Q4 2017 fund wisdom a quarterly publication by marketfolly.com

Background: table of contents

Each quarter, hedge funds are required to disclose their portfolios to the Securities & Exchange Commission (SEC) via 13F consensus buy / sell lists: filings. p.02 Most popular trades

These filings disclose long U.S. equity positions, American portfolios: Depositary Receipts (ADRs), stock options (puts/calls), warrants, as p.06 Baupost Group well as convertible notes. They do not disclose positions in other p.08 Berkshire Hathaway asset classes (such as commodities, currencies, or debt). They also do not reveal foreign market holdings, sales, or cash positions. p.10 Greenlight Capital p.13 Lone Pine Capital Hedge Fund Wisdom, a quarterly publication by p.15 Appaloosa Management http://www.marketfolly.com, aggregates, updates, and analyzes the p.18 Pershing Square Capital latest portfolios of top hedge funds. This issue reveals portfolio p.20 Maverick Capital holdings as of December 31st, 2017. p.27 Third Point In This Issue: p.29 Blue Ridge Capital p.31 Paulson & Co - Consensus buy & sell lists revealing which stocks were most p.34 popular among these managers p.37 ValueAct Capital

- Portfolio updates on 25 prominent hedge funds: data tables, p.39 Bridger Capital expert commentary & historical context on each fund’s moves p.41 Omega Advisors p.45 Coatue Management - Investment thesis summaries on 2 stocks that saw notable p.48 Fairholme Capital hedge fund activity p.50 Tiger Global - To navigate the newsletter, simply click on a page number in p.53 Hound Partners the Table of Contents column on the right to go to that page p.55 SPO Advisory p.57 Glenview Capital Quote of the Quarter: p.60 Viking Global p.63 Farallon Capital p.67 Icahn Capital “As our mentor used to say, short-selling is p.69 Brave Warrior Advisors a bit like going to the gym. You’re not just going to show up one day p.71 Pennant Capital and become powerful; you have to put in the reps on a consistent basis.” investment thesis summaries

~ Chase Coleman in Tiger Global’s Q4 letter p.74 Brighthouse Financial (BHF) p.79 Ensco (ESV)

Next Page: Consensus Buy/Sell Lists 1 Q4 2017 www.hedgefundwisdom.com Hedge Fund Consensus Buy List

Consensus New Buys

Time Warner (TWX): During the fourth quarter, funds like Greenlight Capital, Viking Global, and Baupost Group all established new TWX positions. The company is being acquired by AT&T (T), pending regulatory approval. The Department of Justice, however, has sued to block the deal. Bulls feel that the government doesn’t have a strong argument to block it, as there isn’t much precedent. And if by chance the deal is blocked, bulls say the stock is cheap on a valuation basis and could also be a takeover target for other companies.

Aetna (AET): Merger names were definitely favored by hedge funds this quarter. Arbitrage specialists such as Farallon Capital and Paulson & Co both show new positions in AET, as do other funds like Third Point. The company is set to be acquired by CVS Caremark (CVS), pending regulatory approval.

Comcast (CMCSA): Shares of this cable giant fell during the quarter, allowing such as Tiger Management, Pennant Capital, and Appaloosa Management to build positions at fair valuations. The company is comprised of a TV and internet provider (Comcast Xfinity), a content unit (NBC Universal), and a theme parks unit (Universal Studios). While a decent number of funds were actively acquiring shares, it should be noted that some big names were also out liquidating their positions (like Lone Pine Capital and Farallon Capital).

Lowes (LOW): This home improvement store chain was purchased by the likes of Tiger Management, Greenlight Capital, and Viking Global. As the economy has recovered and household formation turns a corner, the company is benefiting from an increase in consumers buying appliances, as well as maintaining and renovating their homes. LOW’s prime competitor, Home Depot (HD), has long been considered the better operator in the space, but LOW shares perked up in the second half of 2017.

Consensus Increase List

Q4 2017 www.hedgefundwisdom.com 2 Hedge Fund Consensus Increase List

Consensus Increased Positions

Anheuser-Busch Inbev (BUD): Firms including Farallon Capital, Maverick Capital, Viking Global, and Lone Pine Capital increased their allocations to this global beer giant during the quarter. From October to the end of the year, BUD traded down from $124 to $110 and has recently fallen further to $106. While the threat of craft beer stealing market share has been real, BUD has unprecedented scale in the industry and has simply bought out craft brewers in response.

Apple (AAPL): This stock graces this list for the second consecutive quarter. This time around, Maverick Capital, Appaloosa, and Berkshire Hathaway all acquired more shares. That last firm made the most noteworthy buy, as AAPL is now Warren Buffett’s largest holding. The company recently benefited from the tax cuts and tax repatriation holiday that was passed, which allows the company to bring back $250+ billion of its overseas cash to invest in the business, pay dividends, and buyback even more stock. That definitely seems to be a large portion of the bull thesis now.

Parsley Energy (PE): The vast majority of funds in this newsletter haven’t had a ton of energy exposure on the long side over the past year. This quarter, though, Omega Advisors, Third Point, and Viking Global all more acquired PE shares.

Monsanto (MON): Shares of this agricultural giant were accumulated by Paulson & Co, Farallon Capital, and Berkshire Hathaway during the fourth quarter. The company is merging with Bayer in a $63 billion deal that was announced over a year ago. It’s been going through the regulatory gauntlet as of late, with the European Union delaying its ruling until March. Bayer is offering various additional concessions in order to appease regulators.

Consensus Sell List

Q4 2017 www.hedgefundwisdom.com 3 Hedge Fund Consensus Sell List

Consensus Sold Positions

Bank of America (BAC): After generating solid gains on their positions by betting on the banking giant benefiting from a healthier economy and a rising interest rate environment, funds that took profits and exited stage left included Third Point and Viking Global, among others.

Newell Brands (NWL): Hedge funds such as Maverick Capital and Viking Global dumped their positions in Newell Brands during the fourth quarter. After acquiring Jarden, Newell management hasn’t integrated the businesses as well as investors hoped and the company’s performance and share price has suffered because of it. An activist (Starboard Value) recently emerged to try and get the company back on track by working with former Jarden executives.

T-Mobile (TMUS): Funds including Lone Pine Capital and Third Point liquidated their exposure to T-Mobile. Shares drifted and churned sideways and down most of 2017. Hopes of a merger with Sprint (S) came and went and now the company continues its march as a standalone company focused on taking share from the two large incumbents AT&T (T) and Verizon (VZ). Part of the bull thesis has always been that TMUS would be an acquisition target for someone, but the question is who? Other wireless companies, cable companies, or even tech firms have all been rumored suitors, but nothing concrete has materialized, at least not yet.

* C.R. Bard (BCR): This stock no longer trades as Becton Dickinson (BDX) acquired the company in a $24 billion deal. As such, funds no longer show a position in the company.

Consensus Decrease List

Q4 2017 www.hedgefundwisdom.com 4 Hedge Fund Consensus Decrease List

Consensus Decreased Positions

Facebook (FB): This is the third consecutive quarter this stock lands on this list as funds like Tiger, Bridger Capital, Blue Ridge Capital, Farallon, Maverick, Viking, Lone Pine, and Coatue all take some profits and reduce their swelled position sizes. The company has been a monster as it takes online advertising market share, but it has been in the political crosshairs a bit lately, and bears point to regulatory threat as one of the biggest risks associated with the name.

Alibaba Group (BABA): The Chinese e-commerce giant shows up on this list most likely due to its huge year. In 2017, BABA shares traded up well over 85%. So when funds see their position sizes practically double in a short timeframe, risk management practices kick-in and some profits are taken. Tiger, Maverick, Tiger Global, Coatue, Third Point, and Lone Pine all reduced their allocations to BABA.

Microsoft (MSFT): If you haven’t yet noticed a theme, hedge funds were locking in gains in their profitable technology positions during the fourth quarter. Funds that trimmed their MSFT stakes include Tiger, Omega, Farallon, Viking, Lone Pine, and Tiger Global.

