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MONEY MANAGER MONITOR
FOR THE WEEK ENDED NOVEMBER 23, 2001 ----------------------------------------------------------- THIS WEEK: ***NOTABLE CONTACT MOVEMENTS ***MERGERS & ACQUISITIONS ***NEWS ***DIFFERENT STYLES, BILLION-DOLLAR HEDGE FUNDS: TUDOR AND DUQUESNE REPORT ***033 FOCUSES ON TECHNOLOGY ***CROUCHING TIGER, HIDDEN HEDGE FUND ***A TURBULENT QUARTER FOR ZWEIG-DIMENNA ***CHILTON STICKS WITH FINANCIALS ***SECTOR COVERAGE: VAN KAMPEN FUNDS ----------------------------------------------------------- NOTABLE CONTACT MOVEMENTS U.S.: *RICHARD DAHLBERG is expected to join Grantham, Mayo, Van Otterloo & Co. (GMO) in the beginning of December as a member of the firm's U.S. active equity team. This announcement comes a week after it was reported that GMO's U.S. active equity head, Richard Mayo, would be leaving the firm to start a hedge fund with his son R. Scott Mayo. Dahlberg currently serves as the portfolio manager for the Pioneer Value Fund, with approximately $4.5 billion in equity assets as of June 30, 2001. *THOMAS LAIRD, formerly a managing director and portfolio manager with NWQ Investment Management Company, left the firm. Thomas Laird joined NWQ Investment Management Company in 1986. *LOUIS MENDES recently joined Liberty Wanger Asset Management as a portfolio manager and member of the international equity team following Asia and Australia (except Japan, Korea). Prior to joining the firm in late 2001, Mendes served as a portfolio manager at Merrill Lynch Investment Managers where he managed the Merrill Lynch Dragon Fund, Inc. and Merrill Lynch ECS Dragon Portfolio prior to October 2001. *TIMOTHY QUINLISK and R. SCOTT MAYO, portfolio managers with John Hancock Financial Services, are launching a new hedge fund with Richard Grantham, a former portfolio manager with Grantham, Mayo, Van Otterloo & Co. *SHERIDAN REILLY, a senior vice president and portfolio manager with Boca Raton, FL-based Mackenzie Investment Management Inc., was hired by Schroder Investment Management as a senior portfolio manager. Reilly will work with Deborah Chaplin as a member of the firm's institutional EAFE investment team. At Mackenzie, Reilly led the international equities team and managed the Ivy International Fund and the Ivy Global Fund. Moira McLachlan has been appointed as the new head of the international equities team at Mackenzie. McLachlan, portfolio manager of Ivy Developing Markets Fund, will oversee the firm's in-house international effort and assume lead portfolio management responsibilities for the Ivy International Fund, Ivy International Value Fund, Ivy International Growth Fund and Ivy Pacific Opportunities Fund. McLachlan has been a member of the international equities team since 1995. *DAVID STRASSER, a security analyst following specialty retailers with Salomon Smith Barney, joined Andor Capital Management. William Julian now covers the sector. SELL-SIDE: *GREG SMITH, chief investment strategist with Prudential Securities, recently resigned from the firm and will leave by the end of the year. *GREG MACDONALD, a vice president and equity analyst covering Canadian telecom services with Morgan Stanley Dean Witter, recently left the firm. *FRANK MITSCH, formerly a security analyst with J.P. Morgan Securities, recently joined Bear Stearns & Co., Inc. CANADA: *DUNCAN E. MCCRINDELL, formerly a portfolio manager focusing on Canadian equities with HSBC Asset Management (Canada) Ltd., recently left the firm. McCrindell joined the firm in 1998 as an equity portfolio manager. Previously, he was employed as a senior equity analyst at TELUS Pension Fund. ----------------------------------------------------------- MERGERS & ACQUISITIONS *November 21, 2001- CIBC announced that it would acquire the retail brokerage, asset management and Canadian securities services businesses of Merrill Lynch Canada Inc. The retail brokerage and Canadian securities services transaction is subject to regulatory approval and is expected to be complete by December 31, 2001. The asset management transaction, which involves the acquisition of Merrill Lynch Investment Managers Canada Inc., is expected to be complete by January 31, 2002. The Merrill Lynch Canada retail brokerage business will combine with CIBC Wood Gundy and will operate under the CIBC Wood Gundy name. ---------------------------------------------------------------------------- ----------- NEWS *James S. Yu, CFA will soon be assuming the role of lead manager for the John Hancock Large Cap Value Fund (with $1.8 billion in equity assets as of 6/30/2001), Small Cap Value Fund (with $876.4 million in equity assets as of 6/30/2001), and Focused Relative Value Fund (with $30.1 million in equity assets as of 6/30/2001). Yu has been a member of John Hancock's equity value team since he joined the firm in June 2000. The Equity Value Team was previously headed by Timothy E. Quinlisk, and included Yu and R. Scott Mayo. Mayo and Quinlisk, however, resigned from John Hancock in November 2001, to launch a hedge fund with