We were talking about North Run just this week and Greenlight Masters big returns from investments in this fund. Greenlight Masters, Greenlight Capital’s Fund of Fund, holds one of its largest allocations in North Run Capital. North Run returned a handsome 7.6 percent in the final quarter of 2012 which took the year’s returns to 23.9 percent, which beat the return of 16 percent on S&P 500 index in the same period. North Run attributes about half of the gains of 2012 from the companies that lagged in 2011 and thus resulted in North Run’s underperformance in that year.

david einhorn

North Run gained from its positions in TNT Express NV (AMS:TNTE) (PINK:TNTEY), Jda Software Group Inc (NASDAQ:JDAS), PSS World Medical, Inc. (NASDAQ:PSSI), General Electric Company (NYSE:GE) and Marriott Vacations Worldwide Corp (NYSE:VAC). The losing positions were, Xerox Corporation (NYSE:XRX), Triple-S Management Corp. (NYSE:GTS), WellPoint, Inc. (NYSE:WLP) and short positions in Technology and Consumer Discretionary. North Run also lost in its position in Kaupthing Bank’s debt.

Like mentioned in the Greenlight Masters’ performance, North Run’s biggest mover was the string of bids that were made on several of its holdings. To be specific, the fund benefited from the takeover offers made to Jda Software Group Inc (NASDAQ:JDAS), PSS World Medical, Inc. (NASDAQ:PSSI), The Pep Boys – Manny, Moe & Jack (NYSE:PBY) and Christopher & Banks Corporation (NYSE:CBK).

However the managers at North Run, Tom Ellis and Todd Hammer, insist that the reason for building a position in these companies was not because they could be takeover targets but more because of company fundamentals. Going forward North Run has exited Jda Software Group Inc (NASDAQ:JDAS), PSS World Medical, Inc. (NASDAQ:PSSI)

Just like David Einhorn was bullish about a recovery in General Electric Company (NYSE:GE), so is North Run’s portfolio. The fund believes that the company’s spells of underperformance are more because of temporary market swings rather than any intrinsic flaw.

North Run also profited from the spinoff of Marriott Vacations Worldwide Corp (NYSE:VAC) from Marriott International, Inc. (NYSE:MAR), the fund made a profit of $25 on average per share. The fund was also up on the spinoff of Liberty Interactive (Ventures group) (NASDAQ:LVNTA) from Liberty Interactive (Interactive group) (NASDAQ:LINTA).

Performance in the short book was mixed for the year; the fund profited from some positions while losing in others. Overall the short portfolio lost 2.6 percent in the year. One of North Run’s tech shorts in a cloud computing company was profitable. North Run acquired a new long position in Verint Systems Inc. (NASDAQ:VRNT).

North Run’s thesis on the communications company is that the difficult time is over and the soon to be held merging of Comverse Technology, Inc. (NASDAQ:CMVT) into Verint Systems Inc. (NASDAQ:VRNT) will allow it to grow more independently.