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MONEY MANAGER MONITOR
FOR THE WEEK ENDED JUNE 1, 2001 ----------------------------------------------------------- THIS WEEK: ***NOTABLE CONTACT MOVEMENTS ***MERGERS & ACQUISITIONS ***NEWS ***ESSEX TRADITION CONTINUES WITH LONGWOOD AND CCGROWTH ***SIRIOS BOOSTS ITS LARGE-CAP HOLDINGS ***INTREPID AND 033 TAKE CONSERVATIVE STANCE ***SECTOR COVERAGE: STATE STREET RESEARCH & MANAGEMENT ----------------------------------------------------------- NOTABLE CONTACT MOVEMENTS U.S.: *STEVE ABRAHAMSON, formerly a security analyst following high tech- software and the Internet at Prudential Volpe Technology Group, joined Federated Investors, Inc. in May 2001. *LINDA BACHAND, formerly a portfolio manager and generalist with Columbia, SC-based Companion Capital Management, left the firm last week. *KEVIN CARRINGTON, formerly a vice president focusing on enterprise software and technology services at Pequot Capital Management, recently joined the San Francisco office of venture capital firm Partech International as portfolio manager for the $130 million AXA U.S. Growth Fund. *PORTER COLLINS recently joined Chilton Investment Company, Inc. as a security analyst following retail. *RAMON DE OLIVEIRA, head of investment management and private banking at J.P. Morgan Chase & Co., will retire effective August 2001. JAMES E. STANLEY, currently co-head of the Private Banking Group at J.P. Morgan, will assume his management responsibilities. *MORGAN FRANK, previously a security analyst with San Francisco, CA-based Hollis Capital Management, left the firm at the end of March 2001. *ANDREW GITLIN, formerly president of the Stamford, CT-based hedge fund DKR Capital, resigned in May 2001 to pursue other interests. Gary Davis assumed his responsibilities at the firm. *ISAAC GOLDMAN, previously director of research with Chicago, IL-based Talon Asset Management, recently left the firm. *TODD M. GRIESBACH, formerly a security analyst covering office products, furniture/furnishings, electronics, consumer staples, and industrial manufacturing with Chicago, IL-based Ariel Capital Management, recently left the firm. *DAVID LUEBKE recently joined Boston, MA-based Harbor Capital Management as an analyst covering technology, hardware, storage, semiconductors, semiconductor equipment and software. *PETER J. MCCARTHY, CFA recently joined New York-based Barrett Associates as a managing director and portfolio manager. Previously, McCarthy was employed as a senior vice president at Mitchell Hutchins Asset Management, where he was responsible for all institutional equity and balanced portfolios, client relationships and research. *G. HAMILTON MEHLMAN, formerly a senior research analyst and manager of the life sciences specialty hedge fund at Boston, MA-based Essex Investment Management Company, L.L.C., left the firm in April 2001. *Gartmore Investment Management's U.S. equity team, including SIMON MELLUISH, NICK FORD, SIMON MOSS, and BEN WALKER, are making the move from London to the Conshohocken, PA headquarters of Villanova Capital. Simon Moss joined Villanova Capital on Friday, while Melluish, Ford, and Walker will join the firm within the next two weeks. This transition was made as Nationwide Financial Services sought to consolidate the U.S. equity investing activities of two of its subsidiaries, Gartmore and Villanova. Melluish continues to run the Gartmore American Growth Fund, Gartmore Capital Strategy North America Fund, Gartmore American Strategy Fund, and the Gartmore American Focus Fund. *BRIAN PINSKER, a security analyst with Putnam Investment Management, is expected to join Moore Capital Management this Monday where he will focus on investments in the health care sector. *JEFFREY SCHWARTZ, formerly a senior portfolio manager with Munder Capital Management, left the firm in May 2001. Prior to his departure from Munder, Schwartz co-managed the Munder Small Company Growth Fund and the Munder Micro Cap Equity Fund. *DAVID SIMPSON, formerly a senior portfolio manager with Seattle, WA-based WM Advisors Inc., recently left the firm. Prior to his departure from WM Advisors Inc., Simpson managed the WM Variable Trust - Northwest Fund and WM Growth Fund of the Northwest. *MICHAEL