter. Oddly enough, Greenlight Capital sold
completely out of Lockheed Martin (LMT),
having just started it as a new position the
quarter prior. The hedge fund also exited EMC
(EMC) completely, a position labeled as a
consensus sell amongst the various hedge funds
profiled in this issue.
While the SEC does not require disclosure
Q2 2010
of short positions, Einhorns hedge fund

recently revealed their short in St. Joes (JOE).
Einhorn presented why he is short at the Value
Investing Congress and sent shares of JOE
tumbling. Essentially, his thesis argues that the
companys land is overvalued and that should
the company convert to a rural land company,
shares would be worth around $7-10 (JOE
currently trades around $18). You can view his
full presentation here. In an industry where
short positions are guarded close to the vest,
Einhorn has now revealed two shorts: JOE and
Moodys (MCO).
Investors must also realize that while the
positions listed on the next page are
representative of a large portion of Greenlights
holdings, it is not their entire portfolio. They
hold positions in numerous other foreign
markets that are not disclosed to the SEC. In
Greenlights third quarter letter to investors,
they revealed that their five largest positions
were (in alphabetical order): Arkema (AKE on
foreign exchange, ARKAY on the pink sheets),
CIT Group (CIT), Ensco (ESV), physical gold,
Pfizer (PFE), and Vodafone (VOD).
Regarding other positions not disclosed
to the SEC, Einhorn closed his longstanding and
sizable position in Ford Motor Company debt.
Also, Greenlight has owned physical gold for a
long time now as a hedge against the Federal
Reserves printing presses and the debasement
of fiat currency. They prefer physical gold to
exchange traded funds due to cost savings
(storage fees versus ETF expense ratios).
Einhorns Vodafone thesis has been posted on
MarketFolly.com as well, as Einhorn owns the
VOD shares traded in the UK.
View Greenlight Capitals
Greenlight Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Company Name
CIT GROUP INC
ENSCO INTL INC
PFIZER INC
CAREFUSION CORP
APPLE INC.
CARDINAL HEALTH INC
MICROSOFT CORPORATION
NCR CP
MARKET VECTORS - GOLD
MINERS ETF
XEROX CP
BECTON DICKINSON CO
ASPEN INSURANCE HLDG
EINSTEIN NOAH RESTRNT
THE TRAVELERS CO
RALCORP HOLDINGS INC
HEALTH NET INC
FOSTER WHEELER LTD.
EVEREST RE GRP LTD
NVR LP
MI DEV INC CL A
TRANSATLANTIC HLDS
BROADRIDGE FIN SOL
HLTH MGMT ASSOC A
EMPLOYERS HOLDINGS I
INGRAM MICRO A
REPUBLIC AIRWAYS
HOLDINGS, INC.
FIFTH STREET FINANCE
VERIGY LTD.
ENERGY PARTNERS LTD
BIOFUEL ENERGY CORP.
SYMMETRICOM
FURIEX PHARMACEUTICALS
FLAGSTAR BANCORP
ORITANI FINANCIAL CORP.
M D C HOLDINGS
LOCKHEED MARTIN CP
E M C CP
Ticker
CIT
ESV
PFE
CFN
AAPL
CAH
MSFT
NCR
Put/
Call
% of Portfolio
10.76%
10.03%
9.89%
8.27%
5.91%
5.39%
4.67%
3.89%
Activity
Unchanged
Added 21.50%
Unchanged
Added 53.40%
Added 168.00%
Unchanged
Unchanged
Unchanged
Value x
$1000
$432,301
$403,089
$397,557
$332,228
$237,641
$216,428
$187,605
$156,317
# of Shares
10,590,429
9,011,604
23,154,098
13,374,724
837,500
6,550,500
7,660,442
11,468,658
GDX
XRX
BDX
AHL
BAGL
TRV
RAH
HNT
FWLT
RE
NVR
MIM
TRH
BR
HMA
EIG
IM
3.60%
3.48%
3.31%
3.12%
2.83%
2.76%
2.57%
2.37%
2.19%
2.11%
2%
1.55%
1.52%
1.51%
1.25%
0.91%
0.74%
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
Added 47.62%
Unchanged
Added 26.53%
New
Unchanged
Unchanged
New
$144,488
$139,725
$133,121
$125,359
$113,775
$111,092
$103,268
$95,229
$87,896
$84,780
$80,294
$62,151
$61,223
$60,605
$50,090
$36,665
$29,764
2,583,371
13,500,000
1,796,500
4,140,000
10,733,469
2,132,272
1,765,854
3,502,337
3,593,472
980,445
124,000
5,655,235
1,204,700
2,650,000
6,539,241
2,325,000
1,765,386
RJET
FSC
VRGY
EPL
BIOF
SYMM
FURX
FBC
ORIT
MDC
LMT
EMC
0.70%
0.63%
0.59%
0.52%
0.37%
0.24%
0.14%
0.07%
0.05%
0.05%
Unchanged
Unchanged
New
Unchanged
Unchanged
Added 113.85%
Unchanged
Unchanged
Unchanged
Unchanged
Sold
Sold
$28,259
$25,449
$23,902
$20,890
$15,009
$9,781
$5,528
$3,003
$1,996
$2,042
3,412,800
2,284,492
2,940,000
1,739,474
7,542,104
1,709,846
490,000
1,649,998
200,000
70,324
-
Next Page: Lone Pine Capital

Q3 2010
Lone Pine Capital
Seeks to identify companies with

good management teams that are
trading below intrinsic value
Previously a consumer analyst at
Julian Robertsons hedge fund Tiger
Management
Key Takeaways
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Stephen Mandels hedge fund Lone Pine
Capital boosted its Apple (AAPL) position by

20% in the quarter, bringing it up from their
fourth largest holding in Q2 to now their top
holding in Q3. Lone Pines reported positions
total $10.7 billion and their most notable new
purchases include Colgate-Palmolive (CL) and
Express Scripts (ESRX), the latter of which has
been a hedge fund favorite and a consensus
buy/add this past quarter. Mandels firm also
added significantly to a few positions they
already owned, including Equinix (EQIX), Polo
Ralph Lauren (RL), and Dollar General (DG).
Shifting to portfolio sales, Lone Pine sold
partial positions in Cognizant Technology
Solutions (CTSH), JPMorgan Chase (JPM), and
Estee Lauder (EL), all top holdings and sizable
stakes for the firm. Of the positions the hedge
Q3 2010
Stephen Mandel
fund sold completely out of (listed to the left),

only Hewlett-Packard and TD Ameritrade were
of any real size, previously garnering 2.8% and
1.4% positions in the portfolio respectively.
And while Mandel didnt sell completely out of
the following names, he certainly reduced his
position sizes severely in Qualcomm (QCOM
reduced 74%), McDonalds (MCD reduced
73%), Priceline.com (PCLN reduced 70%),
Amazon.com (AMZN reduced 65%), Google
(GOOG reduced 49%), Citrix Systems (CTXS
reduced 48%), Activision Blizzard (ATVI
reduced 47%). As you can see, there was some
sizable reduction and portfolio turnover in Lone
Pines portfolio this past quarter.
Last quarters issue of Hedge Fund
Wisdom drew attention to Mandels brand new
position in Crown Castle International (CCI), a
wireless tower operator. Lone Pine increased
its position by almost 12% again last quarter as
they look to capitalize on the rising trend of
smartphone data usage. In terms of positions
that Lone Pine Capital has continued to buy in
the fourth quarter, theyve disclosed additions
to their stake in Towers Watson (TW) and an
increase in their Polo Ralph Lauren (RL) stake,
two stocks worth keeping an eye on. And lastly,
an interesting fact: Mandels hedge fund is
named after a historical lone pine tree at his
alma mater, Dartmouth College.
View Lone Pine Capitals Updated

Lone Pine Capital

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
APPLE INC.
YUM BRANDS INC
COGNIZANT TECH SOLUTIONS
CROWN CASTLE INTL
JP MORGAN CHASE CO
STREETTRACKS GOLD TR
ACCENTURE LTD.
EQUINIX, INC.
ESTEE LAUDER COS INC
GOODRICH CORPORATION
AUTODESK, INC.
RALPH LAUREN POLO CP
NEW ORIENTAL EDUCATION
DOLLAR GENERAL CORP
AMERIPRISE FINANCIAL
O'REILLY AUTOMOTIVE, INC.
AMPHENOL CP
MEAD JOHNSON NUTRITION CO
SEARS HOLDINGS
STRAYER EDUCATION, INC.
FAMILY DOLLAR STORES
COLGATE PALMOLIVE
EXPRESS SCRIPTS, INC.
DAVITA INC
VISA INC.
INVESCO LTD
CHARLES SCHWAB
WYNDHAM WORLDWIDE
NETWORK APPLIANCE, INC.
GREEN MOUNTAIN COFFEE
LINCARE HOLDINGS INC.
TRANSDIGM GRP INC
CITRIX SYSTEMS, INC.
DICK'S SPORTING GOODS
LIVE NATION, INC.
PRICELINE.COM
AMAZON.COM, INC.
LONGTOP FINL TEC
QUALCOMM
SALESFORCE.COM INC
WATSON WYATT WLD WD
VANCEINFO TECH
CAREER EDUCATION
GOOGLE INC.
DEVRY INC
Ticker
AAPL
YUM
CTSH
CCI
JPM
GLD
ACN
EQIX
EL
GR
ADSK
RL
EDU
DG
AMP
ORLY
APH
MJN
SHLD
STRA
FDO
CL
ESRX
DVA
V
IVZ
SCHW
WYN
NTAP
GMCR
LNCR
TDG
CTXS
DKS
LYV
PCLN
AMZN
LFT
QCOM
CRM
TW
VIT
CECO
GOOG
DV
Put/Call
CALL
PUT
% of
Portfolio
6.75%
6.09%
5.22%
4.75%
3.92%
3.79%
3.45%
3%
2.98%
2.62%
2.44%
2.44%
2.41%
2.20%
2.19%
2.18%
2.17%
2.09%
1.94%
1.90%
1.84%
1.83%
1.81%
1.80%
1.77%
1.77%
1.54%
1.52%
1.43%
1.43%
1.38%
1.35%
1.24%
1.24%
1.20%
1.09%
1.09%
1.06%
1%
0.93%
0.90%
0.81%
0.75%
0.69%
0.69%
Activity
Added 20.26%
Unchanged
Cut -22.28%
Added 11.77%
Cut -28.74%
Unchanged
Cut -4.42%
Added 92.66%
Cut -12.21%
Added 2.93%
Unchanged
Added 46.66%
Added 2.64%
Added 256.50%
Added 20.00%
Added 16.75%
Added 17.06%
Cut -4.13%
Unchanged
Added 3.19%
Added 29.04%
New
New
Cut -32.61%
Added 23.20%
Added 4.63%
New
Added 139.39%
New
Cut -31.31%
Added 52.44%
New
Cut -48.21%
New
Added 18.56%
Cut -69.91%
Cut -64.91%
Added 4.92%
Cut -74.08%
Cut -29.57%
New
Added 146.76%
Added 40.91%
Cut -49.07%
Added 23.98%
Value x
$1000
$768,141
$693,346
$594,625
$540,705
$445,868
$431,057
$392,647
$341,493
$338,915
$298,361
$277,453
$277,571
$274,388
$250,433
$249,844
$247,900
$247,598
$237,760
$220,510
$216,666
$209,017
$208,151
$206,362
$204,645
$201,735
$201,595
$175,430
$173,087
$162,931
$163,061
$156,620
$153,876
$140,837
$141,733
$137,119
$124,563
$124,353
$120,710
$113,901
$105,424
$102,944
$91,699
$85,199
$78,745
$78,464
# of Shares
2,707,106
15,053,094
9,223,288
12,246,997
11,711,781
3,370,000
9,240,919
3,336,520
5,360,033
4,046,664
8,678,543
3,088,927
2,811,927
8,561,804
5,278,758
4,659,771
5,055,079
4,177,816
3,056,700
1,241,638
4,733,166
2,708,179
4,237,421
2,964,583
2,716,607
9,495,772
12,620,845
6,300,947
3,272,364
5,227,990
6,244,817
2,479,871
2,063,852
5,054,663
13,878,448
357,591
791,755
3,067,608
2,523,708
942,973
2,093,206
2,835,474
3,968,301
149,766
1,594,469
Continued on next page

Q3 2010
Lone Pine Capital

Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
Company Name
ACTIVISION, INC.
MCDONALDS CP
POPULAR, INC.
INFORMATICA CORPORATION
VIASAT, INC.
SUN TIMES MEDIA GP
UMPQUA HOLDINGS
CHINA LODGING GROUP LTD
HOME INNS & HOTELS MGMT
SUNTECH POWER HLDGS
AMPHENOL CP
HEWLETT PACKARD CO
PACTIV CORP
REGAL ENTERTAINMENT
TD AMERITRADE
QUINSTREET, INC
VISTAPRINT LIMITED
CNINSURE INC.
QUALCOMM INCORPORATED
UNITED PARCEL SVC
OWENS CORNING
ACCENTURE LTD.
Ticker
ATVI
MCD
BPOP
INFA
VSAT
SVN
UMPQ
HTHT
HMIN
STP
APH
HPQ
PTV
RGC
AMTD
QNST
VPRT
CISG
QCOM
UPS
OC
ACN

Continued
Put/Call
CALL
CALL
CALL
CALL
CALL
% of
Portfolio
0.66%
0.65%
0.61%
0.52%
0.21%
0.19%
0.18%
0.18%
0.10%
Activity
Cut -46.72%
Cut -72.67%
Added 30.96%
New
New
Added 44.56%
Unchanged
Added 46.71%
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$75,687
$74,379
$69,193
$59,762
$23,861
$21,900
$20,534
$20,393
$11,678
# of Shares
6,995,112
998,239
23,859,676
1,555,884
580,411
1,217,331
1,810,735
868,903
235,870
-
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Written by hedge fund analysts, Hedge Fund Wisdom is
published four times a year (February, May, August, &
November)
Next Page: Appaloosa Management

Q3 2010
10
Appaloosa Management
Previously a high yield bond trader

for Goldman Sachs
2%3'4"$565"#$-'
P$J#$++R',7B,5E%&P'V)%
;8-7*%6>-+$?-%&;6;/)%
F$E+5*187%&FI0)%
6$?87*1EH7+*5%P/(I9-%&6FP)%
!""#8$E%F,+$58,#-%&!F!0)%
O1+$51,+8*1,#%',"$5%&O')%
W18+$E%P$,#+.%<5*H"%&W2P)%
S$##'*81+%&S(')%
L(!R0$17*5%&L(!;)%
;*N8E8$1%&;/D)%
A$7+*1%I87B81-*1%&AI:)%
;O<2!%&;O)%
(,?%9$-$,57.%&(9;:)%
%
."/,'!"89/%6%/)':&6':;-'
D,#$5*%31$5G>%&D(/)%
6H1*7*%&6W2)%
0$-*5*%&06/)%
3X05,E$%Q81,178,#%&30Q;)%
!5B,1-,-%A$-+%&!AQ6)%
K9;%S*5#EJ8E$%&K9;S)%
/CC87$F,4%&/F:)%
are three main changes worth

noting in David Teppers third quarter portfolio.
First, he was buying large cap technology in
size. While Stephen Mandels Lone Pine was
selling Hewlett-Packard (HPQ), Appaloosa
Management was buying. Tepper also started a
new stake in Cisco Systems (CSCO) and added
to his pre-existing position in Microsoft
(MSFT).
Second, Appaloosa Management also
bought a bevy of health related plays in the
third quarter. Many medical device makers
such as Medtronic (MDT) and Becton Dickinson
(BDX) had been trading at low valuations and
Tepper was clearly compelled to take advantage.
At the same time, he also started stakes in
various healthcare providers and servicers such
Q3 2010
Has compounded 30% for

investors over 17 years
Takes concentrated positions in
distressed debt & equity
Key Takeaways
There
David Tepper
as United Health (UNH), WellPoint (WLP),

Covidien (COV), and CIGNA (CI). Dan Loebs
hedge fund Third Point had previously owned
WLP but sold out in quarters prior, citing
healthcare reform uncertainty. It appears that
Appaloosa sees the uncertainty as an opportune
time to purchase shares. While the hedge fund
purchased many health-related plays, the size
of these positions pale in comparison to
Teppers brand new tech holdings.
Third, Tepper used Q3 to trim his stake
in various financial positions. Keep in mind
that many of these plays were purchased in the
depths of the financial crisis at very depressed
levels. Given the fierce rally of 2009, these
stakes have appreciated considerably since his
purchase. As such, it appears as though theyre
just taking some profits and reducing position
sizes. He sold 18-20% of his position in each of
the following financials: Bank of America
(BAC), Wells Fargo (WFC), Fifth Third Bancorp
(FITB), SunTrust Banks (STI), and Capital One
Financial (COF).
During the quarter, Tepper also gave a
rare television interview where he advocated
buying stocks because if the economy does well,
stocks will do well. Additionally, he sees the
Federal Reserve as somewhat of a backstop as
they help boost asset prices with quantitative
easing. As the old saying goes, dont fight the
Fed.
While Appaloosa typically allocates
around 70% of its portfolio to debt and 30% to
equities, its clear Tepper has increased
exposure to the latter. Assets reported on
Appaloosas third quarter 13F filing totaled $2.7
billion and at the end of September their
Palomino fund was up 15.13% for the year.
View Appaloosa Managements
11
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
BANK OF AMERICA
WELLS FARGO & CO.PRFD
PFIZER INC
CITIGROUP INC
WELLS FARGO & CO
HEWLETT PACKARD CO
MERCK CO INC
CISCO SYSTEMS, INC.
FIFTH THIRD BANCORP
MACY'S INC
SUNTRUST BANKS
JOHNSON AND JOHNS DC
E-TRADE **NOTES**
UAL CORPORATION
CF IND HLDGS INC
CAPITAL ONE FINANCIA
RBS SERIES N ADS PFD
MEDTRONIC INC
SEMICONDUCTOR HOLDRS
AIG (PREFERRED)
APPLIED MATERIALS, INC.
INTL PAPER
UNITEDHEALTH GROUP
YAHOO! INC.
ROYAL BANK OF SCOTLAND
HARTFORD FIN SVC
WELLPOINT INC.
ROYAL BK PFD
WILLIS GROUP HOLDING
GOODYEAR TIRE RUBBER
ROYAL BK SCOTLAND
ROYAL BANK ADR
ROYAL BANK SCTLND M
BRUNSWICK CP
CONTL AIRLINES CL B
KLA-TENCOR CORPORATION
COVIDIEN LTD
US AIRWAYS GROUP INC
BECTON DICKINSON CO
A M R CP
DELTA AIR LINES
NAVISTAR
CIGNA CP
LAM RESEARCH CORPORATION
Ticker
BAC
WFC/PL
PFE
C
WFC
HPQ
MRK
CSCO
FITB
M
STI
JNJ
MSFT
ETFC
UAL
CF
COF
RBS-PN
MDT
SMH
AIG-PA
AMAT
IP
UNH
YHOO
RBS-PL
HIG
WLP
RBS-PT
WSH
GT
RBS-PS
RBS-PQ
RBS-PM
BC
CAL
KLAC
COV
LCC
BDX
AMR
DAL
NAV
CI
LRCX
Put/
Call
% of
Portfolio
8.79%
8.76%
8.48%
5.96%
4.80%
4.67%
4.04%
3.93%
3.71%
3.05%
2.97%
2.44%
2.05%
1.95%
1.85%
1.84%
1.69%
1.55%
1.41%
1.41%
1.39%
1.31%
1.26%
1.21%
1.18%
1.07%
1.04%
1.03%
1.01%
1.01%
0.99%
0.95%
0.78%
0.72%
0.68%
0.67%
0.67%
0.66%
0.63%
0.58%
0.56%
0.53%
0.53%
0.53%
0.45%
Activity
Cut -17.83%
Cut -3.95%
Added 46.00%
Cut -11.31%
Cut -18.86%
New
Cut -4.16%
New
Cut -18.65%
Cut -8.49%
Cut -18.73%
Cut -0.28%
Added 17.12%
Unchanged
Added 24.21%
Cut -46.73%
Cut -19.17%
Added 8.15%
New
New
Cut -0.87%
New
New
New
Cut -9.05%
Added 8.76%
Cut -75.38%
New
Added 0.81%
Cut -18.34%
Added 12.32%
Added 0.12%
Added 0.13%
Added 7.18%
Cut -8.91%
Added 40.89%
New
New
Added 29.62%
New
Added 16.36%
Added 9.06%
Cut -45.33%
New
New
Value x
$1000
$294,630
$293,771
$284,373
$199,875
$161,101
$156,633
$135,571
$131,693
$124,240
$102,229
$99,474
$81,922
$68,594
$65,280
$61,979
$61,856
$56,510
$52,123
$47,414
$47,350
$46,554
$43,981
$42,159
$40,596
$39,504
$35,806
$34,919
$34,420
$33,971
$33,720
$33,086
$31,689
$26,106
$24,174
$22,645
$22,544
$22,458
$22,261
$20,981
$19,503
$18,814
$17,742
$17,935
$17,733
$15,208
# of Shares
22,473,699
292,019
16,562,202
51,250,000
6,410,700
3,723,144
3,683,000
6,013,386
10,327,506
4,427,423
3,851,090
1,322,177
2,800,911
46,257,000
2,622,898
647,703
1,428,817
3,360,579
1,411,974
1,710,000
5,419,560
3,765,483
1,938,332
1,156,245
2,787,872
1,861,961
1,521,535
607,700
2,023,314
1,094,080
3,077,751
2,005,614
1,609,519
1,560,596
1,487,864
907,579
637,460
553,900
2,268,266
263,200
3,000,694
1,524,241
410,974
495,624
363,399

Q3 2010
12
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
Company Name
NEWCASTLE INV CP
TERADYNE INC
BB&T CP
TEMPLE INLAND INC
MAGUIRE PROPERTIES
BANCO SANTANDER
SUPERMEDIA INC
CONSECO INC
STRATEGIC HOTELS INC
SMURFIT-STONE CONTAINER
TEXAS INSTRUMENTS
INTEL CORPORATION
CON-WAY INC
GRAMERCY CAP CORP
ANALOG DEVICES
ALTERA CORPORATION
CAPITAL ONE WARRANTS
ROYAL BK SCOT HADSSC
XILINX, INC.
BROADCOM CORPORATION
ROYAL BANK OF SCOTLAND PFD
LINEAR TECHNOLOGY
UNITED PARCEL SVC
DANIEL INDUSTRIES
OWENS CORNING WARRANT 'B'
VIRGIN MEDIA INC. - WARRANTS
ARKANSAS BEST CORPORATION
OFFICEMAX INC.
SUNOCO INC
THE PNC FINANCIAL SVS GRP
TESORO CORP
VALERO ENERGY CP
ETRADE FINANCIAL (COMMON)
YRC WORLDWIDE, INC.
Ticker
Put/Call
NCT
TER
BBT
TIN
MPG
STD
SPMD
CNO
BEE
SSCC
TXN
INTC
CNW
GKK
ADI
ALTR
COF/WS
RBS-PH
XLNX
BRCM
RBS-PF
LLTC
UPS
CALL
DAN
RBS-PP
RBS-PR
OC/WS/B
VMEDW
ABFS
OMX
SUN
PNC/WS
TSO
VLO
ETFC
YRCW

Continued
% of
Portfolio
0.36%
0.34%
0.33%
0.32%
0.28%
0.23%
0.15%
0.15%
0.14%
0.12%
0.11%
0.10%
0.08%
0.07%
0.06%
0.06%
0.06%
0.06%
0.05%
0.05%
0.04%
0.04%
0.01%
0.01%
0.00%
0.00%
0.00%
0.00%
Activity
Cut -4.78%
New
Cut -18.24%
New
Cut -8.14%
Cut -18.32%
Cut -5.78%
Cut -18.47%
Cut -9.12%
New
New
New
Cut -87.03%
Cut -44.45%
New
New
Cut -46.29%
Unchanged
New
New
Unchanged
New
Cut -50.00%
New
New
New
Unchanged
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$12,088
$11,274
$11,164
$10,627
$9,293
$7,797
$4,932
$5,087
$4,770
$3,968
$3,528
$3,469
$2,544
$2,405
$2,008
$2,051
$1,931
$2,096
$1,517
$1,557
$1,283
$1,506
$291
$431
$37
$75
$18
$7
# of Shares
3,899,297
1,012,032
463,641
569,489
3,717,100
615,915
466,564
918,195
1,125,056
216,000
130,000
180,400
82,075
1,730,221
64,000
68,000
136,959
88,752
57,000
44,000
53,587
49,000
3,500
34,974
2,400
4,889
10,644
237,059
-
Next Page: Pershing Square

Q3 2010
13
Pershing Square Capital
Bill Ackman
View a profile of Pershing
Square
Subject of the book Confidence
Game: How a Hedge Fund Manager
Called Wall Streets Bluff
Key Takeaways
2%3'4"$565"#$-'
YZ;Z%'$11$>%&Y;')%
Q*5+H1$%A5,1E-%&Q/)%
%
."/,'!"89/%6%/)':&6':;-'
KWF[%A5,1E-%&KWF)%
The
most notable change to Bill

Ackmans portfolio is the addition of brand new
stakes in J.C. Penney (JCP) and Fortune Brands
(FO). Ackman filed activist 13Ds on both of
these companies as he looks to shake things up
and unlock shareholder value. Regarding JCP,
it seems as though Pershing Squares thesis is
centered on real estate. Vornado (VNO), a
publicly traded REIT, also purchased a large
stake in JCP and its likely they will work with
Pershing Square toward a mutually beneficial
goal. You can view Ackmans potential real
estate thesis here. Regarding FO, it appears as
though Ackman will try to spin-off some of the
companys brands to unlock value. So far, FO
seems receptive to Ackmans activist approach.
Pershing Square exited its YUM! Brands
(YUM) stake entirely in the third quarter as it
reached their price target. The hedge fund runs
a highly concentrated portfolio and the only
other notable changes in the third quarter were
reductions in their Target (TGT) and Kraft
Foods (KFT) stakes. Ackman is still fond of his
KFT investment (continuing to view it as a
margin expansion story), but sold some shares
to free up capital in order to build his new
positions in JCP and FO.
Ackman recently updated his disclosed
position in General Growth Properties (GGP)
when he filed a 13G with the SEC. In it, he
disclosed that Pershing Square owns 9.34% of
Q3 2010
the new company. GGP recently emerged from

bankruptcy and spun-off assets in the form of
the new Howard Hughes Company (HHC).
Ackman has also disclosed a 28% ownership
stake in HHC (including stock, warrants, and
cash settled total return swaps). Regarding
GGP, Ackman feels the company will be an
attractive investment over time as it currently
trades at a substantial discount to its peer
group. Pershing maintains a short position in
the REIT index, as well as certain REIT equities
(not disclosed, but most likely Simon Property
Group ~ SPG) in order to mitigate their
exposure to overall REIT valuations.
Regarding his position in Citigroup (C),
Ackman feels that the company still trades at a
discount to their estimate of fair value, namely
due to the overhang of the governments sale of
shares. He thinks this will be resolved in the
short-term and that regulatory/economic
uncertainty will be resolved over the
intermediate term. Turning to his stake in
Automatic Data Processing (ADP), the Pershing
Square manager likes that the company
generates stable and predictable free-cash-flow.
Lastly, Landrys (LNY) has been removed from
the portfolio below as Pershing has since exited
the investment due to a management-led
buyout in October.
Ackman also offered up his latest
investment idea when he declared his
bullishness on housing and recommended
buying single-family homes at the Invest For
Kids Conference. For the year, Pershing Square
is up 7.6%. Since inception in 2004, Pershing
has returned 292.7% net of fees.
View Pershing Squares Updated

14
Pershing Square
Rank
1
2
3
4
5
6
7
8
9
10
11
Company Name
KRAFT FOODS INC
TARGET
CITIGROUP
J.C. PENNEY
FORTUNE BRANDS
AUTOMATIC DATA PROCESSING
GENERAL GROWTH PROPERTIES
CORRECTIONS CORP AMERICA
BORDERS GROUP
GREENLIGHT CAPITAL RE
YUM! BRANDS
Ticker
KFT
TGT
C
JCP
FO
ADP
GGP
CXW
BGP
GLRE
YUM
Put/
Call
% of
Portfolio
19.76%
18.71%
14.69%
11.86%
10.55%
9.28%
8.50%
6.20%
0.28%
0.16%
Activity
Cut -17.9%
Cut -31.6%
Cut -0.2%
New
New
Added 5.21%
Unchanged
Unchanged
Unchanged
Unchanged
Sold
Value x
$1000
$841,119
$796,443
$625,157
$504,826
$449,128
$394,921
$361,702
$263,902
$12,082
$7,085
# of Shares
27,632,023
14,143,896
146,475,426
15,711,994
7,465,555
8,700,612
23,953,782
10,936,672
10,597,980
250,000
-
Next Page: Maverick Capital