Alphabet (GOOG): Continuing with the tech stock trimming theme, Alphabet was reduced by the likes of Tiger, Farallon, Maverick, Appaloosa, and Coatue during the fourth quarter.

IQVIA (IQV): This is the new company that was formed when IMS Health and Quintiles merged. Some funds were playing the merger arbitrage angle, while others were long for the business fundamentals. Either way, Farallon, Lone Pine, Glenview Capital, and Brave Warrior Advisors all reduced their exposure to the newly combined company.

Next: Hedge Fund Portfolios (Baupost Group)

Q4 2017 www.hedgefundwisdom.com 5 Seth Klarman Baupost Group Graduated from Harvard Business School & regarded as one of the best investors of all time

View Seth Klarman’s Recommended Reading List Key Takeaways discerning eye on. This is very much a fluid New Positions: situation. Time Warner (TWX) Another arbitrage related name Baupost Group acquired more of is 21st Century Fox. They Sold Out: were out buying both voting (FOX) and non-voting Dell Technologies (DVMT) (FOXA) share classes. Combined, they now own Avis Budget (CAR) over $1.12 billion worth of exposure to the name. Centennial Resource (CDEV) The company is selling assets to Walt Disney (DIS) in a deal worth $52.4 billion, pending approval. Also, Comcast (CMCSA) has reportedly been interested in acquiring the assets as well. As it stands, Disney would purchase Fox’s movie and television studios, its regional sports The biggest takeaway from Seth Klarman’s channels, cable entertainment brands (FX and fourth quarter portfolio was a strong appetite for risk National Geographic), and Fox’s international arbitrage stocks. Baupost Group initiated a $740 operations. Fox would retain Fox News, the Fox million stake in Time Warner (TWX) during the broadcast network, television stations and Fox fourth quarter and it’s now their fifth largest holding. Sports 1 & 2. Post Disney deal (assuming it’s TWX is being acquired by AT&T (T), pending approved and CMCSA doesn’t submit a higher bid) government approval. During the quarter though, bulls are pointing to the remaining standalone Fox the Department of Justice sued to block the merger. entity as being cheap on a valuation basis. The It remains to be seen if Baupost is simply terms of the deal are that Fox shareholders receive wagering that this deal will go through, or if they see 0.2745 of a DIS share for each Fox share they own. value in Time Warner’s shares even if the deal were Disney also has agreed to a $2.5 billion break-up fee to break. The latter is the argument many bulls have if regulatory approvals aren’t reached. Disney made as of late given the success of TWX’s HBO expects the deal to be completed in 2019. franchise, among other assets that have put up solid Last quarter’s issue highlighted Baupost’s numbers should the company continue to be a new buys in McKesson (MCK) and standalone entity. And of course bulls also point to AmerisourceBergen (ABC). The investment firm the fact that TWX is likely to be a takeout target for continued to build stakes in these companies in Q4, other firms should the AT&T bid fail. boosting their stakes by 172% and 659% The thought is that the deal doesn’t really respectively. These are both now top 20 holdings. have a precedent for being blocked, as previously Not to mention, it was recently announced that Comcast’s (CMCSA) purchase of NBC Universal Walgreens Boots Alliance (WBA) has made a was allowed to go through. However, it’s been takeover approach to ABC to acquire the rest of the reported recently that part of the argument the company (it already owns around 26% of ABC). government will make is that CMCSA’s deal hasn’t really benefited consumers. That merger and TWX’s deal are vertical mergers, rather than the View Baupost Group’s Updated horizontal ones that government typically casts a Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 6 Baupost Group Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Synchrony Financial SYF 11.18% Unchanged $1,131,081,000 29,295,030 2 Cheniere Energy Inc LNG 11.03% Unchanged $1,115,906,000 20,726,340 3 Viasat Inc. VSAT 9.74% Unchanged $984,887,000 13,158,137 4 21st Century Fox, Class A FOXA 7.61% Added 16% $769,630,000 22,288,731 5 Time Warner, Inc. TWX 7.33% New $740,907,000 8,100,000 6 Allergan PLC AGN 7.28% Added 52% $736,110,000 4,500,000 7 Qorvo, Inc. QRVO 7.24% Added 22% $732,600,000 11,000,000 8 Colony NorthStar, Inc. CLNS 5.40% Unchanged $546,601,000 47,905,461 9 Antero Resources Corp. AR 4.64% Added 3% $469,722,000 24,722,187 10 PBF Energy Inc PBF 3.83% Cut -31% $387,262,000 10,924,175 11 21st Century Fox FOX 3.55% Added 43% $359,327,000 10,531,258 12 Pioneer Natural Resources PXD 3.42% Add 6822% $345,700,000 2,000,000 13 Cardinal Health, Inc. CAH 3.09% Added 102% $312,477,000 5,100,000 14 Theravance Bioph TBPH 2.57% Unchanged $259,633,000 9,309,168 15 McKesson Corp MCK 2.10% Added 172% $212,092,000 1,360,000 16 Express Scripts Inc. ESRX 1.70% Cut -10% $172,154,000 2,306,456 17 AmerisourceBergen Corp. ABC 1.30% Added 660% $131,722,000 1,434,565 18 Keryx Biopharmaceuticals KERX 1.19% Unchanged $119,931,000 25,791,678 19 Veritiv VRTV 1.04% Added 19% $105,239,000 3,641,485 20 Atara Biotherapy ATRA 0.96% Unchanged $97,009,000 5,359,632 21 AMC Entertainment AMC 0.75% Added 40% $75,500,000 5,000,000 22 GTY Technology Holdings GTYHU 0.45% Unchanged $45,379,000 4,400,000 23 Paratek Pharmace PRTK 0.42% Unchanged $42,862,000 2,394,498 24 Novagold Resources Inc. NG 0.42% Added 13% $42,219,000 10,742,835 25 Theravance Notes TBPH 0.33% Unchanged $33,038,000 30,000,000 26 Cascadian Therapeutics CASC 0.32% Unchanged $32,268,000 8,721,079 27 ChipMOS Technologies IMOS 0.26% Cut -52% $25,953,000 1,470,408 28 Saban Capital Acquisition SCAC 0.23% Unchanged $23,102,000 2,326,500 29 Sunrun Inc RUN 0.17% Unchanged $16,804,000 2,848,082 30 Sentinel Energy STNLU 0.16% New $15,952,000 1,600,000 31 Forward Pharma FWP 0.15% Cut -35% $15,382,000 4,179,940 32 Trilogy Metals Inc.. TMQ 0.11% Unchanged $11,496,000 10,600,758 33 Orexigen Therapeutics Inc OREX 0.03% Unchanged $2,873,000 2,226,839 34 Saban Capital Acquisition SCACW 0.01% Unchanged $1,442,000 1,163,250 Dell Technologies Inc DVMT Sold Avis Budget Group Inc CAR Sold Silver Run Acquisition SRUN Sold Centennial Resource CDEV Sold Simply Good Foods SMPLW Sold

Next Page: Berkshire Hathaway

Q4 2017 www.hedgefundwisdom.com 7 Warren Buffett Berkshire Hathaway Mentored by Benjamin Graham in the ways of value investing & one of the greatest investors of all time