J. ZIMMERMAN, formerly a portfolio manager with JLF Asset Management, recently re-joined SAC Capital. Prior to joining JLF, Zimmerman served as a portfolio manager with SAC Capital. SELL-SIDE: *STEPHEN BUELL is joining Prudential Securities Inc. as director of global equity research in June 2001. Previously, Buell served as the director of equity research at Dreyfus Corporation. *GEORGE ELLING joined Deutsche Banc Alex. Brown's New York office in June 2001 as a senior equity analyst covering the server and enterprise hardware sector. Prior to joining Deutsche Banc Alex. Brown, Elling was a senior vice president and equity analyst covering server and enterprise hardware at Lehman Brothers. *FRANK G. LOUTHAN joined Raymond James & Associates in May 2001 as a security analyst. Previously, Louthan was an equity analyst covering telecommunications at First Union Securities. *THOMAS VAN LEEUWEN, formerly an analyst with Credit Suisse First Boston, recently joined Deutsche Banc Alex. Brown as an analyst covering non-ferrous metals and steel. *CHRISTINA RIZOPOULOS VALAURI was named as the new director of research at FAC/Equities. Prior to joining the firm, Valauri was employed by ING Barings, where she was a managing director and associate director of the firm's U.S. Equity Research team. Prior to ING Barings, Valauri was a managing director and director of U.S. equity research for Credit Lyonnais Securities. *KEVIN TIMMONS and WILLIAM ARMSTRONG recently joined Albany, NY-based C.L. King & Associates. Timmons, who is a bank analyst, joined the firm from First Albany. Armstrong, a specialty retail analyst, was previously employed by Penn Merchant Group. ----------------------------------------------------------- MERGERS & ACQUISITIONS *May 31, 2001- FleetBoston Financial Corp. is in advanced discussions to acquire Liberty Financial Cos.' asset management unit, which includes investment management firms Colonial Management Associates, Stein Roe & Farnham, Liberty Wanger Asset Management, Newport Pacific Management and Crabbe Huson. Liberty Financial has been looking for a buyer for the unit since November 2000. *May 30, 2001- Legg Mason, Inc. agreed to acquire Naples, FL-based Private Capital Management, with $6.1 billion in equity assets according to the 13F filed for the quarter ended March 31, 2001. Upon completion, the firm will operate as a subsidiary of Legg Mason. ------------------------------------------------------- NEWS *Janus Capital Corporation announced the launch of the Janus Global Value Fund, which will be managed by Jason Yee, and officially begins operations June 29, 2001. Yee looks for companies with high returns on capital and free cash flow that are trading at significant discounts to their intrinsic worth. *American Century Investment Management is adding two new equity funds to its fund family; American Century New Opportunities II and American Century International Opportunities launched on June 1, 2001. The American Century New Opportunities II Fund, which will be managed by Chris Boyd, John Seitzer and Tom Telford, will invest in small company stocks whose earnings and revenues are growing at an accelerating rate. The American Century International Opportunities Fund, which will be managed by Lynn Schroeder and Trevor Gurwich, attempts to find undiscovered gems and strives to invest in these stocks early. *AIM Funds Management (Canada) Inc. recently moved to a new address. The new address is 120 Blur Street East Suite 700 M4W 1B7. The phone and fax numbers remain the same. ---------------------------------------------------------- ESSEX TRADITION CONTINUES WITH LONGWOOD AND CCGROWTH Boston-based Essex Investment Management, an investment management firm with a long, rich tradition of managing the fortunes of some of the world's most powerful leaders, has led to the creation of several equally successful new ventures. With an investment philosophy built on the foundation that a company's management team, business model, earnings growth and profitability will drive its price performance, the firm offers a range of products including more traditional balanced, growth, and small-, mid-, large-cap growth as well as its own alternative investment product, a U.S. Hedge Long/Short fund. The