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Summary Here is what top funds own in the latest quarter. Opportunities remain in these positions. Here are some of the best ideas. Media General (NYSE: MEG ) While the long term is what really matters, Warren Buffett has returned 1,826,163% since 1965 which is a strong start by any measure. If he can keep this up in the second half of his career, he could literally end up with all of the money currently in the world. Buffett’s Berkshire Hathaway ( BRK.A / BRK.B ) owns 3.4 million shares of MEG. It is up over 4% since this position was first disclosed on StW . If you would like to read more about it, you might like Catalysts Drive Media General’s 20% Upside . Additionally, we discussed it in Is Nothing Sacred? Rangeley Podcast #2 . It currently costs under $16 and will probably be sold for over $17 in a deal announced before yearend. Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we’re trying to do. It’s imperfect, but that’s what it’s all about. – Warren Buffett It has been a busy quarter for Berkshire. They doubled their position in Phillips 66 (NYSE: PSX ). Berkshire’s Todd Combs and Ted Weschler added to Axalta (NYSE: AXTA ), Liberty Media ( LMCA / LMCK ), Liberty Global ( LBTYA / LBTYK ), 21st Century Fox (NASDAQ: FOXA ) and Charter (NASDAQ: CHTR ). Folks in Omaha are substantially overlapping with John Malone these days. In terms of stock sales, Berkshire reduced its exposure to Chicago Bridge & Iron (NYSE: CBI ). A number of other positions were the result of corporate events as opposed to active trades. For example, Buffet now owns over 325 million shares of Kraft Heinz (NASDAQ: KHC ) as a result of the successful completion of the merger between Kraft and Heinz. Berkshire has held onto the 59 million shares of AT&T (NYSE: T ) that they received as a result of its acquisition of DirecTV. John Malone, the perpetual new ticker generator, recently created the new Liberty Global Latin American ( LILA / LILAK ) tracking stocks. Berkshire received these as a result of their Liberty Global stake. The Berkshire portfolio is active in terms of ongoing corporate events in the latter half of 2015. They own 10 million shares of Charter after increasing the size by 21%. Charter is wading through the regulatory process of acquiring Time Warner Cable (NYSE: TWC ). They own 4.2 million shares of Precision Castparts (NYSE: PCP ) which Berkshire is in the process of acquiring. There is a $4.02 net arbitrage spread which offers a 6% annual return if they close the deal by next March. No impediments are expected to delay or threaten the deal’s closing. They own 30 million shares of Suncor (NYSE: SU ) which recently launched an unsolicited offer for Canadian Oil ( OTCQX:COSWF ). While Buffett is not a fan of hostile bids, his portfolio companies do not necessarily share his dislike. M&T (NYSE: MTB ) is a 5.3 million share position for Buffett. It is integrating its recently completed acquisition of Hudson City Bancorp. Liberty Global is buying Cable & Wireless ( OTCPK:CBWYY ). Berkshire owns 19 million shares of Liberty Global. Finally, Berkshire has about 11 million shares of General Electric (NYSE: GE ) which is refocusing on its industrial portfolio through a series of major asset sales. What’s next after the PCP deal closes? Another collaboration with 3G on the horizon? We could see another food or beverage deal within the next year that breaks their prior record for scale. ChipMos (NASDAQ: IMOS ) Seth Klarman , one of history’s greatest investors, added 14%% to his position in IMOS, taking it to about 3.8 million shares for his fund, Baupost Group. IMOS is up by over 19% since it was first disclosed on StW . For background reading on this idea, please check out 30% Underpriced? How Is The Market So Wrong About ChipMOS? It is still a compelling long opportunity worth substantially more than it costs. Value investing is at its core the marriage of a contrarian streak and a calculator. – Seth Klarman Greenlight RE (NASDAQ: GLRE ) David Einhorn’s annual returns have been about 19% per year. I highly recommend his book, Fooling Some of the People All of the Time , to any investor, especially one interested in short ideas. Greenlight is down over 17% this year. One way to get exposure to a potential recovery would be to buy Greenlight RE . Its book value per share was $23.29 at the beginning of the quarter. When someone doesn’t want you to look at traditional metrics, it’s a good time to look at traditional metrics. – David Einhorn Allergan (NYSE: AGN ) Stephen Mandel, who used to work as a consumer analyst at Julian Robertson’s Tiger, added 13% to his Allergan position. His hedge fund, Lone Pine Capital, owns about 2.6 million shares. AGN is in a deal with Pfizer (NYSE: PFE ) in which AGN holders will get about $363 per share in PFE equity. Even with a wide spread, the deal is worth between $310-325 per AGN share. Pershing Square Holdings ( OTCPK:PSHZF ) Bill Ackman’s Pershing Square is down about 25% year to date. One way to get exposure to a potential recovery is via a long position in Pershing Square Holdings. Its NAV/share was $19.92 while its price was $19.45 as of November 17. Aercap ( AER ) Lee Ainslie has compounded at around 14% per year