View Buffett’s Recommended Reading List Key Takeaways $252 billion over and pay $38 billion in tax in the New Positions: process. The company has already announced that it Teva Pharmaceuticals (TEVA) will invest in America. Investors are also expecting the company to return cash back to shareholders via Sold Out: increased dividends and/or buybacks. Apple has None already returned over $233 billion via these methods over the past five years. In recent portfolio activity since the end of 2017, a press release recently announced that Berkshire Hathaway has sold $3.3 billion worth of its Phillips 66 (PSX) shares back to the company at erkshire Hathaway initiated a brand new $93.725 per share. This 35 million share block B means that Berkshire now only owns 45.6 million position in Teva Pharmaceuticals (TEVA) during the PSX shares and this is not reflected on the next fourth quarter. Given the smaller position size of page. This means they’ve cut their position size by $357 million, this is likely attributed to one of their over 43%. younger portfolio managers, either Todd Combs or In a recent interview with CNBC, Buffett Ted Weschler. The company makes generic drugs said that stocks are “not richly valued relative to and recently announced a restructuring plan, cutting interest rates.” He says that the tax act is also a big spending by $3 billion. factor in valuation. On interest rates, he noted that Turning to other portfolio moves in low rates have buoyed the Berkshire’s book, one move is very clearly Warren significantly. It’s a strange situation to have the Buffett: he sold 94% of his stake in IBM (IBM). Federal Reserve say their goal is 2% inflation and Even after the massive sale, Berkshire still owns then people buy Treasuries at 1.5% so the around $314 million worth of shares. But make no government has basically said it doesn’t pay to save, mistake, this is a massive reduction as they Buffett noted. He didn’t think that a 21% corporate previously owned over $5.3 billion worth of shares. tax rate was baked into the markets and highlighted It looks as though Buffett moved at least a how a huge change from the previous 35% is a big portion of that capital into Apple (AAPL), now deal. Lastly, he said Berkshire has a little over $100 Berkshire’s largest holding worth almost $28 billion. billion in cash but normally likes to only hold $20 Berkshire boosted its position size by 23% during billion, so he’s got a lot of excess capital. He said the quarter as the smartphone maker released its he wants to put that to work but hasn’t yet. latest iPhone X and HomePod, a smart speaker. The company has also announced it will be repatriating its massive overseas cash balance on the heels of the government’s decision to lower the corporate tax rate and to allow a one-time cash repatriation tax break. Apple holds somewhere around 94% of its cash overseas and will bring the vast majority of the View Berkshire Hathaway’s Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 8 Berkshire Hathaway Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Apple Inc AAPL 14.63% Added 23% $27,979,467,000 165,333,962 2 Wells Fargo WFC 14.54% Cut -1% $27,800,952,000 458,232,268 3 Kraft Heinz Co. KHC 13.24% Unchanged $25,321,363,000 325,634,818 4 Bank of America Corp. BAC 10.48% Unchanged $20,044,080,000 679,000,000 5 Coca Cola Co. KO 9.60% Unchanged $18,352,001,000 400,000,000 6 American Express AXP 7.87% Unchanged $15,056,458,000 151,610,700 7 Phillips 66 PSX 4.27% Unchanged $8,161,782,000 80,689,892 8 U.S. Bancorp USB 2.44% Added 2% $4,664,615,000 87,058,877 9 Moodys Corp MCO 1.90% Unchanged $3,641,506,000 24,669,778 10 Bank of New York Mellon BK 1.71% Added 21% $3,275,697,000 60,818,783 11 Southwest Airlines Co. LUV 1.63% Unchanged $3,119,312,000 47,659,456 12 Delta Air Lines Inc. DAL 1.56% Unchanged $2,974,182,000 53,110,395 13 Charter Communications CHTR 1.49% Unchanged $2,852,096,000 8,489,391 14 Goldman Sachs Group GS 1.46% Unchanged $2,792,047,000 10,959,519 15 DaVita HealthCare DVA 1.46% Unchanged $2,786,362,000 38,565,570 16 American Airlines AAL 1.25% Cut -2% $2,393,379,000 46,000,000 17 GM 1.07% Cut -17% $2,049,500,000 50,000,000 18 United Continental UAL 0.99% Unchanged $1,901,459,000 28,211,563 19 USG Corp. USG 0.79% Unchanged $1,503,918,000 39,002,016 20 VeriSign Inc. VRSN 0.78% Unchanged $1,482,312,000 12,952,745 21 Monsanto Co. MON 0.72% Added 32% $1,367,348,000 11,708,747 22 Liberty SiriusXM LSXMK 0.64% Unchanged $1,233,068,000 31,090,985 23 Visa V 0.63% Unchanged $1,204,332,000 10,562,460 24 M&T Bank Corp. MTB 0.48% Unchanged $920,275,000 5,382,040 25 Costco Co. COST 0.42% Unchanged $806,526,000 4,333,363 26 Synchrony Financial SYF 0.42% Unchanged $803,203,000 20,803,000 27 Axalta Coating AXTA 0.39% Unchanged $754,765,000 23,324,000 28 MasterCard Inc. Class A MA 0.39% Unchanged $746,925,000 4,934,756 29 Sirius XM Radio SIRI 0.39% Unchanged $739,228,000 137,915,729 30 Liberty Global Inc, Class A LBTYA 0.38% Unchanged $723,283,000 20,180,897 31 Liberty SiriusXM LSXMA 0.31% Unchanged $589,362,000 14,860,360 32 Torchmark Corp. TMK 0.30% Unchanged $576,346,000 6,353,727 33 Restaurant Brand QSR 0.27% Unchanged $518,782,000 8,438,225 34 Store Capital STOR 0.25% Unchanged $484,908,000 18,621,674 35 Teva Pharmaceutical TEVA 0.19% New $357,695,000 18,875,721 36 IBM IBM 0.16% Cut -94% $314,211,000 2,048,045 37 Liberty Global LBTYK 0.13% Unchanged $248,621,000 7,346,968 38 Sanofi Oyj ADR SNY 0.09% Cut -1% $166,777,000 3,878,524 39 Verisk Analytics VRSK 0.08% Unchanged $150,090,000 1,563,434 40 Wal-Mart Stores WMT 0.07% Unchanged $137,610,000 1,393,513 41 Graham Holdings, Inc. GHC 0.03% Unchanged $60,065,000 107,575 42 Liberty Global LatAm LILA 0.03% Unchanged $54,704,000 2,714,854 43 Johnson & Johnson Co. JNJ 0.02% Unchanged $45,702,000 327,100 44 Procter & Gam PG 0.02% Unchanged $28,979,000 315,400 45 Liberty Global LatAm LILAK 0.01% Unchanged $25,539,000 1,284,020 46 Mondelez MDLZ 0.01% Unchanged $24,738,000 578,000 47 United Parcel Service UPS 0.00% Unchanged $7,078,000 59,400 48 Verizon Communications VZ 0.00% Unchanged $49,000 928 Next Page: Greenlight Capital

Q4 2017 www.hedgefundwisdom.com 9 David Einhorn Greenlight Capital Has returned 16.1% annualized