firm's hedge investment strategy combines bottom-up fundamental research with secular trend evaluation to invest in companies across all market-caps. The long investment approach combines both a growth and opportunistic investment style looking for companies with accelerating fundamentals, sustainable earnings growth, product or service dominance and consensus earnings below the firm's projections. The firm's short strategy focuses on a universe of companies that are in the beginning stages of technical weakness, downward earnings revisions, peak profit margins and increased competition. ROBERT A. DAVIDSON and DON DOUGHERTY, two former Essex portfolio managers have continued the Essex tradition in managing their own hedge funds, Longwood Investment Advisors and CCGrowth Management, L.L.C. LONGWOOD INVESTMENT ADVISORS Founded in 1994, Boston-based hedge fund Longwood Investment Advisors was formed by former Essex Investment Management portfolio manager Robert A. Davidson. The firm is responsible for Longwood Partners, Longwood Offshore and Zurich Master Hedge Fund. Longwood Investment Advisors' long strategy invests in a select number of attractive, high quality growth-oriented companies. Longwood looks to identify companies that are in the early stages of dynamic change, which the firm believes will translate into accelerating earnings growth. Emphasis is placed on purchasing companies where the price of a company's stock is attractive relative to its intrinsic value. For Longwood's short portfolios, the firm looks to short companies with long-term business valuations that will be negatively affected by poor management, increased competition or declining industry fundamentals. For the quarter ended March 31, 2001, the firm reported $256.5 million in equity assets invested in a portfolio of 213 companies. While the firm's equity assets under management increased slightly from the fourth quarter of 2000 to the first quarter of 2001, the number of companies in the firm's portfolio increased dramatically. For the quarter ended December 31, 2001, the firm reported $172.1 million in equity assets under management invested in a portfolio of 43 companies. The most heavily weighted sectors for the quarter included technology (42.6%), energy (19.8%), financials (10.9%), capital goods (8.9%), and consumer cyclicals (4.9%). From the fourth quarter of 2000 through the first quarter of 2001, the firm greatly increased it holdings in the technology sector, while decreasing its holdings in the energy, capital goods, and financial sector. In the fourth quarter of 2000, the most heavily weighted sectors included financials (25.6%), energy (21.7%), capital goods (16.5%), technology (13.5%), and consumer cyclicals (6.6%). Largest purchases for the quarter included Efunds Corp. [EFDS] with 789,450 valued at $15.2 million; Edwards Lifesciences Corp. [EW] with 462,550 shares valued at $9.1 million; THQ Inc. [THQI] with 201,950 shares valued at $7.7 million; Informix Corp. [IFMX] with 1,385,000 shares valued at $7.5 million; and, Celgene Corp. [CELG] with 261,450 shares valued at $6.5 million. Top holdings for the quarter ended March 31, 2001 included Tetra Technologies Inc. [TTI] with 861,150 shares valued at $17.4 million; Efunds Corp. [EFDS] with 789,450 shares valued at $15.2 million; Cinar Corp. [CINR] with 1,300,900 shares valued at $10.1 million; Universal Compression Holdings [UCO] with 284,250 shares valued at $9.9 million; and, Forest Oil Corp. [FST] with 320,279 shares valued at $9.6 million. CCGROWTH MANAGEMENT, L.L.C. Founded in 1999 by Don Dougherty, a former partner and portfolio manager with Essex Investment Management, CCGrowth Management, L.L.C. manages the long/short growth equity Compound Capital Growth Partners, L.P. and Compound Capital Growth Partners II, L.P. hedge funds. Using a fundamental, bottom-up approach, combined with technical analysis to focus primarily on domestic large-cap growth and emerging growth companies, the firm seeks to invest in companies with a proprietary market position; improving company or industry outlook; above-average growth; high ROIC; pricing power; predictable and sustainable earnings; and, low vulnerability to external events. On the short side, CCGrowth targets