Q3 2010
15
Maverick Capital
Lee Ainslie
14.1% annualized returns since
inception in 1995
Key Takeaways
Compares a companys enterprise

value to sustainable free cash flow
2%3'4"$565"#$-'
P$J#$++R',7B,5E%&P'V)%
!M$575*?M8$%U%Q8+7.%&!2Q)%
A$E%A,+.%U%A$>*1E%&AAAK)%
<*#E?,1%6,7.-%&<6)%
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(8C$%0$7.1*#*G8$-%&(OQ3)%
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%
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;8+584%6>-+$?-%&;0:6)%
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S.8+81G%'$+5*#$H?%&S(()%
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A,1B%*C%2$J%K*5B%F$##*1%&AL)%
;*N8E8$1%&;/D)%
;D6%;,5$?,5B%&;D6)%
34"5$--%6758"+-%&369:)%
0*>*+,%F*+*5-%&0F)%
3EH7,+8*1%F,1,G$?$1+%&3IF;)%
!?$587,1%'HM#87%3EH7,+8*1%&!'3O)%
View a profile of Maverick Capital
averick Capital currently has its

highest exposure to technology ever at 17% net
long.
Thats saying something, especially
considering that Lee Ainslie was a technology
analyst
at
Julian
Robertsons
Tiger
Management before founding Maverick. At the
Value Investing Congress, Ainslie pitched
Commscope (CTV) and the company recently
received a buyout offer from the Carlyle Group.
Other technology names Maverick currently
favors include Marvell Technology (MRVL) ~
their top position, as well as Apple (AAPL),
Hewlett-Packard (HPQ), and Corning (GLW).
Q3 2010
One interesting thing about Mavericks

portfolio is that they sold completely out of
Hewlett-Packard (HPQ), Dell (DELL), Oracle
(ORCL), and Abercrombie & Fitch (ANF) in the
second quarter, yet turned around and started
them as brand new positions again in the third
quarter.
Overall, Maverick saw a decent
amount of portfolio turnover on a quarter over
quarter basis. Brand new positions they started
in the second quarter in Citrix (CTXS), Adobe
(ADBE), Whiting Petroleum (WLL) and Bank of
New York Mellon (BK) have already been sold
off just one quarter later. There is some
intriguing portfolio maneuvering going on here
and it will be interesting to see if the hedge fund
maintains this level of turnover in the fourth
quarter.
Regarding notable position size changes,
Maverick boosted its position in Citigroup by
38% and more than doubled its position in
Google (GOOG). While they still own shares of
the following companies, they trimmed their
stakes by a noticeable margin in VanceInfo
Technologies (VIT), Qualcomm (QCOM),
Skyworks Solutions (SKWS), and DaVita
(DVA).
In Mavericks latest investor letter, they
reveal that their main fund is up 8.2% year to
date while their levered fund is up 17.3%.
View Maverick Capitals Updated

16
Maverick Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
APOLLO GROUP, INC.
HEWLETT PACKARD CO
MARVELL TECHNOLOGY GROUP
CORNING INC
APPLE INC.
PFIZER INC
CITIGROUP INC
EXPEDIA, INC.
ABERCROMBIE & FITCH
GOOGLE INC.
BED BATH & BEYOND INC.
Stanley Black & Decker
WELLPOINT INC.
PROGRESSIVE CP
UNITEDHEALTH GROUP
THE DIRECTV GROUP, INC
TYCO INTL LTD
COMMSCOPE INC
MACY'S INC
DOLLAR GENERAL CORP
COMCAST CORPORATION
LONGTOP FINL TEC
GOLDMAN SACHS
LENDER PROCESSING
ITRON, INC.
INVESCO LTD
GILEAD SCIENCES, INC.
DAVITA INC
COCA COLA ENTRPR INC
ORACLE CORPORATION
LIFELINE SYSTEMS
TEVA PHARMACEUTICAL
CHILDREN'S PLACE RETAIL
LM ERICSSON TELEPHONE
DELL INC.
SOLARWINDS, INC.
COMCAST CORPORATION
AMERICA MOVIL, S.A.B
PERFECT WORLD CO., LTD.
DEVRY INC
HOME INNS & HOTELS MGMT
SKYWORKS SOLUTIONS, INC.
ITAU UNIBANCO BANCO
Ticker
APOL
HPQ
MRVL
GLW
AAPL
PFE
C
EXPE
ANF
GOOG
BBBY
SWK
WLP
PGR
UNH
DTV
TYC
CTV
M
DG
CMCSK
LFT
GS
LPS
FDO
ITRI
IVZ
GR
GILD
DVA
CCE
ORCL
LIFE
TEVA
PLCE
ERIC
DELL
SWI
CMCSA
AMX
PWRD
DV
HMIN
SWKS
ITUB
Put/
Call
% of
Portfolio
4.28%
4.19%
4.13%
4.11%
4.11%
4.00%
3.63%
3.57%
2.89%
2.77%
2.77%
2.74%
2.73%
2.72%
2.59%
2.57%
2.53%
2.41%
2.24%
1.87%
1.76%
1.67%
1.60%
1.58%
1.40%
1.39%
1.38%
1.38%
1.38%
1.38%
1.37%
1.33%
1.33%
1.30%
1.30%
1.24%
1.22%
1.12%
0.99%
0.96%
0.91%
0.90%
0.78%
0.77%
0.69%
Activity
Added 2.55%
New
Added 5.42%
Added 1.64%
Added 1.68%
Cut -7.59%
Added 38.01%
Added 4.12%
New
Added 123.13%
New
Cut -13.02%
Added 1.20%
Added 4.59%
Added 75.11%
Added 29.81%
Cut -4.98%
Added 23.80%
Cut -28.65%
Added 83.53%
Added 23.18%
Added 8.20%
New
Added 26.23%
Cut -31.24%
Added 37.04%
Cut -4.53%
New
Added 3.93%
Cut -49.03%
New
New
New
Added 81.79%
Added 18.33%
Added 21.59%
New
Added 91.76%
Cut -9.22%
New
Cut -2.00%
Cut -11.90%
Cut -26.46%
Cut -73.37%
New
Value x
$1000
$394,095
$385,686
$379,857
$377,905
$377,920
$368,410
$333,831
$328,341
$266,306
$255,234
$254,825
$251,759
$251,376
$250,597
$238,340
$236,377
$232,882
$221,787
$205,727
$172,222
$161,779
$153,948
$146,907
$145,305
$129,100
$127,616
$126,788
$127,231
$127,097
$127,311
$125,955
$122,558
$122,123
$119,333
$119,751
$114,126
$112,411
$103,433
$90,776
$88,070
$83,283
$83,249
$71,527
$71,307
$63,338
# of Shares
7,674,685
9,167,720
21,693,708
20,673,150
1,331,875
21,456,618
85,378,710
11,630,915
6,772,788
485,429
5,870,192
4,108,346
4,438,129
12,007,515
6,788,388
5,678,040
6,340,373
9,342,313
8,913,669
5,887,935
9,510,830
3,912,267
1,016,095
4,372,703
2,923,458
2,084,203
5,972,100
1,725,637
3,569,147
1,844,291
4,063,073
4,564,540
2,615,613
2,262,238
2,455,432
10,403,427
8,667,012
5,992,657
5,020,800
1,651,414
3,245,652
1,691,715
1,444,703
3,449,786
2,619,421

Q3 2010
17
Maverick Capital
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
Company Name
CITIGROUP TANGIBLE DIVIDEND
CAPELLA EDUCATION COMPANY
OWENS CORNING
DIGITALGLOBE INC
IRONWOOD PHARMACEUTICALS INC
SIGNET GRP PLC ADR
INTERACTIVE BROKERS GROUP, INC.
AMDOCS LTD ORD
ROYAL BANK OF SCOTLAND PFD T
MEDIDATA SOLUTIONS, INC.
WINNEBAGO IND INC
ARTIO GLOBAL INVESTORS INC.
KIRKLAND'S, INC.
SOUFUN HOLDINGS LIMITED
HISOFT TECHNOLOGY
ROYAL BANK OF SCOTLAND PFD S
ROYAL BANK OF SCOTLAND PFD L
ROYAL BANK OF SCOTLAND PFD Q
BLUEFLY, INC.
CARDIOVASCULAR SYSTEMS INC
VANCEINFO TECH ADS
ROYAL BANK OF SCOTLAND PFD M
ROYAL BANK OF SCOTLAND PFD N
CHINA NUOKANG BIO-PHARMA
ROYAL BANK OF SCOTLAND PFD F
TOYOTA MTR CP ADS
ADOBE SYSTEMS INCORPORATED
CVS CAREMARK CP
BANK OF NY MELLON CP
AMERICAN PUBLIC EDUCATION, INC.
WHITING PETE CORP
KOHLS CP
VIACOM INC CL B
COVIDIEN LTD
EDUCATION MANAGEMENT
JP MORGAN CHASE CO

Continued
Put/
Ticker
Call
C/PH
CPLA
QCOM
OC
DGI
IRWD
SIG
IBKR
DOX
RBS-PT
MDSO
WGO
ART
KIRK
SFUN
HSFT
RBS-PS
RBS-PL
RBS-PQ
BFLY
CSII
VIT
RBS-PM
RBS-PN
NKBP
RBS-PF
TM
CTXS
ADBE
CVS
BK
APEI
WLL
ESRX
KSS
VIA-B
COV
EDMC
JPM
% of
Portfolio
0.64%
0.62%
0.57%
0.49%
0.43%
0.40%
0.37%
0.28%
0.26%
0.23%
0.21%
0.20%
0.19%
0.17%
0.15%
0.14%
0.10%
0.10%
0.10%
0.09%
0.08%
0.08%
0.05%
0.03%
0.03%
0.00%
Activity
New
Added 21.35%
Cut -88.49%
New
Added 13.36%
Added 309.79%
Added 52.91%
New
New
Added 132.58%
Added 58.89%
Added 4.01%
Added 13.91%
New
New
New
Added 1037.12%
Added 223.60%
Added 229.42%
Unchanged
Unchanged
Cut -94.16%
New
New
Unchanged
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$59,020
$57,310
$52,643
$44,703
$39,664
$37,128
$33,716
$26,035
$24,382
$20,995
$19,626
$18,759
$17,539
$15,296
$13,495
$13,025
$9,343
$9,583
$9,570
$8,093
$7,162
$7,461
$4,413
$2,334
$3,000
$275
# of
Shares
500,000
738,339
1,166,401
1,744,168
1,304,729
3,647,124
1,062,249
1,512,767
850,722
1,250,100
1,022,190
1,800,316
1,146,363
1,103,628
207,040
529,672
591,300
498,350
590,000
3,704,101
1,366,817
230,717
284,900
150,500
600,000
11,500
-
Next Page: Third Point

Q3 2010
18
Dan Loeb
Third Point
Offshore fund has returned 17.9%

annualized since inception
Focuses on event-driven and
distressed plays
Key Takeaways
View his recommended reading list
2%3'4"$565"#$-'
'*+,-.%&'/0)%
!""#$%&!!'()%
;,5$QH-8*1%&;Q2)%
LL9%&LL9)%
2*5+.$51%05H-+%&2096)%
6'I9%<*#E%05H-+%&<(I)%
684%Q#,G-%31+$5+,81?$1+%&6O:)%
/1$8E,%Q81,178,#%&/2Q;)%
3,G#$%9*7B%31$5G>%&39/;)%
!?$E8->-%&!F3I)%'H+-%
!?$587,1%O1+$51,+8*1,#%<5*H"%&!O<)%'H+-%
%
."/,'!"89/%6%/)':&6':;-'
05,1-I8G?%<5*H"%&0I<)%
F,7>T-%&F)%
:$5*4%&:9:)%
;*7,%;*#,%31+$5"58-$-%&;;3)%
9Q%F875*E$N87$-%&9QFI)%
'#,81-%34"#*5,+8*1%U%'5*EH7+8*1%&':')%
D8$J"*81+%Q81,178,#%&D'Q<)%
!EN,17$E%F875*%I$N87$-%&!FI)%
Dan
Loebs Third Point started a

massive new position in Potash (POT) in the
third quarter as its now their top equity long.
Undoubtedly, this was an arbitrage play as POT
received a takeover bid from BHP Billiton
(BHP) at $130 per share. Numerous other
hedge funds in this issue initiated a position in
Potash as well and it was a consensus buy/add
last quarter. However, since Third Point took
this position, there have been numerous
developments as Canada essentially blocked
BHPs bid and then BHP pulled the bid. Each
company has announced large share buybacks
instead. So, if Third Point had purchased
shares of POT with the exclusive thesis of an
arbitrage of the takeover offer, they could
possibly have exited the position, its tough to
say. Many buy-siders agree that Potash is an
Q3 2010
attractive takeover target and there are

numerous potential suitors. Many hedgies feel
that $160-165 is the right price based on POTs
assets. However, given the size of a potential
takeover and potential regulatory/approval
hurdles, things are very much up in the air.
Shares of POT have held up relatively well all
things considered as they still trade around the
$135 level of BHPs offer.
Shifting to other activity from Loebs
hedge fund, Third Point also started a new
position in Apple (AAPL), joining the hundreds
of other hedge funds that own this name. Third
Point also initiated a new stake in CareFusion
(CFN), a stock HFW has labeled a hedge fund
favorite. An in-depth analysis of CFN is found
later in this issue.
Of the positions the hedge fund exited,
TransDigm Group (TDG) was the only one of
any previous real size. The hedge fund also
trimmed positions in CIT Group (CIT), Liberty
Media (LINTA), and Madison Square Garden
(MSG), but still owns shares of all three.
The other main story in Third Points
portfolio is their new ownership of gold via
SPDR Gold Trust (GLD). In previous Offshore
Fund disclosures, Loeb revealed ownership of
gold bullion, so he owns some physical gold as
well. Loeb has initiated this position as part of
a basket of tail-risk hedges.
Lastly, keep in mind that Third Point
owns numerous positions in other asset classes
that the SEC doesnt require disclosure of.
Theyve had exposure to various plays such as
mortgage-backed securities (MBS), as well as
distressed and performing debt.
View Third Points Updated

19
Third Point
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Company Name
POTASH
ALCON INC
AIRGAS INC
HEALTH NET INC
PHH CORP
CIT GROUP INC
MEAD JOHNSON NUTRITION
LIBERTY MEDIA CORPORATION
APPLE INC.
NXP SEMICONDUCTORS N.V.
ASPEN TECHNOLOGY INC
DEPOMED, INC.
NABI BIOPHARMACEUTICALS
ORITANI FINANCIAL CORP.
PHH CORP NOTE 4.000% 4/1
CAREFUSION CORP
XERIUM TECHNOLOGIES
MADISON SQUARE GARDEN
NORTHERN TRUST
VIEWPOINT FINANCIAL GROUP
ABRAXAS PETROLEUM CORP
KKR
BIOFUEL ENERGY CORP.
SIX FLAGS ENTERTAINMENT
EMMIS COMMUNICATIONS
LIGAND PHARMACEUTICALS
ONEIDA FINANCIAL CORP.
EAGLE ROCK ENERGY
AMER INTL GROUP INC
AMEDISYS INC
VANTAGE DRILLING Warrants
NORTHERN TRUST
ALCON INC
ADV MICRO DEVICES
RF MICRO DEVICES, INC.
XEROX CP
PLAINS EXPL&PROD
MACY'S INC
TRANSDIGM GRP INC
Ticker
POT
ACL
ARG
HNT
PHH
CIT
MJN
LINTA
AAPL
NXPI
AZPN
DEPO
NABI
ORIT
PHH
CFN
XRM
MSG
GLD
NTRS
VPFG
ABP
KKR
BIOF
SIX
EMMS
LGND
ONFC
EROC
AIG
AMED
VTG-WS
NTRS
CCE
ACL
AMD
RFMD
XRX
PXP
M
TDG
Put/Call
PUT
PUT
CALL
% of
Portfolio
7.15%
5.79%
5.06%
3.78%
3.66%
3.14%
2.82%
2.72%
2.11%
1.88%
1.80%
1.51%
1.04%
1.01%
0.87%
0.86%
0.85%
0.84%
0.73%
0.72%
0.65%
0.63%
0.63%
0.55%
0.37%
0.26%
0.16%
0.11%
0.03%
0.02%
0.00%
0.00%
0.00%
CALL
Activity
New
Added 16.67%
Added 38.89%
Cut -6.67%
Cut -16.07%
Cut -36.64%
Unchanged
Cut -20.00%
New
New
Added 0.25%
Unchanged
Cut -5.43%
New
Unchanged
New
Cut 0.00%
Cut -20.00%
New
New
Added 81.74%
Unchanged
New
Unchanged
New
Added 48.64%
Unchanged
New
New
New
New
Unchanged
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$144,040
$116,753
$101,925
$76,132
$73,710
$63,271
$56,910
$54,840
$42,562
$37,790
$36,295
$30,419
$20,880
$20,390
$17,512
$17,388
$17,062
$16,872
$14,710
$14,472
$13,030
$12,742
$12,720
$11,102
$7,523
$5,179
$3,172
$2,307
$672
$444
$94
$38
$75
# of Shares
1,000,000
700,000
1,500,000
2,800,000
3,500,000
1,550,000
1,000,000
4,000,000
150,000
3,050,000
3,500,000
6,790,000
4,350,100
2,043,100
15,000,000
700,000
1,294,505
800,000
115,000
300,000
1,408,700
4,801,054
1,200,000
5,578,800
171,127
321,057
2,007,378
305,600
639,780
200,000
200,000
1,875,000
300,000
-
Next Page: Blue Ridge Capital

Q3 2010
20
Blue Ridge Capital
View his recommended reading list
2%3'4"$565"#$-'
A'%&A')%
D,#$,1+%'.,5?,7$H+87,#-%&D9:)%
2$+C#84%&2Q(:)%
ON,1.*$%F81$-%&OD2)%
(H#H#$?*1%!+.#$+87,%&(W(W)%
0$-#,%F*+*5-%&06(!)%
ON,1.*$%31$5G>%&OD!2)%
($N$#%\%;*??H187,+8*1-%&(D(0)%
%
."/,'!"89/%6%/)':&6':;-'
F7I*1,#ET-%&F;I)%
<**G#$%&<//<)%
0$5,E,+,%&0I;)%
F*5G,1%6+,1#$>%&F6)%
31-7*%&36D)%
F*1-,1+*%&F/2)%
'58?$587,%&'9O)%
Griffins Blue Ridge Capital sold

one third of its stake in Apple (AAPL), yet it still
stands as their second largest equity long. Their
top position in JPMorgan Chase (JPM) remains
unchanged. Regarding positions they already
owned but added to, Range Resources (RRC),
Express Scripts (ESRX), and Credicorp (BAP)
garnered new capital from John Griffin and his
team.
The most noticeable adjustment to
Griffins book is a brand new position in BP
(BP). In the wake of the oil spill, Blue Ridge
originally purchased oil driller Ensco (ESV) in
the second quarter as shares were sold off even
though the company had no involvement in the
oil spill. An in-depth analysis of ESV was
featured in last quarters issue of Hedge Fund
Wisdom. Blue Ridge sold its ESV holdings in
the third quarter and has now purchased a
sizable stake in BP. It appears as though theyve
let the smoke and waters clear. While some
hedge funds like Whitney Tilsons T2 Partners
Q3 2010
Classifies investments as catalyst

driven or time arbitrage
Previously was Julian Robertsons
right-hand man at Tiger
Management
Key Takeaways
John
John Griffin
bought into BPs massive sell-off, taking

advantage of the uncertainty, it appears as
though Blue Ridge was a bit more cautious.
While they potentially might have paid higher
prices for their position, they have the added
benefit of less uncertainty surrounding the
company. Another brand new position of Blue
Ridges worth highlighting is Valeant
Pharmaceuticals (VRX).
Of positions Blue Ridge sold completely
out of, McDonalds (MCD) and Google (GOOG)
had previously been the most sizable for the
hedge fund.
And regarding stakes they
trimmed but still own shares of, Blue Ridge sold
partial positions in only a few stocks: CME
Group (CME), Western Union (WU) and Apple
as referenced earlier.
Last quarters issue of Hedge Fund
Wisdom drew attention to Blue Ridges large
position in Crown Castle International (CCI) as
numerous hedge funds are fond of the wireless
tower operators. This stake was highlighted as
Blue Ridge had built it up and this quarter it
remains unchanged as their sixth largest equity
long.
This hedge fund is interesting to track
due to their long-term focus and propensity to
build up larger stakes in companies and hold
them, rather than generating obscene turnover
each quarter. The key is identifying which
companies Blue Ridge classifies as time
arbitrage versus event driven.
They are
obviously more likely to sell-off an event driven
holding after the catalyst occurs while time
arbitrage plays require them to patiently wait as
value is unlocked and assumed.
View Blue Ridge Capitals Updated

21
Blue Ridge Capital

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
JP MORGAN CHASE CO
APPLE INC.
AMAZON.COM, INC.
GOLD MINERS ETF
CROWN CASTLE INTL
BP PLC
DOLLAR TREE STORES, INC.
RANGE RES CORP
TEVA PHARMACEUTICAL
VALEANT PHARMA INTL
DISCOVERY HOLDING CO
THERMO FISHER SCIENT
CIT GROUP INC
BANCO SANTANDER BRASIL
CREDICORP LTD
BLACKROCK INC
COVANTA HLD CP
CME GROUP INC CL A
PFIZER INC
DISCOVERY COMMUNICATIONS
WESTERN UNION COMPAN
LIBERTY GLOBAL, INC.
GOLDMAN SACHS
TD AMERITRADE HOLDING
GEN GROWTH PROP INC
STARWOOD HOTELS&RESORTS
KROGER CO
M G I C INVEST CP
ARES CAPITAL CORPORATION
MASTERCARD INC
LIBERTY STARZ
NETFLIX, INC.
NVR LP
IVANHOE MINES COM NPV
VISA INC.
ECHOSTAR CORPORATION
J CREW GROUP INC.
LULULEMON ATHLETICA INC.
GENPACT LIMITED
INTEROIL CORPORATION
XINYUAN RE CO ADS
P M I GROUP INC
Put/
Ticker Call
JPM
AAPL
AMZN
GDX
CTXS
CCI
BP
DLTR
ESRX
RRC
TEVA
VRX
DISCA
TMO
MSFT
CIT
BSBR
BAP
BLK
CVA
CME
PFE
DISCK
WU
LBTYA
GS
AMTD
GGP
HOT
KR
MTG
ARCC
MA
LSTZA
NFLX
NVR
IVN
V
SATS
JCG
LULU
G
IOC
XIN
PMI
% of
Portfolio
6.48%
5.38%
5.16%
4.74%
4.61%
4.36%
3.20%
3.00%
2.93%
2.91%
2.81%
2.81%
2.69%
2.49%
2.45%
2.43%
2.28%
2.13%
2.11%
2.11%
1.98%
1.89%
1.87%
1.81%
1.77%
1.75%
1.73%
1.69%
1.57%
1.44%
1.42%
1.33%
1.28%
1.28%
1.26%
1.05%
0.96%
0.79%
0.78%
0.78%
0.57%
0.56%
0.56%
0.53%
0.45%
Activity
Unchanged
Cut -35.42%
Unchanged
Added 6.41%
Added 14.29%
Unchanged
New
Unchanged
Added 36.39%
Added 49.17%
Added 3.93%
New
Unchanged
Added 2.01%
Added 11.17%
Unchanged
Unchanged
Added 34.44%
Unchanged
Unchanged
Cut -25.15%
Added 18.33%
Unchanged
Cut -46.03%
Unchanged
Added 122.86%
Unchanged
Cut -6.67%
Cut -14.44%
Unchanged
Added 10.00%
Unchanged
Unchanged
Unchanged
New
Added 18.66%
New
Unchanged
Cut -14.03%
Unchanged
New
Unchanged
Unchanged
Unchanged
Unchanged
Value x
$1000
$418,660
$347,622
$333,438
$306,385
$297,526
$281,843
$206,673
$193,821
$188,907
$187,981
$181,460
$181,638
$173,438
$160,877
$158,450
$156,978
$147,298
$137,819
$136,200
$136,428
$127,881
$121,907
$120,871
$117,064
$114,613
$112,772
$111,758
$109,200
$101,159
$92,705
$91,383
$85,919
$82,880
$82,461
$81,080
$67,537
$61,828
$50,868
$50,276
$50,094
$37,118
$36,169
$35,931
$34,324
$29,378
# of Shares
11,000,000
1,225,100
2,123,000
5,478,000
4,360,000
6,383,750
5,020,000
3,975,000
3,879,000
4,930,000
3,440,000
7,251,038
3,982,500
3,360,000
6,470,000
3,845,610
10,697,000
1,210,000
800,000
8,662,117
491,000
7,100,000
3,165,000
6,625,000
3,720,000
780,000
6,920,000
7,000,000
1,925,000
4,280,000
9,900,600
5,490,000
370,000
1,270,000
500,000
104,300
2,641,100
685,000
2,635,000
1,490,000
830,000
2,040,000
525,000
13,952,933
8,005,000

Q3 2010
22
Blue Ridge Capital

Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
Company Name
PENNYMAC MORTGAGE
GREENLIGHT CAPITAL RE
THERAVANCE, INC.
TESLA MOTORS INC
JPMORGAN CHASE & CO Warrants
GOLUB CAPITAL BDC, INC.
WELLS FARGO & CO NEW
LEVEL 3 COMMUNICATIONS, INC.
IVANHOE ENERGY, INC.
TERADATA CORP
MONSANTO COMPANY
PRIMERICA, INC.
GOOGLE INC.
MCDONALDS CP
MORGAN STANLEY
ENSCO INTL INC

Continued
Put/
Ticker Call
PMT
GLRE
THRX
TSLA
JPM/WS
GBDC
WFC
LVLT
IVAN
TDC
MON
PRI
GOOG
MCD
MS
ESV
% of
Portfolio
0.44%
0.34%
0.19%
0.18%
0.17%
0.16%
0.16%
0.11%
0.06%
Activity
Unchanged
Unchanged
Unchanged
New
Unchanged
Unchanged
Unchanged
New
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$28,338
$22,090
$12,462
$11,733
$10,888
$10,552
$10,048
$7,297
$3,603
# of Shares
1,584,000
882,892
620,000
575,000
933,000
689,655
1,275,100
7,785,000
1,732,037
-
See what top hedge funds have been buying and selling by
subscribing to the most current issue of Hedge Fund Wisdom.
Click here to subscribe
Next Page: Paulson & Co