Predicted & profited from the demise of Lehman Brothers

Author of Fooling Some of the People All of the Time Key Takeaways

(TWX) during the fourth quarter. Greenlight’s letter New Positions: notes that even though the company’s deal with Consol Energy (CEIX) * spin-off AT&T (T) is facing opposition, they think the Twitter (TWTR) government has a weak case. And even if the deal is Time Warner (TWX) blocked, they feel shares are cheap and the company Ensco (ESV) has plenty of strategic options. This is also a name Medicines Co (MDCO) Greenlight has owned in the past, so they’re very JC Penney (JCP) familiar with it. Greenlight shows a ‘new’ stake in Consol Sold Out: Energy (CEIX), but this is a stake they received due Gold Miners ETF (GDX) to their ownership of CNX. CEIX was spun-off from Hewlett Packard Enterprise (HPE) CNX Resources. The former houses the company’s The Stars Group (TSG) coal business, while the latter is a natural gas General Motors (GM) Calls operation. Monsanto (MON) Brighthouse Financial (BHF) is now Greenlight’s second largest US position and they built a stake at an average cost of $57.92. BHF was spun out of MetLife and includes businesses selling annuities and life . Greenlight writes, “BHF appears to be a traditional spin-off – an Greenlight Capital finished 2017 up 1.6%. underperforming and unloved part of a larger, more In the fourth quarter, they started new positions in a successful company. The tone of the spin-off road bevy of stocks. First, they show a new position in show was noticeably downbeat, with management Twitter (TWTR). The beleaguered social media advancing a business plan that does not sound company is used so prevalently but hasn’t been able to particularly exciting for shareholders. Notably, monetize like the giant in the space: Facebook (FB). despite very conservative capitalization and high Greenlight outlined their TWTR thesis in their risk-based capital levels, the base expectation calls Q4 letter, noting that the user experience has for no capital return until 2020. The result is a improved, yielding growth in new users and time valuation of just 56% of book value and 6.4x 2018 spent on the platform. They believe the company now EPS estimates.” has a better pitch to advertisers, which can lead to Basically, Greenlight’s BHF thesis is all revenue growth. David Einhorn actually has a Twitter about valuation. They feel analysts have been too account: @davidein, but he doesn’t post about the negative on the name and that shares are trading at a market and usually just tweets about his poker 40-50% discount to peers and also point out that activity. Greenlight now owns $66.8 million worth of management is incentivized if shares appreciate. TWTR shares and it’s their seventeenth largest BHF is featured in the investment thesis summary holding. later in the issue. Einhorn’s firm, like many others you’ll see in this issue, also jumped into shares of Time Warner View Greenlight Capital’s Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 10 Greenlight Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 General Motors Co. GM 19.26% Cut -25% $1,060,091,000 25,862,200 2 Brighthouse Financial BHF 11.72% Added 62% $645,040,000 11,000,000 3 Aercap Holdings N V AER 9.34% Cut -21% $513,904,000 9,768,178 4 Mylan Inc MYL 7.83% Cut -5% $430,813,000 10,182,307 5 Apple Inc AAPL 6.74% Unchanged $371,105,000 2,192,900 6 Voya Financl Inc VOYA 5.13% Cut -4% $282,101,000 5,702,444 7 Green Brick Part GRBK 4.95% Unchanged $272,542,000 24,118,668 8 CONSOL Energy Inc CNX 4.73% Cut -21% $260,519,000 17,807,181 9 Perrigo Cmpn Plc PRGO 4.49% Cut -2% $247,241,000 2,836,632 10 Tempur Sealy TPX 3.22% Cut -29% $177,036,000 2,824,000 11 Altaba, Inc. AABA 2.81% Cut -48% $154,816,000 2,216,400 12 Micron Technology, Inc. MU 2.54% Cut -32% $139,976,000 3,404,100 13 Adient Plc ADNT 2.44% Cut -1% $134,215,000 1,705,385 14 Consol Energy CEIX 1.60% New $87,936,000 2,225,663 15 CONSOL Coal Resources CCR 1.56% Unchanged $85,894,000 5,488,438 16 Conduent Inc CNDT 1.27% Cut -27% $70,097,000 4,337,700 17 Twitter Inc TWTR 1.22% New $66,868,000 2,785,000 18 Time Warner TWX 1.11% New $60,827,000 665,000 19 Ensco Plc ADR ESV 1.04% New $57,327,000 9,700,000 20 Chemours Co CC 0.95% Cut -29% $52,468,000 1,048,100 21 DSW Inc. Class A DSW 0.94% Cut -21% $51,548,000 2,407,700 22 Dillards Inc. DDS 0.88% Cut -46% $48,379,000 805,659 23 Exela Technologies, Inc. XELA 0.78% Unchanged $43,181,000 8,384,629 24 Venator Materials PLC VNTR 0.68% Unchanged $37,604,000 1,700,000 25 Medicines Company MDCO 0.50% New $27,340,000 1,000,000 26 J.C. Penney JCP 0.37% New $20,219,000 6,397,990 27 Varex Imaging Corp VREX 0.17% Cut -65% $9,315,000 231,900 28 Clipper Realty Inc CLPR 0.16% Cut -12% $8,826,000 883,377 29 Kohls Corp. KSS 0.13% New $7,203,000 132,800 30 Best Buy Co., Inc. BBY 0.13% New $7,168,000 104,700 31 Wayfair W 0.13% New $7,024,000 87,500 32 Shutterfly Inc SFLY 0.13% New $6,915,000 139,000 33 Carters, Inc. CRI 0.12% New $6,815,000 58,000 34 Under Armour, Inc. UAA 0.12% New $6,529,000 452,500 35 Lowes Companies, Inc. LOW 0.12% New $6,330,000 68,100 36 Childrens Place PLCE 0.11% Cut -35% $6,264,000 43,100 37 The Gap GPS 0.11% Cut -33% $6,015,000 176,600 38 Nordstrom Inc. JWN 0.11% New $5,965,000 125,900 39 Signet Jewelers, Inc. SIG 0.11% New $5,881,000 104,000 40 Weight Watchers WTW 0.10% New $5,757,000 130,000 41 Michael Kors KORS 0.06% New $3,037,000 48,250 42 Five Below Inc FIVE 0.05% New $2,937,000 44,300 43 SeaWorld Entertainment SEAS 0.04% New $1,929,000 142,148

Continued on Next Page…

Q4 2017 www.hedgefundwisdom.com 11 Greenlight Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares Gold Miners ETF GDX Sold Monsanto MON Sold General Motors GM CALL Sold Kroger Co. KR Sold HewlettPackard Enterprise HPE CALL Sold Dollar Tree Inc. DLTR Sold Tech Data Corp. TECD Sold Freds Inc. FRED Sold Rite Aid Corp. RAD Sold The Stars Group Inc. TSG Sold HewlettPackard Enterprise HPE Sold Cars.com CARS Sold Gannett Co. TGNA Sold AMERCO Inc UHAL Sold Quorum Health Corp QHC Sold

Next Page: Lone Pine Capital

Q4 2017 www.hedgefundwisdom.com 12 Stephen Mandel

Lone Pine Capital Seeks to identify companies with good management teams that are trading below intrinsic value