Richard Mayo, formerly a founding partner and head of U.S. active strategy at Grantham, Mayo, Van Otterloo & Co. Quinlisk will be leaving his position at John Hancock on December 21 to join the father and son team. *According to a filing submitted with the SEC on November 15, 2001, a merger of the Munder Digital Economy Fund into the Munder Large-Cap Growth Fund and the merger of the Munder Framlington Global Financial Services Fund into the Munder Large-Cap Value Fund was approved by the Board of Directors of the funds. Shareholders are expected to vote on the proposal in the spring of 2002. The filing suggested several reasons for the proposed mergers including a "change in market conditions since the launch of the Merging Fund, small asset size, lack of expected asset growth and increasing expense ratios." *Pequot Ventures, the venture capital arm of hedge fund Pequot Capital Management, announced the opening of a Silicon Valley office located in Menlo Park, California. The office will be under the direction of Karen White and Greg Rossmann. Pequot Venture Partners was launched by Pequot Capital Management, Inc. in 1999 with the objective of making significant investments in seed and early stage technology infrastructure companies participating in the rapid growth of the Internet and other related networks. ---------------------------------------------------------- DIFFERENT STYLES, BILLION-DOLLAR HEDGE FUNDS: TUDOR AND DUQUESNE REPORT For the third quarter ended September 30, 2001, Boston-based hedge fund Tudor Investment Corporation reported ownership of 223 companies, valued at $2.78 billion, a slight decrease from the previous quarter when the firm reported $2.82 billion in equity assets under management invested in a portfolio of 196 companies. The firm has managed to keep a large asset base over the years despite market fluctuations and its aggressive growth style. Duquesne Capital Management, the firm started by George Soros lieutenant STANEY DRUCKENMILLER, has also weathered numerous difficult markets but using a GARP oriented style that often reflected that of Soros. For the third quarter ended September 30, 2001, Pittsburgh, PA-based hedge fund Duquesne Capital Management reported ownership of 120 companies, valued at $1.10 billion, a decrease from the previous quarter when the firm reported ownership of 114 companies, valued at $1.26 billion. Despite the tumultuous market, both funds have managed to keep their equity assets under management within relatively narrow margins, but nearly always in the billions. Despite different styles, both firms seemed to increase their bullishness on technology. TUDOR INVESTMENT CORPORATION Tudor Investment Corporation increased its holdings in sectors like consumer cyclicals, health care, and technology while moving away from financials, diversified, and communication services. Top five holdings for the firm included: H&R Block Inc. [HRB] with 3,113,000 shares (valued at $120.0 million); Bank of America Corp. [BAC] with 1,757,800 shares (valued at $102.7 million); Pactiv Corp. [PTV] with 4,660,400 shares (valued at $67.5 million); Abbott Laboratories [ABT] with 1,285,900 shares (valued at $66.7 million); and, Aetna Inc. [AET] with 2,233,800 shares (valued at $64.5 million). The firm's stake in Aetna was the firm's largest new purchase for the quarter. Other new additions to the firm's portfolio included: Allstate Corp. [ALL] with 1,020,700 shares (valued at $38.1 million); Amerisourcebergen Corp. [ABC] with 460,298 shares (valued at $32.7 million); Gtech Holdings Corp. [GTK] with 763,500 shares (valued at $26.4 million); and Unocal Corp. [UCL] with 753,600 shares (valued at $24.5 million). DUQUESNE CAPITAL MANAGEMENT Duquesne Capital Management moved into sectors like technology, health care, and communications services while decreasing its holdings in consumer cyclicals, capital goods, and financials. Top sector weightings included basic materials (23.0%), technology (22.9%), and consumer cyclicals (14.8%). Top five holdings for the third quarter ended September 30, 2001 included: USA Education Inc. [SLM] with 1,000,000 shares (valued at $82.9 million); Home Depot Inc. [HD] with 1,737,100 shares (valued at $66.7 million); Eli Lilly & Co. [LLY] with 700,000 shares (valued at $56.5 million); Georgia-Pacific Corp. [GP] with 1,886,500 shares (valued at $54.3 million); and, Weyerhaeuser Co. [WY] with 1,112,200 shares (valued at $25.3 million). Duquesne's holdings in Eli Lilly & Co. was one of the firm's largest new purchases. Other new additions to the firm's portfolio included: Microsoft Corp. [MSFT] with 915,000 shares (valued at $46.8 million); Sprint Corp. [FON] with 1,707,500 shares (valued at $41.0 million); Intel Corp. [INTC] with 1,625,000 shares (valued at $33.2 million); and, Medimmune Inc. [MEDI] with 650,000 shares (valued at $23.2 million). ---------------------------------------------------------- 033 FOCUSES ON TECHNOLOGY For the third quarter ended September 30, 2001, San Francisco-based hedge fund 033 Asset Management, L.L.C. reported ownership of 24 companies valued at $30.6 million, a decrease from the previous quarter when the firm reported ownership of 26 companies valued at $101.2 million. 