Q3 2010
23
John Paulson
Paulson & Co
Predicted & profited from the

subprime crisis
Featured in the book The Greatest
Trade Ever
Key Takeaways
View our in-depth look at Paulsons

gold fund
2%3'4"$565"#$-'
!1,E,5B*%'$+5*#$H?%&!';)%
F7!C$$%&FQ3)%
!/2%&!/2)%
0,#$758-%A8*+.$5,"$H+87-%&0(;9)%
<$1=>?$%&<32@)%
(8M$5+>%F$E8,%O1+$5,7+8N$%&(O20!)%
6>?,1+$7%&6KF;)%
'*+,-.%&'/0)%
AF;%6*C+J,5$%&AF;)%
%
."/,'!"89/%6%/)':&6':;-'
344*1%F*M8#%&:/F)%
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<*#E?,1%6,7.-%&<6)%
67.#H?M$5G$5%&6(A)%
F,7$587.%&F!;)%
6"581+%2$4+$#%&6)%
;,-$>-%<$1$5,#%6+*5$-%&;!6K)%
P>,++%P*+$#-%&P)%
While viewing Paulson & Cos collective
holdings, keep in mind that this disclosure

encompasses the positions of numerous
separate hedge funds pursuing different
strategies. For instance, Paulsons Recovery
fund focuses on assets benefiting from an
economic recovery, while Paulsons legacy fund
employs a merger arbitrage strategy. Also, each
quarter there is inevitably discussion about
Paulson & Cos largest disclosed holding: SPDR
Gold Trust (GLD). Market prognosticators use
this information to proclaim that Paulson is an
ardent gold bull, betting on the precious metals
appreciation. However, what many fail to
recognize is that Paulson has numerous fund
share-class offerings denominated in US
dollars, euros, and gold. As such, he has to
own a lot of gold to effectively hedge out the
share-class exposure. While John Paulson has a
gold fund, its purpose is to bet against the US
Q3 2010
dollar via acquiring equity stakes in gold miners

and owning derivatives on gold. You can view
more in-depth information on Paulsons gold
fund here.
Shifting to Paulsons recent quarterly
activity, a few brand new positions jump out.
Firstly, Paulson has taken a position in
Anadarko Petroleum (APC), a company affected
by the Gulf oil spill. On the merger arbitrage
side of things, Paulsons brand new stake in
Potash (POT) is a clear takeover play. But as
referenced earlier in this issue, a bid for the
company has been rescinded.
It will be
interesting to see if Paulson & Co hold on for
potential future suitors or not. Last, but
certainly not least, Paulson also initiated a stake
in AON (AON). An in-depth analysis of AON is
featured later in this issue, as numerous
prominent hedge funds now own shares. Both
POT and AON were consensus buy/adds
amongst the hedge funds profiled in this issue
for the third quarter.
Potentially the most headline-grabbing
activity in Paulsons portfolio is their decision
to sell 16% of their Citigroup (C) stake and 18%
of their position in Bank of America (BAC).
These are undoubtedly recovery plays for the
hedge fund and it simply looks like theyre
taking some profits and reducing position sizes.
Of the positions Paulson sold completely out of,
Goldman Sachs (GS) and Exxon Mobil (XOM)
were two positions he had just newly purchased
the quarter prior but has already exited.
Lastly, Paulson advocated buying stocks
and selling bonds in a recent speech. He is also
bullish on the housing market, calling it the
best time to buy a home in fifty years.
View Paulson & Cos Updated
24
Paulson & Co
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
ANGLOGOLD ASHANTI LT
BANK OF AMERICA CP
CITIGROUP INC
HARTFORD FIN SVC
ANADARKO PETROLEUM
SUNTRUST BANKS
COMCAST CORPORATION
KINROSS GOLD CP
CAPITAL ONE FINANCIA
MYLAN INC
M G M MIRAGE
BOSTON SCIENTIFIC CP
PFIZER INC
WELLS FARGO & CO
HEWITT ASSOC INC A
GOLD FIELDS LTD ADS
N B T Y INC
AMERICAN CAPITAL
CB RICHARD ELLIS GRP
MARINER ENERGY INC
MCAFEE, INC
TALECRIS BIOTHERAPEUTICS
ALCON INC
JPMORGAN CHASE Warrants
BANK OF AMERICA Warrants
POPULAR, INC.
JP MORGAN CHASE CO
MIRANT CORP
NOVELL, INC.
NOVAGOLD RESOURCES, INC
MARSHALL & ILSLEY CORP
REGIONS FINANCIAL CP
CIT GROUP INC
GENZYME CORPORATION
CONSECO INC
BURGER KING HOLDINGS
LEAR CORP.
GEN GROWTH PROP INC
AIRGAS INC
FIRST HORIZON NTL CP
STARWOOD HOTELS
VAIL RESORTS INC
APOLLO GROUP, INC.
Ticker
GLD
AU
BAC
C
HIG
APC
STI
CMCSA
KGC
COF
MYL
MGM
BSX
PFE
WFC
HEW
GFI
NTY
ACAS
CBG
ME
MFE
TLCR
ACL
JPM/WS
BAC/WS
BPOP
JPM
MIR
NOVL
NG
MI
RF
CIT
GENZ
CNO
BKC
LEA
GGP
ARG
FDO
FHN
HOT
MTN
APOL
Put/
Call
% of
Portfolio
17.60%
8.28%
7.88%
7.24%
4.41%
3.34%
3.31%
3.16%
2.72%
2.59%
2.46%
2.16%
2.14%
1.71%
1.70%
1.67%
1.60%
1.46%
1.11%
1.08%
1.06%
1.03%
1.00%
0.99%
0.95%
0.85%
0.85%
0.83%
0.79%
0.78%
0.77%
0.68%
0.61%
0.60%
0.59%
0.59%
0.52%
0.48%
0.45%
0.45%
0.39%
0.38%
0.38%
0.37%
0.36%
Activity
Unchanged
Cut -6.29%
Cut -17.88%
Cut -16.32%
Unchanged
New
Cut -3.29%
Cut -9.09%
Unchanged
Cut -11.76%
Unchanged
Unchanged
Unchanged
Unchanged
Cut -11.43%
New
Unchanged
New
Unchanged
Unchanged
Unchanged
New
Added 100%
Added 40.73%
Unchanged
Unchanged
Added 0.50%
Cut -28.57%
Unchanged
Unchanged
Unchanged
Cut -8.32%
Unchanged
Unchanged
New
Unchanged
New
Added 0.07%
Unchanged
Added 50%
Cut -66.67%
Added 1.66%
Cut -37.9%
Unchanged
Unchanged
Value x
$1000
$4,029,165
$1,895,840
$1,805,519
$1,657,840
$1,009,800
$764,470
$758,903
$723,200
$622,532
$593,250
$564,300
$494,064
$490,400
$391,476
$389,283
$383,268
$367,244
$335,378
$254,042
$246,780
$242,300
$236,300
$228,800
$226,868
$218,556
$194,400
$194,300
$190,300
$181,305
$179,100
$175,414
$155,232
$140,629
$136,385
$134,586
$135,481
$119,400
$109,145
$102,359
$101,925
$88,320
$86,033
$86,182
$84,042
$82,160
# of Shares
31,500,000
41,000,000
137,794,296
424,000,000
44,000,000
13,400,000
29,380,700
40,000,000
33,140,000
15,000,000
30,000,000
43,800,000
80,000,000
22,800,000
15,500,000
7,600,000
24,050,000
6,100,000
43,725,000
13,500,000
10,000,000
5,000,000
10,000,000
1,360,200
18,727,997
30,000,000
67,000,000
5,000,000
18,203,321
30,000,000
20,181,818
22,050,000
19,343,700
3,341,134
1,901,200
24,455,000
5,000,000
1,382,812
6,561,500
1,500,000
2,000,000
7,540,184
1,640,000
2,239,924
1,600,000

Q3 2010
25
Paulson & Co
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
Company Name
ZYMOGENETICS, INC.
LIBERTY MEDIA CORPORATION
STATE STREET CP
SYMANTEC CORPORATION
POTASH CP SASKATCHEW
CAPITAL ONE WARRANTS
B M C SOFTWARE
RANDGOLD RESOURCES
QUADREX CORP
IAMGOLD CORP
NORTHERN TRUST COR
DEX ONE CORP
SUNSTONE HOTEL INV
TERADATA CORP
NETWORK APPLIANCE, INC.
STRATEGIC HOTELS INC
INTL TOWER HILL MINES LTD
BOYD GAMING CORP
QUEST SOFTWARE, INC.
ASHFORD HOSP TR INC
SUPERMEDIA INC
BEAZER HOMES USA INC
MCCLATCHY CO HLD
FELCOR LODGING TR
STARWOOD PROPERTY TRUST
BARRICK GOLD CP
ALBERTO-CULVER CO
P M I GROUP INC
CHENIERE ENERGY, INC
BROCADE COMMUNICATIONS
FELCOR LODG PR A
BEAZER HOMES 7.5% 01/15/13
BEAZER HOMES
SYBASE INC
CASEY'S GENERAL STORES
DEVON ENERGY CP
SPRINT NXTEL CP
HYATT HOTELS CORP
SMITH INTL INC
ODYSSEY HEALTHCARE, INC.
EXXON MOBIL CP
INVENTIV HEALTH, INC.
MACERICH CO
APACHE CP
SONICWALL, INC.
GOLDMAN SACHS
DYNCORP INTL INC.
Q3 2010

Continued
Put/
Ticker
Call
ZGEN
LINTA
STT
SYMC
POT
COF/WS
BMC
GOLD
QUAD
MJN
IAG
NTRS
DEXO
SHO
TDC
NTAP
BEE
THM
BYD
QSFT
AHT
SPMD
BZH
BAC/WS/B
MNI
FCH
STWD
ABX
ACV
PMI
LNG
BRCD
FCH-PA
BZMD
BZH
SY
CASY
DVN
S
H
SII
ODSY
XOM
VTIV
MAC
APA
SNWL
DTV
GS
DCP
% of
Portfolio
0.34%
0.34%
0.33%
0.33%
0.31%
0.25%
0.23%
0.22%
0.22%
0.22%
0.21%
0.21%
0.20%
0.20%
0.16%
0.16%
0.15%
0.14%
0.13%
0.13%
0.12%
0.12%
0.10%
0.10%
0.09%
0.09%
0.09%
0.08%
0.08%
0.08%
0.08%
0.07%
0.05%
0.01%
0.01%
Activity
New
New
Unchanged
New
New
Unchanged
New
Unchanged
New
Cut -58.06%
Unchanged
Unchanged
Unchanged
Unchanged
New
New
Unchanged
New
Unchanged
New
Unchanged
Unchanged
Cut -1.53%
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
New
Unchanged
Unchanged
New
Unchanged
Unchanged
Cut -98.47%
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$78,000
$78,147
$75,320
$75,850
$71,777
$56,295
$52,624
$50,223
$50,317
$51,031
$47,817
$48,240
$45,146
$45,350
$35,668
$35,849
$33,920
$31,500
$29,000
$29,508
$27,150
$27,561
$23,954
$23,800
$19,650
$20,700
$20,784
$18,516
$18,825
$18,350
$18,802
$16,936
$11,242
$3,398
$1,755
# of Shares
8,000,000
5,700,000
2,000,000
5,000,000
500,000
3,992,520
1,300,000
495,000
1,077,000
896,700
2,700,000
1,000,000
3,676,394
5,000,000
925,000
720,000
8,000,000
5,000,000
4,000,000
1,200,000
3,000,000
2,607,504
5,800,000
10,000,000
5,000,000
4,500,000
1,046,000
400,000
500,000
5,000,000
7,461,191
2,900,000
524,100
150,000
90,000
-
26
Tiger Management
View a profile of Tiger Management
2%3'4"$565"#$-'
SH48%'.,5?,+$7.%&S:)%
;,M#$N8-8*1%&;D;)%
0.$5,N,17$%&0P9:)%
%
."/,'!"89/%6%/)':&6':;-'
'587$#81$Z7*?%&';(2)%
$A,>%&3A!K)%
6*#H+8,%&6/!)%
O+,H%W18M,17*%&O0WA)%
0,#8-?,1%31$5G>%&0(F)%
I87BT-%6"*5+81G%<**E-%&IL6)%
I85$70D%&I0D)%
D$58-B%!1,#>+87-%&D96L)%
F,E8-*1%6]H,5$%<,5E$1%&F6<)%
the third quarter, the Tiger

Management investment vehicle disclosed a
portfolio totaling $271 million. Its slightly
unclear as to whether or not Julian Robertson is
actively managing this portfolio or if there is a
team behind these trades. This year it has been
revealed that Tiger Management is essentially
being reborn as a hedge fund investment
platform. But for the time being, they are also
disclosing direct investments in equities to the
SEC.
As such, Hedge Fund Wisdom will
continue to track the movements of this
legendary managers investment vehicle.
In a recent television interview,
Robertson declared his fondness for shares of
Apple (AAPL) and it should come as no surprise
that the company remains Tiger Managements
top holding even though he trimmed 16% of the
position in the quarter. His second largest
holding is Goldman Sachs (GS), a name he
increased his position in by 34%. During Q3,
Robertson cut almost half of his stake in Google
(GOOG), yet it is still his third largest US equity
long.
The Tiger Management hedge fund
started a few new positions in the quarter,
Q3 2010
Mentored the Tiger Cub hedge funds

& seeded other talented up & coming
managers
Featured in the book A Tiger in the
Land of Bulls and Bears
Key Takeaways
For
Julian Robertson
including Theravance (THRX), a position held

by the esteemed Seth Klarman. Robertson also
peculiarly started brand new stakes in
Cablevision (CVC) and Wuxi Pharmatech (WX),
two positions he had sold completely out of just
one quarter prior. But this time around, hes
right back in those names again, which is
interesting. Tiger Management seems fond of
cable service providers with the re-instated
Cablevision position and a 23% increase in their
Time Warner Cable (TWC) stake. One position
Robertson sizably reduced (-70%) but still owns
shares of is Alvarion (ALVR). Of positions
Tiger sold completely out of, Priceline.com
(PCLN) and eBay (EBAY) had previously been
sizable stakes for the firm.
In addition to running Tiger over the
years, Robertson spawned a vast network of
talented hedge fund managers, named Tiger
Cubs for their time spent as analysts and
managing directors at Tiger Management
before heading out to start funds of their own.
The Hedge Fund Wisdom newsletter tracks
many of these managers such as Stephen
Mandels Lone Pine Capital, John Griffins Blue
Ridge Capital, Lee Ainslies Maverick Capital,
Andreas Halvorsens Viking Global, and
Roberto Mignones Bridger Management. Also,
Robertson has himself seeded various
managers, deemed Tiger Seeds. These funds
include Chase Colemans Tiger Global (also
detailed in this newsletter) and Bill Hwangs
Tiger Asia, amongst many others.
View Tiger Managements

27
Tiger Management
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Company Name
APPLE INC.
GOLDMAN SACHS
BEST BUY CO INC
GOOGLE INC.
MASTERCARD INC
VISA INC.
SNAP ON INC
TIME WARNER CABLE
GOLDMAN SACHS
CANADIAN NAT RES
WUXI PHARMATECH ADS
E M C CP
CARDIOME PHARMA
NEXEN INC
CABLEVISION SYSTEM
LCA-VISION INC.
THERAVANCE, INC.
RYANAIR HOLDINGS PLC
DIGITALGLOBE INC
APPLE INC.
SUNCOR ENERGY
ALVARION LTD.
SEALED AIR CP NEW
SONOCO PRODUCTS
CARNIVAL CORP
PRICELINE.COM
FIRST FINL FUND
TALISMAN ENERGY INC
DICK'S SPORTING GOODS
THE DIRECTV GROUP
EBAY INC.
MADISON SQUARE GARDEN
WAL MART STORES
SOLUTIA INC
ITAU UNIBANCO
VERISK ANALYTICS
Ticker Put/Call
AAPL
GS
BBY
CALL
GOOG
MA
V
SNA
TWC
GS
CALL
CNQ
WX
EMC
CRME
NXY
CVC
LCAV
THRX
RYAAY
DGI
AAPL
CALL
SU
ALVR
SEE
SON
CCL
PCLN
FOFI.PK
TLM
DKS
DTV
EBAY
MSG
WMT
CALL
SOA
ITUB
VRSK
% of
Portfolio
12.12%
8.22%
8.20%
6.68%
6.55%
5.79%
5.36%
5.26%
4.96%
4.59%
4.58%
4.53%
4.45%
4.08%
3.96%
3.01%
1.94%
1.37%
1.27%
0.95%
0.75%
0.60%
0.37%
0.27%
0.13%
Activity
Cut -16.38%
Added 34.02%
Cut -25.00%
Cut -46.93%
Cut -8.58%
Cut -9.09%
Cut -14.21%
Added 23.83%
Unchanged
Added 11.84%
New
Unchanged
Added 10.01%
Unchanged
New
Added 6.60%
New
Unchanged
Cut -70.19%
Cut -82.30%
Unchanged
Cut -24.21%
Unchanged
Unchanged
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$36,201
$24,550
$24,498
$19,954
$19,573
$17,303
$15,999
$15,711
$14,819
$13,722
$13,670
$13,526
$13,283
$12,179
$11,838
$8,994
$5,784
$4,098
$3,800
$2,838
$2,230
$1,799
$1,093
$798
$380
# of Shares
127,580
169,800
600,000
37,950
87,380
233,000
344,000
291,000
102,500
396,800
796,621
666,000
2,177,615
605,600
452,000
1,614,796
287,763
133,022
125,000
10,000
68,500
977,665
48,600
23,870
9,950
-
Next Page: Soros Fund Management

Q3 2010
28
Soros Fund Mgmt
Famously broke the Bank of England

with a huge bet against the British
Pound
Renowned global macro hedge fund
Key Takeaways
Author of The Alchemy of Finance
2%3'4"$565"#$-'
86.,5$-%<*#E%05H-+%&O!W)%
I$1E5$*1%&I2I2)%
;$1+H5>#81B%&;0()%
I*J%;.$?87,#%&I/S)%
;*,7.%&;/P)%
;6<%6>-+$?-%&;6<6)%
6$#$7+%6$7+*5%P$,#+.7,5$%&:(D)%
(,=,5E%&(!@)%
'*+,-.%&'/0)%
6,#84%'.,5?,7$H+87,#-%&6(:')%
%
."/,'!"89/%6%/)':&6':;-'
;*M,#+%31$5G>%
A$-+%AH>%&AAK)%
ON,1.*$%F81$-%&OD2)%
'*J$5-.,5$-%W6%I*##,5%AH##%&WW')%
!F9%&!F9)%
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6,1E58EG$%31$5G>%&6I)%
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!/(%&!/()%
;.81,%9$,#%3-+,+$%O1C*5?,+8*1%&;9O;)%
!H+*7.81,%O1+$51,+8*1,#%&!W0;)%
First, a disclaimer: global macro funds
are not particularly useful to track via 13F filing

due to the fact that they move in and out of
positions rapidly and invest across multiple
asset classes. Hedge Fund Wisdom tracks Soros
Fund Management mainly due to reader
demand and the fact that people are always
interested to see what George Soros has been
investing in. But keep in mind also, that Mr.
Soros is not involved in the day-to-day activities
of the hedge fund. Georges son, Robert Soros,
manages the Quantum Fund Endowment for
the firm.
Not to mention, Soros Fund
Management often holds in excess of 800
Q3 2010
George Soros
positions. Many of these positions are in

convertible notes (denoted as **NOTES** in
the table below) and other less liquid securities
that are harder to track via 13F filing. With that
said, Hedge Fund Wisdom will focus on the
latest changes to the hedge funds equity
portfolio as that is the pertinent part of their
book that is easily tracked over time. And in an
effort to extract the most valuable information
pertaining to Soros portfolio, HFW will only
focus on the top 40-50 positions, as those are
the stakes really of any size.
The first noticeable aspect of the hedge
funds portfolio is the fact that they still own
SPDR Gold Trust (GLD) as their top holding,
despite selling 10% of their position in the
quarter. The fund also initiated a new stake in
another gold exchange traded fund, iShares
Gold Trust (IAU) as it appears Soros is slightly
diversifying its gold fund exposure, perhaps for
liquidity or other purposes.
Of Soros recent portfolio, there are two
positions they added to heavily. Soros boosted
its stake in Teva Pharmaceutical (TEVA) by
almost 48,000% (it was a relatively small
position beforehand).
TEVA is now their
seventh largest US equity long position. Also,
Soros
raised
its
stake
in
Verizon
Communications (VZ) to the tune of 13,790%
(again, another previously small position
ratcheted up last quarter). There are a few
other holdings Soros added to in the quarter
(but to a lesser extent than those above),
including: Monsanto (MON), InterOil (IOC),
Plains Exploration & Production (PXP),
Weatherford
International
(WFT),
and
Westport Innovations (WPRT).
View Soros Fund Managements
29
Soros Fund Mgmt

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
SPDR Gold Shares
Monsanto Co.
InterOil Corporation
LINEAR TECH **NOTES**
LAWSON SOFTWARE **NOTES**
Plains Exploration & Production
EPICOR SOFTWARE **NOTES**
Teva Pharmaceutical
Weatherford International Ltd.
JDS UNIPHASE **NOTES**
RF MICRODEVICES **NOTES**
iShares Russell 2000 Index
NovaGold Resources Inc.
Convertible Notes **NOTES**
BLACKBOARD **NOTES**
iShares MSCI Emerging Markets
DIODES INC **NOTES**
EMDEON INC.
1.5%13 **NOTES**
SPDR Gold Shares
RF MICRODEVICES **NOTES**
A D C TELECOM **NOTES**
MENTOR GRAPHICS **NOTES**
SPDR S&P 500
Dendreon Corp.
Kinross Gold Corporation
CERADYNE INC **NOTES**
Apple Inc.
CommScope, Inc.
ORBITAL SCIENCES **NOTES**
iShares COMEX Gold Trust
Verizon Communications Inc.
ARRIS GROUP INC **NOTES**
CenturyLink, Inc.
WESTPORT INNOVATIONS
Allied Nevada Gold Corp.
AT&T, Inc.
Lawson Software, Inc.
Yahoo! Inc.
Mosaic Co.
The Dow Chemical Company
Delta Air Lines Inc.
Pfizer Inc.
Google Inc.
DIRECTV
Ticker
GLD
MON
IOC
LLTC
LWSN
PXP
EPIC
TEVA
WFT
JDSU
RFMD
IWM
NG
CDNS
BBBB
EEM
DIOD
EM
CDNS
GLD
RFMD
ADCT
MENT
SPY
DNDN
KGC
CRDN
AAPL
CTV
ORB
IAU
VZ
ARRS
CTL
WPTFF
ANV
T
LWSN
YHOO
MOS
DOW
DAL
PFE
GOOG
DTV
Put/
Call
PUT
PUT
Call
PUT
Call
% of
Portfolio
8.98%
4.67%
4.11%
3.28%
3.26%
2.70%
2.11%
1.93%
1.83%
1.77%
1.75%
1.72%
1.69%
1.67%
1.65%
1.60%
1.50%
1.42%
1.40%
1.35%
1.25%
1.20%
1.19%
1.15%
1.12%
1.08%
1.07%
1.05%
1.03%
0.98%
0.96%
0.95%
0.93%
0.91%
0.86%
0.82%
0.77%
0.74%
0.72%
0.71%
0.64%
0.64%
0.62%
0.60%
0.59%
Activity
Cut -10.44%
Added 15.96%
Added 18.50%
Unchanged
Unchanged
Added 33.19%
Added 8.77%
Added 47829%
Added 34.59%
Added 54.53%
Cut -62.74%
New
Unchanged
Cut -41.75%
Added 18.7%
New
Cut -5.03%
Added 4.19%
Cut -48.24%
New
Cut -73.84%
Added 14.13%
New
Added 237.5%
New
Cut -0.07%
Added 4.71%
Added 13.43%
Added 39.85%
Added 2025%
New
Added 13790%
New
New
Added 38.93%
Cut -8.07%
Added 255.69%
Added 14.18%
Cut -3.42%
New
New
Added 365%
Added 627%
Added 1541%
Cut -35.24%
Value x
$1000
$600,794
$312,638
$275,295
$219,800
$218,071
$180,858
$141,179
$128,942
$122,701
$118,529
$117,246
$115,425
$112,791
$111,699
$110,631
$106,888
$100,559
$94,848
$93,586
$90,177
$83,525
$80,122
$79,535
$77,038
$74,802
$72,597
$71,634
$70,252
$69,137
$65,295
$64,000
$63,829
$62,236
$60,934
$57,322
$54,887
$51,365
$49,775
$48,267
$47,596
$42,593
$42,963
$41,433
$40,154
$39,513
# of Shares
4,697,008
6,522,804
4,022,422
219,252,000
213,795,000
6,781,315
149,002,000
2,444,400
7,175,522
125,428,000
116,663,000
1,710,000
12,905,142
113,544,000
109,807,000
2,387,500
100,059,000
7,787,218
100,901,000
705,000
81,887,000
80,677,000
76,476,000
675,000
1,816,463
3,863,600
72,085,000
247,584
2,912,272
65,623,000
5,000,000
1,958,546
63,184,000
1,544,193
3,256,910
2,072,215
1,795,982
5,876,666
3,406,300
810,000
1,551,100
3,691,000
2,413,100
76,368
949,153
Continued on Next Page

Q3 2010
30
Soros Fund Mgmt

Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
Company Name
COVANTA HLDG **NOTES**
Exar Corp.
GLOBAL CROSSING **NOTES**
Citi Trends
TECH DATA CORP **NOTES**
Massey Energy Co.
QUALCOMM Incorporated
Popular Inc.
Covanta Holding Corporation
3.25%11 **NOTES**
JPMorgan Chase & Co.
MAP Pharmaceuticals, Inc.
VERIGY LTD **NOTES**
Extreme Networks Inc.
LAZARD LTD.
Amazon.com Inc.
SANDISK CORP **NOTES**
Teradata Corporation
BPZ Resources, Inc.
Lowe's Companies Inc.
MERCURY COMPUTER SYS
FEI CO **NOTES**
CSG Systems International
InterOil Corporation
Coach Inc.
SPDR S&P 500
Health Care Select Sector
Comcast Corporation
Potash Corp. of Saskatchewan
Thermo Fisher Scientific
LAZARD LTD.
Solutia Inc.
Baidu, Inc.
Great Basin Gold Ltd.
EURONET **NOTES**
Cooper Tire & Rubber Co.
Bluefly Inc.
LIBERTY STARZ
Walter Energy, Inc.
Time Warner Cable Inc.
Hospira Inc.
Gilead Sciences Inc.
NEWPORT CORP **NOTES**
Mindray Medical International
United Therapeutics Corp.
Ticker
CVA
EXAR
GLBC
CTRN
TECD
MEE
QCOM
BPOP
CVA
SIRI
JPM
MAPP
VRGY
EXTR
LAZ
AMZN
SNDK
TDC
BPZ
LOW
MRCY
FEIC
CSGS
IOC
COH
SPY
XLV
CMCSA
POT
TMO
LAZ
SOA
BIDU
GBN
EEFT
CTB
BFLY
LSTZA
WLT
TWC
HSP
GILD
NEWP
MR
UTHR

Continued
Put/
Call
Call
Call
Call
Call
Call
% of
Portfolio
0.57%
0.57%
0.54%
0.50%
0.50%
0.49%
0.49%
0.46%
0.46%
0.44%
0.43%
0.42%
0.41%
0.41%
0.40%
0.36%
0.34%
0.34%
0.33%
0.33%
0.31%
0.31%
0.27%
0.26%
0.26%
0.26%
0.25%
0.25%
0.25%
0.24%
0.24%
0.23%
0.23%
0.22%
0.21%
0.21%
0.20%
0.20%
0.20%
0.19%
0.19%
0.18%
0.18%
0.17%
0.16%
Activity
Added 4.85%
Added 64.66%
Unchanged
Added 17.73%
New
Cut -51.18%
Added 190.9%
Added 2076%
Cut -13.11%
Added 0.51%
Added 598%
Unchanged
New
Added 2.10%
New
Added 4402%
New
Cut -25.14%
Cut -14.60%
New
Added 28.9%
Added 1586%
New
New
New
Cut -51.49%
New
Added 29.05%
New
Added 1054%
New
Added 15.35%
Added 140.3%
Cut -7.67%
Unchanged
Added 18.72%
Unchanged
Cut -5.45%
Added 37.04%
Added 282.5%
Added 4003%
Added 160%
New
New
Added 1447%
Value x
$1000
$38,041
$38,136
$36,187
$33,523
$33,283
$32,912
$32,591
$30,807
$31,064
$29,158
$28,579
$27,940
$27,771
$27,264
$26,573
$24,046
$23,063
$22,816
$22,397
$22,123
$20,878
$20,641
$18,121
$17,110
$17,330
$17,131
$17,009
$16,883
$16,565
$16,088
$15,961
$15,190
$15,546
$14,592
$14,061
$13,982
$13,626
$13,401
$13,535
$12,660
$12,867
$12,083
$11,815
$11,089
$10,491
# of Shares
39,319,000
6,366,666
35,900,000
1,384,686
32,590,000
1,061,000
722,311
10,623,200
1,972,300
29,268,000
750,700
1,826,169
26,864,000
8,766,666
757,500
153,100
25,000,000
591,700
5,847,875
992,500
1,735,466
20,236,000
994,000
250,000
403,400
150,100
558,053
933,811
115,000
336,000
455,000
948,209
151,493
5,955,520
14,311,000
712,302
5,924,515
206,550
166,500
234,491
225,700
339,310
12,041,000
375,000
187,300
Next Page: Bridger Management

Q3 2010
31
Bridger Management
Known for his sleuthing abilities on

the short side
2%3'4"$565"#$-'
34"$E8,%&3:'3)%
!##-758"+-%P$,#+.7,5$%&FI9:)%
!7+8N8-8*1%A#8==,5E%&!0DO)%
!?,=*1%&!F@2)%
6*#,5J81E-%&6SO)%
6+5,+,->-%&66K6)%
<5$$1%I*+%&<I/0)%
!7*5E,%0.$5,"$H+87-%&!;/9)%
%
."/,'!"89/%6%/)':&6':;-'
6'I9%6U'%^__%&6'K)%'H+-%
F,-+$57,5E%&F!)%
F,E8-*1%6]H,5$%<,5E$1%&F6<)%
O??H7*5%&A(WI)%
Y'F*5G,1%;.,-$%&Y'F)%
D8-,%&D)%
S>1E.,?%S*5#EJ8E$%&SK2)%
!$+1,%&!30)%
;.81,%9$,#%3-+,+$%O1C*5?,+8*1%&;9O;)%
Y,==%'.,5?,7$H+87,#-%&Y!@@)%
A58-+*#%F>$5-%6]H8MM%&AFK)%
S58G.+%F$E87,#%<5*H"%&SF<O)%
S*1E$5%!H+*%0$7.1*#*G>%&S!0<)%
QH$#%6>-+$?-%&Q6K6)%
D8NH-%&DDW6)%
Mignones
Bridger
Management typically focuses on the health
sector and its very evident upon glancing at
their holdings. The most notable change to
their portfolio in the third quarter was an
increase in their CareFusion (CFN) stake by
271%. As mentioned previously in this issue,
this name was added by numerous other hedge
funds in the quarter and an in-depth analysis of
CFN is found later in this issue of Hedge Fund
Wisdom. And while not a health-play, Bridger
started a sizable brand new position in Expedia
(EXPE) in the quarter as well. This is another
stock that many funds have been buying as well,
as various hedge fund managers have often
Q3 2010
Typically focuses on the healthcare

sector
Utilizes long/short equity and eventdriven strategies
Key Takeaways
Roberto
Roberto Mignone
cited the companys valuable TripAdvisor asset.