companies with deteriorating market position; loss of pricing power; new competition; weak management; vulnerability to external shocks, events or regulatory changes; weak balance sheet; high valuation; decelerating growth; and, deteriorating company or industry characteristics. For the quarter ended March 31, 2001, the firm reported $192.6 million in equity assets under management invested in a portfolio of 55 companies. This was an increase from the fourth quarter of 2000 in which the firm reported $65.7 million in equity assets invested in a portfolio of 50 companies. Top five holdings, which were all new buys for the first quarter of 2001, included: Standard Poor's Depository Receipts Trust [SPY] with 500,000 shares valued at $58.3 million; Nasdaq 100 Trust [QQQ] with 400,000 shares valued at $15.7 million; Check Point Software Technologies Ltd. [CHKP] with 290,000 shares valued at $13.8 million; Elan Plc- ADR [ELN] with 256,100 shares valued at $13.4 million; and, Loews Corp. [LTR] with 200,000 shares valued at $11.9 million. ----------------------------------------------------------- SIRIOS BOOSTS ITS LARGE-CAP HOLDINGS For the first quarter ended March 31, 2001, hedge fund Sirios Capital Management, L.P. reported ownership of 98 companies valued at $1.4 billion, an increase from the previous quarter when the firm reported ownership of 88 companies valued at $1.1 billion. It was another of the many increases in equity assets that the firm has reported quarter after quarter. Former MFS Investment Management members CHRISTIAN FELIPE and JOHN BRENNAN founded the firm in mid 1999. The firm has also had some turnover recently, losing analyst VLADIMIR VELKOV to Tudor Investment Management; the firm has gained the talents of portfolio manager THOMAS BARRETT, who hails from Felipe and Brennan's former firm, MFS Investment Management. In the firm's first filing in December 1999, the firm's large-cap holdings accounted for approximately 50% of the portfolio. By June 2000, that figure had climbed to 65%. In Sirios Capital's most recent filing, almost 80% of the Boston-based firm's holdings were in large-caps. The firm decreased its holdings in the capital goods sector only slightly, while increasing its ownership in health care, technology, and consumer cyclicals. While technology had comprised a large proportion of the firm's invested assets, in it's most recent filing, technology comprised just 14.0% of the portfolio. As recently as September 30, 2000, technology was the top holding with 29.5% of the portfolio. The firm's overall assets have continued to grow, despite a slowing economy and difficult market. Sirios, however, is also a nimble player, shifting its investments when necessary; for the most recent quarter the firm had a portfolio turnover of 195.4%. Top five holdings for the quarter included: Schering-Plough Corp. [SGP] with 3,710,000 shares (valued at $135.5 million); Voicestream Wireless Corp. [VSTR] with 1,210,363 shares (valued at $111.8 million); Freddie Mac [FRE] with 1,416,743 shares (valued at $91.8 million); Tyco International Ltd. [TYC] with 1,900,000 shares (valued at $82.1 million); and, Bristol Myers Squibb Co. [BMY] with 755,458 shares (valued at $44.9 million). Top five new purchases included: JC Penney Co. Inc. [JCP] with 2,100,000 shares (valued at $33.6 million); Gtech Holdings Corp. [GTK] with 786,900 shares (valued at $21.4 million); WellPoint Health Networks Inc. [WLP] with 218,500 shares (valued at $20.8 million); C R Bard Inc. [BCR] with 450,000 shares (valued at $20.4 million); and, Duke Energy Co. [DUK] with 400,000 shares (valued at $17.1 million). ------------------------------------------------------- INTREPID AND 033 TAKE CONSERVATIVE STANCE Among the milieu of hedge funds filing for the first quarter, numerous funds have seen their asset bases drops and have, in many cases, altered their investments to leave them less vulnerable to technology. This change in approach has led them to more moderate investments. The 13F filings of Intrepid Capital and 033 Asset Management illustrate a further trend: the migration of some hedge funds towards more temperate investment instruments. Intrepid Capital Advisors LLC For the first quarter ended March 31, 2001, Intrepid