for two decades. He added 9% to his Aercap position which now stands at 4.9 million shares in his hedge fund, Maverick Capital. For background reading on AER, I recommend Aercap: An Incredible Bargain Hiding In Plain Sight, 40-50% Upside (For Starters) , winner of a recent Seeking Alpha investing competition . Danaher (NYSE: DHR ) Dan Loeb has annualized at over 20% for over 20 years. In a new position, his fund, Third Point, owns 2.3 million shares of DHR. DHR underwent a complex series of transactions this year. The split into two companies will be finalized by the end of next year. The two key managers, Mitch and Steven Rales, will each serve on both boards. This is crucial as they have proved to be among the very best asset allocators among many corporate insiders. It is up over 13% since it was disclosed in StW earlier this year. For further reading on this idea, I recommend Better Than The Berkshire Hathaway? Danaher’s Value . Our philosophy is to be opportunistic all the way across the capital structure from debt to equity, across industries and different asset classes. – Dan Loeb Altera (NASDAQ: ALTR ) John Paulson was the single greatest exploiter of the price opportunities presented by the housing finance bubble. What is he up to this year? In a new position, his hedge fund, Paulson & Co., recently bought about 3.5 million shares of ALTR. The $1.45 net arbitrage spread currently offers a 7% annual return if the deal closes by next April. It is up over 28% since first discussed on StW . If you want to learn more about this opportunity, then click on 6% Yield From Intel’s Deal With Altera . Baker Hughes (NYSE: BHI ) Jeff Ubben is one of the greatest activist investors of all time. His ValueAct Capital owns over 37 million shares of Halliburton (NYSE: HAL ) and 23 million shares of BHI. He supports their merger and could substantially benefit from the 73% annual return from the arbitrage spread if the deal closes by next March. Cigna (NYSE: CI ) Leon Cooperman’s Omega Advisors has earned an annualized net return of about 11% since inception. His fund owns about a quarter of a million shares of CI. He will benefit from a 42% annual return if CI’s sale to Anthem (NYSE: ANTM ) closes by next August. Time Warner Cable One of Chase Coleman’s forefathers, Peter Stuyvesant built the wall in Wall Street. He has compounded at over 21% since inception. TWC is a new position of Chase’s Tiger Global hedge fund. He newly owns about 580,000 shares. The $17.83 net arbitrage spread offers a 26% annual return if the deal closes by next April. It is up over 35% since we disclosed our position in this equity. You can read more about it here . Humana ( HUM ) After Larry Robbins came out of Leon Cooperman’s Omega Advisors, he turned Glenview Capital into a spectacular success. With over 6.6 million shares, his largest position is HUM. After adding 1% to this position over the quarter, it is now about 6% of his portfolio. Robbins has probably been the greatest beneficiary of the Affordable Care Act, racking up massive profits on his investments in health insurers. There will be more to come if the Aetna (NYSE: AET ) deal to acquire HUM slips past its antitrust review. There is a 38% annual return if it closes by next August. As he also owns 5.5 million shares of AET, his position in the combined company will still be substantial if and when the deal closes. Briadcom (NASDAQ: BRCM ) Andreas Halvorsen’s Viking Global has returned an average of 13% over the past ten years. One big new position of his is BRCM. He owns almost 24 million shares. He will benefit from a 13% annual return if BRCM’s sale to Avago (NASDAQ: AVGO ) closes by next February. It is up over 13% since we disclosed our position in this equity. You can read about the details here . Solarwinds (NYSE: SWI ) Andrew Spokes’ Farallon Capital is one of the largest and best funds that focuses heavily on risk arbitrage. His fund recently started a new position in SWI. Today, he owns about 2.4 million shares. The arbitrage spread offers an annual return of about 13% if it closes by next March. It returned about 22% since we disclosed our position in this one. If you are interested in learning more, you can get the details in this edition of M&A Daily . Icahn Enterprises (NASDAQ: IEP ) Carl Icahn has defined the role of activist investor since it was called “corporate raider”. I prefer the name “owner”. His Icahn Capital owns 115 million shares of IEP; the last I heard, he is satisfied with management. IEP is 28% of the portfolio, up 2% in the past quarter. IEP is down about 28% since I disclosed it as a short earlier this year. I like Icahn. However, he is on the long, long list of people that I do not want to pay a premium for. There’s a strategy behind everything. Everything fits. Thinking this way taught me to compete in many things, not only takeovers but chess and arbitrage. – Carl Icahn Exits One of the big exits of this past quarter was DirecTV, which was sold to AT&T . This was a top position of many funds including mine. Next Ideas What are the best ideas for 2016? We will disclose our #1 candidate in early December on StW . Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. Scalper1 News
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