Bridger Managements top US equity
long continues to be UnitedHealth Group
(UNH), a position they doubled in size back in
the second quarter. This time around, they
trimmed the stake by 22%. In addition to
health plays, another portfolio theme at Bridger
seems to be waste management services. Two
out of the hedge funds three largest overall
positions are related to this theme: Waste
Connections (WCN) and IESI BFC (BIN).
Other large holdings of theirs include Morgan
Stanley (MS), Pfizer (PFE), and Popular
(BPOP). The rest of the upper half of Bridgers
portfolio remained largely unchanged in the
third quarter.
The only other notable
transactions were partial sales in their Boston
Scientific (BSX) and Genpact (G) positions.
Bridger purchased both of the major
credit card processors back in the second
quarter but sold completely out of both of them
only one quarter later. Of all the equity
positions the hedge fund exited last quarter,
Mastercard (MA) was the most sizable.
However, Bridgers largest absolute sale came
in puts on the S&P 500 exchange traded fund
(SPY). Bridger bought a massive put position
on the market indices in the second quarter but
promptly sold it in the third quarter, exiting
their hedge or bearish market bet.
Prior to founding Bridger Management,
Mignone co-founded Blue Ridge Capital with
John Griffin, another hedge fund profiled
earlier in this issue. Mignone also worked at
Julian Robertsons Tiger Management and
received both his undergraduate degree and
MBA from Harvard.
View Bridger Managements
32
Bridger Management
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
UNITEDHEALTH GROUP
WASTE CONNECTIONS
SAMES CORPORATION
CAREFUSION CORP
PFIZER INC
POPULAR, INC.
MORGAN STANLEY
GENPACT LIMITED
CENTENE CORP
HYATT HOTELS CORP
PALL CP
CARDINAL HEALTH INC
HERTZ GLOBAL HOLDING
EXPEDIA, INC.
BOSTON SCIENTIFIC CP
AVIS BUDGET GROUP, I
STATE STREET CP
GOOGLE INC.
MARRIOT INT CL A
ELECTRONIC ARTS INC.
ALLSCRIPTS HEALTHCARE
NATIONAL CINEMEDIA, INC.
MOBILE TELSYS OJSC
US AIRWAYS GROUP INC
FOREST LABS CL A
ACTIVISION, INC.
DAVITA INC
ONYX PHARMACEUTICALS, INC.
ISTAR FINL INC
PENNYMAC MORTGAGE
REGAL ENTERTAINMENT
AERCAP HOLDINGS N.V.
AMAZON.COM, INC.
A M R CP
SYNOVUS FINL CP
DOLLAR THRIFTY AUTO
K12 INC
XENOPORT, INC.
MEDIFAST INC
KAPSTONE PAPER & PACKAGING
CARDIOME PHARMA
PRINCETON REVIEW, INC
Ticker Put/Call
UNH
WCN
BIN
CFN
PFE
BPOP
MS
G
CNC
H
PLL
CAH
HTZ
EXPE
BSX
CAR
STT
GOOG
MAR
ERTS
MDRX
NCMI
MBT
LCC
GILD
FRX
ATVI
DVA
ONXX
SFI
PMT
RGC
AER
AMZN
AMR
SNV
DTG
PUT
LRN
XNPT
BAC/WS
MED
KS
CRME
REVU
ALLERGAN
AGN
% of
Portfolio
6.29
5.65
4.46
4.05
3.86
3.81
3.64
3.43
3.33
3.32
3.22
3.13
2.78
2.67
2.65
2.61
2.52
2.34
2.12
2.12
2.0
1.97
1.95
1.64
1.6
1.56
1.47
1.39
1.35
1.34
1.17
1.12
1.02
0.98
0.97
0.96
0.94
0.9
0.84
0.73
0.72
0.7
0.58
0.48
0.47
Activity
Cut -22.71%
Cut -2.43%
Cut -7.06%
Added 272%
Unchanged
Added 0.00%
Unchanged
Cut -33.61%
Added 0.46%
Unchanged
Added 6.09%
Added 13.22%
Cut -11.50%
New
Cut -10.15%
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
New
Added 2065%
Unchanged
Cut -36.17%
Unchanged
Cut -58.33%
New
Added 15.25%
Cut -51.83%
Added 29.8%
Unchanged
Unchanged
Cut -9.99%
New
Unchanged
Unchanged
New
Unchanged
Added 42.9%
Unchanged
Cut -42.95%
Added 24.4%
Unchanged
Added 33.33%
Added 20%
Value x
$1000
$106,208
$95,488
$75,354
$68,310
$65,160
$64,258
$61,421
$57,849
$56,262
$56,085
$54,394
$52,864
$46,861
$45,168
$44,749
$44,100
$42,556
$39,434
$35,830
$35,773
$33,708
$33,240
$32,907
$27,750
$27,064
$26,291
$24,886
$23,470
$22,810
$22,601
$19,679
$18,958
$17,194
$16,491
$16,302
$16,140
$15,859
$15,149
$14,220
$12,317
$12,074
$11,769
$9,760
$8,160
# of Shares
3,025,000
2,407,669
3,292,000
2,750,000
3,795,000
22,158,081
2,488,700
3,262,780
2,385,000
1,500,000
1,306,300
1,600,000
4,425,000
1,600,000
7,300,000
3,785,374
1,130,000
75,000
1,000,000
2,175,000
1,825,000
1,856,969
1,550,000
3,000,000
760,000
850,000
2,300,000
340,000
864,685
7,385,965
1,100,000
1,445,000
1,453,388
105,000
2,600,000
6,560,800
316,300
521,823
2,000,000
1,900,700
445,044
969,399
1,600,000
4,000,000
$7,984
120,000

Q3 2010
33
Bridger Management
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
Company Name
CASELLA WASTE SYSTEMS, INC.
CRUCELL NV
BOSTON BEER CO INC
ORCHID CELLMARK INC.
PHARMASSET, INC.
SOLARWINDS, INC.
STRATASYS, INC.
IRONWOOD PHARMACEUTICALS
GREEN DOT CORP
AFFYMAX, INC.
ACORDA THERAPEUTICS, INC.
MTR GAMING GROUP, INC.
MADISON SQUARE GARDEN, INC.
WYNDHAM WORLDWIDE
BRISTOL MYERS SQIBB
JAZZ PHARMACEUTICALS, INC.
WONDER AUTO TECHNOLOGY
AFFYMAX, INC.
SPDR S&P 500
VIVUS, INC.
JP MORGAN CHASE CO
WRIGHT MEDICAL GROUP
CHINA REAL ESTATE INFO
AETNA INC. NEW
FUEL SYSTEMS SOLUTIONS
MASTERCARD INC
IMMUCOR, INC.
VISA INC.
Ticker
CWST
CRXL
SAM
ORCH
VRUS
SWI
SSYS
IRWD
GDOT
AFFY
ACOR
MNTG
MSG
WYN
BMY
JAZZ
WATG
AFFY
SPY
VVUS
JPM
WMGI
CRIC
AET
FSYS
MA
BLUD
V

Continued
Put/Call
% of
Portfolio
0.45
0.38
0.36
0.36
0.31
0.31
0.26
0.25
0.22
0.15
0.11
0.03
PUT
PUT
Activity
Added 4.91%
Unchanged
Unchanged
Unchanged
Added 29.63%
New
New
Added 169.2%
New
Cut -18.89%
New
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$7,533
$6,486
$6,085
$6,023
$5,153
$5,178
$4,435
$4,174
$3,636
$2,556
$1,912
$506
# of Shares
1,793,507
195,000
91,000
3,962,179
175,000
300,000
160,000
410,000
75,000
429,496
57,899
292,739
-
Next Page: Omega Advisors

Q3 2010
34
Leon Cooperman
Omega Advisors
Has returned 16% annualized

over 18 years
Prior to founding Omega, he spent 25
years at Goldman Sachs and was
Chief Executive Officer of Goldmans
Asset Management division
Key Takeaways
2%3'4"$565"#$-'
/?187,5$%&/;9)%
S,#RF,5+%&SF0)%
LL9%&LL9)%
A,1B%*C%2$J%K*5B%F$##*1%&AL)%
6858H-%:F%9,E8*%&6O9O)%
F,G$##,1%P$,#+.%6$5N87$-%&F<(2)%
F875*-*C+%&F6Q0)%
;8-7*%6>-+$?-%&;6;/)%
05,1-*7$,1%&9O<)%
%
."/,'!"89/%6%/)':&6':;-'
I$#+,%!85#81$-%&I!()%
A,1B%*C%!?$587,%&A!;)%
0$##,M-%&0(!A)%
6+,+$%6+5$$+%&600)%
9*G$5-%;*??H187,+8*1-%&9<)%
0*J$5%<5*H"%&0S<')%
$A,>%&3A!K)%
;,E$17$%I$-8G1%6>-+$?-%&;I26)%
3,-+?,1%L*E,B%&3L)%
;*?7,-+%&;F;6!)%
058?M#$%2,N8G,+8*1%&09FA)%
!H+*1,+8*1%&!2)%
'$5C$7+%S*5#E%&'S(I)%
2*5+.-+,5%9$,#+>%Q81,17$%&29Q)%
6+$$#%I>1,?87-%&60(I)%
he most significant move in the

portfolio of Leon Coopermans Omega Advisors
involves Teva Pharmaceutical (TEVA), a
position they increased their position size in by
56% (its now their eighth largest holding).
Omega joins the ranks of other hedge funds
purchasing TEVA shares in the third quarter,
including Soros Fund Management. Other
significant maneuvers across Coopermans
equity book include almost a 200% increase in
his Plains Exploration & Production (PXP)
position. Regarding PXP specifically, many
buy-siders have argued that when purchasing it
Q3 2010
you get the companys core assets and then are

essentially getting the deepwater Gulf of Mexico
assets and its 23% stake in McMoRan
Exporation (MMR) for free.
Additionally,
Cooperman
added
massively to his previously miniscule stake in
3M (MMM), boosting his position size by over
937%.
Coopermans top five equity longs
remain largely unchanged in the third quarter
with Atlas Energy (ATLS), SLM (SLM), Linn
Energy (LINE), Atlas Pipeline Partners (APL),
and KKR Financial Holdings (KFN).
Cooperman is the only hedge fund
manager tracked in this issue holding SLM so
its worth examining the investment thesis
there. Jon Jacobson of Highfields Capital
(previously of Harvards endowment) has cited
his fondness for SLM due to the transition to a
fee-based business with a great management
team. While he admits this is a risky play, he
feels it is undervalued and worth between $1525 in a run-off scenario (shares currently trade
around $11).
In the wake of the tragic Gulf oil spill in
the second quarter, Leon Coopermans firm
exited its entire stake in driller Transocean
(RIG). Yet now that there is less uncertainty
surrounding the name, theyve added it back as
a new position in the third quarter... funny how
that works. Regarding stocks Omega sold off
entirely in the third quarter, two had just been
purchased in the second quarter but only had a
short stay in the portfolio, having already been
disposed of: Rogers Communications (RG) and
Trimble Navigation (TRMB).
View Omega Advisors Updated

35
Omega Advisors
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
SLM CORPORATION
ATLAS AMERICA, INC.
LINN ENERGY, LLC
KKR FINANCIAL CORP.
TEVA PHARMACEUTICAL
ATLAS PIPELINE PTNRS
UAL CORPORATION
XL CAPITAL LTD
ENERGY XXI (BERMUDA)
BROADRIDGE FIN SOL
PLAINS EXPL&PROD
WELLPOINT INC.
M G I C INVEST CP
ETRADE FINANCIAL CORP
FORD MOTOR CO
OMNICARE INC
3M COMPANY
STREETTRACKS GOLD TRUST
PACTIV CORP
SPDR LEHMAN HYB ETF
GIVEN IMAGING LTD.
WILLIAMS COS
DOMTAR CORP NEW
WAL MART STORES
MCDONALDS CP
LINCOLN NATL CP
DENBURY RES INC
CABLEVISION SYSTEM
LORILLARD, INC
ACE LTD
VALIDUS HOLDINGS LTD
JP MORGAN CHASE CO
DISH NETWORK CORP
GEN GROWTH PROP INC
REGAL ENTERTAINMENT
YAHOO! INC.
UNITEDHEALTH GROUP
BANK OF NY MELLON CP
KOHLS CP
KKR
APOLLO INVESTMENT
CISCO SYSTEMS, INC.
MAGELLAN HEALTH
WELLS FARGO & CO
SIRIUS SATELLITE RADIO INC.
Ticker
SLM
ATLS
LINE
KFN
TEVA
APL
UAL
XL
EXXI
BR
PXP
WLP
MTG
ETFC
F
OCR
MMM
GLD
PTV
JNK
GIVN
WMB
UFS
WMT
MCD
LNC
DNR
CVC
LO
ACE
VR
JPM
DISH
GGP
RGC
YHOO
UNH
BK
KSS
KKR
AINV
CSCO
MGLN
WFC
SIRI
Put/
Call
% of
Portfolio
5.73
5.54
4.23
3.52
3.17
2.77
2.77
2.76
2.63
2.44
2.43
2.38
2.37
2.15
2.06
1.98
1.97
1.92
1.73
1.73
1.45
1.45
1.44
1.41
1.38
1.35
1.35
1.3
1.25
1.19
1.17
1.13
1.08
1.08
1.06
1.04
1.04
0.98
0.95
0.93
0.92
0.89
0.87
0.86
0.82
Activity
Added 0.97%
Cut -0.47%
Cut -3.85%
Added 0.08%
Added 56.16%
Added 8.12%
Added 130.72%
Added 4.05%
Cut -0.03%
Cut -0.70%
Added 191.38%
Unchanged
Cut -1.02%
Cut -0.34%
Cut -0.55%
New
Added 937.26%
Cut -1.13%
Unchanged
Unchanged
Added 2.92%
Cut -20.00%
Cut -0.75%
New
Cut -2.20%
Unchanged
Added 37.40%
Cut -3.31%
Cut -11.23%
Unchanged
Unchanged
Added 2.38%
Added 43.37%
Cut -3.89%
Added 1.95%
Cut -41.32%
Cut -35.82%
New
Cut -1.51%
New
Cut -2.51%
New
New
Added 36.35%
New
Value x
$1000
$204,672
$197,808
$151,113
$125,790
$113,057
$98,912
$98,783
$98,742
$93,882
$87,158
$86,856
$85,045
$84,562
$76,686
$73,675
$70,876
$70,244
$68,547
$61,696
$61,663
$51,850
$51,817
$51,360
$50,309
$49,363
$48,163
$48,070
$46,265
$44,523
$42,493
$41,847
$40,450
$38,430
$38,568
$37,935
$37,094
$37,110
$34,884
$34,026
$33,357
$32,918
$31,819
$31,188
$30,799
$29,421
# of Shares
17,720,500
6,906,691
4,728,201
14,326,867
2,143,264
5,639,218
4,175,125
4,558,737
4,062,380
3,811,000
3,256,700
1,501,507
9,161,600
5,263,310
6,019,200
2,968,000
810,100
535,900
1,870,700
1,541,200
2,880,556
2,711,508
795,300
940,000
662,500
2,013,500
3,025,200
1,766,517
554,390
729,500
1,587,500
1,062,800
2,000,500
2,472,300
2,891,400
2,617,800
1,056,976
1,335,000
645,907
3,146,887
3,217,800
1,452,900
660,200
1,226,300
24,517,500

Q3 2010
36
Omega Advisors
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
Company Name
EXXON MOBIL CP
P M I GROUP INC
VODAFONE GRP PLC
TRANSOCEAN INC
INTL PAPER
THE TRAVELERS CO
AES CORPORATION
RELIANT ENERGY INC
SELECT MEDICAL HOLDINGS
CARNIVAL CORP
GOLDMAN SACHS
MCMORAN EXPLOR CO SC
IBM
ALTISOURCE PORTFOLIO
UNITED RENTALS INC
CHINA YUCHAI INTL LT
ADC TELECOM
THL CREDIT, INC.
PEPSICO INC
TIME WARNER INC
BEST BUY CO INC
LIBERTY MEDIA
APPLE INC.
AXIS CAP HLDGS LTD
N B T Y INC
RESOURCE AMERICA, INC.
CENTER BANCORP, INC.
CITIGROUP INC
ICONIX BRAND GROUP, INC.
DEAN FOODS CO
CHARMING SHOPPES, INC.
CASUAL MALE RETAIL GROUP
MOODY'S CORP
TEREX CP
SMURFIT-STONE CONTAINER
DOMINOS PIZZA INC
MULTIMEDIA GAMES, INC.
HOT TOPIC, INC.
JAKKS PACIFIC, INC.
SKECHERS USA INC
CONSTELLATION BRD A
SELECT COMFORT CORP

Continued
Ticker
XOM
PMI
MSFT
VOD
RIG
SWK
IP
TRV
AES
RRI
SEM
CCL
DTV
GS
MMR
IBM
ASPS
URI
CYD
ADCT
TCRD
PEP
TWX
BBY
LCAPA
AAPL
AXS
NTY
REXI
CNBC
C
ICON
DF
CHRS
CMRG
MCO
TEX
SSCC
DPZ
MGAM
HOTT
JAKK
SKX
STZ
SCSS
Put/Call
% of
Portfolio
0.82
0.81
0.79
0.74
0.74
0.71
0.7
0.62
0.59
0.57
0.56
0.54
0.53
0.53
0.49
0.47
0.42
0.36
0.36
0.36
0.35
0.33
0.32
0.29
0.29
0.29
0.27
0.22
0.19
0.12
0.11
0.1
0.09
0.08
0.08
0.08
0.07
0.07
0.07
0.05
0.05
0.03
0.03
0.01
0.01
Activity
Cut -39.90%
Unchanged
New
Unchanged
New
Cut -0.88%
Cut -28.15%
Unchanged
Cut -59.58%
Cut -9.63%
Cut -1.19%
Unchanged
Unchanged
New
New
New
Unchanged
New
Added 257.58%
Cut -8.98%
Unchanged
Cut -2.32%
Added 59.57%
New
New
New
Cut -33.17%
Cut -4.93%
Unchanged
New
Added 32.68%
Cut -58.86%
Cut -14.22%
Added 43.62%
Cut -22.41%
New
Cut -91.01%
New
Cut -32.18%
Cut -3.90%
Cut -6.12%
Cut -40.50%
Added 672.10%
Cut -57.53%
New
Value x
$1000
$29,219
$29,087
$28,220
$26,368
$26,359
$25,511
$24,976
$22,090
$21,202
$20,277
$20,112
$19,146
$18,985
$18,911
$17,554
$16,754
$15,125
$12,877
$12,710
$12,837
$12,369
$11,727
$11,494
$10,285
$10,412
$10,357
$9,485
$7,840
$6,788
$4,191
$3,969
$3,622
$3,319
$2,818
$2,811
$2,748
$2,613
$2,330
$2,382
$1,658
$1,755
$1,056
$1,117
$371
$269
# of Shares
472,876
7,925,600
1,152,300
1,062,800
410,000
416,300
1,148,300
424,000
1,868,057
5,711,700
2,612,000
501,400
456,038
130,800
1,020,000
124,900
485,700
867,700
664,409
1,013,200
1,050,000
176,500
375,000
251,900
200,000
36,500
287,960
142,600
1,195,000
545,000
1,015,000
206,960
325,030
800,563
688,969
110,000
114,000
126,833
180,207
448,040
292,994
59,872
47,538
20,952
39,675

Q3 2010
37
Omega Advisors
Rank
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
Company Name
1-800 FLOWERS.COM, INC.
KENNETH COLE PROD IN
SALLY BEAUTY HLDG
GAMESTOP CORP
JAMBA, INC.
TOWER GROUP, INC.
NORTHSTAR RLTY FIN
SUPERVALU INC
HIMAX TECHNOLOGIES, INC.
EBAY INC.
AMERICAN APPAREL INC
STEEL DYNAMICS, INC.
PERFECT WORLD CO., LTD.
MOLSON COORS CO CL B
TRIMBLE NAVIGATION
ROGERS COMMUNICATIONS
TOWN SPORTS INTL.
BANK OF AMERICA CP
TELETECH HOLDINGS, INC.
DELTA AIR LINES
CHARM COMMUNICATIONS
AMERICAN EAGLE OUTFITTERS
CONTL AIRLINES CL B
EASTMAN KODAK CO
STATE STREET CP
COMCAST CORPORATION
AUTONATION INC
CADENCE DESIGN SYSTEMS
TELLABS, INC.

Continued
Ticker
FLWS
KCP
SBH
GME
JMBA
TWGP
NRF
SVU
HIMX
EBAY
APP
STLD
PWRD
TAP
TRMB
RCI
CLUB
BAC
TTEC
DAL
CHRM
AEO
CAL
EK
STT
CMCSK
AN
CDNS
TLAB
Put/
Call
% of
Portfolio
0.01
0.01
0.01
0
0
Activity
Added 373.24%
Added 538.90%
Cut -69.30%
Cut -99.94%
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$469
$324
$379
$2
$122
# of Shares
248,360
19,429
33,817
93
55,727
-
Next Page: Shumway Capital Partners

Q3 2010
38
Shumway Capital
2%3'4"$565"#$-'
;8+8G5*H"%&;)%
'587$#81$Z7*?%&';(2)%
6'I9%<*#E%05H-+%&<(I)%
0,5G$+%&0<0)%
A'%&A')%
P$J#$++R',7B,5E%&P'V)%
2OO%P*#E81G-%&2OPI)%
'*+,-.%&'/0)%
;D6%;,5$?,5B%&;D6)%
6,1E8-B%&62IL)%
<$1=>?$%&<32@)%
%
."/,'!"89/%6%/)':&6':;-'
A,4+$5%O1+$51,+8*1,#%&A!:)%
0$N,%'.,5?,7$H+87,#%&03D!)%
3]H8184%&3VO:)%
08?$%S,51$5%&0S:)%
L5,C+%Q**E-%&LQ0)%
($11,5%&(32)%
Q5$$"*5+%F7F*5,1%&Q;:)%
!?$58"58-$%Q81,178,#%&!F')%
2$+C#84%&2Q(:)%
0I%!?$58+5,E$%&!F0I)%
6858H-%:F%9,E8*%&6O9O)%
F,-+$57,5E%&F!)%
;8-7*%6>-+$?-%&;6;/)%
I9%P*5+*1%&IPO)%
Capital Partners portfolio

can be summed up in one word: turnover. The
hedge fund started a bevy of brand new
positions and completely exited other names en
masse. The biggest story in Shumways equity
book is their position in Apple (AAPL). They
increased their position by 168% and it is now
the firms top holding. At the same time,
Shumway also boosted its stake in Las Vegas
Sands (LVS) by 85% (now their second largest
position). Rounding out the third and fourth
largest stakes in the portfolio, Shumway
Q3 2010
Previously one of Julian Robertsons

right-hand men at Tiger Management
Received his MBA from Harvard
Business School & undergraduate
degree from the University of Virginia
Key Takeaways
Shumway
Chris Shumway
initiated brand new positions in Citigroup (C)

and Priceline.com (PCLN). Of Shumways top
eleven positions, five of them are brand new.
The rest of these new additions include the
SPDR Gold Trust (GLD), Target (TGT), and BP
(BP). The hedge fund also added shares of
Hewlett-Packard (HPQ), a somewhat beaten
down tech bellwether.
Like numerous other prominent hedge
funds this past quarter, Shumway bought brand
new stakes in Potash (POT), most likely to play
the takeover arbitrage. But if you look closely at
their portfolio, youll see that Shumway actually
holds numerous potential merger arbitrage
related plays such as Air Products & Chemicals
(APD), Genzyme (GENZ), and Alcon (ACL) as
well.
If you were to characterize the hedge
funds holdings, momentum stocks would
certainly come to mind.
Shumways
performance has been subpar this year so you
almost have to wonder if theyre starting to
chase the hot stocks in hopes of riding waves
back into the black.
By far the most important recent
development at Shumway comes not from a
new investment, but rather a shake-up amongst
its investment managers. Chris Shumway, who
founded the hedge fund in 2002, recently
announced he will relinquish duties as Chief
Investment Officer and will slide into a less
active CEO role. Tom Wilcox, Shumways head
of equities, will take over the investment
management duties. Arguably, not a lot will
change with regards to investment process as
Wilcox has largely been running the show
behind the scenes the past two years.
View Shumway Capitals Updated
39
Shumway Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
APPLE INC.
CITIGROUP INC
PRICELINE.COM
PFIZER INC
LAS VEGAS SANDS CORP
BAIDU.COM, INC.
TARGET CP
AIR PRODUCTS CHEM
UNION PACIFIC
BP PLC
ILLUMINA, INC.
HEWLETT PACKARD CO
EL PASO CORPORATION
NII HOLDINGS, INC.
P N C FIN SVCS GR
CVS CAREMARK CP
SANDISK CORPORATION
GENZYME CORPORATION
DOLLAR GENERAL CORP
UNIVERSAL HLTH SVC B
LIVE NATION, INC.
YUM BRANDS INC
NOVO NORDISK A S
ALCON INC
ISHARES MSCI E.M.I.F
CITIGROUP INC. Unit
SANOFI-AVENTIS SA
AIRGAS INC
MCAFEE, INC
MERCADOLIBRE, INC.
NOVARTIS AG ADS
APACHE CP
SHIRE PLC
COMPANHIA BRASIL ADS
C S X CP
MAKEMYTRIP
PIONEER NATURAL RES
WARNER CHILCOTT
EQUINIX NOTES 2.500% 4/1
WILLIAMS COS
E M C CP
Ticker
AAPL
C
PCLN
PFE
LVS
BIDU
GLD
TGT
APD
UNP
BP
ILMN
HPQ
EP
NIHD
POT
PNC
CVS
POT
SNDK
GENZ
DG
UHS
LYV
YUM
MJN
NVO
ACL
EEM
C/PH
SNY
ARG
MFE
MELI
NVS
APA
SHPGY
CBD
CSX
MMYT
PXD
WCRX
EQIX
WMB
EMC
Put/Call
PUT
PUT
PUT
% of
Portfolio
11.49%
8.74%
8.02%
7.96%
7.71%
7.63%
5.91%
2.95%
2.57%
2.56%
2.55%
2.48%
2.08%
1.98%
1.98%
1.97%
1.94%
1.94%
1.92%
1.49%
1.42%
1.12%
1.10%
1.02%
0.99%
0.98%
0.98%
0.96%
0.61%
0.57%
0.52%
0.50%
0.48%
0.47%
0.46%
0.31%
0.28%
0.23%
0.21%
0.20%
0.16%
0.15%
0.14%
0.09%
0.03%
Activity
Added 168.42%
New
New
Added 51.43%
Added 85.49%
Cut -7.33%
New
New
Cut -22.64%
Cut -25.97%
New
Cut -15.77%
New
Cut -23.97%
New
New
Cut -22.27%
New
New
New
New
Unchanged
Cut -59.56%
Cut -6.19%
New
New
Cut -7.54%
New
New
New
New
New
New
Cut -51.44%
New
New
New
New
New
New
New
New
Cut -76.70%
New
New
Value x
$1000
$516,367
$392,543
$360,289
$357,824
$346,605
$342,754
$265,638
$132,482
$115,398
$114,895
$114,754
$111,665
$93,266
$88,863
$89,083
$88,423
$87,231
$87,023
$86,424
$66,966
$63,819
$50,275
$49,388
$45,721
$44,466
$43,840
$44,160
$43,321
$27,556
$25,563
$23,288
$22,652
$21,709
$21,338
$20,761
$13,763
$12,384
$10,532
$9,272
$8,805
$7,356
$6,732
$6,458
$4,164
$1,336
# of Shares
1,819,797
100,652,169
1,034,304
20,840,044
9,945,623
3,340,029
2,076,756
2,479,088
1,393,355
1,404,586
2,787,314
2,269,610
2,216,926
7,177,916
2,167,474
613,878
1,680,427
2,765,257
600,000
1,827,167
901,528
1,718,796
1,270,920
4,627,662
965,400
770,332
448,600
259,733
615,500
216,566
700,385
333,368
459,355
295,625
360,000
140,783
184,065
152,594
167,600
227,469
113,111
300,000
12,000,000
217,901
65,800

Q3 2010
40

Continued
Shumway Capital
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
Company Name
FREEPORT MCMORAN B
SIRIUS SATELLITE RADIO INC.
KB HOME
CISCO SYSTEMS, INC.
TIME WARNER INC
RADIOSHACK CORP
AMERICAN EAGLE OUTFITTERS
HANSEN NATURAL
TD AMERITRADE
D R HORTON INC
LENNAR CP CL A
GEN DYNAMICS CP
NETFLIX, INC.
BAXTER INTL INC
KRAFT FOODS INC
EQUINIX, INC.
MASTERCARD INC
AMERIPRISE FINANCIAL
TEVA PHARMACEUTICAL
CEPHALON, INC.
PULTE HOMES, INC.
Ticker
FCX
SIRI
KBH
CSCO
TWX
RSH
AEO
HANS
AMTD
DHI
LEN
GD
NFLX
BAX
KFT
EQIX
MA
AMP
TEVA
CEPH
PHM
WFC
Put/Call
% of
Portfolio
CALL
Activity
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
# of Shares
-
Next Page: Fairholme Capital