Capital Advisors LLC reported ownership of 52 companies valued at $437.0 million, an increase from the previous quarter when the firm reported ownership of 65 companies valued at $263.7 million. STEVEN SHAPIRO, formerly of Soros Fund Management, and MICHAEL AU, formerly of Maverick Capital, founded Intrepid Capital in July 1998. The firm was originally founded to specialize in the technology sector. In it's most recent filing, however, it has seemingly moved away from the sector. Technology comprised 51.4% of the portfolio, closely followed by financials with 40.3%. (However, the firm's financial holdings are not entirely accurate, since the firm owns ETF's such as the Nasdaq 100 Trust, which are counted as mutual funds, and thus financials, rather than the underlying securities they represent.) By contrast, in the fourth quarter of 2000, the firm's top sector weightings included technology with 82.5%, financials with 4.4%, and communication services with 3.4%. Top five holdings included: Nasdaq 100 Trust [QQQ] with 2,700,000 shares (valued at $105.7 million); Standard Poor's Depository Receipts Trust [SPY] with 600,000 shares (valued at $70.0 million); Microsoft Corp. [MSFT] with 550,000 shares (valued at $30.1 million); IBM [IBM] with 309,600 shares (valued at $29.8 million); and, Qwest Communications International Inc. [Q] with 600,000 shares (valued at $21.0 million). Intrepid's new purchases included stakes in Standard Poor's Depository Receipts, IBM, and Qwest. Rounding out the top five were new stakes in Verizon Communications [VZ] with 200,000 shares (valued at $9.9 million), and Apple Computer Inc. [AAPL] with 300,000 shares (valued at $6.6. million). 033 Asset Management, L.L.C. For the first quarter ended March 31, 2001, San Francisco-based hedge fund 033 Asset Management, L.L.C. reported ownership of 18 companies valued at $73.8 million, a decrease from the previous quarter when the firm reported ownership of 28 companies valued at $126.3 million. The firm, founded by former members of the Robertson Stevenson Private Client Group, has managed to increase its equity assets under management in a market where many other players have unwittingly watched their assets dwindle. The founders, including ROBERT TISHMAN, MATTHEW KLEIN, JOHN SCHNUGG, and MICHAEL VIGO, manage the 033 Growth Partners I, L.P., 033 Growth Partners II, L.P., Oyster Pond Partners, L.P. and 033 Growth International Fund, Ltd. Tishman, who serves as the CIO, operates out of the firm's offices in Boston with analysts DANNY DIAS, and MARIO FIALHO, while the remaining principals operate out of the firm's San Francisco offices. The firm emphasizes its focus on technology and is reportedly very active on road shows and in meeting with company management. Despite its technology focus, however, the fund seems to have taken less risky positions in market tracking instruments. While such baskets of stocks can be traded and shorted quickly, it may also identify a trend among some technology funds. Quickly running out of solid tech-companies to invest in, many funds are moving to safer positions before returning to the fray. For 033 Capital, the large concentration in such instruments is similar to the previous quarter. However, the fund did have some turnover, selling out its holdings in Standard Poor's Depository Receipts Trust [SPY] and Midcap Spdr Trust Communications Corp. [MDY]. The firm also has an extremely high turnover; eight of the firm's top ten purchases were new to the firm's portfolio. The firm's portfolio turnover rate thus far is 301.7%. Top ten holdings for the quarter included: iShares Trust (Rusl 2000 Grow) [IWO] with 563,000 shares (valued at $30.9 million); Sector SPDR Trust (Sbi Int-Tech) [XLK] with 240,000 shares (valued at $6.0 million); Cendant Corp. [CD] with 400,000 shares (valued at $5.8 million); Kinder Morgan Inc. [KMI] with 75,000 shares (valued at $4.0 million); Calpine Corp. with 60,000 shares (valued at $3.3 million); Agile Software Corp. [AGIL] with 275,000 shares (valued at $3.0 million); Entergy Corp. [ETR] with 75,000 shares (valued at $2.8 million); MCK Communications Inc. [MCKC] with 1,238,000 shares (valued at $2.7 million); Dynegy Inc. New [DYN] with 50,000 shares (valued at $2.6 