Has returned 19.5% annualized since inception in 1997

Key Takeaways coming to fruition as they’re already going to be New Positions: offering 2-hour delivery from Whole Foods to Prime Amazon (AMZN) members. They also offer video content, music, e- CSX (CSX) books and more. Needless to say, the company is Alphabet (GOOG) sprawling and each time it is rumored to enter an Blackrock (BLK) industry, share prices of those associated companies TransDigm Group (TDG) immediately take a hit. Agilent (A) The second biggest buy Steve Mandel’s firm Sea Ltd (SE) ~ IPO made in Q4 was Adobe Systems (ADBE). This was already a pre-existing position but they boosted their Sold Out: position size by 47% during the quarter and it’s now their fourth largest position. The company provides Comcast (CMCSA) software and has transitioned from a license model Expedia (EXPE) to a subscription model, which has been a boon. Intercontinental Exchange (ICE) Lone Pine also ratcheted up its exposure to T-Mobile (TMUS) Electronic Arts (EA), increasing its stake by 72% Charter Comm (CHTR) Calls and it’s now Lone Pine’s 11th largest holding. Advance Auto Parts (AAP) Previous issues of the newsletter have highlighted how Mandel is bullish on gaming (and mobile gaming) and has expressed this bet via large stakes in EA and also Activision Blizzard (ATVI), which is Lone Pine’s third largest position. The big takeaway from Lone Pine’s year- In the online travel space, the hedge fund end activity was the fact that they initiated a brand jettisoned its Expedia (EXPE) exposure in favor of new stake in Amazon (AMZN) worth over $900 its primary competitor. Lone Pine boosted its million. This is now their seventh largest holding. Priceline (PCLN) stake by 35% during Q4, making Founder and CEO Jeff Bezos is widely regarded as it their sixth largest holding. one of the most ambitious people on the planet and Recently, Priceline made a seemingly long- one of the best CEO’s. While most people will term decision to pullback on some of its immediately think of Amazon’s retail business, the performance-based advertising channels to focus company’s Amazon Web Services (AWS) division instead on brand-building ads. The phrase ‘long has been the star as of late, posting huge growth and term’ is used mainly because this news was met with commanding market share in the cloud computing a sell-off in shares as it weakened the company’s segment. Not to mention, the company has also built near-term guidance. However, some bulls feel this out a logistics fleet, started the smart speaker was a strong strategic decision for PCLN to flex its movement with its infamous ‘Alexa’ assistant, and is muscle in the space as the dominant player. constantly pushing for ways to bring more value to its Prime subscribers via value-add offerings. As the company begins to integrate its View Lone Pine Capital’s Updated acquisition of Whole Foods, some of their strategy is Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 13 Lone Pine Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Constellation Brands, Inc. STZ 5.81% Cut -31% $1,112,932,000 4,869,109 2 Alibaba Group BABA 5.71% Cut -28% $1,094,581,000 6,347,975 3 Activision Blizzard Inc ATVI 5.66% Cut -14% $1,084,956,000 17,134,499 4 Adobe Systems, Inc. ADBE 5.30% Added 47% $1,014,732,000 5,790,528 5 IQVIA Holdings, Inc. IQV 5.04% Cut -2% $966,110,000 9,868,332 6 Priceline Group Inc PCLN 5.01% Added 35% $959,107,000 551,928 7 Amazon.com Inc. AMZN 4.70% New $900,487,000 769,996 8 Microsoft Corp. MSFT 4.28% Cut -15% $819,881,000 9,584,771 9 UnitedHealth Group Inc. UNH 4.19% Cut -17% $802,819,000 3,641,563 10 Facebook Inc FB 4.05% Cut -13% $776,503,000 4,400,447 11 Electronic Arts, Inc. EA 4.01% Added 73% $767,798,000 7,308,184 12 PayPal Holdings Inc PYPL 3.65% Added 41% $698,523,000 9,488,228 13 Broadcom Limited AVGO 3.30% Cut -52% $632,749,000 2,463,016 14 CSX Corp. CSX 3.27% New $626,200,000 11,383,382 15 Alphabet GOOG 3.26% New $625,227,000 597,503 16 Anheuser-Busch Inbev BUD 3.06% Added 634% $586,170,000 5,254,307 17 TransUnion TRU 3.03% Cut -14% $581,067,000 10,572,548 18 Charter Communications CHTR 3.03% Cut -53% $580,445,000 1,727,722 19 BlackRock Inc. Class A BLK 2.96% New $567,069,000 1,103,870 20 ServiceNow, Inc. NOW 2.80% Cut -22% $536,710,000 4,116,193 21 MasterCard Inc. Class A MA 2.66% Cut -25% $508,973,000 3,362,667 22 Equinix EQIX 2.66% Cut -12% $508,753,000 1,122,529 23 Salesforce.com Inc. CRM 2.60% Cut -22% $497,305,000 4,864,570 24 MercadoLibre Inc MELI 2.53% Cut -6% $483,785,000 1,537,485 25 Transdigm Group Inc TDG 2.02% New $387,325,000 1,410,402 26 Grupo Televisa S.A. TV 1.96% Cut -4% $375,113,000 20,091,736 27 Agilent Technologies A 1.26% New $241,602,000 3,607,622 28 Wynn Resorts Ltd WYNN 1.12% Cut -53% $214,118,000 1,270,051 29 FleetCor Technologies, Inc. FLT 0.81% Unchanged $154,229,000 801,482 30 Sea Ltd SE 0.22% New $42,966,000 3,223,222 31 VIX Short Term Futures VXX 0.04% Unchanged $6,980,000 250,000 Advance Auto Parts, Inc. AAP Sold Charter Communications CHTR CALL Sold Worldpay, Inc. Class A WP Sold T-Mobile USA Inc TMUS Sold Expedia Inc. EXPE Sold IntercontinentalExchange ICE Sold Comcast CMCSA Sold

Next Page: Appaloosa Management

Q4 2017 www.hedgefundwisdom.com 14 Appaloosa Management Has compounded 30% for investors over 17 years

Profiled in the book: The Masters

Key Takeaways

assets on their 13F filing increased from $7.11 New Positions: billion in Q3 to over $10.73 billion in Q4. While Emerging Markets ETF (EEM) some of that is undoubtedly due to appreciation as Financial Sector ETF (XLF) the market rose, it does seem as though Appaloosa T-Mobile (TMUS) put more money to work when you look at all the Energy Sector ETF (XLE) Calls positions they added to during Q4. (As a reference, Comcast (CMCSA) Appaloosa as a firm manages around $17 billion.) MGM (MGM) During the fourth quarter, David Tepper’s Caesars (5% Notes & CZR Equity) team ramped up buying in nine stocks significantly. All of these positions are now within Appaloosa’s Sold Out: top ten holdings as well: Micron (MU), Facebook PNC Financial (PNC) (FB), QQQ (QQQ), Apple (AAPL), Alibaba Whirlpool (WHR) (BABA), Altaba (AABA), Allergan (AGN), Bank of Kinder Morgan (KMI) America (BAC), and the emerging markets ETF CBS (CBS) (EEM). Of these plays, Appaloosa boosted Hain Celestial (HAIN) exposure to QQQ, AAPL, and BAC the most, increasing those stakes by 305%, 237%, and 170% respectively, as each were previously smaller stakes. While Appaloosa boosted its Alibaba (BABA) stake by 21% in the quarter, they have even further exposure to the name via Altaba (AABA), In an interview last month with CNBC, which they increased their position in by 89%. The David Tepper said that the market is as ‘cheap as a company is the stub of the former Yahoo entity after year ago’ and he expressed bullishness on the the business was sold to Verizon. What was left corporate tax cut that was passed recently. He noted, over was an ownership stake in BABA, Yahoo “Explain to me where this market is rich? It’s not Japan, and a few other assets. If you combine the rich with the tax thing that just changed earnings value of Appaloosa’s BABA and AABA stakes, it projections. With earnings forecasts going up and would collectively be their largest position worth interest rates where they are, how is this market over $1.36 billion. Alibaba, of course, is the leading expensive? I don’t see the overvaluation. World e-commerce platform in China that has also growth is higher.” diversified into other fields such as cloud Tepper also noted that there’s no inflation computing, payments, and more. and said that bond prices are the key indicator of whether or not the market can keep going higher. He argues that, “The market can’t go down until the gets hit.” Keep in mind of course, that he made these comments before the recent volatility in the markets. When looking at Appaloosa Management’s View Appaloosa Management’s portfolio, the first thing to consider is that reported Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 15 Appaloosa Management Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Micron Technology, Inc. MU 10.54% Added 61% $1,130,800,000 27,500,000 2 Facebook Inc FB 9.09% Added 68% $975,725,000 5,529,441 3 QQQ Trust QQQ 8.42% Added 306% $903,408,000 5,800,000 4 Apple Inc AAPL 7.23% Added 237% $776,402,000 4,587,852 5 Alibaba Group BABA 6.94% Added 21% $744,938,000 4,320,234 6 Altaba, Inc. AABA 5.77% Added 89% $619,220,000 8,865,000 7 Allergan PLC AGN 5.28% Added 84% $566,946,000 3,465,862 8 Bank of America Corp. BAC 4.72% Added 171% $506,268,000 17,150,000 9 Emerging Markets ETF EEM 3.99% New $428,792,000 9,100,000 10 Alphabet GOOG 3.47% Cut -37% $372,235,000 355,729 11 Financial Sector ETF XLF 2.60% New $279,100,000 10,000,000 12 NRG Energy Inc NRG 2.59% Added 16% $277,958,000 9,759,777 13 T-Mobile USA Inc TMUS 2.28% New $244,972,000 3,857,224 14 Ally Financial ALLY 2.18% Added 18% $234,345,000 8,036,523 15 XPO Logistics XPO 1.88% Add 3327% $201,845,000 2,203,790 16 Energy Transfer Partners ETP 1.37% Cut -32% $146,587,000 8,180,094 17 Energy Sector ETF XLE CALL 1.35% New $145,040,000 2,007,200 18 Williams Partners L.P. WPZ 1.34% Cut -50% $144,111,000 3,716,117 19 United Rentals, Inc. URI 1.22% Cut -18% $130,906,000 761,478 20 UnitedHealth Group Inc. UNH 1.22% Cut -12% $130,422,000 591,589 21 Boston Scientific Inc. BSX 1.10% Added 27% $118,563,000 4,782,683 22 Thermo Fisher Scientific TMO 1.01% Cut -3% $108,611,000 572,000 23 Caesars Ent. Notes CZR 0.89% New $95,594,000 48,992,834 24 Owens Corning OC 0.85% Cut -54% $90,840,000 988,035 25 Huntsman Corp HUN 0.82% Cut -49% $87,659,000 2,633,185 26 Energy Transfer Equity LP ETE 0.81% Added 8% $87,350,000 5,060,815 27 Comcast CMCSA 0.74% New $79,542,000 1,986,078 28 Allstate Corp. ALL 0.74% Cut -48% $79,377,000 758,069 29 Summit Materials Inc SUM 0.74% Added 26% $78,927,000 2,510,401 30 MGM Resorts MGM 0.72% New $77,691,000 2,326,766 31 Dollar General DG 0.71% Added 38% $76,697,000 824,607 32 Centene Corp CNC 0.71% Cut -30% $76,539,000 758,717 33 Atlantica Yield AY 0.70% Cut -24% $75,147,000 3,543,012 34 Oil & Gas ETF XOP CALL 0.70% New $74,628,000 2,007,200 35 Caesars Entertainment CZR 0.69% New $74,133,000 5,860,349 36 Kennametal Inc. KMT 0.64% Cut -22% $68,297,000 1,410,804 37 Stryker Corp. SYK 0.54% Cut -30% $57,446,000 371,000 38 TerraForm Power TERP 0.52% Cut -46% $55,556,000 4,645,157 39 PG&E Corp. PCG 0.47% New $50,649,000 1,129,808 40 HCA Holdings, Inc. HCA 0.45% Added 201% $48,565,000 552,884 41 Western Digital Corp WDC 0.44% Cut -77% $47,718,000 600,000 42 Venator Materials PLC VNTR 0.36% New $38,679,000 1,748,605 43 Financial Sector ETF XLF CALL 0.33% Cut -85% $35,013,000 1,254,500 44 Peabody Energy BTU/P 0.22% Added 4% $23,280,000 314,121 45 Mohawk Industries Inc. MHK 0.18% Cut -78% $19,121,000 69,305 46 Vistra Energy VST 0.16% New $17,611,000 961,285 47 CSX Corp. CSX 0.09% New $9,653,000 175,479 48 Cheniere Energy Inc LNG 0.09% New $9,532,000 177,045 49 WMIH Corp WMIH 0.06% Unchanged $6,453,000 7,600,000 50 Southwest Airlines Co. LUV 0.05% Cut -90% $4,861,000 74,265

