Investors and traders have started to get a glimpse of how some of Wall Street's savviest stock pickers positioned themselves before the summer's rout.
John Paulson, Dinakar Singh and David Tepper were heavy sellers of Bank of America Corp. in the second-quarter, eliminating or cutting their exposure before the financial giant's recent woes.
But Mr. Paulson's move to cut his stake in BofA nearly in half was not enough to prevent his flagship funds from declining as much as 30 per cent for the year through the first week of August, investor sources have said.
Eric Mindich's Eton Park Capital appeared prescient in eliminating his holdings of some of the world's gold mining companies, which delivered mixed returns even as the metal itself soared.
Mr. Paulson was the day's most closely watched filer because of the poor performance in his funds this year and traders were looking to see how much he reduced his stakes in several beaten-down financial stocks. The billionaire investor was less nimble in the gold market, where his large holding of the SPDR Gold Trust remained unchanged – reaping some but not all of the potential rewards there.
George Soros, however, reduced his exposure in the gold exchange-traded fund.
"Oracle of Omaha" Warren Buffett made some small moves in his portfolio, adding to one favourite and cutting back on another long-time holding.
Top hedge-fund managers disclosed their second-quarter U.S. equity holdings in so-called 13-Fs with the Securities and Exchange Commission. The deadline for these quarterly filings was on Aug. 15.
The filings show which managers began scaling back positions that came under fire in recent weeks – the managers who therefore best weathered the turmoil.
Financial stocks had been a favourite with big investors betting on a recovery in the United States, but some investors got cold feet earlier this year – which turned out to be a good idea.
Another good idea, which may have saved the day for some firms, was holding metals. Gold streaked higher as investors worried about Europe's debt crisis, the U.S. economic recovery and whether the United States would raise its debt ceiling or ratings agencies would downgrade countries' debt.
Here are highlights of some of the moves in and out of stocks and sectors that fund managers made during the second-quarter:
Based on his filing, TPG-Axon Management's Dinakar Singh eliminated his positions in Bank of America and JPMorgan Chase & Co.
David Tepper of Appaloosa Management, which had earned billions by buying battered down financial stocks, nearly halved his holding in Bank of America to 10 million shares while also trimming his position in Citigroup Inc.
Thomas Steyer's Farallon took a different tack, boosting its holdings in Wells Fargo & Co. to 3.4 million shares from 2.7 million shares at the end of March. Also, Mr. Buffett raised his Wells Fargo stake by a little more than 1 per cent.
Because Wells Fargo had less exposure to mortgage problems, some investors considered it a good way to diversify.
Farallon also upped its holdings in trust bank State Street Corp. to 3.1 million shares from 2.9 million shares at the end of March.
In the financial area, Eton Park Capital stuck by its bets and kept its positions in JP Morgan, Morgan Stanley and Bank of American unchanged.
But Mr. Mindich's Eton Park Capital, which had invested heavily in gold and mining companies, slashed his SPDR Gold Trust position, which had been his second-largest holding, to 813,000 shares from 2.3 million shares, possibly missing some of the gains from gold's recent run-up. He also eliminated mining companies Kinross Gold Corp. , Goldcorp Inc. , Gold Fields Ltd. and Barrick Gold , which have delivered mixed performances this year.
Mr. Soros, one of the hedge fund industry's most successful investors over decades, also further reduced his holdings in gold by cutting the SPDR Gold Trust by 13.4 per cent to 42,800 shares.
Jana Partners upped its holding in Apple Inc. and added a new position in Google Inc. with 127,894 shares.
Coatue Management trimmed its stake in Google to 467,918 from 583,180 shares. Meanwhile, Maverick Capital, according to its filing, eliminated a stake in Google during the second-quarter. The hedge fund previously reported owning 478,519 Class A shares.
Microsoft Corp. found a little more love from David Einhorn, who made a splash earlier this year by demanding that Microsoft oust its chief executive officer, Steve Ballmer. His Greenlight Capital hedge fund raised its holdings of the software giant by 63 per cent to 14.8 million. It had already been the fifth-largest holding for Greenlight.
Farallon, however, trimmed its holdings of Microsoft to 3.2 million shares from 3.6 million shares at the end of March.
Dan Loeb, one of the $2-trillion industry's biggest winners in the last months, clearly liked energy producers, and raised El Paso Corp. , which has been a winner this year, to 13 million shares from 11 million shares. Mr. Loeb also raised CVR Energy , another big gainer this year, to own 7.3 million at the end of the quarter, up from 6.3 million shares. But he slashed his third biggest holding, Williams Energy , which gained this year but not as much as the other two, by 76 per cent.
The portfolio at Mr. Buffett's Berkshire Hathaway continued to be dominated by the likes of Coca Cola Co. and Kraft Foods Inc. , but he trimmed his Kraft holdings by more than 5 per cent. Mr. Buffett, while backing Kraft's split, has been critical of the company over the last two years and has steadily cut that stake.
Berkshire Hathaway also reported new positions in retailer Dollar General and financial research and data company Verisk Analytics , which may reflect the influence of the recently hired investment manager Todd Combs.
OTHER HEADLINE STOCKS
Jana, as previously reported, more than doubled its stake in McGraw-Hill , possibly with an eye to breaking up the family-owned business that oversees ratings agency Standard & Poors. Jana owned 7.7 million shares at the end of the second-quarter and more recently said it met with McGraw-Hill to discuss the business.
News Corp. , embroiled in an image-tarnishing telephone hacking scandal, remains a big holding for Seth Klarman's Baupost Group as he kept the position steady at about 19 million shares.