Q3 2010
41
Fairholme Capital
Bruce Berkowitz
Named Morningstars Fund Manager
of the Decade
Manages over $10 billion and runs a
highly concentrated portfolio, making
him ideal to track
Key Takeaways
2%3'4"$565"#$-'
<$1$5,#%3#$7+587%&<3)%
%
0%,&1%,'4"$565"#$'7#-'
A'%&A')%
P$5+=%<#*M,#%&P0@)%
;*?7,-+%&;F;6!)%
!?$587,1%O1+$51,+8*1,#%<5*H"%&'5$C$55$E)%
;*?7,-+%&;F;6L)%
I,8#>%Y*H51,#%;*5"%&IY;/)%
ruce Berkowitzs Fairholme Capital

has been betting on an economic and financial
system recovery as evidenced by his portfolio
full of previously distressed financial names.
Fairholmes top three holdings remain
unchanged with American International Group
(AIG), Citigroup (C), and Goldman Sachs (GS).
Fairholme owns 24% of the outstanding stock in
AIG, 38% of the mandatory convertible bonds
and other debt instruments. In total, Berkowitz
has invested over $1.8 billion into the company,
more than 10% of his assets under management
(AUM). You can view the companys plan for a
road to recovery here.
The most notable maneuver in
Berkowitzs portfolio in the third quarter was an
increase in his Morgan Stanley (MS) position,
boosting it by 123%. He also added marginally
to his Bank of America (BAC) and CIT Group
(CIT) holdings. Berkowitz only started one new
position in the quarter: General Electric (GE).
Regarding positions Fairholme reduced,
only Humana (HUM) really jumps out as it was
cut 73%. It seems the firm was trimming all
health related plays as it also sold 21% of its
stake in Wellcare Health Plans (WCG) as well.
Last quarters issue of Hedge Fund Wisdom
Q3 2010
drew attention to the fact that Berkowitz was

reducing his stakes in Hertz (HTZ) and
Comcast (CMCSA). This time around, he
continued to sell these names and exited them
completely.
One other quarter over quarter change
worth noting was Berkowitzs sale of BP (BP).
Originally purchased in the second quarter
amidst the Gulf oil spill crisis, it appears as
though Berkowitz was happy to take the shortterm move, pocket it, and move on to other
investments. This was interesting because
while Berkowitz was selling in Q3, various other
hedge funds were initiating a position now that
there is less uncertainty surrounding the
company.
Perhaps the most intriguing thing
concerning Berkowitzs portfolio though, were
developments regarding his position in St. Joe
(JOE). During the quarter, David Einhorns
Greenlight Capital presented a short thesis on
the company that sent shares plunging. JOE is
only Berkowitzs tenth largest holding but he
actually owns 29% of the company. Back in
2009, Berkowitz entered into a standstill
agreement with St. Joe that caps his ownership
stake at 30%.
So even when Einhorns
presentation
provided
Berkowitz
an
opportunity to buy more at cheaper prices, he
couldnt.
The Fairholme Fund manager
obviously disagrees with Einhorns thesis.
Keep in mind that in addition to the
portfolio disclosed below, Fairholme also owns
various other debt positions as well.
View Fairholme Capitals Updated

42
Fairholme Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Company Name
AMER INTL GROUP INC
SEARS HOLDINGS
CITIGROUP INC
BANK OF AMERICA CP
MORGAN STANLEY
GOLDMAN SACHS GRP
ST JOE CO (THE)
CIT GROUP INC
AMERICREDIT CP
REGIONS FINANCIAL CP
BERKSHIRE HATHAWAY (A)
LEUCADIA NATL CP
BERKSHIRE HATHAWAY (B)
SPIRIT AEROSYSTEMS H
M B I A INC
GEN ELECTRIC CO
HUMANA INC
WELLCARE HEALTHPLANS
RSC HOLDINGS INC
WINTHROP REALTY TR
TAL INTERNATIONL GRP
COMCAST CORPORATION
HERTZ GLOBAL HOLDING
COMCAST CORPORATION
AIG (PREFERRED 8.5%)
BP PLC
DAILY JOURNAL CORP. (S.C.)
Ticker
AIG
SHLD
C
BAC
MS
GS
JOE
CIT
ACF
RF
BRK-A
LUK
BRK/B
SPR
MBI
GE
HUM
WCG
RRR
FUR
TAL
CMCSA
HTZ
CMCSK
AIG-PA
BP
DJCO
Put/Call
% of
Portfolio
11.46%
9.42%
8.38%
8.25%
7.99%
7.74%
5.93%
5.61%
5.40%
4.64%
4.46%
4.05%
3.49%
3.45%
2.87%
2.08%
1.55%
1.50%
1.00%
0.39%
0.32%
Activity
Added 0.37%
Added 4.45%
Added 1.72%
Added 30.66%
Added 123.56%
Added 0.32%
Cut -0.10%
Added 26.17%
Cut -0.03%
Cut -0.26%
Added 1.41%
Cut -2.24%
Cut -5.49%
Cut -14.26%
Added 41.29%
New
Cut -73.49%
Cut -21.61%
Added 1.19%
Cut -14.98%
Cut -21.47%
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$1,286,761
$1,057,700
$941,512
$926,589
$897,002
$868,897
$665,840
$630,364
$606,743
$521,451
$500,739
$455,163
$391,998
$387,903
$322,836
$233,915
$174,529
$169,003
$112,014
$44,202
$35,562
# of Shares
32,909,500
14,661,671
241,413,400
70,678,015
36,345,300
6,009,800
26,772,820
15,442,529
24,804,495
71,726,404
4,022
19,269,377
4,740,600
19,462,920
32,123,000
14,394,800
3,473,900
5,834,967
15,015,300
3,574,285
1,467,388
-
Next Page: Tiger Global

Q3 2010
43
Chase Coleman
Tiger Global
Mentored and seeded by Julian

Robertson of Tiger Management
From 2001-2007, he returned 47% on
average
Key Takeaways
Descendant of Peter Stuyvesant, the

man who built the wall in Wall St
2%3'4"$565"#$-'
!?,=*1Z7*?%&!F@2)%
F,B$F>058"%&FFK0)%
;181-H5$%&;O6<)%
6$,5-%P*#E81G-%&6P(I)%
'*J$5%/1$%&'S39)%
<5$$1%I*+%&<I/0)%
9HM87*1%0$7.1*#*G>%&9A;2)%
%
."/,'!"89/%6%/)':&6':;-'
'$"-8;*%&'3')%
!?$587,1%0*J$5%&!F0)%
(*58##,5E%&(/)%
P,5M81%3#$7+587%&P9A2)%
6.,1E,%<,?$-%&<!F3)%
I*?81*-%'8==,%&I'@)%
Chase
Colemans Tiger Global, like so

many other hedge funds, owns Apple (AAPL) as
its top position (and one they increased by 20%
in the third quarter). That said, the biggest
change in Tiger Globals portfolio comes in the
form of the funds now second largest position.
Coleman ratcheted up his holdings in Viacom
(VIA.B) by a whopping 659%.
Upon glancing at Tigers latest holdings,
one prevalent theme is evident: cable/satellite
companies.
The hedge fund has sizable
positions in DirecTV (DTV), Cablevision (CVC),
and Liberty Global (LBTYA). Tigers thesis on
these names seems largely predicated on the
companies ability to return cash to
shareholders. These companies are free cash
flow machines and are levering up. In a past
investor letter, Coleman singled out DirecTV as
an attractive investment as the company
increases leverage to buyback shares and uses
cashflow to cover current debt.
In the most recent quarter, Tiger
trimmed stakes in Priceline.com (PCLN),
Liberty Media Capital (LCAPA), Lockheed
Q3 2010
Martin (LMT), and Longtop Financial

Technologies (LFT). The most notable sale,
though, comes in their Apollo Group (APOL)
stake as they dumped half of their shares. The
for-profit education stocks have been a
battleground and it appears as though theres
just too much uncertainty right now for Tiger
Global, so it makes sense to reduce their
position size.
In terms of brand new positions, Chase
Colemans firm bought Amazon.com (AMZN)
and MakeMyTrip (MMYT) in the quarter. One
facet of Tiger Globals portfolio that must not be
overlooked is the two put positions theyve
disclosed in their latest 13F filing. They own
sizable put positions on both the Powershares
QQQ Trust (QQQQ) and the SPDR S&P 500
(SPY) exchange traded funds. These appear to
be market hedges and are duly noted.
Coleman sold a few stocks in the quarter
worth mentioning as well. He no longer owns
PepsiCo (PEP), previously a sizable position for
his hedge fund. And while he still owns shares
of IAC Interactive (IACI) and Live Nation
(LYV), he trimmed both stakes substantially.
Since the disclosure of their latest
portfolio, Tiger Global has also revealed a stake
in TAL Education (XRS). Keep in mind as well
that part of Tigers portfolio is allocated to
private investments. They recently bought
stakes in LinkedIn.com as well as other global
web-oriented companies. They seem to be
placing an emphasis on social networking and
online travel companies.
View Tiger Globals Updated

44
Tiger Global
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Company Name
POWERSHARES Q's ETF
APPLE INC.
VIACOM INC CL B
THE DIRECTV GROUP, INC.
MERCADOLIBRE, INC.
SPDR S&P 500
PRICELINE.COM
CABLEVISION SYSTEM
APOLLO GROUP, INC.
APOLLO GROUP, INC.
MAKEMYTRIP
DISCOVERY COMMUNICTNS
LIBERTY MEDIA
AMAZON.COM, INC.
MASTERCARD INC
TRANSDIGM GRP INC
LIVE NATION, INC.
LOCKHEED MARTIN CP
XEROX CP
LONGTOP FINL TEC
GENPACT LIMITED
NIKE INC CL B
COMMSCOPE INC
IAC/INTERACTIVECORP
COMPANIA CERV UNI SA
CNINSURE INC.
SEARS HOLDINGS
POWER-ONE, INC.
DUOYUAN GLOBAL WATER
RUBICON TECHNOLOGY, INC.
GREEN DOT CORP
SHANDA GAMES
DOMINOS PIZZA INC
AMER TOWER CP
LORILLARD, INC
PEPSICO INC
HARBIN ELECTRIC, INC.
Ticker
QQQQ
AAPL
VIA-B
DTV
MELI
SPY
PCLN
CVC
APOL
LBTYA
APOL
MMYT
DISCK
LCAPA
AMZN
MA
TDG
LYV
ERTS
LMT
ERTS
XRX
LFT
G
NKE
CTV
IACI
CU
CISG
SHLD
PWER
DGW
RBCN
GDOT
GAME
DPZ
AMT
LO
PEP
LBTYA
HRBN
Put/Call
PUT
PUT
CALL
CALL
CALL
% of
Portfolio
11.76%
7.66%
6.78%
6.72%
5.89%
5.31%
4.15%
4.08%
3.74%
3.59%
3.55%
3.44%
3.29%
2.98%
2.80%
2.61%
2.56%
2.54%
2.44%
2.28%
2.16%
1.90%
1.87%
1.70%
0.88%
0.65%
0.59%
0.59%
0.45%
0.31%
0.26%
0.24%
0.10%
0.10%
Activity
New
Added 20.60%
Added 659.15%
Added 0.33%
Cut -9.51%
New
Cut -37.90%
Added 17.64%
Unchanged
Added 0.77%
Cut -50.75%
New
Unchanged
Cut -29.97%
New
Cut -7.97%
Cut -7.89%
Cut -81.57%
Cut -13.75%
Cut -30.39%
Unchanged
Added 23.02%
Cut -43.56%
Added 74.17%
Unchanged
Cut -11.91%
Cut -66.92%
Added 5.60%
New
New
New
Unchanged
New
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$547,131
$356,363
$315,396
$312,575
$273,886
$247,070
$193,155
$189,644
$173,892
$167,144
$165,193
$160,152
$153,199
$138,821
$130,360
$121,632
$118,981
$118,070
$113,488
$105,993
$100,330
$88,493
$86,868
$79,200
$41,113
$30,373
$27,505
$27,235
$20,916
$14,428
$12,272
$11,336
$4,538
$4,848
# of Shares
11,150,000
1,255,904
8,715,000
7,508,400
3,794,484
2,165,000
554,500
7,241,080
3,386,400
5,425,000
3,217,000
4,129,760
4,011,499
2,666,563
830,000
543,000
1,917,500
1,950,393
6,900,000
1,487,000
6,100,000
8,550,000
2,207,570
4,467,000
513,019
1,279,395
1,047,000
489,396
900,000
200,000
1,350,000
870,000
200,000
100,000
-
Next Page: Passport Capital

Q3 2010
45
John Burbank
Passport Capital
Has returned 23.6% annualized

Makes plays based on macro themes;
has thought markets to be overvalued
for many years now
Key Takeaways
Received his MBA from Stanford &

undergraduate degree from Duke
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;,#84%&;!(:)%
K,.**%&KP//)%
F*+*5*#,%&F/0)%
'58E$%O1+$51,+8*1,#%&'I3)%
'$+5*#$H?%I$N%;*5"%&'30I)%
As
you can see from above, John

Burbanks Passport Capital entered and exited
numerous positions in the third quarter. Not to
mention, the hedge fund holds far more
positions than the average hedge fund tracked
in this issue, so focusing on the upper-most
echelon of the portfolio makes the most sense as
Q2 2010
those positions garner the most capital.

Passports top US equity long continues to be
fertilizer play CF Industries (CF) even though
they reduced their stake by 23%. They like this
company for its exposure to resources that
China needs. Passports second largest US
equity long is brand new in the form of Exxon
Mobil (XOM). In fact, Passports top ten US
equity holdings are littered with brand new
positions, including: Microsoft (MSFT),
Cummins (CMI), Arcelor Mittal (MT), and
Murphy Oil (MUR).
While the above brand new holdings are
sizable, Burbank also added heavily to some
smaller existing positions: boosting his stake in
Vale (RIO) by over 1,000%, increasing his
Smithfield Foods (SFI) position by 827%, and
ratcheting up his stake in Cliffs Natural
Resources (CLF) by 2,053%. On the selling side
of things, Passport Capital dumped half of its
holdings in Nevsun Resources (NSU) and over
72% of its position in Apple (AAPL). The hedge
fund also exited completely out of some sizable
past positions, including Sigma Aldrich (SIAL)
and WW Grainger (GWW).
At the recent Value Investing Congress,
Burbank noted his fondness for hard assets and
commodities. He loves gold, but says to own
physical gold rather than the exchange traded
funds. Passport currently has an 8% position in
the precious metal. Burbank also likes a basket
of countries to invest in including Canada,
Australia, Singapore, Switzerland, and Hong
Kong.
Conversely, he likes being short
countries with large debt. Overall, Passports
top holding is in foreign-based Riversdale
Mining (ASX: RIV).
View Passport Capitals Updated
46
Passport Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Company Name
SPDR S&P 500
ISHARES RUSSELL 2000 INDEX
ISHARE MSCI BRAZIL F
PPOWERSHARES QQQ TRUST
EXXON MOBIL CP
CF IND HLDGS INC
SPDR S&P METALS & MINING
WALTER INDS INC
WENDYS INTL INC
TYSON FOODS INC CL A
PACTIV CORP
CUMMINS INC
ARCELORMITTAL
HANSEN NATURAL CORP
SMITHFIELD FOODS
CYTEC IND INC
COMPANHIA VALE DO RIO
MURPHY OIL CP HLDG
CLEVELAND CLIFFS
TYSON FOODS INC CL A
M G M MIRAGE
ROCKWELL AUTOMAT INC
ALCON INC
DENDREON CORPORATION
NEVSUN RESOURCES LTD
ENDO PHARMACEUTICALS
MASTERCARD INC
VODAFONE GRP PLC ADS
LENDER PROCESSING
ALLERGAN INC
TEVA PHARMACEUTICAL
IMPERIAL SUGAR COMPANY
UNITED STATES STEEL
A K STEEL HLDG CORP
MCKESSON CORP
JOY GLOBAL INC.
PFIZER INC
WATSON PHARMACEUTCLS
BLACKROCK INC
FOCUS MEDIA HOLDING
ECOLAB INC
APPLE INC.
VIACOM INC CL B
NORANDA ALUMINUM
OIL SERVICE HOLDRS
GOLDMAN SACHS
Ticker
SPY
IWM
GLD
EWZ
QQQQ
XOM
CF
MSFT
LVS
XME
WLT
WEN
TSN
MSFT
PTV
CMI
MT
HANS
SFD
CYT
VALE
MUR
CLF
TSN
MGM
ROK
ACL
DNDN
NSU
ENDP
MA
VOD
LPS
AGN
TEVA
IPSU
X
AKS
MCK
JOYG
PFE
WPI
BLK
FMCN
ECL
AAPL
VIA-B
NOR
OIH
GS
Put/Call
PUT
PUT
PUT
PUT
PUT
CALL
CALL
PUT
CALL
CALL
PUT
CALL
% of
Portfolio
17.59%
14.01%
11.96%
7.51%
3.06%
2.35%
2.30%
2.29%
2.17%
1.42%
1.15%
1.15%
1.03%
1.00%
0.94%
0.93%
0.84%
0.81%
0.80%
0.80%
0.80%
0.77%
0.73%
0.71%
0.70%
0.69%
0.69%
0.67%
0.64%
0.64%
0.59%
0.56%
0.54%
0.54%
0.49%
0.49%
0.48%
0.48%
0.48%
0.44%
0.43%
0.42%
0.40%
0.40%
0.39%
0.39%
0.37%
0.35%
0.35%
0.34%
Activity
Added 149.9%
Cut -45.06%
New
Added 191.43%
New
New
Cut -23.11%
New
New
New
Cut -44.06%
Added 1.50%
Unchanged
New
New
New
New
Added 11.34%
Added 827.2%
New
Added 1079%
New
Added 2053%
Added 165.19%
New
New
Added 5.44%
Added 30.38%
Cut -48.72%
New
Added 369%
New
Added 30.38%
Added 335%
Unchanged
Added 11.88%
New
New
New
New
Added 59.52%
Added 295.8%
New
New
Cut -52.20%
Cut -72.63%
New
Cut -4.91%
New
Cut -46.88%
Value x
$1000
$564,327
$449,550
$383,730
$240,847
$98,140
$75,444
$73,827
$73,470
$69,700
$45,458
$36,833
$36,784
$33,161
$32,068
$30,157
$29,928
$26,978
$25,954
$25,517
$25,557
$25,817
$24,849
$23,401
$22,626
$22,560
$22,037
$21,983
$21,475
$20,583
$20,609
$18,928
$18,086
$17,329
$17,365
$15,825
$15,601
$15,291
$15,489
$15,445
$14,190
$13,695
$13,395
$12,769
$12,984
$12,553
$12,428
$11,773
$11,190
$11,298
$10,844
# of Shares
4,944,600
6,660,000
3,000,000
3,130,000
2,000,000
1,220,980
773,059
3,000,000
2,000,000
850,000
453,100
8,120,000
2,070,000
1,309,400
914,400
330,400
818,000
556,700
1,516,200
453,300
825,600
401,313
366,100
1,412,400
2,000,000
357,000
131,800
521,500
4,220,720
620,000
84,500
729,000
521,500
261,000
300,000
1,192,713
348,800
1,121,600
250,000
201,800
797,600
316,600
75,000
535,359
247,400
43,800
325,300
1,361,300
100,000
75,000

Q3 2010
47
Passport Capital
Rank
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
Company Name
HSN, INC.
GOOGLE INC.
IAMGOLD CORP COM NPV
HUMAN GENOME SCIENCES
ALEXION PHARMACEUTICALS
YAMANA GOLD INC COM NPV
DANAHER CP
VERIZON COMMUN
FOREST LABS CL A
OMEGA PROTEIN CP
LONGTOP FINL TEC
KINROSS GOLD CP
VALEANT PHARMA INTL
ZIPREALTY, INC.
BIOMARIN PHARMACEUTICAL
MOSAIC COMPANY (THE)
INTERCNTNTL EXCHANGE
SEABOARD CORP
COSAN LIMITED CL A
PILGRIMS PRIDE CP
TRANSOCEAN INC
BAIDU.COM, INC. - ADS
ASIAINFO HOLDINGS, INC.
NATL OILWELL VARCO
ALPHA NATURAL RESOURCES
MONSANTO COMPANY
VIVUS, INC.
COCA COLA CO THE
HALLIBURTON CO
ACORDA THERAPEUTICS, INC.
OPENTABLE INC
AFFILIATED MGRS GRP
LABRANCHE & CO INC
KROGER CO
VEECO INSTRUMENTS INC.
KOHLS CP
CREE, INC.
TUPPERWARE BRANDS CP
BP PLC
MYR GROUP INC
SPRINT NEXTEL
SOUTHWESTERN ENERGY
KRAFT FOODS INC
OMNIVISION TECHNOLOGIES
ARRIS GROUP INC
PROCTER GAMBLE CO
CAMERON INTL CP
EQUAL ENERGY LTD

Continued
Ticker
HSNI
GOOG
IAG
HGSI
ALXN
AUY
DHR
VZ
FRX
OME
LFT
KGC
VRX
ZIPR
BMRN
MOS
ICE
SEB
CZZ
PPC
RIG
BIDU
ASIA
NOV
ANR
MON
VVUS
KO
HAL
ACOR
OPEN
AMG
LAB
KR
QCOM
VECO
KSS
CREE
TUP
BP
MYRG
S
MJN
SWN
KFT
OVTI
ARRS
PG
CAM
EQU
Put/Call
CALL
PUT
CALL
CALL
CALL
CALL
% of
Portfolio
0.33%
0.32%
0.32%
0.32%
0.31%
0.31%
0.31%
0.30%
0.30%
0.30%
0.29%
0.29%
0.26%
0.23%
0.22%
0.21%
0.21%
0.20%
0.20%
0.19%
0.19%
0.18%
0.18%
0.17%
0.17%
0.16%
0.16%
0.15%
0.13%
0.13%
0.12%
0.12%
0.12%
0.11%
0.11%
0.11%
0.10%
0.10%
0.10%
0.10%
0.10%
0.09%
0.09%
0.09%
0.08%
0.08%
0.07%
0.07%
0.07%
0.07%
Activity
Added 213.92%
Added 4.99%
Cut -24.34%
New
New
Unchanged
Cut -45.84%
New
New
Cut -2.09%
Added 573.52%
New
New
Unchanged
New
Cut -91.28%
New
Cut -5.26%
New
Added 167.58%
Added 1.05%
Added 4.76%
Added 140.2%
Unchanged
New
New
New
New
Added 11.05%
New
Added 32.33%
Unchanged
Unchanged
Unchanged
Cut -42.28%
Cut -38.38%
New
Added 18.99%
New
Unchanged
Unchanged
Unchanged
New
New
New
Added 22.86%
Unchanged
New
Cut -28.57%
Added 325.19%
Value x
$1000
$10,628
$10,267
$10,150
$10,426
$9,872
$9,906
$9,856
$9,608
$9,743
$9,663
$9,362
$9,348
$8,412
$7,281
$7,040
$6,593
$6,807
$6,376
$6,366
$5,973
$6,171
$5,644
$5,925
$5,327
$5,399
$5,272
$5,185
$4,939
$4,054
$4,128
$3,818
$3,900
$3,900
$3,665
$3,688
$3,677
$3,161
$3,312
$3,203
$3,088
$3,315
$2,913
$2,846
$3,010
$2,512
$2,514
$2,132
$2,381
$2,148
$2,267
# of Shares
355,677
19,528
573,100
350,000
153,400
868,934
242,700
294,800
315,000
1,689,273
237,926
497,500
335,800
2,519,550
315,000
112,200
65,000
3,600
549,300
1,062,687
96,000
55,000
300,300
119,779
131,200
110,000
775,000
84,400
122,600
125,000
56,076
50,000
1,000,000
170,000
81,725
105,454
60,000
61,000
70,000
75,000
202,250
629,100
50,000
90,000
81,400
109,100
218,200
40,000
50,000
490,056

Q3 2010
48
Passport Capital
Rank
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
Company Name
KOHLS CP
GEN MILLS INC
GOLAR LNG LIMITED
DEERE CO
BANRO CORPORATION
NEWFIELD EXP COM
SANDERSON FARMS, INC.
YUM BRANDS INC
CAVIUM NETWORKS, INC.
STR HOLDINGS, INC.
NYSE EURONEXT
GEOKINETICS INC.
PETROLEO BRASILEIRO
WUXI PHARMATECH ADS
ST MARY LAND EXPL
SUPERIOR ENERGY SV
HEINZ H J CO
VIVUS, INC.
TEMPUR-PEDIC INTL
WAL MART STORES
REALNETWORKS, INC.
OASIS PETROLEUM INC.
BARRICK GOLD CP
F M C CP
ULTRASHORT S&P500
WESTWAY GROUP, INC.
ULTRASHORT FINANCIALS
TRANSDIGM GRP INC
ULTRASHORT SMALLCAP600
ULTRASHORT RUSSELL2000
ULTRASHORT MIDCAP400
COMPANHIA SANEA ADS
ANDERSONS, INC. (THE)
AZZ INCORPORATED
TRINA SOLAR LTD ADR
ENERNOC, INC.
RUBICON TECHNOLOGY, INC.
SUNPOWER CORPORATION
ITC HOLDINGS CORP
POLYPORE INTERNATION
ENERSYS
TRI-TECH HOLDING INC.
WATTS WATER TECH A
JA SOLAR HOLDINGS, CO., LTD

Continued
Ticker Put/Call
KSS
GIS
CALL
GLNG
DE
BAA
NFX
SAFM
YUM
CAVM
STRI
NYX
GOK
PBR
WX
SM
SPN
HNZ
VVUS
CALL
MDRX
TPX
WMT
RNWK
OAS
ABX
FMC
SDS
WWAY
SKF
TDG
SDD
TWM
MZZ
SBS
ANDE
AZZ
TSL
ENOC
RBCN
SPWRB
ITC
PPO
ENS
TRIT
WTS
JASO
% of
Portfolio
0.07%
0.06%
0.06%
0.06%
0.05%
0.05%
0.05%
0.05%
0.04%
0.04%
0.04%
0.04%
0.04%
0.03%
0.03%
0.03%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Activity
New
New
New
New
Cut -29.00%
Cut -82.90%
New
New
Unchanged
Cut -21.80%
Unchanged
Unchanged
New
New
Cut -32.93%
Cut -33.33%
New
New
New
New
New
Cut -46.56%
New
New
Cut -95.74%
Cut -65.57%
New
Unchanged
New
Unchanged
Cut -44.84%
Cut -46.13%
Unchanged
Cut -14.63%
Unchanged
Cut -47.37%
Cut -95.99%
Unchanged
Unchanged
Unchanged
Unchanged
New
Unchanged
New
New
Value x
$1000
$2,371
$1,813
$1,843
$2,038
$1,614
$1,721
$1,485
$1,727
$1,438
$1,158
$1,143
$1,240
$1,270
$868
$936
$1,068
$540
$669
$493
$775
$551
$561
$581
$727
$520
$278
$458
$251
$205
$222
$327
$315
$29
$27
$31
$24
$155
$136
$42
$31
$35
$30
$53
$27
$29
# of Shares
45,000
50,000
150,000
29,200
710,000
29,970
34,300
37,500
50,000
53,800
40,000
200,000
35,000
50,600
25,000
40,000
11,400
100,000
26,700
25,000
10,300
172,175
30,000
15,700
7,600
9,400
140,399
12,650
3,300
11,750
18,700
20,200
630
700
720
800
4,944
6,000
3,000
500
1,150
1,200
5,000
800
3,100

Q3 2010
49
Passport Capital
Rank
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193

Continued
Company Name
PRIDE INTL INC
GERDAU AMERISTEEL CP
ISHARES TR FTSE INDX
YAHOO! INC.
TIMBERLINE RES CORP
RESEARCH IN MOTION COM NPV
AGCO CP
TYCO INTL LTD
CALIX, INC
DARLING INTL INC
SELECT SECTOR SPDR-UTILITIES
COCA COLA CO THE
EOG RESOURCES INC
QUANTA SERVICES INC
ULTRASHORT REAL ESTATE
CLAYMORE/MAC GLOBAL
PROSHARES ULTRASHORT
PETROLEUM DEVELOPMENT
FASTENAL COMPANY
ARCHER DANIELS MDLND
SOCIEDAD DE CHILE SC
BARRICK GOLD CP
PENTAIR INC
RESEARCH IN MOTION COM NPV
AKAMAI TECHNOLOGIES, INC.
NEWMONT MIN CP
PRAXAIR INC
SIGMA-ALDRICH CORPORATION
THOMPSON CRK MTLS CO
LOGMEIN, INC.
SELECT SECTOR MATERIALS
TERRA NITR CO COM UT
GRAINGER W W INC
A V X CORP
BIOVAIL CORP
FIRST SOLAR, INC.
IMPERIAL SUGAR COMPANY
ARM HOLDINGS
MCKESSON CORP
CHINA VALVES TECHNOLOGY
PROSH DJ-AIG CRUDE
TRANSOCEAN INC
MOTOROLA INC
Ticker
GLD
PDE
GNA
FXI
YHOO
TLR
ESRX
RIMM
AG
TYC
CALX
DAR
XLU
KO
EOG
PWR
SRS
WFC
TAN
GLL
PETD
FAST
ADM
SQM
ABX
PNR
RIMM
AKAM
NEM
PX
SIAL
TC
LOGM
XLB
TNH
MJN
GWW
AVX
LVS
BVF
FSLR
IPSU
ARMH
MCK
CVVT
SCO
RIG
MOT
Put/Call
PUT
PUT
CALL
PUT
CALL
PUT
PUT
CALL
CALL
% of
Portfolio
Activity
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
# of Shares
-
Next Page: Perry Partners