Q4 2017 www.hedgefundwisdom.com 16 Appaloosa Management Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares Hain Celestial Group HAIN Sold General Motors Co. GM Sold Antero Resources Corp. AR Sold Chesapeake Energy Corp. CHK Sold Peabody Energy Corp BTU Sold Kinder Morgan Inc. KMI Sold Applied Materials Inc. AMAT Sold Aerie Pharmaceuticals AERI Sold CBS Corp. CBS Sold PNC Financial PNC Sold Whirlpool Corp WHR Sold Range Resources Corp. RRC Sold

Next Page: Pershing Square

Q4 2017 www.hedgefundwisdom.com 17 Bill Ackman Pershing Square Capital Check out Ackman’s recommended reading list

Has generated a compound annual gross return of 14.8% versus 7.7% for the S&P over same timeframe Key Takeaways 15% discount to both peers and the historical New Positions: multiple as the stock has been hit by concerns Nike (NKE) around the US grocery landscape and the recent CEO transition (Dirk Van de Put recently succeeded Sold Out: Irene Rosenfeld). Pershing expects revenue growth None to accelerate and notes that prior headwinds like forex, emerging markets, and product rationalization are now tailwinds for the business. Third, Ackman’s firm freed up some capital by cutting its stake in Howard Hughes (HHC) in Bill Ackman made three notable changes to half. They still own $292 million worth of shares, his portfolio by year-end. First, he initiated a brand but this is a notable reduction. new stake in Nike (NKE). In a recent presentation to It’s also worth highlighting that in Pershing’s investors, Ackman outlined his rationale for buying recent investor presentation they revealed that they the apparel giant: “It’s a high quality business that were buying S&P Global (SPGI) shares during 2017 should compound long-term earnings at a high rate but dumped the stake because they couldn’t build a due to strong revenue growth and margin full position size before shares ran away from them. expansion.” They see Nike as an iconic brand with a Their thesis was that, “S&P is an annuity-like dominant market position. business with pricing power, strong secular growth They point to the company’s assets as well: and a margin opportunity.” It’s a credit ratings firm patents, a huge marketing budget, brand loyalty, (55% of EBIT) and a financial data services firm manufacturing skill, and leverage with suppliers and (45% of EBIT). customers. Pershing thinks Nike can grow revenue Additionally, the presentation notes Pershing in the high single digits and also think the company bought an undisclosed position but sold that as well. benefits from secular trends of health/wellness. Does the fact that they hid the name mean they’re They also believe the company has pricing power looking to re-enter? Only time will tell. and a huge growth opportunity in emerging markets. Keep in mind that Pershing also has Additionally, Ackman’s firm sees NKE exposure to Fannie Mae and Freddie Mac preferreds expanding margins via new manufacturing processes that are not listed on their portfolio sheet on the next and growth in distribution channels that have more page. Additionally, the investment firm remains favorable economics. For a history of the company, short Herbalife (HLF) but instead of being outright many investors (including Warren Buffett) have short shares, they’ve restructured their short via put recommended reading the book Shoe Dog about options. Nike’s founder Phil Knight. Second, Pershing Square boosted its exposure to Mondelez (MDLZ) by 66% during the quarter and it’s now their third largest holding worth almost $1 billion. They feel there’s catalysts for shares to revalue higher as MDLZ trades around 18x their estimates of 2018 EPS. They note that this is a View Pershing Square’s Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 18 Pershing Square Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Restaurant Brand QSR 27.74% Unchanged $1,629,265,000 26,500,729 2 Automatic Data Processing ADP 17.56% Unchanged $1,031,089,000 8,798,442 3 Mondelez International MDLZ 16.95% Added 67% $995,374,000 23,256,402 4 Chipotle Mexican Grill, Inc. CMG 14.19% Unchanged $833,118,000 2,882,463 5 Howard Hughes HHC 10.52% Unchanged $617,564,000 4,704,534 6 PlatformSpecialtyProducts PAH 6.83% Unchanged $401,279,000 40,451,506 7 Nike NKE 6.22% New $365,043,000 5,836,020

Next Page: Maverick Capital

Q4 2017 www.hedgefundwisdom.com 19 Lee Ainslie

Maverick Capital 14.0% annualized returns since inception in 1995

Compares a company’s enterprise value to sustainable free cash flow Key Takeaways