million); and, Fibernet Telecom Group Inc. [FTGX] with 923,260 shares (valued at $2.5 million). ------------------------------------------------------ SECTOR COVERAGE: STATE STREET RESEARCH & MANAGEMENT Boston-based State Street Research & Management, with $18.5 billion in equity assets as of March 31, 2001, recently lost one its top portfolio managers to the world of hedge funds. RUDOLPH KLUIBER, formerly a portfolio manager specializing in small-cap value stocks with State Street Research & Management Co., left the firm to launch a hedge fund with GREGORY FRASER and TIMOTHY KROCHUK, who recently left Fidelity. At State Street, Kluiber managed the State Street Research Aurora Fund (with $989.4 million in equity assets as of September 30, 2000) and Advantus Venture Fund. Except for the loss of Kluiber, State Street's investment team has remained relatively intact since the end of last year. STEPHEN C. ORR, who previously covered computer services, electronic equipment, electronics- semiconductors, electronics- instrumentation, and manufacturing-diversified with State Street, retired at the end of 2000, while ANU KOTHARI, previously a security analyst covering specialty retail-apparel, department stores and restaurants at State Street, joined State Street Global Advisors. Current research responsibilities are as follows: *KEVIN BEATTY: investment banking/brokerage, major regional banks, monoline credit companies and S&Ls *JOHN BORZILLERI: biotechnology, healthcare (HMOs), hospital management, and pharmaceuticals *JOHN BURBANK: automobiles, heavy-duty trucks & parts, and auto parts- after market *MAUREEN DEPP: apparel & footwear manufacturing, beverages & tobacco, broadlines & specialty hardgoods, cosmetics, drug stores, food chains, foods, general merchandise chains, household products, and restaurants *JULIANNE DICENSO: Internet services *EDMOND GRIFFIN: generalist/small-caps *BILL HAMILTON: asset management, insurance brokers, life insurance, multi-line insurance, and property-casualty insurance *LARRY HAVERTY: hotels-motels, Internet- portals, toys, broadcast media, entertainment, and softgoods retailers *ROB JOSEPH: computer software, computer systems, and computers & peripherals *BRYAN KRAUSE: telecommunication service *AMY LUBAS: computers- contract systems *JIM MOORE: communications- equipment manufacturing and telecommunications equipment *CLIFF RANSOM: aerospace/defense, electrical equipment, electronics/defense, engineering & construction, hardware & tools, machinery- diversified, machine- tools, manufacturing- diversified and transportation *MICHAEL SCHRAGE: aluminum, chemicals, conglomerates, containers- metal & glass, containers- paper, electronics- filtration, electronics- instrumentation, metals- miscellaneous, office products & supplies, paper & forest products, pollution control, and steel *ANNE TUCHER-TRUESDALE: business services, education, financial- miscellaneous, govt. sponsored enterprises, IT consulting, and publishing/newspapers *ERIN XIE: medical devices *DENIS WALSH: oil & gas drilling, natural gas, oil exploration & production, oil well equipment & service, oil- integrated domestic, and oil- integrated internationals ------------------------------------------------------- NOTE: Positions reported are derived from 13F filings, which do not include cash figures, and may not be representative of a firm's equity assets as of March 31, 2001. In addition, if a firm is hedged with many short positions, when reversed they may appear as net purchases. ----------------------------------------------------------- Questions, comments or if you would like the MMM staff to investigate any news heard on the Street, please send inquiries to staff@news.moneymanagermonitor.com, or call (212) 510-9263. -------------------------------------------------- ?Money Manager Monitor. 2001. Although no assurance can be given for its accuracy, the information contained in this report was obtained from sources considered reliable. Except for making one printed copy of this document, published by The Money Manager Monitor, it may not be reproduced, republished, broadcast or otherwise distributed without prior written permission from The Money Manager Monitor.
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