Q3 2010
50
Richard Perry
Perry Capital
Seeks to deliver strong returns with

low correlations to equity markets
The firm is apparently returning to its
event-driven, deep-value hedged
roots
Key Takeaways
2%3'4"$565"#$-'
6'I9%6U'%^__%&6'K)%;,##-%
'*+,-.%&'/0)%
I8,?*1E-%&IO!)%;,##-%
<$1=>?$%&<32@)%
;8+8G5*H"%&;)%
86.,5$-%3?$5G81G%F,5B$+-%&33F)%'H+-%
W18->-%&WO6)%
!#7*1%&!;()%
F875*-*C+%&F6Q0)%
L5,C+%Q**E-%&LQ0)%'H+-%
6$?87*1EH7+*5%P/(I9-%&6FP)%'H+-%
A5*7,E$%&A9;I)%
<$1=>?$%&<32@)%'H+-%
86.,5$-%9H--$##%`___%&OSF)%;,##-%
%
."/,'!"89/%6%/)':&6':;-'
86.,5$-%9H--$##%`___%&OSF)%
VH$-+,5%&609)%
LH#87B$%U%6*CC,%&L(O;)%
!$+1,%&!30)%;,##-%
W18+$EP$,#+.%&W2P)%
Q8E$#8+>%2,+8*1,#%O1C*5?,+8*1%&QO6)%
;*7,%;*#,%31+$5"58-$-%&;;3)%
<8#$,E%678$17$-%&<O(I)%
($,"%S85$#$--%&(3!')%
VH,#7*??%&V;/F)%
6'I9%<*#E%05H-+%&<(I)%'H+-%
37#8"->-%&3;(')%
I*##,5%0.58C+>%&I0<)%
PH?,1,%&PWF)%;,##-%
The
first thing to consider when

viewing Perrys portfolio is that the hedge fund
holds a lot of options positions. As such, its
much harder to decipher their net position in a
given company due to the fact that 13F filings
do not reveal the strike price or expiration dates
of specific options positions. Thus, Perrys
positions must be taken with a grain of salt. In
the third quarter, the hedge fund started new
Q3 2010
positions in a lot of merger arbitrage related

plays via Potash (POT), Alcon (ACL), and
Genzyme (GENZ). Many hedge funds are
playing the potential spreads in these names
and the landscape has certainly shifted since
theyve taken these stakes. As mentioned
earlier in this issue, BHP Billiton (BHP)
rescinded its bid for Potash (POT), so it will be
interesting to see if any of these buy-side firms
maintain their position.
Another point of interest in Perrys
portfolio is their new position in Citigroup (C).
In the second quarter, Perry previously exited
their entire C position due to price appreciation
and renewed financial reform concerns.
However, theyve since re-opened the position
in the most recent quarter, which is interesting.
You can see their previous thoughts on the
position in their past investor letter.
Regarding positions Perry exited in the
quarter, Coca Cola Enterprises (CCE) is notable
because the company sold its North American
bottling operations to Coca Cola (KO) and paid
a one-time dividend to shareholders. Also,
Perry exited shares of Dollar Thrifty (DTG),
which is interesting because many hedge funds
have been eyeing consolidation in the car rental
space. Doug Silverman of Senator Investment
Group was bullish on the group at the recent
Invest For Kids Conference.
Perrys top 3 largest reported holdings
are all options positions on various market
indices. Whether these are hedges or bearish
bets remains to be seen. Richard Perry told
investors recently that the firm is returning to
its event-driven, deep-value hedged roots.
Their last equity specialist just left the firm as
well, so the firm is clearly changing course.
View Perry Capitals Updated
51
Perry Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
SPDR S&P 500
ISHARES RUSSELL 2000
SPDR S&P 500
ENDURANCE SPLTY HLD
HUMANA INC
DIAMONDS
GENZYME CORPORATION
CITIGROUP INC
UNIVERSAL AMERICAN CORP.
ISHARES MSCI E.M.I.F
AIRGAS INC
UNISYS CP
ALCON INC
KRAFT FOODS INC
LIZ CLAIBORNE INC
SEMICONDUCTOR HOLDRS
BROCADE COMMUNICATIONS
NORTH AMERICAN ENERG
GENZYME CORPORATION
MOTOROLA INC
JOHNSON AND JOHNS DC
MENTOR GRAPHICS CORP
GENZYME CORPORATION
QEP RESOURCES, INC.
EBAY INC.
HEALTHSPRING INC.
LIBERTY MEDIA
DELL INC.
SPDR S&P RETAIL ETF
FORD MTR CO Warrants
SMART TECHNOLOGIES INC.
KINDER MORGAN ENERGY
PETROLEO BRASILEIRO
PNC FINANCIAL Warrants
Ticker
SPY
IWM
SPY
ENH
POT
HUM
MSFT
DIA
GENZ
C
UAM
EEM
ARG
UIS
RBS-PM
RBS-PS
ACL
MSFT
KFT
RBS-PQ
LIZ
SMH
RBS-PT
BRCD
NOA
GENZ
MOT
JNJ
ENZN
MENT
GENZ
IWM
QEP
QCOM
EBAY
HS
RBS-PN
LINTA
DELL
XRT
F/WS
SMT
KMP
PBR
PNC/WS
Put/Call
PUT
PUT
CALL
CALL
CALL
PUT
PUT
PUT
PUT
CALL
CALL
PUT
PUT
PUT
PUT
% of
Portfolio
35.69%
11.56%
9.38%
4.47%
3.71%
2.57%
1.99%
1.79%
1.78%
1.72%
1.58%
1.41%
1.34%
1.10%
1.09%
0.99%
0.88%
0.75%
0.67%
0.67%
0.67%
0.65%
0.65%
0.64%
0.59%
0.56%
0.54%
0.53%
0.51%
0.50%
0.45%
0.41%
0.39%
0.38%
0.38%
0.37%
0.36%
0.35%
0.34%
0.33%
0.33%
0.32%
0.28%
0.26%
0.24%
Activity
Added 68.9%
Added 28.2%
New
Unchanged
New
Unchanged
Cut -27.86%
New
New
New
Unchanged
New
Added 989%
New
Unchanged
Unchanged
New
New
New
Unchanged
Unchanged
New
Unchanged
New
Unchanged
New
New
Unchanged
Added 0.35%
New
New
New
Cut -64.78%
New
New
New
Added 3.96%
New
New
Cut -85.71%
Unchanged
New
Unchanged
New
New
Value x
$1000
$2,270,046
$735,278
$596,900
$284,294
$235,930
$163,280
$126,858
$113,845
$113,070
$109,524
$100,548
$89,540
$85,373
$69,750
$69,496
$62,988
$55,975
$47,756
$42,587
$42,905
$42,523
$41,569
$41,600
$41,020
$37,477
$35,395
$34,340
$33,510
$32,484
$31,710
$28,324
$26,325
$24,625
$24,365
$24,400
$23,256
$23,015
$22,104
$21,773
$20,910
$20,770
$20,325
$17,865
$16,322
$15,573
# of Shares
19,890,000
10,893,000
5,230,000
7,143,056
1,637,950
3,250,000
5,180,000
1,055,000
1,597,263
28,011,334
6,816,833
2,000,000
1,256,415
2,500,000
4,486,483
3,986,560
335,602
1,950,000
1,380,000
2,645,164
6,993,834
1,500,000
2,476,946
7,000,000
4,598,466
500,000
4,025,747
540,835
2,890,000
3,000,000
400,000
390,000
817,024
540,000
1,000,000
900,000
1,483,912
1,612,240
1,680,000
500,000
1,696,900
1,500,000
260,800
450,000
300,000

Q3 2010
52
Perry Capital
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
Company Name
ARC SIGHT, INC.
SYNAPTICS INCORPORATED
INTEGRATED DEVICE TECH
CHUBB CP THE
CIRRUS LOGIC, INC.
DIAMONDS
EXXON MOBIL CP
PACIFIC SUNWEAR
EBAY INC.
CRUCELL NV
DORAL FINANCIAL
CRUCELL NV
KRAFT FOODS INC
SYNAPTICS INCORPORATED
WILLIAMS COS
CHARMING SHOPPES, INC.
YAHOO! INC.
RITE AID CP
DELL INC.
PETROLEO BRAS PETROB
ORACLE CORPORATION
CISCO SYSTEMS, INC.
STEC, INC.
COINSTAR, INC.
GLOBALSTAR, INC.
ICO GLOBAL COMMUNICATIONS
TERRESTAR CORP
CITIGROUP INC PRFD 'I'
VIRGIN MEDIA WARRANTS
QUESTAR CP
KULICKE AND SOFFA
AETNA INC. NEW
UNITEDHEALTH GROUP
FIDELITY NAT INF SVC
LEAP WIRELESS
ECLIPSYS CORPORATION
NET 1 UEPS TECHNOLOGIES
DOLLAR THRIFTY AUTO
HUMANA INC

Continued
Ticker
Put/Call
ARST
BAC/WS
SYNA
PUT
IDTI
CB
PUT
CRUS
DIA
PUT
XOM
PSUN
EBAY
CRXL
PUT
DRL
CRXL
KFT
SYNA
WMB
CHRS
YHOO
RBS-PR
RAD
DELL
PUT
PBR-A
ORCL
PUT
CSCO
PUT
STEC
RBS-PP
CSTR
GSAT
ICOG
TSTRQ.PK
C-PI
VMEDW
IWM
STR
KLIC
AET
CALL
UNH
CALL
FIS
CCE
GILD
LEAP
QCOM
GLD
PUT
ECLP
UEPS
DTG
HUM
CALL
% of
Portfolio
0.24%
0.19%
0.18%
0.18%
0.18%
0.18%
0.17%
0.16%
0.16%
0.16%
0.16%
0.16%
0.16%
0.15%
0.13%
0.12%
0.12%
0.11%
0.10%
0.10%
0.09%
0.09%
0.09%
0.08%
0.08%
0.07%
0.07%
0.06%
0.04%
0.03%
0%
0%
Activity
New
Unchanged
Unchanged
New
Unchanged
New
New
New
Cut -36.51%
New
New
Added 4733%
New
New
Unchanged
New
New
New
Added 5.21%
New
New
New
New
New
Unchanged
Added 15%
New
Unchanged
Unchanged
Unchanged
New
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$15,246
$11,892
$11,256
$11,700
$11,352
$11,385
$10,791
$10,072
$10,460
$10,370
$9,978
$10,029
$9,978
$9,721
$8,442
$7,673
$7,744
$7,085
$6,090
$6,678
$5,832
$5,744
$5,907
$4,818
$4,981
$4,741
$4,299
$3,924
$2,649
$1,736
$209
$0
# of Shares
350,000
907,600
400,000
2,000,000
200,000
600,000
100,000
163,000
2,000,000
425,000
300,000
6,041,461
300,000
315,000
300,000
401,505
2,200,000
500,000
395,699
7,082,000
450,000
175,000
220,000
220,000
400,100
306,857
100,000
2,255,428
1,615,018
5,000,000
4,600
17,349
-
Next Page: Glenview Capital

Q3 2010
53
Glenview Capital
2%3'4"$565"#$-'
S$##'*81+%&S(')%
;8-7*%6>-+$?-%&;6;/)%
Q#*J-$5N$%&Q(6)%
;.8?$5,%&;OF)%
!?$587,1%O1+$51,+8*1,#%<5*H"%&!O<)%
6+,"#$-%&6'(6)%
3F;%&3F;)%
%
."/,'!"89/%6%/)':&6':;-'
/5,7#$%&/9;()%
<**G#$%&<//<)%
A,1B%*C%!?$587,%&A!;)%
'C8=$5%&'Q3)%
!?$587,1%0*J$5%&!F0)%
F*1-,1+*%&F/2)%
F7!C$$%&FQ3)%
!#7*1%&!;()%
0,#$758-%A8*+.$5,"$H+87-%&0(;9)%
($,5%;*5"%&(3!)%
F7I$5?*++%&FI9)%
A,M7*7B%U%S8#7*4%&AS;SO)%
<8#$,E%678$17$-%&<O(I)%
'66%S*5#E%&'66O)%
6>1*NH-%&62D)%
Q5$-$18H-%F$E%;,5$%&QF6)%
he biggest change in Larry Robbins

Glenview Capital portfolio was doubling its
stake in Express Scripts (ESRX), now the firms
top holding. Robbins sees the company as
poised to benefit from the impending generic
drug boom in 2012 and likes their $6 billion in
cash. In fact, Glenview has a generous portion
of its portfolio allocated to the pharmacy benefit
manager (PBMs) sector, owning sizable stakes
in ESRX, Medco Health (MHS), and CVS
Caremark (CVS).
Since May of this year, Robbins has been
touting ESRX and McKesson (MCK) as his
favorite stock picks. At the recent Invest For
Kids Conference in Chicago, Robbins continued
Q3 2010
Known for taking concentrated

positions in large caps
Previously a trader at Leon
Coopermans Omega Advisors
Key Takeaways
Larry Robbins
to advocate those names. In the third quarter,

Glenview increased its holdings in MCK by 58%
and believes the company is attractive due to its
use of cash to accelerate earnings per share
(EPS) growth. At the conference, he also
provided
bullish
comments
on
Life
Technologies (LIFE). Robbins likes LIFEs
valuation and thinks the company should
buyback shares. It should come as no surprise
that the three positions Robbins has been
talking about the most are the three largest at
his hedge fund. Everyone talks their book and
Robbins seems to be focusing on the companies
where hes committed the most capital.
Back in May at the Ira Sohn Conference,
Robbins spoke positively of Fidelity National
Information (FIS).
This past quarter he
trimmed 19% of his position in the company but
obviously still fancies it as an investment due to
the fact it remains his sixth largest US equity
long.
One other interesting change to
Glenviews portfolio over the past two quarters
involves shares of WellPoint (WLP). Glenview
sold all of its position in WLP back in the
second quarter but started it as a new stake
again in the most recent quarter, indicating a
swift change of heart.
Some hedge fund
managers (most notably Dan Loeb of Third
Point) had exited shares of WLP due to
healthcare reform uncertainty.
Of positions Glenview Capital exited
entirely in the quarter, their no-longer-present
position in Oracle (ORCL) is the one most
notably absent. And in terms of portfolio
activity in the present fourth quarter, Glenview
has been increasing its position in Punch
Taverns, traded in London.
View Glenview Capitals Updated
54
Glenview Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
LIFELINE SYSTEMS
MCKESSON CORP
DAVITA INC
FIDELITY NAT INF SVC
MEDCOHEALTH SOLUTNS
THERMO FISHER SCIENT
XEROX CP
AON CORP
B M C SOFTWARE
CVS CAREMARK CP
VIACOM INC CL B
FLEXTRONICS INTL
OMNICARE INC
TARGET CP
EXPEDIA, INC.
WELLPOINT INC.
REPUBLIC SVCS INC
HEWLETT PACKARD CO
FISERV, INC.
TYCO INTL LTD
HARTFORD FIN SVC
U R S CP
CITIGROUP INC
CIGNA CP
PITNEY BOWES INC
ARVINMERITOR INC
CISCO SYSTEMS, INC.
WATERS CP
WYNDHAM WORLDWIDE
CIT GROUP INC
AIR PRODUCTS CHEM
FLOWSERVE CP
RADIOSHACK CORP
LIVE NATION, INC.
COMCAST CORPORATION
CHIMERA INVESTMENT
DISCOVER FIN SVCS
PHH CORP
MUELLER WATER PRODUC
AMER INTL GROUP INC
APPLIED MATERIALS, INC.
STAPLES, INC.
Ticker
ESRX
LIFE
MCK
DVA
FIS
MHS
TMO
XRX
AON
BMC
CVS
VIA-B
FLEX
OCR
TGT
EXPE
WLP
RSG
HPQ
FISV
TYC
HIG
URS
C
CI
PBI
ARM
CSCO
WAT
GR
WYN
LNCR
CIT
APD
FLS
RSH
LYV
CMCSA
CIM
DFS
PHH
MWA
AIG
AMAT
SPLS
Put/
Call
% of
Portfolio
7.73%
6.87%
6.68%
5.27%
5.17%
4.70%
4.35%
4.29%
3.66%
3.25%
3.15%
2.97%
2.79%
2.52%
2.49%
2.43%
2.32%
2.01%
1.86%
1.79%
1.68%
1.64%
1.57%
1.46%
1.45%
1.42%
1.27%
1.10%
0.94%
0.87%
0.81%
0.71%
0.64%
0.58%
0.55%
0.52%
0.50%
0.50%
0.48%
0.47%
0.47%
0.41%
0.39%
0.38%
0.38%
Activity
Added 103.06%
Added 10.58%
Added 58.75%
Added 25.49%
Cut -18.77%
Added 19.56%
Added 22.83%
Cut -5.01%
Added 592.48%
Added 6.02%
Added 21.05%
Cut -3.71%
Added 21.58%
Cut -8.25%
Added 309.41%
Cut -47.93%
New
Added 6.20%
Cut -69.67%
Added 16.00%
Unchanged
Added 39.81%
Added 15.72%
Added 70.89%
Cut -26.76%
Cut -0.14%
Added 11.57%
New
Cut -28.95%
Unchanged
Cut -24.15%
Cut -32.42%
Cut -49.48%
Unchanged
New
Cut -51.92%
Unchanged
Added 200.43%
New
Unchanged
Cut -55.04%
Added 9.55%
New
Cut -64.44%
New
Value x
$1000
$424,299
$377,128
$366,512
$289,119
$283,965
$257,904
$238,859
$235,689
$201,156
$178,237
$172,868
$162,917
$153,146
$138,215
$136,891
$133,532
$127,154
$110,415
$102,311
$98,159
$92,142
$89,842
$86,248
$80,182
$79,373
$78,126
$69,948
$60,210
$51,669
$47,973
$44,232
$39,219
$35,089
$31,662
$30,094
$28,510
$27,541
$27,572
$26,450
$26,056
$26,026
$22,528
$21,396
$21,064
$20,920
# of Shares
8,712,512
8,077,282
5,932,541
4,188,316
10,466,825
4,953,976
4,988,697
22,771,862
5,143,340
4,403,087
5,493,095
4,501,703
25,355,320
5,787,902
2,561,580
4,730,133
2,244,950
3,621,354
2,431,917
1,823,840
2,508,630
3,914,700
2,270,878
20,507,000
2,218,372
3,654,148
4,501,186
2,749,299
730,000
650,652
1,610,187
1,563,742
859,600
382,300
275,036
1,336,637
2,787,513
1,525,000
6,696,300
1,562,100
1,235,792
7,459,493
547,200
1,803,441
1,000,000

Q3 2010
55
Glenview Capital
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
Company Name
TAKE-TWO INTERACTIVE
JP MORGAN CHASE CO
CLEARWIRE CORPORATION
TEXTRON INC
LOUISIANA PACIFIC CP
EMC
OWENS CORNING
BROADRIDGE FIN SOL
MASCO CP
QUEST DIAGNOSTC
LABORATORY CORP
TERRESTAR CORP
BANK OF AMERICA CP
MONSANTO COMPANY
FRESENIUS MED
PFIZER INC
AMER TOWER CP
MCAFEE, INC
ORACLE CORPORATION
ALCON INC
GOOGLE INC.
PSS WORLD MEDICAL INC.
TALECRIS BIOTHERAPEUTICS
LEAR CORP.
MCDERMOTT INT PANAMA
SYNOVUS FINL CP

Continued
Ticker
TTWO
JPM
CLWR
TXT
LPX
EMC
OC
BR
MAS
DGX
LH
BAC/WS
TSTRQ.PK
BAC
MON
FMS
PFE
AMT
MFE
ORCL
ACL
GOOG
PSSI
GILD
TLCR
LEA
MDR
SNV
Put/
Call
% of
Portfolio
0.36%
0.36%
0.30%
0.30%
0.28%
0.23%
0.23%
0.21%
0.20%
0.01%
0.01%
0.01%
0.01%
Activity
Added 34.34%
Cut -86.15%
Added 79.68%
Cut -0.01%
Unchanged
New
Cut -54.53%
Cut -70.64%
Unchanged
Unchanged
Unchanged
Cut -82.98%
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$19,832
$19,634
$16,549
$16,471
$15,140
$12,541
$12,815
$11,597
$11,010
$646
$690
$809
$425
# of Shares
1,955,848
515,860
2,045,653
801,100
2,000,000
617,500
500,000
507,065
1,000,000
12,800
8,800
124,900
1,223,988
-
This is a free past issue.

You can view the most current issue by clicking here.
Next Page: Viking Global

Q3 2010
56
Andreas Halvorsen
Viking Global
A Tiger Cub, formerly of Julian

Robertsons Tiger Management
Have been directing more capital to
their best ideas & are taking a more
concentrated portfolio approach than
in the past
Key Takeaways
2%3'4"$565"#$-'
;8+8G5*H"%&;)%
D8,7*?%&DO!ZA)%
<H$--%&<36)%
!?,=*1Z7*?%&!F@2)%
344*1%F*M8#%&:/F)%
!*1%&!/2)%
S,+-*1%'.,5?,7$H+87,#-%&S'O)%
S$##'*81+%&S(')%
;5*J1%;,-+#$%&;;O)%
'*+,-.%&'/0)%
!##-758"+-%P$,#+.7,5$%&FI9:)%
;*-+7*%&;/60)%
!""#$%&!!'()%
;,5$QH-8*1%&;Q2)%
%
."/,'!"89/%6%/)':&6':;-'
:$5*4%&:9:)%
(817,5$%P*#E81G-%&(2;9)%
2$J-%;*5"%&2S6!)%
;*#G,+$%',#?*#8N$%&;()%
!H+*E$-B%&!I6L)%
!E*M$%6>-+$?-%&!IA3)%
/J$1-%;*5181G%&/;)%
08?$%S,51$5%&0S:)%
!?$587,1%34"5$--%&!:')%
L$>7*5"%&L3K)%
F*5G,1%6+,1#$>%&F6)%
I*##,5%<$1$5,#%&I<)%
This
quarter, Andreas Halvorsens

Viking Global has been added to the newsletter.
Before founding Viking, Halvorsen plied his
trade at Julian Robertsons Tiger Management.
Vikings portfolio saw some notable activity in
Q3, including two brand new large positions in
Citigroup (C) and Viacom (VIA.B). The stakes
are Vikings fifth and sixth largest US equity
longs and each represent over a 4% position
(calculated based on reported 13F assets). In
his second quarter letter to investors, Halvorsen
revealed that the hedge fund was allocating
Q3 2010
more capital to its portfolio managers best

ideas. As such, the hedge fund is running a
more concentrated portfolio than in the past.
(It is also worth noting that the firms Chief
Investment Officer, David Ott, has departed).
Viking also initiated brand new positions in
Aon (AON) and CareFusion (CFN), two stocks
covered in-depth later in this issue in our
Hedge Fund Favorites section.
Back in the second quarter, HFW
profiled American Tower (AMT) in the
Favorites section, and it was one of Vikings
largest holdings. During the third quarter, they
reduced their position by 27% but it still
remained their third largest position. And
while they reduced their exposure to one
wireless tower stock, they started a brand new
position in AMTs competitor, Crown Castle
(CCI). John Griffins Blue Ridge Capital owns
the latter in size.
Regarding positions that Viking already
owned but augmented, they doubled their Estee
Lauder (EL) exposure and this is worth noting
as numerous hedge funds have accumulated
shares over the past few quarters (it is a large
holding at Stephen Mandels Lone Pine
Capital). In terms of positions Viking Global
exited entirely, Xerox (XRX), Owens Corning
(OC), Colgate Palmolive (CL) and Lincare
Holdings (LNCR) are the most notable.
Since the third quarters expiration,
Halvorsens hedge fund has been busy
accumulating more shares of Guess (GES), a
holding that shows up as a new position in this
portfolio disclosure.
View Viking Globals Updated

57
Viking Global
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
INVESCO LTD
COMCAST CORPORATION
AMER TOWER CP
ORACLE CORPORATION
CITIGROUP INC
VIACOM INC CL B
SHERWIN WILLIAMS CO
ESTEE LAUDER COS INC
DANAHER CP
GUESS INC.
HESS CP
AMAZON.COM, INC.
FLOWSERVE CP
TIME WARNER CABLE
P N C FIN SVCS GR
CIGNA CP
E M C CP
DAVITA INC
TYCO INTL LTD
EXXON MOBIL CP
AON CORP
UNIVERSAL HLTH SVC B
VALEANT PHARMA INTL
MEDNAX
WATSON PHARMA
WELLPOINT INC.
CROWN CASTLE INTL
DEVON ENERGY CP
METLIFE INC
COSTCO WHOLESALE
MEDCOHEALTH SOLUTNS
JP MORGAN CHASE CO
UNITEDHEALTH GROUP
APPLE INC.
CYTEC IND INC
CAREFUSION CORP
HLTH MGMT ASSOC A
CVS CAREMARK CP
C.H. ROBINSON
GOLDMAN SACHS
Ticker
IVZ
CMCSA
AMT
ORCL
C
VIA-B
SHW
GR
EL
DHR
GES
HES
AMZN
FLS
TWC
PNC
CI
EMC
DVA
TYC
XOM
AON
UHS
VRX
MD
ESRX
WPI
WLP
CCI
DVN
SWK
MET
POT
MDRX
COST
MHS
JPM
UNH
AAPL
CYT
CFN
HMA
CVS
CHRW
GS
Put/Call
% of
Portfolio
8.80%
4.99%
4.75%
4.68%
4.10%
3.66%
3.47%
3.41%
3.30%
2.71%
2.58%
2.53%
2.52%
2.51%
2.51%
2.44%
2.39%
2.38%
2.09%
2.05%
2.04%
1.89%
1.81%
1.74%
1.53%
1.34%
1.27%
1.24%
1.22%
1.15%
1.14%
1.14%
1.12%
0.91%
0.89%
0.89%
0.88%
0.84%
0.83%
0.77%
0.70%
0.70%
0.66%
0.62%
0.55%
Activity
Added 4.72%
Added 10.22%
Cut -27.44%
Cut -24.22%
New
New
Cut -16.74%
Cut -13.56%
Added 113.39%
Added 39.26%
New
Added 34.26%
New
Added 5.63%
Added 101.43%
Cut -6.03%
Added 5.72%
Added 56.87%
Added 66.30%
Cut -52.05%
New
New
Added 21.81%
Added 3522%
Cut -0.38%
Cut -28.62%
New
New
New
Added 66.93%
Added 22.32%
Cut -40.85%
New
New
New
Added 116.26%
Cut -65.82%
New
New
New
New
Added 68.02%
Cut -9.39%
Cut -69.61%
New
Value x
$1000
$812,718
$461,171
$438,790
$432,083
$378,558
$337,653
$320,117
$314,539
$304,859
$250,307
$238,502
$233,872
$232,637
$231,335
$232,226
$225,517
$220,860
$220,129
$192,551
$189,388
$188,422
$174,309
$167,124
$161,057
$140,833
$123,488
$117,338
$114,831
$112,542
$106,555
$105,573
$105,472
$103,060
$84,408
$82,263
$82,343
$81,169
$77,779
$76,328
$70,902
$64,451
$64,244
$61,243
$57,193
$51,181
# of Shares
38,281,593
25,507,275
8,560,100
16,092,500
97,066,200
9,330,026
4,260,282
4,266,100
4,821,441
6,163,700
5,870,100
3,955,900
1,481,200
2,114,200
4,301,285
4,344,400
6,172,729
10,838,472
2,789,382
5,156,246
3,049,400
4,456,900
4,300,694
6,429,442
2,642,287
2,535,689
2,773,299
2,027,400
2,549,100
1,645,900
1,722,800
2,743,104
715,500
4,570,052
1,275,600
1,581,700
2,132,100
2,215,300
269,000
1,257,581
2,594,670
8,387,033
1,946,100
817,986
354,000

Q3 2010
58
Viking Global
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
Company Name
KB HOME
AMERIGROUP CORP
BAIDU.COM, INC. - ADS
CAMERON INTL CP
NOBLE ENERGY INC
HUMAN GENOME SCIENCES
CHECK POINT SOFTWARE
ILLUMINA, INC.
GAFISA SA ADR
CHARLES RIVER LAB
UNITED THERAPEUTICS
WELLCARE HEALTHPLANS
MAGELLAN HEALTH
HEXCEL CP DELAWARE
MODUSLINK GLOBAL
WALGREEN CO
XEROX CP
CORINTHIAN COLLEGES
SMITHFIELD FOODS
ACE LTD
NEWS CORP CL A
COLGATE PALMOLIVE
KEYCORP
PRUDENTIAL FINCL INC
UNITED TECH
BIOVAIL CORP
AMER EXPRESS INC
TIME WARNER INC
CHARLES SCHWAB
EQUITY RESIDENTAL
OWENS CORNING
AUTODESK, INC.
ADOBE SYSTEMS
DOLLAR GENERAL CORP
FRONTLINE LTD
LABORATORY CORP
PALM
MORGAN STANLEY
PRECISION CASTPARTS
BAKER HUGHES INTL
HALLIBURTON CO
VIRGIN MEDIA INC.
B R E PROP INC
AGRIUM INC.