033 is the hedge fund founded by former Robertson Stephens Private Client professionals. The firm manages technology-oriented hedge funds including the 033 Growth Partners I, L.P., 033 Growth Partners II, L.P., Oyster Pond Partners, L.P. and 033 Growth Intl. Fund, Ltd. Since its previous filing, the firm moved more into sectors like technology, energy, and transportation while reducing its exposure to utilities and capital goods. Top sector holdings included technology (70.0%), energy (14.0%), and consumer cyclicals (10.4%). Top five holdings for the third quarter ended September 30, 2001 included: Orasure Technologies Inc. with 425,900 shares (valued at $4.4 million); Baker Hughes Inc. [BHI] with 115,000 shares (valued at $3.3 million); Adobe Systems Inc. [ADBE] with 114,000 shares (valued at $2.7 million); RF Micro Devices Inc. [RFMD] with 151,500 shares (valued at $2.5 million); and, Netiq Corp. [NTIQ] with 98,000 shares (valued at $2.2 million). All of the firm's top holdings except Orasure were new purchases for the quarter. Additional new purchases included: Profit Recovery Group International Inc. [PRGX] with 200,100 shares (valued at $2.0 million); SeaChange International Inc. [SEAC] with 114,700 shares (valued at $2.0 million); Oak Technology Inc. [OAKT] with 229,000 shares (valued at $1.8 million); O2Micro International Limited [OIMM] with 90,000 shares (valued at $1.2 million); and, Noble Drilling Corp. [NE] with 40,000 shares (valued at $1.0 million). ---------------------------------------------------------- CROUCHING TIGER, HIDDEN HEDGE FUND When JULIAN H. ROBERTSON, JR. decided to wind-down his legendary Tiger Management, L.L.C., he became a fixture on television, explaining that the economy had changed too greatly for his style of investment and that he was not prepared to change the funds' investment styles to adapt to momentum technology investing. Yet now it appears that Robertson, through an old acquaintance, has moved into technology investments, just when technology and the "New Economy" appear to be in their darkest hour. Indeed, it seems ironic even that Robertson, a name synonymous with value oriented investment would be involved in something resembling the "New Economy," a concept he often derided as a Ponzi scheme. Tiger Technology, L.P. began operations on March 1, 2001. The fund's general partner is CHARLES P. COLEMAN III, who is joined by a three-member investment team that is responsible for the coverage of various technology related industries. The team includes Coleman, the former partner and assistant portfolio manager with Tiger Management LLC. His primary coverage is in the software and Internet sectors, an area he covered while at Banc of America Securities (then Montgomery Securities). JONATHAN LOCKER, a research analyst, joined the firm after serving as a financial analyst in the Technology Mergers and Acquisitions Group at Morgan Stanley & Co. He primarily covers the communications sector. KARTHIK SARMA, a research analyst, is the third member of the investment team. Sarma's primary coverage includes the software and service sector, fields he worked with while a junior engagement manager at McKinsey & Company. The team members meet regularly with company management and monitor sales activity in different technology end-markets and spends significant time modeling and performing valuation analysis on portfolio investments. The fund screens for companies with sound business models in attractive markets, forward-looking management teams with superior operational skills, strong cash flows contributing to solid balance sheets, reasonable Wall Street earnings expectations and attractive valuations. The firm's investment team also seeks to exploit its contacts in the technology field to gain greater insights on technology related industries. When looking for short opportunities, the firm looks for companies with poor management teams, under-performing products, deteriorating financial performance, and unrealistic earning expectations. The fund also attempts to maintain between 5% and 50% of its exposure in international equities. Tiger is also heavily marketing two other long/short funds, Tiger Sharks Partners LP and the Tiger Asia Fund LP. THOMAS FACCIOLA and MICHAEL SEARS are reportedly managing the Tiger Sharks fund while BILL HWANG is currently responsible for the Tiger Asia fund. At present, Tiger Management provides administrative services including accounting, settlement, and trading for the funds. ---------------------------------------------------------- A TURBULENT QUARTER FOR ZWEIG-DIMENNA According to the 13F filed for the quarter ended September 30, 2001, the firm managed approximately $3.0 billion in equity assets invested in a portfolio of 254 companies. This was a decrease from the previous quarter in which the firm reported $4.5 billion in equity assets invested in