Brokers (IBKR) is by far the low cost provider in New Positions: the space, but their client base is a bit different than Charles Schwab (SCHW) the typical wealth management client that Schwab World Pay (WP) possesses. So despite competition in the space from British American Tobacco (BTI) the likes of Fidelity, Merrill Edge, AMTD, and CommScope (COMM) ETFC, Schwab’s scale and full-suite of offerings Ciena (CIEN) gives them an advantage, bulls argue. Ambev (ABEV) Maverick’s recent letter to investors notes that their largest short position as a whole is a bet Sold Out: against companies that will be negatively affected Newell Brands (NWL) by a slowing smartphone market. Most of their Pfizer (PFE) short bet is allocated against companies in the Qualcomm (QCOM) smartphone supply chain. The hedge fund feels that Fidelity National Info (FIS) the past ten years were a boon for the industry but Comcast (CMCSA) the next ten will be much different as the pace of Vulcan Materials (VMC) technological change has slowed and processing Jack in the Box (JACK) power only improving incrementally. They point to the fact that consumers are keeping smartphones longer than they used to and are not upgrading as frequently, especially as costs of newer models has During the fourth quarter, Lee Ainslie’s risen (see the iPhone X). Maverick also believes firm boosted its exposure to Microsoft (MSFT) in a that the domestic Chinese makers have entered a big way. It’s now their 8th largest holding worth down cycle. over $301 million after they increased their position In international short selling activity, size by 207%. This was probably the second most Maverick has disclosed a few positions to popular tech buy among hedge funds overall during regulators. In the UK, they were short 0.64% of th the quarter (behind only Alphabet (GOOG), which Cineworld Group as of February 9 , short 1.37% of th Maverick actually trimmed). J Sainsbury as of January 26 , and short 1.68% of th Maverick Capital’s largest new position is WM Morrison Supermarkets as of December 7 . Charles Schwab (SCHW). It’s now a top-20 holding Additionally, in France Maverick was short 0.57% th and is widely viewed as one of the best brokerage of Publicis Groupe SA as of February 8 . firms out there. The company benefits from rising Lastly, when viewing Maverick’s portfolio interest rates and is also much larger than some of its on the next page, keep in mind that they also run a closest competitors like TD Ameritrade (AMTD) quant strategy now and this most likely explains the and ETrade (ETFC). high quantity of smaller positions. In recent years, there has been deflation in the commissions these firms charge customers to buy and sell securities as competition intensifies. Also, nowadays many firms offer free trades of View Maverick Capital’s Updated various index or ETF products as well. Interactive Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 20 Maverick Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Universal Health Services UHS 7.79% Cut -7% $616,926,000 5,442,665 2 Facebook Inc FB 6.50% Cut -11% $514,706,000 2,916,842 3 Visa V 5.20% Added 8% $411,945,000 3,612,923 4 Adobe Systems, Inc. ADBE 4.85% Added 49% $384,294,000 2,192,956 5 Alphabet GOOG 4.54% Cut -22% $359,920,000 343,960 6 Envision Healthcare EVHC 4.36% Added 31% $345,675,000 10,002,182 7 DXC Technology DXC 4.14% Cut -2% $327,990,000 3,456,165 8 Molson Coors TAP 3.86% Added 65% $305,913,000 3,727,466 9 Microsoft Corp. MSFT 3.81% Added 208% $301,700,000 3,527,000 10 MGM Resorts MGM 3.74% Added 26% $296,096,000 8,867,800 11 DowDuPont DWDP 3.65% Cut -17% $289,115,000 4,059,462 12 Waste Connections Inc WCN 3.33% Cut -30% $263,616,000 3,716,045 13 Shire Plc ADS SHPG 3.26% Cut -16% $257,908,000 1,662,637 14 Anheuser-Busch Inbev BUD 3.18% Added 53% $252,258,000 2,261,184 15 Andeavor ANDV 3.14% Cut -15% $248,860,000 2,176,489 16 T-Mobile USA Inc TMUS 2.68% Added 103% $212,697,000 3,349,036 17 Charles Schwab Corp SCHW 2.04% New $161,834,000 3,150,359 18 Constellation Brands, Inc. STZ 1.90% Cut -55% $150,653,000 659,110 19 Wynn Resorts Ltd WYNN 1.85% Cut -1% $146,358,000 868,130 20 Worldpay, Inc. Class A WP 1.58% New $125,571,000 1,707,281 21 Impax Laboratories, Inc. IPXL 1.54% Added 13% $122,008,000 7,327,798 22 Las Vegas Sands Corp. LVS 1.20% Cut -29% $94,892,000 1,365,542 23 Sabre SABR 1.18% Cut -66% $93,093,000 4,541,121 24 Lowes Companies, Inc. LOW 1.17% Added 539% $92,933,000 999,925 25 British American Tobacco BTI 0.96% New $76,098,000 1,135,965 26 CommScope COMM 0.96% New $75,894,000 2,006,180 27 FleetCor Technologies, Inc. FLT 0.92% Cut -49% $73,154,000 380,158 28 Alibaba Group BABA 0.82% Cut -6% $65,277,000 378,572 29 Ciena Corp CIEN 0.64% New $50,962,000 2,434,864 30 Ambev S.A. ADR ABEV 0.63% New $50,200,000 7,770,958 31 Pacific Biosciences PACB 0.37% Added 6% $29,629,000 11,223,094 32 Tiffany & Co. TIF 0.30% Added 83% $23,581,000 226,853 33 Etsy Inc ETSY 0.27% New $21,709,000 1,061,552 34 SeaWorld Entertainment SEAS 0.27% New $21,163,000 1,559,523 35 Skechers USA, Inc. Class A SKX 0.26% New $20,781,000 549,177 36 Dollar General DG 0.26% Added 37% $20,354,000 218,840 37 Six Flags Entertainment SIX 0.23% Added 51% $18,216,000 273,630 38 Kohls Corp. KSS 0.23% Added 287% $18,011,000 332,120 39 American Eagle Outfitters AEO 0.22% Added 604% $17,035,000 906,132 40 Yum! Brands, Inc YUM 0.21% New $16,781,000 205,620 41 Caseys General Stores, Inc. CASY 0.20% Added 54% $15,538,000 138,810 42 Tapestry, Inc. TPR 0.19% New $14,987,000 338,842 43 Dollar Tree Inc. DLTR 0.19% Added 18% $14,940,000 139,220 44 L Brands Inc LTD 0.18% Added 98% $14,494,000 240,680 45 Bloomin Brands Inc BLMN 0.18% New $14,435,000 676,447

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Q4 2017 www.hedgefundwisdom.com 21 Fourth Quarter 2017 Portfolio: Maverick Capital …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 Sprouts Farmers Market SFM 0.17% Add 26295% $13,735,000 564,063 47 Target Corp. TGT 0.17% Added 105% $13,654,000 209,259 48 Five Below Inc FIVE 0.17% Added 580% $13,507,000 203,659 49 Netflix Inc NFLX 0.16% New $12,642,000 65,860 50 Best Buy Co., Inc. BBY 0.14% New $11,193,000 163,480 51 Nike NKE 0.14% New $10,759,000 172,010 52 Darden Restaurants DRI 0.14% New $10,731,000 111,760 53 Childrens Place PLCE 0.13% Added 109% $10,068,000 69,270 54 Intuitive Surgical ISRG 0.12% Added 64% $9,861,000 27,020 55 DSW Inc. Class A DSW 0.12% Added 410% $9,840,000 459,584 56 VMWare, Inc. VMW 0.12% Added 50% $9,746,000 77,770 57 Hibbett Sports, Inc. HIBB 0.12% Added 136% $9,551,000 468,188 58 Spirit Aerosystems SPR 0.12% Added 56% $9,475,000 108,600 59 Johnson & Johnson Co. JNJ 0.12% Added 69% $9,434,000 67,520 60 eBay Inc. EBAY 0.12% Added 140% $9,354,000 247,850 61 Shutterfly Inc SFLY 0.12% Added 632% $9,245,000 185,820 62 KLA - Tencor Corp KLAC 0.12% New $9,211,000 87,670 63 Chipotle Mexican Grill, Inc. CMG 0.11% New $9,104,000 31,500 64 Valeant Pharmaceuticals VRX 0.11% Added 58% $9,052,000 435,630 65 Humana, Inc. HUM 0.11% Added 72% $9,032,000 36,410 66 Edwards Lifesciences Corp. EW 0.11% Added 73% $8,956,000 79,460 67 Electronic Arts, Inc. EA 0.11% Added 101% $8,949,000 85,180 68 Boeing Company BA 0.11% New $8,897,000 30,170 69 Wellcare Health Plans Inc. WCG 0.11% New $8,772,000 43,620 70 Wayfair W 0.11% New $8,705,000 108,441 71 Carters, Inc. CRI 0.11% Cut -12% $8,647,000 73,600 72 Cognizant Tech Solutions CTSH 0.11% New $8,614,000 121,290 73 Urban Outfitters Inc. URBN 0.11% Cut -36% $8,524,000 243,140 74 Oracle Corp ORCL 0.11% Added 85% $8,503,000 179,850 75 Take-Two Interactive TTWO 0.11% Added 57% $8,484,000 77,280 76 Intel Corp. INTC 0.11% New $8,325,000 180,360 77 Waters Corporation WAT 0.10% Added 60% $8,294,000 42,930 78 Wolverine World Wide WWW 0.10% Added 43% $8,280,000 259,726 79 S&P Global, Inc SPGI 0.10% Added 54% $8,279,000 48,870 80 BJs Restaurants Inc. BJRI 0.10% New $8,173,000 224,539 81 TJX Companies Inc TJX 0.10% Added 54% $8,157,000 106,679 82 Weight Watchers WTW 0.10% Added 55% $8,093,000 182,776 83 Madison Square Garden MSG 0.10% Added 56% $7,879,000 37,370 84 Teradyne Inc. TER 0.10% New $7,847,000 187,420 85 Bed Bath & Beyond Inc. BBBY 0.10% New $7,802,000 354,792 86 Lear Corp LEA 0.10% Added 41% $7,764,000 43,950 87 Chicos FAS CHS 0.10% New $7,704,000 873,430 88 MercadoLibre Inc MELI 0.10% Added 47% $7,703,000 24,480 89 Brinker International Inc. EAT 0.10% New $7,681,000 197,750 90 Twitter Inc TWTR 0.10% New $7,649,000 318,580