Continued
Ticker
KBH
AGP
BIDU
CAM
NBL
HGSI
CHKP
ILMN
GFA
CRL
UTHR
WCG
MGLN
HXL
MLNK
WAG
XRX
COCO
LNCR
SFD
ACE
NWSA
CL
KEY
PRU
UTX
BVF
AXP
TWX
SCHW
EQR
OC
ADSK
ADBE
DG
FRO
LH
HPQ
MS
PCP
BHI
HAL
VMED
BRE
AGU
Put/Call
% of
Portfolio
0.48%
0.43%
0.41%
0.38%
0.36%
0.34%
0.33%
0.30%
0.29%
0.28%
0.24%
0.17%
0.15%
0.10%
0.00%
0.00%
Activity
Added 38.31%
New
New
New
New
Cut -46.97%
New
Cut -21.93%
New
New
New
New
New
New
Unchanged
New
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$44,286
$39,369
$37,630
$34,947
$33,460
$31,044
$30,260
$27,876
$26,374
$26,198
$22,067
$15,954
$13,945
$9,184
$0
$75
# of Shares
3,908,800
927,000
366,700
813,500
445,600
1,042,121
819,400
566,600
1,702,702
790,300
394,000
550,930
295,200
516,281
146
2,250
-
Next: Farallon Capital

Q3 2010
59
Thomas Steyer
Farallon Capital
Typically focuses on risk arbitrage

strategies
Founded Farallon in 1986 & invests
in equities, private investments, debt,
etc.
Key Takeaways
2%3'4"$565"#$-'
PHE-*1%',78C87%'5*"$5+8$-%&P'')%
<$1=>?$%&<32@)%
F7!C$$%&FQ3)%
0,5G$+%&0<0)%
F,581$5%31$5G>%&F3)%
AH5G$5%L81G%&AL;)%
W18+$E%0$7.%&W0:)%
%
."/,'!"89/%6%/)':&6':;-'
D8-,%&D)%
S,#RF,5+%&SF0)%
VH$-+%I8,G1*-+87%&I<:)%
;,5?,4%&LF:)%
<*#E?,1%6,7.-%&<6)%
SH48%'.,5?,+$7.%&S:)%
68G1$+%&6O<)%
<$5E,H%!?$58-+$$#%&<2!)%
Thomas Steyers Farallon Capital is also
added to the newsletter this quarter. Steyer

founded the firm in 1986 and today it is a multibillion dollar hedge fund. Prior to founding
Farallon, Steyer was an analyst in Morgan
Stanleys mergers & acquisitions department
and also an associate on Goldman Sachs risk
arbitrage desk. Steyer graduated Summa Cum
Laude from Yale University and received his
MBA from Stanfords Graduate School of
Business. And while Steyer founded the firm,
Farallon has given key man status to Andrew
Spokes at the firm, enabling a succession plan
should Steyer ever depart. Should both Steyer
and Spokes leave, then the funds would be
liquidated.
Farallon Capital typically employs risk
arbitrage strategies and youll see evidence of
that in their portfolio below. The hedge funds
largest position is Alcon (ACL), a name they
added to by 17.5% in the quarter. Their second
largest stake is in puts on Novartis (NVS) and
Q3 2010
these two positions are part of a corresponding

merger arbitrage trade. The investment thesis
behind Alcon is detailed later in this issue in the
Hedge Fund Quick Pitch section.
But
basically, Novartis owns a solid amount of ACL
and hedge funds have been betting that
Novartis will acquire the rest of the company at
some point. And, as often is the case in merger
arbitrage trades, Farallon has gone long the
target company that potentially could be
acquired (ACL), and short the company that
would be doing the acquiring (NVS via puts).
There are other obvious risk arbitrage trades in
Farallons portfolio, including their brand new
position in Genzyme (GENZ).
In Farallons portfolio on the next page,
disregard the new position that shows up in
Hewitt Associates (HEW) as Aon (AON) has
since acquired the company. The investment
thesis behind the new Aon entity is detailed
later in this issue and Farallon again was
playing the takeover arbitrage. Given their
strategys focus, it should also come as no
surprise that Steyers firm ramped up its
holdings in Potash (POT) as the company
received a takeover bid in the quarter (which
has since been rescinded).
Another position Farallon heavily added
to was their stake in Allegheny Energy (AYE),
boosting their position size by over 2,400%. It
is now their third largest US equity long.
Regarding positions the hedge fund completely
sold out of, their exit from Visa (V) is noted as
numerous other hedge funds sold shares of the
company as well. In fact, Visa is a consensus
sell in Q3 by the hedge funds covered in this
edition of Hedge Fund Wisdom.
View Farallon Capitals Updated
60
Farallon Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Company Name
ALCON INC
NOVARTIS AG
ALLEGHENY ENERGY INC
HUDSON PACIFIC PROPERTIES
VIACOM INC CL B
GENZYME CORPORATION
HOME DEPOT INC
HEWITT ASSOC INC A
CHARLES SCHWAB
B M C SOFTWARE
STATE STREET CP
ORACLE CORPORATION
CHECK POINT SOFTWARE
MCAFEE, INC
WELLS FARGO & CO
TARGET CP
THE DIRECTV GROUP, INC.
SIRIUS SATELLITE RADIO
**NOTES**
MARINER ENERGY INC
MASTER SILICON CARBIDE
CROWN CASTLE INTL
SAMES CORPORATION
KNOLOGY, INC.
BURGER KING HOLDINGS
CAPITALSOURCE **NOTES**
DISCOVERY COMMUNICATIONS
YINGLI GREEN ENERGY
**NOTES**
UNITED TECH
ENERGY PARTNERS LTD
WHIRLPOOL CP
JONES LANG LASALLE
CARRIZO OIL & CO **NOTES**
COVIDIEN LTD
LIFELINE SYSTEMS
FREIGHTCAR AMERICA
BEACON ROOFING SUPPLY
MI DEV INC CL A
GEOEYE, INC.
EXXON MOBIL CP
TRANSDIGM GRP INC
FEI COMPANY
CASEY'S GENERAL STORES
BAXTER INTL INC
VERISK ANALYTICS, INC.
% of
Portfolio
7.10%
5.75%
4.46%
3.97%
3.76%
3.71%
3.66%
3.60%
3.53%
3.24%
3.13%
2.74%
2.73%
2.57%
2.33%
2.12%
2.04%
Activity
Added 17.55%
Added 113.22%
Added 2434.5%
New
Cut -1.93%
New
Added 0.98%
New
Added 5.01%
Added 2.31%
Added 10.93%
Cut -29.95%
Cut -22.58%
New
Unchanged
New
Cut -9.46%
Value x
$1000
$208,002
$168,339
$130,692
$116,372
$110,199
$108,663
$107,300
$105,290
$103,486
$94,926
$91,702
$80,147
$79,917
$75,380
$68,102
$62,097
$59,739
# of Shares
1,247,088
2,919,000
5,330,000
7,108,860
3,045,000
1,535,000
3,387,000
2,085,000
7,445,000
2,345,000
2,435,000
2,985,000
2,164,000
1,595,000
2,710,000
1,162,000
1,435,000
SIRI
ME
MSCI
CCI
POT
BIN
KNOL
BKC
CSE
DISCK
1.79%
1.75%
1.73%
1.72%
1.70%
1.66%
1.63%
1.61%
1.39%
1.34%
Unchanged
New
Cut -7.12%
Cut -18.06%
Added 219.30%
Cut -11.35%
Added 0.56%
New
Cut -19.61%
Cut -4.63%
$52,513
$51,368
$50,665
$50,463
$49,809
$48,499
$47,843
$47,163
$40,751
$39,336
52,888,000
2,120,000
1,525,600
1,143,000
345,800
2,118,770
3,562,394
1,975,000
41,000,000
1,030,000
YGE
UTX
EPL
WHR
JLL
CRZO
COV
LIFE
RAIL
BECN
MIM
GEOY
XOM
TDG
FEIC
CASY
BAX
VRSK
1.29%
1.21%
1.17%
1.16%
1.14%
1.13%
1.04%
0.99%
0.99%
0.93%
0.91%
0.86%
0.85%
0.82%
0.78%
0.67%
0.55%
0.54%
Unchanged
New
Unchanged
Added 195.76%
Cut -38.90%
Cut -4.04%
Unchanged
Added 21.34%
Unchanged
Cut -35.48%
Unchanged
Cut -0.40%
Unchanged
Cut -51.55%
Added 6.90%
Added 83.41%
Unchanged
Cut -60.63%
$37,879
$35,473
$34,341
$33,906
$33,473
$33,172
$30,544
$28,994
$29,028
$27,232
$26,538
$25,292
$24,889
$24,013
$22,725
$19,526
$16,221
$15,826
32,838,000
498,000
2,859,337
418,800
388,000
35,655,000
760,000
621,000
1,180,000
1,869,032
2,419,116
624,807
402,800
387,000
1,161,200
467,691
340,000
565,000
Ticker
ACL
NVS
AYE
HPP
VIA-B
GENZ
HD
HEW
SCHW
BMC
STT
ORCL
CHKP
MFE
WFC
TGT
DTV
Put/Call
PUT

Q3 2010
61
Farallon Capital
Rank
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
Company Name
CHIQUITA BRANDS
ARC SIGHT, INC.
LIVE NATION, INC.
COMPANIA CERV UNI SA
BRINKER INTL INC
SANDRIDGE ENERGY INC
PSYCHIATRIC SOLUTIONS, INC.
TOWN SPORTS INTL
CAPITALSOURCE **NOTES**
COGENT, INC.
FRESH DEL MONTE PROD
NRG ENERGY INC
SAVIENT PHARMACEUTICALS
EBAY INC.
AMAG PHARMACEUTICALS
DOLE FOOD CO INC
LIGAND PHARMACEUTICALS
LINKTONE LTD
ARQULE, INC.
RAM ENERGY RESOURCES
WUXI PHARMATECH ADS
GOLDMAN SACHS
CARMAX INC
MILLIPORE **NOTES**
E M C CP
QUEST DIAGNOSTC
VISA INC.
SMITH INTL INC
DOLLAR GENERAL CORP
SIGNET GRP PLC ADR
GERDAU AMERISTEEL CP
MILLIPORE CP
WAL MART STORES
DRESSER-RAND GROUP

Continued
Ticker
CQB
ARST
LYV
CU
EAT
ESRX
SD
PSYS
CLUB
CSE
COGT
FDP
NRG
SVNT
EBAY
AMAG
DOLE
LGND
LTON
ARQL
RAME
WX
GS
KMX
MIL
EMC
DGX
V
SII
DG
SIG
GNA
MIL
WMT
DRC
Put/Call
% of
Portfolio
0.52%
0.51%
0.48%
0.45%
0.43%
0.42%
0.42%
0.40%
0.38%
0.34%
0.33%
0.32%
0.25%
0.23%
0.19%
0.18%
0.15%
0.06%
0.06%
0.05%
0.02%
Activity
Unchanged
New
Added 59.29%
Cut -51.17%
New
New
Unchanged
Unchanged
Unchanged
Cut -80.39%
New
Unchanged
Cut -27.17%
New
Unchanged
New
New
Unchanged
Unchanged
Unchanged
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Value x
$1000
$15,226
$14,915
$14,166
$13,044
$12,681
$12,224
$12,361
$11,575
$11,043
$9,901
$9,523
$9,316
$7,266
$6,838
$5,434
$5,335
$4,419
$1,613
$1,829
$1,494
$664
# of Shares
1,150,000
342,500
1,433,800
234,386
672,400
251,000
2,176,298
345,000
4,060,082
10,000,000
895,000
429,300
349,000
299,000
222,700
310,000
483,000
1,020,634
1,279,000
290,000
425,416
-
Next: Icahn Capital

Q3 2010
62
Carl Icahn
Icahn Capital
Known as a rabblerouser and a

corporate raider; typically takes
controlling stakes & uses activism to
generate shareholder value
Key Takeaways
2%3'4"$565"#$-'
F,++$#%&F!0)%
F,-7*%&F!6)%
I>1$G>%&IK2)%
;*??$578,#%F$+,#-%&;F;)%
;,E$17$%I$-8G1%6>-+$?-%&;I26)%
%
."/,'!"89/%6%/)':&6':;-'
F875*-%6>-+$?-%&F;96)%
K,.**[%&KP//)%
31-7*%&36D)%
S$1E>-%&S32)%
A#*7BMH-+$5%&A(/!VZ'L)%
6?8+.%U%S$--*1%&6SP;)%
!1,E,5B*%'$+5*#$H?%&!';)%
ast, but certainly not least, Carl Icahn

is also added to the Hedge Fund Wisdom
newsletter line-up. The well-known investor
made a name for himself as a corporate raider
and today his shareholder activism is his
trademark. He runs a somewhat concentrated
portfolio and takes large, controlling stakes in
companies he is targeting to shake up.
The first major portfolio theme youll see
in Icahns portfolio (or lack thereof) for the
third quarter is the fact that he sold out of all his
(presumed) Gulf oil spill plays. He exited
shares of Ensco (ESV) and Anadarko Petroleum
(APC), two stocks hedge funds added heavily to
back in the second quarter as shares tanked due
to the oil spill. It appears as though Icahn has
taken the short-term gain and exited the
investments almost as an event-driven play as
the well was capped and the leak stopped
gushing oil.
Of the positions Icahn already owned, he
added heavily to his stakes in Mentor Graphics
(MENT), Hain Celestial Group (HAIN), and
Lawson Software (LWSN). The activist investor
also initiated a few new positions in the quarter,
Q3 2010
most notably in Dynegy (DYN), a company

whose takeover he opposed. Of the newly
started stakes, Mattel (MAT) is the largest.
Turning to positions Icahn dumped in
the quarter, Yahoo! (YHOO) is worth
highlighting.
He originally started selling
shares en masse back in the fourth quarter of
2009. And now, he has completely exited his
stake in a stock he will want to quickly forget, as
it was nothing but a headache for him. Icahns
top holding continues to be Motorola (MOT) as
he bets on the companys turnaround after
spinning off some of its assets.
Another theme youll notice in the
corporate raiders portfolio is his propensity to
own health related companies, and in
particular, pharmaceuticals. Genzyme (GENZ),
Biogen
Idec
(BIIB),
and
Amylin
Pharmaceuticals (AMLN) have seemingly been
mainstays in Icahns portfolio as he attempts to
work his magic. In other sectors, he maintains
his positions in Lions Gate Entertainment
(LGF) and Take Two Interactive (TTWO),
positions that have been detailed on
MarketFolly.com numerous times.
Keep in mind also that Icahn typically
holds investments in other asset classes
(especially debt) that do not show up on SEC
13F filings. As such, the snapshot on the next
page is by no means his full portfolio. In recent
activity since the quarters end, hes also
acquired more Tropicana Entertainment.
View Icahn Capitals Updated

63
Icahn Capital
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Company Name
MOTOROLA INC
GENZYME CORPORATION
BIOGEN IDEC INC
CHESAPEAKE ENERGY CP
AMYLIN PHARMACEUTICALS
LIONS GATE ENTMT CP
MENTOR GRAPHICS
HAIN CELESTIAL GROUP
LAWSON SOFTWARE, INC.
TAKE-TWO INTERACTIVE
REGENERON PHARMA
MATTEL INC
CYBERONICS, INC.
MASCO CP
NRG ENERGY INC
DYNEGY INC CL A NEW
FOREST LABS CL A
COMMERCIAL METALS CO
CADENCE DESIGN SYSTEMS
EXELIXIS, INC.
LIONS GATE ENTMNT
**NOTES**
LIONS GATE ENTMNT
**NOTES**
ADVENTRX PHARMA
MICROS SYSTEMS, INC.
YAHOO! INC.
ENSCO INTL INC
WENDYS INTL INC
BLOCKBUSTER INC
SMITH & WESSON
ANADARKO PETROLEUM
Ticker
MOT
GENZ
BIIB
CHK
AMLN
LGF
MENT
HAIN
LWSN
TTWO
REGN
MAT
CYBX
MAS
NRG
DYN
FRX
CMC
ENZN
CDNS
EXEL
Put/Call
% of
Portfolio
34.04%
14.78%
14.38%
7.51%
5.39%
5.23%
2.72%
2.41%
2.22%
1.99%
1.33%
1.13%
1.12%
1.10%
0.99%
0.93%
0.75%
0.71%
0.63%
0.44%
0.18%
Activity
Added 12.76%
Unchanged
Unchanged
Added 30.64%
Unchanged
Added 11.60%
Added 107.5%
Added 73.78%
Added 72.96%
Added 4.38%
Unchanged
New
Unchanged
New
Unchanged
New
Unchanged
New
Unchanged
New
Unchanged
Value x
$1000
$1,708,915
$741,879
$721,715
$376,965
$270,452
$262,495
$136,313
$120,873
$111,461
$99,823
$66,968
$56,903
$56,241
$55,293
$49,487
$46,752
$37,522
$35,603
$31,690
$21,852
$9,240
# of Shares
200,341,729
10,480,000
12,860,205
16,643,030
12,971,328
35,713,655
12,896,232
5,040,577
13,159,546
9,844,502
2,444,081
2,425,520
2,107,972
5,022,080
2,376,880
9,600,001
1,213,120
2,457,052
2,816,861
2,864,000
2,357,110
LGF
0.02%
Cut -27.10%
$906
923,200
LGF
ANX
MCRS
YHOO
ESV
WEN
BLOAQ.PK
SWHC
APC
0.01%
0.01%
Cut -72.90%
Unchanged
Sold
Sold
Sold
Sold
Sold
Sold
Sold
$334
$281
343,200
138,377
-
*** Please Note: Current & future issues of the newsletter

also include portfolio updates on Barry Rosenstein's JANA
Partners, Alan Fournier's Pennant Capital, and Philippe
Laffont's Coatue Management. In total, we now track 25 top
hedge fund managers.
Up Next: Hedge Fund Quick Pitch
Q3 2010
64
This section features equity analysis written by hedge fund analysts
Hedge Fund Quick Pitch:

Brief Investment Thesis Summaries
Overview
This quarters issue of Hedge Fund Wisdom features a new section: the hedge fund quick pitch.
Each brief summary below is meant to serve as an elongated elevator pitch of a hedge funds
potential investment thesis. Ideas detailed below cover a myriad of investment strategies including
value, growth at a reasonable price (GARP), and merger arbitrage. Featured in this issue: Cisco
Systems (CSCO), Express Scripts (ESRX), Alcon (ACL), and Sirius XM Radio (SIRI).
Value Play:
Cisco Systems (CSCO)
Cisco is a global large-cap leader in the development and sale of internet
networking products. It has +$40bn in sales, a $110bn market cap, 63% gross profit
margin and 26% EBITDA margin. It is projected to grow top and bottom-line by 11% and
18% annually for the next three years, trades at 11.3x forward earnings (excluding net
cash) and has a 10% free cashflow yield. It competes with companies like Juniper (JNPR),
Aruba (ARUN), F5 (FFIV), NetGear (NTGR), Motorola (MOT), Avaya and Huawei.
David Teppers Appaloosa Management established an almost 4% new position in
Cisco in 3Q, which is now even more interesting considering the company just reported
very disappointing guidance and dropped close to 20% to its 52-week lows. So, investors
currently have the opportunity to buy the stock at a lower cost-basis than Appaloosas
(assuming they still own the position). The reasons investors were disappointed were
weak projected growth and gross margins, driven primarily by softness in Europe, state
government spending, and market share loss in the US set-top box business.
Cisco checks off all value-investor requirements:
-
Cheap valuation (not paying for growth)

Strong barriers to entry in a highly concentrated industry (where Cisco is the
market leader)
Solid long-term fundamentals (internet bandwidth usage increases
exponentially with mobility and video)
Fortress balance sheet ($25bn of net cash)
High returns on invested capital (30% ROIC).
The criticism is that Ciscos stock hasnt really done much over a 10-year period, so
it has somehow failed miserably to realize any value from very strong fundamentals. Also,
there are increasing concerns that Cisco will lose market share and/or its gross margin
will deteriorate. Finally, Ciscos products and strategy are geared more towards
integrated IT infrastructure, which is under attack by cloud computing.
Next: Express Scripts (ESRX)
Q3 2010
65

Growth at a Reasonable Price:
Express Scripts (ESRX)
While the last quick pitch was only purchased by a few hedge funds in the quarter, Express
Scripts (ESRX) garnered more interest from investors. Stephen Mandels Lone Pine Capital
established a new position in ESRX in 3Q. Larry Robbins Glenview Capital doubled its exposure to
the stock, John Griffins Blue Ridge Capital boosted its holdings by 36%, and Janus increased its
ownership by half. Larry Robbins has pitched this name as an attractive investment at two
conferences: Ira Sohn (notes here) and then at Invest For Kids (notes here). He sees the company as
poised to benefit from the generic drug boom in 2012 and likes their cash stockpile.
Heightened investor concerns around pricing pressures and contract displacement created a
buying opportunity in the pharmacy benefit management (PBM) sector during 3Q. Walgreens (WAG)
was threatening to stop participating in CVS/Caremark (CVS) network plans as a distributor, but the
dispute was also resolved in 3Q.
ESRX is a large-cap pharmacy benefit management (PBM) company. It is the third largest
behind Medco Health (MHS) and CVS/Caremark (CVS). It has $45bn in sales, a $28bn market cap,
8% gross profit margin and 6% EBITDA margin. It is projected to grow top- and bottom-line by 1%
and 16% annually for the next three years, and trades at 18x forward earnings and 6% free cashflow
yield.
PBMs contract with healthcare providers and employers and help them control healthcare
costs by establishing and managing lists of approved drugs for their clients. They make a spread
between their cost and what they charge for prescription drugs. Their economics improve with higher
penetration of generic drugs (higher spread) and mail ordering (lower distribution costs). The low
gross margin in this business is due to the relatively low value-add to the final product (effectively,
PBMs are distributors). On the positive side, PBMs tend to have highly recurring, stable revenues,
which reduces their cost of capital.
ESRX is an earnings power story. In December 2009, it acquired WellPoints (WLP) PBM
business (NetRx), which is expected to create significant synergies that will expand the companys
gross margin and deliver +15% annual earnings growth despite flat revenues. NetRx has a high
generics penetration that should boost ESRX gross margins. Also, managements cost-savings
estimates seem conservative, so the company has the potential to surprise substantially (management
projected 1% of revenues in cost-cuts versus the CVS/Caremark mergers 3%).
Each issue of the newsletter analyzes different stocks. To see the latest
analysis, head to HedgeFundWisdom.com to subscribe
Up Next: Alcon (ACL)
Q3 2010
66

Merger Arbitrage:
Alcon (ACL)
Alcon (ACL) is the largest player in the ophthalmology market with products ranging from
surgical equipment to consumer eye-care. It generates $7bn in annual revenue and has a $49bn
market cap. It is highly profitable with a 75% gross and 35% operating margin, and it has a low-30%
return on invested capital.
Alcon was purchased by Nestle in 1977. Nestle floated to the public a 25% stake in the
company in 2002. In April 2008, Novartis (NVS) purchased from Nestle a 25% stake in Alcon for
$143 per share. And in August of 2010, Novartis exercised its call option to acquire Nestles
remaining stake at a price of $181 per share.
In January 2010, Novartis made an offer of 2.8 shares of Novartis stock for each share of Alcon
for the stake owned by the public (which currently values Alcon at $156 per share). Still, Alcon is
trading at $163 because the offer has been rebuffed so far and investors are looking for a more
equitable offer to the Nestle stake takeout that was done at $181. Arbitrageurs are betting that
Novartis will increase the effective exchange ratio, so they buy Alcon and short Novartis in order to
hedge out the risk that Novartis shares may go down by the time the deal closes.
Novartis closed its acquisition of Nestls stake in 3Q, which increased investors confidence
that a buyout of the public shares will happen sooner rather than later. In addition, Alcons share
price is tied to the value implied by the exchange ratio offered by Novartis. So, as Novartis shares
dropped in late 2Q / early 3Q, so did Alcon shares. At $135, the spread to the Nestle takeout at $181
was seen as too wide and the value of Alcons franchise was under-appreciated by the market.
This combination motivated some new funds to add Alcon to their portfolio. Magnetar Capital
started a new position in Alcon and made it its top portfolio holding with a 12% weight. Steven
Cohens SAC Capital maintained Alcon as its #1 position and increased its exposure during the
quarter by 20%. John Paulsons hedge fund Paulson & Co increased its exposure by 30%. Highbridge
Capital doubled its position while Jamie Dinans York Capital and Thomas Steyers Farallon Capital
also added shares of ACL. And while some funds are obviously short Novartis as part of the arbitrage
pair (though they dont disclose it), other funds have elected to purchase puts on Novartis to round
out the merger-arb trade.
Up Next: Sirius XM Radio (SIRI)

Q3 2010
67

Sirius XM Radio (SIRI)
Sirius operates a subscription-based high-quality satellite
radio network, which is primarily distributed through automakers
and comes pre-installed in many cars. It generates $2.8bn in sales,
has a $5.5bn market cap, and has a 60% gross & almost 20% EBITDA
margin. The wide gap between gross and EBITDA margin is
attributable to high sales & marketing expenses (~$35 per gross
additional subscriber) and very high subscriber acquisition costs
(~$60 per gross addition).
The business has a high churn rate: Sirius has 20mm customers and is adding 7.5mm new
customers every year but loses 6.5mm, so net subscriber additions are 1mm, or 5% growth.
(However, churn was only 1.8% last quarter). Another way to grow top-line is by increasing the
Average Revenue per User (ARPU), which tends to be fairly stable. After going through the merger
with XM Satellite Radio in mid-2008, Sirius became a highly-levered company with relatively low free
cashflow, so its equity value has been highly volatile.
Sirius is effectively a very levered call on the rebound of auto sales and managements ability to
navigate its precarious financial situation and competitive positioning. The company has both high
fixed costs (programming and content, as well as administrative and engineering expenses are highly
scalable) and high gearing with debt at 4x EBITDA. Therefore, it has both operating and financial
leverage, and operates in a highly cyclical industry.
Given the current low point in the auto sales cycle, Sirius value could explode, as long as it can
defend its market share from the likes of Pandora. Analysts estimate a slow pick-up in auto sales, but
even so, Sirius earnings could jump to 13c by 2013 and it trades at 11x. However, if auto sales
rebound much faster, Sirius can surprise investors and show much higher earnings and cashflows,
which will allow it to pay back debt much faster and eliminate the overhang of high leverage. The risk
is that due to the companys high leverage even small losses in subscribers to competing internetbased radio services could lead to negative cashflows.
Leon Coopermans Omega Advisors added Sirius as a new position in his portfolio during 3Q,
perhaps as commentary on the direction of auto sales started becoming increasingly positive, or after
the stock formed a satisfactory base as the company increased its revenue guidance.
Brian Zied, founder of Charter Bridge Capital (and formerly of Maverick Capital), is bullish on
SIRI shares and pitched them at the recent Invest For Kids Conference. He highlights that 60% of
new cars have built-in satellite radios and that 46% of those convert into paying customers. He
acknowledges the companys leverage but expects them to pay down debt sooner rather than later
(noting that there are no major maturities until 2013). Lastly, he feels the company could potentially
be acquired, as John Malone (chairman of Liberty Media) is a significant shareholder.
Update: Since publication, shares of SIRI are up

almost 60%
Q3 2010
Up Next: Hedge Fund Favorites
68

In-Depth Equity Analysis
Overview
While the previous section focused on quick summaries of an investment thesis, this next
area of the newsletter differs in two facets. First, the Hedge Fund Favorites section delves into much
greater detail in an attempt to gain a better understanding of a hedge funds given investment thesis.
Hedge Fund Quick Pitches are just that: a quick pitch. The Favorites section approaches an
investment just as a hedge fund analyst would in preparation to present the full idea to a fund
manager. Second, the investment ideas detailed in the following pages are much more consensus
picks amongst the hedge funds profiled in this newsletter. While various managers purchased the
quick pitch equities during the quarter, the favorites are equities that truly jumped off the page
when reviewing the latest portfolio updates (i.e. sizable purchases were made by numerous hedge
funds).
When presenting an investment idea to a fund manager, a hedge fund analyst outlines
numerous aspects of a thesis. The Hedge Fund Favorites section mirrors this approach and looks at
an investment thesis from the following angles:
-
Company background
Business model
Cursory first impressions of the idea
A second, deeper look at the potential of the company
The investment thesis
The contrarian/pessimistic viewpoint
Potential upside of the investment (reward)
Potential downside of the investment (risk)
Market valuation (EV/EBITDA, etc)
Potential catalysts (if any)
Detailed financials (models, etc)
Comparables (comparisons to industry peers/competitors)
This issue of Hedge Fund Wisdom takes an in-depth look at the following equities in this
quarters Hedge Fund Favorites section:
-
Aon (AON)
CareFusion (CFN)
Up Next: In-Depth Analysis of Aon (AON)