a portfolio of 256 companies. This appears to be a diffiucult time for Zweig-DiMenna, which according to the Wall Street Journal on September 26, 2001, was down approximately about 25%. Financials and technology garnered the lion's share of the portfolio; both sectors represented approximately 25.9% of the portfolio. Holdings in the consumer cyclicals, diversified and health care sectors followed behind, all hovering around 10.0%. Over the course of the third quarter, the firm's holdings in the energy sector decreased by approximately $149.0 million. In the second quarter of 2001, the sector comprised approximately 5.7% of the portfolio; by the end of the third quarter the sector represented only 1.1%. Holdings in the consumer staples sector also decreased. At the end of the third quarter, this sector represented only 5.2%, the quarter before 8.3% of the portfolio was invested in consumer staples. Top five holdings according to the 13F filed for the quarter ended September 30, 2001 included: Philip Morris Cos Inc. [MO] with 3,379,700 shares valued at $163.2 million; Everest Reinsurance Group Ltd. [RE] with 1,943,000 shares valued at $125.7 million; Freddie Mac [FRE] with 1,527,400 shares valued at $99.3 million; Washington Mutual Inc. [WM] with 2,531,000 shares valued at $97.4 million; and, Tenet Healthcare Corp. [THC] with 1,495,800 shares valued at $89.2 million. New positions for the firm included 700,000 shares of Johnson & Johnson [JNJ] valued at $38.8 million; 433,300 shares of Golden West Financial Corp. [GDW] valued at $25.2 million; 915,000 shares of Transkaryotic Therapies [TKTX] valued at $24.8 million; 426,900 shares of Icos Corp. [ICOS] valued at $21.0 million; and, 457,200 shares of DST Systems Inc. [DST] valued at $19.8 million. ----------------------------------------------------------- CHILTON STICKS WITH FINANCIALS According to the 13F filed for the quarter ended September 30, 2001, the firm managed approximately $1.7 billion in equity assets invested in a portfolio of 121 companies. This was a decrease from the previous quarter in which the firm managed $2.2 billion in equity assets invested in a portfolio of 128 companies. The most heavily weighted sectors included financials (25.3%), consumer cyclicals (19.9%), consumer staples (17.0%), technology (14.5%), and communication services (14.2%). Top five holdings included Comcast Corp. [CMCSK] with 4,100,486 shares valued at $147.1 million; Microsoft Corp. [MSFT] with 1,707,407 shares valued at $87.4 million; John Hancock Financial Services [JHF] with 2,035,000 shares valued at $81.3 million; Sprint Corp. (FON Group) [FON] with 3,237,447 shares valued at $77.7 million; and, News Corp. [NWS A] with 3,613,097 shares valued at $76.9 million. The positions in Comcast and John Hancock Financial Services were both new positions with the firm. Other new holdings for the third quarter included Sprint Corp. [SDE] with 1,750,000 shares valued at $47.6 million; Lincoln National Corp. [LNC] with 1,000,000 shares valued at $46.6 million; and, Imclone Systems Inc. [IMCL] with 740,2000 shares valued at $41.9 million. ---------------------------------------------------------- SECTOR COVERAGE: VAN KAMPEN FUNDS EMERGING GROWTH GROUP: GARY LEWIS, DUDLEY BRICKHOUSE, MATT HART, JANET LUBY, DAVID WALKER and SCOTT MILLER QUANTITATIVE GROUP: JOHN CUNNIFF and RAJ WAGLE VALUE GROUP: BOB BAKER: energy, utilities, capital goods, raw materials/process industries, and consumer durables KEVIN HOLT: consumer services, healthcare, retail, and consumer non-durables JASON LEDER: transportation, financials, technology, and energy GROWTH & INCOME GROUP: JIM GILLIGAN: healthcare, basic industries, consumer durables, energy and financials SCOTT CARROLL: consumer discretionary, financials, telecom service, transportation, and utility group JIM ROEDER: technology (except telecom service providers) and consumer staples (except food/drug retailers) VINCE VIZACHERO: consumer durables GROWTH GROUP: JEFF NEW: financials, healthcare, and technology SEAN CONNER: cable, media entertainment, technology, telecom equipment, and telecom services MIKE DAVIS: energy, capital goods, consumer staples (ex. broadcasting), consumer cyclicals, transportation, and utilities CORE GROWTH GROUP: MARY JAYNE MALY: energy, financials, healthcare, and utilities TOM COPPER: basic materials, communication services, consumer staples, technology (communications equipment), and transportation BALANCED GROUP: CHRISTINE DRUSCH: technology (semi's and capital equipment, contract manufacturers), telecom services, consumer distribution & services, consumer non-durables, financials, and utilities DAVID MCLAUGHLIN: energy, healthcare, transportation, and utilities ----------------------------------------------------------- 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 September 30, 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. -------------------------------------------------- ?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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