Kynikos Associates LP, the hedge fund managed by legendary short seller Jim Chanos, increased its stakes in the technology sector during the second quarter of 2012, based on its 13F regulatory filing.
The 13F only lists $270 million in assets, while total assets for the firm are close to $6 billion. Most positions are likely shorts, which are not required to be disclosed. Jim Chanos has increased his long equity book it appears. Assets in the last 13F were at $120 million.
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
The fund bought 229,500 shares of Microsoft Corporation (NASDAQ:MSFT), worth $7,020,405, and 250,000 shares of Oracle Corporation (NASDAQ:ORCL), worth $7,425,000.
The hedge fund also purchased 14,100 additional shares in Amazon.com, Inc. (NASDAQ:AMZN), increasing its stakes to 49,400, with a total value of $11, 280, 490.
Kynikos Associates also invested $11, 152,648 to purchase 293,800 shares of Chicago Bridge & Iron Company N.V. (NYSE:CBI) and 135,600 shares Whole Foods Market, Inc. (NASDAQ:WFM), with a $12,925,392 market value.
The hedge fund added four new stocks to its holdings, including CBI, WFM, MSFT, and ORCL. The market value of its new holdings is approximately $38.5 million. The current market value of Kynikos Associates potfolio is more than $268 million.
During the second quarter, Jim Chanos was one of the hedge fund managers who boosted their stakes in JPMorgan Chase & Co. (NYSE:JPM). The filing indicated that hedge fund managers took the opportunity to increase their stakes in JPMorgan Chase & Co. (NYSE:JPM) when the stock plummeted, due to the “London whale” controversy. Kynikos purchased 231,800 additional shares of JPM, boosting its stake in the bank to 324,000 shares, with more than $11.5 million market value. The hedge fund also added 279,000 shares of Citigroup Inc. (NYSE:C), increasing its stake in the bank to 383,700 shares, with more than $10.5 million market value. The firm also indicated strong confidence in the financial sector during the period. Many other hedge funds have shied away from the sector.
Kynikos Associates sold out 6 stocks during the second half of the year, including BP Plc (LON:BP) (NYSE:BP)’s 122,300 shares and Actvision Blizzard Inc. (Nasdaq:ATVI)’s 389,800 shares. The company also closed its holding in SPDR S&P Emerging Markets Small Cap (NYSEArca:EWX)’s 37,000 shares; iShares S&P Europe 350 Index (NYSE:IEV) 135,000 shares; iShares MSCI EAFE Small Cap Index (NYSEArca:SCZ)es 84,000 shares and Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO)’s 38,000 shares.
SPDR S&P 500 (NYSE:SPY) and SPDR S&P MidCap 400 (NYSEArca:MDY) are the top two stock holdings of Kynikos Associates, with more than $22.5 million and $20 million market value respectively.
Meanwhile, despite Chanos’ strong position is in the technology sector this quarter, he advised investors to avoid certain technology companies that serve as the “ultimate value trap” such as Hewlett-Packard Company (NYSE:HPQ). He said the company’s $37 billion acquisitions for the past four to five years is a strategy to hide its R&D spending. He described the strategy as a “value destruction via acquisition.” Seth Klarman a legendary value investor, has purchased a large stake in Hewlett-Packard Company (NYSE:HPQ).