Q3 2010
69

Equity Analysis
Aon Corp (AON)
Aon Corp (AON)

Share Price
52-week High
52-week Low
Market Cap
$41.01
$44.34
$35.10
$11.11B
Hedge Fund Activity
John Paulsons hedge fund firm Paulson & Co started a new position in Aon Corp (AON) in the
third quarter. Andreas Halvorsens hedge fund Viking Global also initiated a new $183 million
position in the company. And while Larry Robbins Glenview Capital already owned AON, the hedge
fund boosted its position size by 592% this past quarter. Needless to say, numerous separate and
prominent managers were acquiring shares.
Back in the second quarter of this year, Jay Petscheks Corsair Capital Management singled out
this company as a compelling opportunity and laid out the rationale behind the investment. In his
letter to investors he wrote, We have followed AON with interest as part of our work in the insurance
sector, and believe it is a high quality franchise which is undervalued due to the weak insurance cycle.
The investment recently became compelling when AON announced it was acquiring Hewitt Associates
(HEW), one of the largest HR consulting firms.
Petscheck sees the risk/reward skew as favorable and goes on to say that, We estimate 2011
economic EPS to be $4-4.20 per share, growing to approximately $5 per share in 2012. Investing at
less than 9x earnings for a business with a wide moat, low capital needs, strong management, and
more cyclical upside than downside seems like excellent risk/reward. There should be limited
downside, and we think the upside opportunity is to get 13-14x our estimate of $5/share in two years,
or almost a double in the stock.
Company Background
Q3 2010
70
Aon Corp (AON)

Equity Analysis
Company Background
Aon is the largest insurance broker and
one of the largest business process consultants
with 35,000 employees in 120 countries that
generates $7.5+bn in annual revenues and
$600-700mm net income for a low-mid teens
return on equity (ROE). Aon was incorporated
in 1979 and it has developed through a roll-up
strategy in the insurance brokerage industry,
which is evidenced by the sizeable goodwill on
its balance sheet.
Its main line of business is insurance
brokerage in the P&C industry, which accounts
for 83% of revenues and 85% of operating
income.
This segment consists of retail
brokerage, which accounts for 75% of the
revenue, and reinsurance, which accounts for
the remaining 25%.
In retail brokerage, Aons brokers spend
time to understand clients complex insurance
needs and then utilize their extensive network of
insurance carriers and knowledge of the
different programs and pricing structures in
order to most effectively and cost-efficiently
match the clients needs with the carriers
capabilities. These insurance contracts can be
fairly complex, which makes it a time-consuming
proposition for a client to communicate the
business needs to the many insurers and then
try to compare the usually non-uniform rate
quotes. Aon takes a lot of the inefficiency and
guesswork out of the system. The reinsurance
part of the business provides similar services to
insurance customers, by helping them efficiently
offload parts of their risks to reinsurers.
The remaining less-than-20% part of
Aons business is consulting and outsourcing
services, often to many of the commercial clients
that receive insurance through Aon.
Aon
provides advice and execution services to
companies on structuring health and benefits,
retirement and compensation programs, but also
on managing employees.
Aons consulting
services account for 85% of the sales in this
segment (with the rest contributed by benefits
outsourcing services).
Hewitt Associates (old ticker: HEW) was
one of the largest pure-play public companies
competing with Aon in the consulting segment.
On July 12th, Aon announced the acquisition of
Hewitt in a $4.9bn transaction (at a ~40%
premium) that was financed 50% with cash
(debt issued by Aon) and 50% equity (Aon stock)
and closed on October 1st. Hewitt merged with
Aons consulting division.
The transaction
valued Hewitt at 7.5x 2010 EBITDA and Aons
management expects it will generate $1.5bn in
shareholder value.
With the integration of Hewitt, Aon adds
$3.0bn in revenue in its consulting division,
balancing the two segments more evenly. The
revenue contribution mix will shift from 83%
insurance brokerage (75% retail vs 25%
reinsurance) and 17% consulting (85%
consulting vs 15% benefits outsourcing) to 60%
insurance brokerage (same split as before on
retail vs reinsurance) and 40% consulting (49%
consulting vs 40% benefits outsourcing vs 11%
HR outsourcing).
The rationale for the transaction and
the source of the increased shareholder value
was simple: to leverage clients and products
across the two franchises. Aon has historically
targeted smaller to mid-size companies, whereas
Hewitt has developed strong relationships with
larger corporations. The combined entity could
leverage these relationships to sell each others
products, thus capturing a larger share-of-wallet
without adding significant costs (which should
translate into higher profit margins). Aons
management anticipates that operating margins
in that segment will improve from 17% for Aon
and 14% for Hewitt to 20% combined.
Business Model
Q3 2010
71
Aon Corp (AON)

Equity Analysis
Business Model
Aon has a very human capital-intensive
business model that is highly recurring, has
significant entry barriers, as well as economies
of scale and scope. Aon charges commissions
for its insurance sales and fees for its consulting
and outsourcing services.
The company functions as the interface
between a client and an insurance carrier for
which it earns commissions. Every time a client
makes a premium payment, Aon collects the
money and then remits it to the insurance
carrier, net of its commissions. On the opposite
side of the cashflows, when the client
experiences an event that is covered by the
carrier, the latter sends a payment to Aon, which
then remits the claims payment to
the client. This is a highly recurring
business model, as Aons clients sign
multi-year contracts that are likely to
renew, and Aon collects commissions
throughout the duration of the
contract.
Offsetting
these
commissions are the commissions it pays out to
its employees.
Fees from consulting and
outsourcing services are also offset primarily by
compensation payments to its consultants.
Aons largest cost of goods sold is its employee
compensation.
The brokerage industry is generally
characterized by low barriers to entry, but Aons
business model is defensible by virtue of its
scope. It has a global reach that can satisfy the
largest clients, and it has the largest network of
connections with insurance carriers that allow it
to customize service and product offerings for its
clients with the highest cost-efficiency. At the
same time, the expanded scope of its business
generates significant cost savings as the largest
cost of this business the human capital can
be leveraged more efficiently, so Aon can be
cost-competitive. The cost of selling additional
services to one client is relatively small, so the
game is about gaining a larger share of the
Q3 2010
clients wallet, so that costs (primarily

salespeople) are spread across more services.
The result is higher profitability and market
share.
Service business models are generally
more capital efficient, but Aon requires a lot of
capital and has a relatively low return on its
capital. This is the result of its strategic decision
to execute a roll-up in its industry.
The
evolution of a low-barrier industry like
brokerage often stabilizes with a few players
with sufficient scale and scope to effectively
compete with each other and with a larger
number of small players that cater to local and
much smaller customers, who perhaps cannot be
serviced as efficiently by the larger
players (for example, because their
requirements are not complex
enough to benefit from the increased
scope and sophistication of the larger
providers, so the cost of offering
additional service offerings is wasted
on these customers, who can be serviced more
cost-effectively by niche players).
Another way insurance brokers make
money is by investing the funds that they hold
either for their clients or for the insurance
companies for the time between receipt and
remittance. They may collect premiums early or
insurance companies may send the funds before
they need to be disbursed to the clients. This
float fluctuates around ~$3.5bn and can add
$200mm of income that flows straight to the
bottom line since there are no costs attached to
it. However, at the current low rates Aon only
generates ~$60mm of float investment income.
As interest rates rise, Aons profitability will
expand meaningfully, since operating income is
in the $1.5bn range (pro forma with Hewitt) and
higher rates can add 10% on top.
First Look & Investment Thesis
72

Equity Analysis
Aon Corp (AON)
At First Glance
Aon diversified its main line of business by acquiring Hewitt and paid for it at a multiple that
was higher than Aons own. The higher multiple is a problem, because it will take longer for the
benefits from revenue cross-selling and cost-cutting to show through to the companys earnings. In
fact, all Aon accomplished in the short term was to increase its leverage (by issuing debt to finance
half of the transaction price) and decrease its return on equity, since it added a lower-ROE business
and paid a high price for it. The transaction worsened Aons fundamentals and increased its risk
profile, so Aon perhaps deserves its discount multiple of approximately 1x EV / EBITDA.
Digging Deeper
Aons sub-par profitability is only temporary, and in the next couple of years it may surpass the
profitability of its peers while developing a higher-quality (i.e. less volatile) earnings stream as it will
balance its two main business lines of P&C insurance brokerage and consulting/outsourcing more
evenly. Even though in the short term Aon looks more volatile (because of integration risk) and less
profitable (because of a seemingly pricey transaction), both criticisms are likely to reverse course in
the medium term. Therefore, the current valuation discount is an opportunity for outperformance as
the company delivers on its plan of profitable growth and diversification.
Investment Thesis
Transformational merger to deliver superior diversification, growth and profits.
Aons merger with Hewitt will shift its revenue exposure to the insurance brokerage industry from
more than 80% down to 60%, helping to diversify its revenue mix. At the same time, the addition of
Hewitt presents significant efficiency opportunities as the two operations can leverage each others
selling infrastructure in order to deliver superior growth and profitability.
Investment Summary & Contrarian View

Q3 2010
73

Equity Analysis
Aon Corp (AON)
Investment Summary
Aon has a defensible business model characterized by highly recurring revenues. However, in
3Q10, it announced its merger with Hewitt in a transaction financed 50-50 with debt and equity at
7.5x forward EBITDA (when Aon was trading at <7x). It seemed to have overpaid and mergerarbitrageurs shorted the stock, which dropped 7% in one day. On the other hand, the merger
diversified its revenue stream away from the P&C industry (Aons primary revenue contributor),
which has been plagued by excess capital and the attendant pricing pressure, squeezing P&C carriers
margins and growth, and Aons commissions. Trading on the announcement day at 6.8x EBITDA
versus peers 7.8 8.0x was justified by bearish investors because the transaction will produce the
earnings benefits in a couple of years so in the meantime Aons margins will lag peers.
More optimistic investors are willing to look through these years and welcome the
diversification brought on by the merger as well as the opportunity to buy into such a great franchise
at a discount. Aon continues to trade at a discount to peers: it has an EV / EBITDA of 7.6x versus
Marsh & McLennans 8.5x and Willis Groups 8.8x (using trailing-twelve-months EBITDA and
adjusting Aons figures to reflect results pro forma with Hewitt). Even though part of the discount is
attributable to a higher contribution to earnings by float investment income which is more volatile
(therefore, lower quality and deserves a lower multiple), the large discount is evidence that investors
still see Aon as a wait and see story.
Contrarian View
Aon is the new sponsor of English Premier

League team Manchester United, whose
jersey is pictured above
Aon overpaid for Hewitt, effectively increasing its

leverage while lowering its return on equity. Merging Hewitt
may distract management, which increases the risk of losing
market share to its formidable competitors. Also, the benefits
of the merger may not be realized: Aon relies on cost-cutting
and top line growth from leveraging each franchises selling
infrastructure and product set. However, the uncertainty may
create gaps and lack of motivation in the sales culture, and the
two organizations may prove less compatible than management
thought. There is high execution risk that can reduce the value
creation of the transaction. Fundamentally, Aon became a
higher-risk entity in a market environment that penalizes risk
heavily.
Upside / Downside
Q3 2010
74
Aon Corp (AON)

Equity Analysis
Upside
Downside
The companys peers trade at more than

1x EV / EBITDA higher than Aon. Aon trades
at 7.2x versus MMCs 8.5x and WSHs 8.8x. At
the same EBITDA multiple, Aon would be a
$47 - $50 stock (15-20% upside). However,
there is additional value creation from
$355mm in transaction synergies (revenue and
expenses), which is worth ~$2bn at 7x less
integration costs, or $6 per share. Therefore,
the upside is that in 2-3 years Aon will be a $53
- $56 stock (30%-35% upside).
The combination of the valuation
discount and managements assertion that it is
creating $1.5bn ($4.50 per share) in DCF terms
probably was what caught the eye of some
value investors. A few percentage points ought
to be shaved off from the return calculations in
order to account for the lower quality of Aons
earnings profile due to a higher contribution of
float investment income (it earns more money
from the funds it holds in transit between
payments it receives from clients or insurance
companies,
and
remittances
to
the
corresponding party).
Aon traded at trough LTM EBITDA

multiples in the range of 4-6x for the period
from late 2002 to the middle of 2005.
However, back then Aon was more of a
turnaround story. Since then, management has
delivered on efficiency and profitability
improvements, so it should not trade at similar
levels. At 4x pro forma 2012 EBITDA, Aon
could be trading at ~$20 per share, and at 6x it
would be trading at $36 (10-15% downside).
The 4x multiple for a high-quality
business with the majority of its revenues
highly-recurring is potentially a temporaryonly risk. Aon could trade there, but should
generally bounce back to at least the industryaggregate trough level of ~6x, which would also
imply a downside share price of $36. Of
course, Aon has traded below that level
recently, so given the heightened uncertainty
related to this stock, an additional discount of
say 10% is not unreasonable to the low $30s.
This price might indicate that something is
going wrong with the Hewitt integration or Aon
is experiencing market share losses.
Valuation & Catalysts

Q3 2010
75

Equity Analysis
Aon Corp (AON)
Market Valuation
The key players in the P&C insurance brokerage segment are: Aon, Marsh & McLennan (MMC),
Willis Group Holdings (WSH), Arthur J. Gallagher (AJG), and Brown & Brown (BRO). Investors value
this industry on an EV / EBITDA basis (8x historical average) primarily in order to account for
different capital structures, and on a P/E basis secondarily (15x historically).
Historically, it has traded at ~8x EV / EBITDA, with a trough at 6x and peak of 12x. The trough
occurs when P&C insurance pricing softens (capital overcapacity and benign catastrophe season that
signals lower forward prices and increased competition), and the peak occurs as the P&C industry
starts increasing prices (hard pricing environment). One reason for different multiples across
brokers is the mix of business as well as the contribution of the float investment income, which is more
volatile and thus lower quality than the core business (so it deserves a lower multiple). Aons float
investment income can account for 10% or more of operating income vs ~5% for other brokers.
Leverage tends to be ~1.5x EBITDA, with lower levels indicating flexibility (usually towards M&A for
growth) and levels above 2.5x indicating lack of flexibility to support strategic growth.
Catalysts
There
are
no
hard-date
catalysts for Aon. Aons value will
thus take some time to become
realized by the market. It is a process
of gaining investor confidence and
proving to the community that
management is executing successfully
on the merger integration and is
realizing the benefits it outlined after
the announcement of the transaction.
Each quarter, investors will focus on
the performance of the transaction
and Aon will have to deliver each time
for the valuation gap with its peers to
narrow.
AON 1 year chart
Update: Since publication, shares of AON are up over 25%

Financials & Comparables
Q3 2010
76

Equity Analysis
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Aon Corp (AON)

Financial Snapshot & Comparables
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Up Next: In-Depth Analysis of CareFusion (CFN)

Q3 2010
77
For more in-depth equity analysis, please head to HedgeFundWisdom.com to subscribe

Equity Analysis
CareFusion (CFN)
CareFusion (CFN)
Share Price
52-week High
52-week Low
Market Cap
$23.50
$30.08
$20.63
$$5.24B
Hedge Fund Activity

In the third quarter, numerous hedge funds purchased shares of CareFusion (CFN) in the $2124 per share range. In late September, David Einhorns Greenlight Capital disclosed a 6% ownership
stake in the company, increasing their position size by 56%. Additionally, Andreas Halvorsens Viking
Global initiated a new CFN position and Roberto Mignones Bridger Management almost tripled its
position in the company.
CareFusion is a recent spin-off in the medical technology space and a turnaround story that
can deliver significant operating leverage. Investors are already paying for the low-hanging fruit of
efficiency improvements that management has already identified, but get any meaningful
convergence to the lower industry-average operating costs for free. The rationale for the spin was the
different R&D and growth profile of the parents business; management can now streamline its
operations and save costs in order to invest behind R&D. Therefore, outperformance will have to
come from operational improvements that surprise analysts and from gaining market share from
Baxter (dealing with a product recall). In addition, the entire sector is trading at ~10% free cashflow
yields and has minimal leverage; there is significant opportunity to return capital to shareholders or
invest for faster growth but the market currently does not ascribe much value to the sectors financial
flexibility until there is more clarity on how the cash will be used.
Potential reasons for the hedge fund purchases during 3Q may be that the perception of
industry growth headwinds peaked in the quarter following disappointing guidance adjustments and
the first decline in hospital CPI in 35 years, potentially setting at least a short-term floor in the stock.
More specific to CFN, its ex-parent, Cardinal Health (CAH), sold out of its remaining post-spin 19%
stake by mid-September, eliminating the overhang of a large seller.
Company Background
Q3 2010
78
CareFusion (CFN)

Equity Analysis
Company Background
CareFusion was Cardinal Healths (CAH)
roll-up of niche medical products and
technologies.
It came to its current state
through 6 acquisitions since 1996 of companies
which themselves were a result of other parents
roll-ups and/or spin-offs.
Cardinal Health
created a diversified business with leading
market shares in all its businesses.
CareFusion operates in two main
business lines: Critical Care Technologies (2/3
of sales and >85% of operating income) and
Medical Technologies and Services (1/3 of sales
and 15% of operating income). The difference
between the two segments is that Critical Care
develops primarily capital equipment (and
related supplies) that are sold to critical care
units in hospitals and are used long term,
whereas MedTech develops disposable products
that are used primarily in the operating rooms
at hospitals.
In the Critical Care Technologies
segment, CFN sells equipment that help
hospitals improve safety by reducing errors and
improving administrative controls.
The
equipment is sold to hospitals and requires a
sizeable capital investment, so sales-cycles tend
to be longer and sales rely more heavily on a
captive and (generally) more sophisticated
salesforce. The main products are: infusion
pumps and disposables that account for 23% of
sales (estimated 55% gross margin and highteens operating margin based on financials of
predecessor acquired companies and sell-side
analysts) and where CFN has a 40% market
share (competes with Baxter and Hospira);
dispensing equipment for medication and
medical supplies that accounts for 25% of sales
and where CFN has a leading market share of
70% against competitors that include McKesson
(MCK) and Cerner (CERN); and respiratory
Q3 2010
diagnostic equipment and supplies that accounts

for 20% of sales (estimated 50% gross margin
and high single-digits operating margin) and
where CFN has a 10% market share (and
competes primarily with Covidien).
In the Medical Technologies and Services
segment, CFN sells disposable and single-use
products that help hospitals reduce the
occurrence of infections from procedures. These
are smaller dollar-amount sales that dont need a
sophisticated salesforce, so sales are managed by
both its captive force and third-party
distributors. The main products are infection
prevention products, such as skin disinfectants
and surgical preparation (6% of sales) and
specialty products and services, including
surgical equipment, catheters, etc. (26% of
sales). CFN competes primarily with Covidien
and Johnson & Johnson (JNJ) in this segment.
In September 2008, Cardinal Health
announced its plans to spin off its clinical and
medical products businesses. Carefusion was
formed in January 2009 to hold these assets,
and the spin-off was completed almost a year
after its announcement, in August 2009. CAH
shareholders received half a share of CFN for
each CAH share owned, while CAH itself
retained a 19% stake in CFN (to qualify as a taxfree spin-off, the parent needs to distribute at
least 80% of the shares in order to lose
control). As of September 15, 2010, CAH had
disposed of its entire stake in CFN, eliminating
the potential overhang.
Business Model & Valuation
79

Equity Analysis
CareFusion (CFN)
Business Model
CFN hires scientists to develop intellectual property through R&D, manufactures products
using its own machinery and equipment in its own buildings based on its intellectual property, and
sells these products to hospitals through its captive salesforce or third-party distributors. It has to
balance its gross profit margin with its operating costs, in order to have enough money to invest in
research and development in order to keep its products up to date and competitive, as well as to
generate an adequate return for investors.
The products are generally large equipment that requires a substantial capital outlay by the
hospital, a long sales-cycle, and a sophisticated captive salesforce; or disposables and single-use
products (catheters, disinfectants, etc.) that can be sold via third-party distributors.
CFNs aggregate gross profit margin fluctuates in the 45-50% range depending on the product
mix, SG&A eats up 27-30% from that and R&D another 4-5%, leaving a residual 14-15% operating
margin. CFN commits an amount equal to 4-5% of sales (25% of its EBITDA) to capital investments
that consist of machinery purchases and trademarks or patents or customer relationships, and spends
approximately 5% of its sales on research and development, in order to come up with superior
supplies and devices that help hospitals perform operations better and safer.
Market Valuation
The MedTech segment trades at 13x forward P/E, 8x forward EBITDA, and 13x forward FCFE
(a 13.2% free cashflow yield to equity). Companies with higher operating margins and growth profiles
generally trade at higher multiples, but in this environment the market rewards those companies that
have less exposure to the hospital CAPX cycle and favor products that involve a smaller capital outlay
and a simpler decision process. Also, the companies at the top of the valuation range tend to return
capital to shareholders, whereas the companies at the bottom of the range make acquisitions.
Covidien is the cheapest in the group because of its slower growth profile and lower profit
margins. Also, its gross margin is already at the top end of the range, so it is susceptible to declines
(e.g., from price competition to maintain market share). Perhaps equally important though for
valuation purposes is managements strategy to utilize excess cash for M&A instead of returning it to
shareholders, even while investors question industry growth prospects. C.R. Bard is in a similar
financial profile with Covidien with the highest gross profit margins and operating expenses which in
combination result in in-line operating margins; it trades at a premium multiple due to its more
attractive growth profile. Hospira has an in-between valuation as it delivers its high profitability
through low-gross margin products but efficient operations.
Baxter and Becton Dickinson trade at the highest multiples in the industry as they have high
gross margins and low operating expenses, but perhaps the premium valuation is ascribed more to
managements inclination to return capital to shareholders (share repurchases to augment operating
leverage, and dividends) instead of utilizing it for M&A (which has delivered arguably mixed results in
the space) as more optimistic industry players do.
First Glance
Q3 2010
80
CareFusion (CFN)

Equity Analysis
At First Glance
CFN appears expensive, trading at 15.1x
P/E vs 13.2x for the MedTech peers aggregate
consisting of Baxter (BAX), C.R. Bard (BCR),
Becton Dickinson (BDX), Covidien (COV) and
Hospira (HSP). Fundamentally, the business
appears mismanaged, as CFN has lagging gross
profit (48% vs 53% for peers) and operating
margins (15% vs 23% for peers). In addition, the
company disappointed analysts with its top-line
performance in fiscal 1Q11 (ended September
30), as it faces headwinds in some of its
segments. More recently, CFNs CEO announced
his departure at an arguably critical time for CFN
given that it is a turnaround story and thus needs
investors to have faith in the management team.
Digging Deeper
Indeed CFN appears expensive and
operationally challenged, but therein lies the
opportunity. There is significant upside in the
companys earnings power if the company
captures even part of the 10-point deficiency of
its operating margin versus the industry. The
Street is not factoring in any meaningful margin
convergence, but rather an industry-wide margin
expansion. Still, improving from a smaller base,
the impact is larger percentage-wise for CFN.
This means that simply following an industrywide margin expansion, CFNs P/E multiple is
expected to converge by 2014.
Using free
cashflows to equityholders as a valuation metric
instead, CFN will reach industry averages by
2013. Therefore, investors pay the same 3-year
forward multiple for an operation with the same
growth profile as the industry, which can also
have substantial incremental cashflows in the
case that management executes a successful
turnaround.
Investment Thesis & Contrarian View
Q3 2010
81

Equity Analysis
CareFusion (CFN)
Investment Thesis
Buying a cheap call on the return of hospital capital expenditures (CAPX) and getting the potential
margin convergence to the industry-average for free.
CFN is a call on the return of hospital capital expenditures, which were originally curtailed by
the lack of financing during the credit market freeze, then by deteriorating hospital economics (due to
slower admission trends and more bad debts from uninsured patients) that may persist for some time,
and more recently by pressures from healthcare regulatory reform. Industry reports indicate that
hospital CAPX is near its trough and will grow in the next couple of years. This is a sector call, which
is relatively cheap when free cashflow generation and leverage/financial flexibility are taken into
consideration. Even more specific to CFN, its operating margins are significantly below the industry
aggregate by 9-10 points. The fact that it was recently spun off suggests that there may be an
opportunity for efficiency improvements, and there is no evidence that CFNs business is structurally
materially different than the rest of the industry. Nevertheless, there is a risk that management will
fail to realize margin expansion or that the business will have to be radically restructured in order to
achieve industry margins. Regardless, investors are not paying much for the potential incremental
cashflows to equityholders from meaningful margin convergence.
Contrarian View
CareFusions Alaris device used

for infusion
CFNs outperformance from its peers is predicated on

improving operating margins and market share gains, neither
of which may be realized. So far, there is no evidence that CFN
is not structurally different so as to justify permanently lower
operating margins than the rest of the industry. In fact, CFNs
cost structure is similar to Covidiens (COV), a 2007 spin-off
whose cost-structure still has not normalized. The difference
though is that Covidien is sellng much higher gross margin
products, so its operating margins are in line with the rest of
the industry. So, the question is whether CFN has a lowermargin product set that requires the same cost structure as
Covidiens higher-margin products. In addition, a larger
portion of CFNs revenues come from equipment sales relative
to the industry, which are large capital investments for
hospitals and are more susceptible to budget postponements in
this environment.
Upside / Downside
Q3 2010
82
CareFusion (CFN)

Equity Analysis
Upside
Downside
CFN is projected to earn $2.10 in EPS

and $2.20 in FCFE for the year ending in mid2013, so it is trading at 11.4x EPS (versus 10.8x
for peers, some of which has a December yearend, so a small discount is justified due to
timing) and 10.8x FCFE (versus 10.7x for
peers). So, the company generally trades in
line with peers as long as investors are willing
to look through a couple of years of
overvaluation. The valuation catch-up is the
result of CFN expanding its operating margins
by the same number of points as its peers, but
expanding from a smaller base.
CFNs outperformance potential will
come from expanding its operating margin by
more points than the rest of the industry, since
it is currently lagging by so much. CFN will be
generating $4.6bn in sales in 2013, so a 10point improvement in its EBITDA margins (the
amount by which they are currently deficient vs
the industry) to match the industry average
would generate $455mm of incremental
EBITDA or ~$1.30 per share after taxes, which
is worth $14 per share at the industry P/E
multiple, and that is on a $24 stock. This
would be the maximum value creation from the
turnaround, but a more reasonable expectation
could be a fraction of that.
The downside is that CFN fails to deliver

even on its short-term turnaround plan
(outlined by management and factored into
sell-side analysts models), loses market share,
or stronger industry headwinds materialize due
to healthcare reform. CFNs P/E could collapse
to the industry average for starters, and
industry P/Es could compress further if the
industry faces slower growth. At the industry
forward P/E multiple of 13.2x, CFN could trade
down 13% to $21 using 2011 earnings. Industry
multiples should not have much risk of
meaningful compression because a lot of
pessimism is already baked into the stock.
Besides, medical technology companies are
more defensive because they help hospitals
save money. Also, the industry has been
dealing with growth headwinds for a couple of
years already.
Conclusion
Given a projected 15% growth in EPS, the upside without further margin recapture is ~15% and
the downside is a similar 13%, so the upside-to-downside ratio does not appear compelling. However,
considering there is potential for a $14 upside and limited downside makes the stock a more
interesting investment. When the large hedge funds were buying, the stock was trading around $21,
so their risk-reward was much better than the current price of $24.
Financials & Comparables
Q3 2010
83
CareFusion (CFN)

Equity Analysis
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Q3 2010
84
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Portfolio updates on 23 prominent hedge fund portfolios (3

p.27 Tiger Management

Third Quarter Summary:

p.44 Tiger Global Management

p.46 Passport Capital

p.60 Farallon Capital

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To view a specific hedge funds portfolio, simply click on the

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Next Page: Baupost Groups Updated Portfolio

Graduated from Harvard Business

examining Baupost Groups

the world broadly than Ive ever been in my

Third Quarter 2010 Portfolio:

THERAVANCE NOTE 3.0% 1/1

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View Buffetts Recommended

ach quarter, investors are anxious to

Mentored by Benjamin Graham in

made in the third quarter include adding to

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hile Buffett was selling last quarter,

of short positions, Einhorns hedge fund

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Lone Pine Capital

Seeks to identify companies with

Stephen Mandels hedge fund Lone Pine

Capital boosted its Apple (AAPL) position by

fund sold completely out of (listed to the left),

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Lone Pine Capital

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Previously a high yield bond trader

are three main changes worth

Has compounded 30% for

as United Health (UNH), WellPoint (WLP),

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Next Page: Pershing Square

Pershing Square Capital

most notable change to Bill

the new company. GGP recently emerged from

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Compares a companys enterprise

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averick Capital currently has its

One interesting thing about Mavericks

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