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Q4 2017 www.hedgefundwisdom.com 22 Fourth Quarter 2017 Portfolio: Maverick Capital …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 91 Shake Shack Inc SHAK 0.10% New $7,601,000 175,943 92 Generac Holdings Inc GNRC 0.09% New $7,493,000 151,310 93 Grand Canyon Education LOPE 0.09% Added 45% $7,454,000 83,260 94 Goldman Sachs Group GS 0.09% Added 42% $7,439,000 29,200 95 Western Digital Corp WDC 0.09% New $7,399,000 93,040 96 Priceline Group Inc PCLN 0.09% Added 68% $7,352,000 4,231 97 DineEquity Inc DIN 0.09% New $7,302,000 143,936 98 New Oriental Education EDU 0.09% Added 87% $7,278,000 77,430 99 TAL Education Group TAL 0.09% Added 113% $7,232,000 243,430 100 E*Trade Financial Corp. ETFC 0.09% Added 35% $7,118,000 143,590 101 Applied Materials Inc. AMAT 0.09% Added 40% $7,009,000 137,100 102 Baxter International Inc. BAX 0.09% Added 91% $6,995,000 108,210 103 Proto Labs Inc PRLB 0.09% Added 15% $6,976,000 67,732 104 Akorn, Inc. AKRX 0.09% Added 108% $6,971,000 216,280 105 Aetna Inc. AET 0.09% Added 175% $6,950,000 38,530 106 Allstate Corp. ALL 0.09% Added 171% $6,931,000 66,190 107 On Semiconductor Corp ON 0.09% New $6,928,000 330,840 108 Hasbro Inc. HAS 0.09% Added 101% $6,731,000 74,060 109 MasterCard Inc. Class A MA 0.08% Added 170% $6,728,000 44,450 110 Entegris Inc. ENTG 0.08% Added 32% $6,717,000 220,590 111 Ally Financial ALLY 0.08% Added 57% $6,678,000 229,020 112 Fidelity National Financial FNF 0.08% Added 65% $6,666,000 169,890 113 Primerica, Inc. PRI 0.08% Added 15% $6,623,000 65,221 114 Red Robin Burgers Inc RRGB 0.08% New $6,617,000 117,314 115 Anthem Inc ANTM 0.08% Added 57% $6,570,000 29,200 116 UnitedHealth Group Inc. UNH 0.08% Added 69% $6,565,000 29,780 117 Huntsman Corp HUN 0.08% Added 30% $6,554,000 196,890 118 Taiwan Semiconductor TSM 0.08% Added 82% $6,551,000 165,220 119 Castlight Health CSLT 0.08% Unchanged $6,522,000 1,739,167 120 Southwest Airlines Co. LUV 0.08% Added 134% $6,507,000 99,420 121 American Express AXP 0.08% Added 155% $6,487,000 65,320 122 Cadence Design Systems CDNS 0.08% Added 68% $6,483,000 155,030 123 United Rentals, Inc. URI 0.08% Added 17% $6,478,000 37,680 124 Foot Locker Inc. FL 0.08% New $6,454,000 137,674 125 Expedia EXPE 0.08% Added 127% $6,429,000 53,680 126 Steel Dynamics, Inc. STLD 0.08% Added 60% $6,410,000 148,610 127 Apple Inc AAPL 0.08% Added 182% $6,407,000 37,860 128 Alaska Air Group ALK 0.08% Added 193% $6,364,000 86,580 129 Citizens Financial CFG 0.08% Added 56% $6,315,000 150,420 130 Skyworks Solutions, Inc. SWKS 0.08% Added 67% $6,303,000 66,380 131 Sina Corp SINA 0.08% New $6,295,000 62,760 132 Alcoa Corp AA 0.08% New $6,289,000 116,740 133 Citrix Systems Inc. CTXS 0.08% Added 63% $6,244,000 70,960 134 Arista Networks ANET 0.08% New $6,226,000 26,430 135 Abiomed Inc ABMD 0.08% New $6,106,000 32,580

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Q4 2017 www.hedgefundwisdom.com 23 Fourth Quarter 2017 Portfolio: Maverick Capital …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 136 NVIDIA Corp. NVDA 0.08% New $5,989,000 30,950 137 Ferrari N V RACE 0.08% New $5,972,000 56,960 138 Baidu Inc BIDU 0.08% Added 78% $5,968,000 25,480 139 Lam Research Corp. LRCX 0.07% Added 65% $5,938,000 32,260 140 Jazz Pharma Plc JAZZ 0.07% Added 100% $5,863,000 43,540 141 Blackbaud Inc BLKB 0.07% Added 63% $5,852,000 61,930 142 Credit Acceptance Corp. CACC 0.07% Added 57% $5,852,000 18,090 143 BHP Billiton plc ADS BBL 0.07% New $5,775,000 143,300 144 KKR KKR 0.07% Added 48% $5,723,000 271,760 145 Align Technology Inc ALGN 0.07% Added 38% $5,699,000 25,650 146 Royal Caribbean RCL 0.07% Added 77% $5,657,000 47,430 147 Petrobras PBR 0.07% New $5,576,000 541,850 148 Sothebys Holdings Inc. BID 0.07% Added 54% $5,516,000 106,890 149 Yandex NV YNDX 0.07% Added 67% $5,363,000 163,760 150 Fiat Chrysler Au FCAU 0.07% New $5,330,000 298,740 151 Vale de Rio Doce VALE 0.07% Added 66% $5,260,000 430,110 152 Rowan Companies Plc RDC 0.07% New $5,212,000 332,844 153 Conns Inc CONN 0.07% Added 3% $5,201,000 146,303 154 Chemours Co CC 0.07% Added 71% $5,149,000 102,860 155 Petmed Express Inc PETS 0.05% New $4,352,000 95,653 156 Tailored Brands TLRD 0.05% New $4,244,000 194,404 157 Finish Line, Inc. FINL 0.05% New $4,108,000 282,707 158 Restaurant Brand QSR 0.05% New $3,809,000 61,949 159 Crocs Inc CROX 0.05% Added 224% $3,784,000 299,347 160 Michaels Companies MIK 0.04% Cut -37% $3,555,000 146,978 161 Hertz Global HTZ 0.03% New $2,608,000 118,000 162 GNC Holdings, Inc. GNC 0.03% Add 1759% $2,494,000 676,010 163 Becton, Dickinson and Co. BDX 0.03% New $2,188,000 10,223 164 Sherwin-Williams Co. SHW 0.02% Cut -83% $1,946,000 4,745 165 Wingstop Inc WING 0.02% Cut -49% $1,821,000 46,720 166 Fossil Inc. FOSL 0.02% New $1,658,000 213,441 167 Cracker Barrel CBRL 0.02% Added 247% $1,599,000 10,062 168 Zoes Kitchen ZOES 0.02% Cut -27% $1,587,000 94,930 169 PayPal Holdings Inc PYPL 0.02% Cut -87% $1,579,000 21,450 170 Home Depot HD 0.02% Cut -85% $1,497,000 7,900 171 Barnes & Noble Inc BKS 0.02% Added 889% $1,365,000 203,723 172 Zumiez Inc ZUMZ 0.01% Added 10% $988,000 47,422 173 Ingles Markets, Inc Class A IMKTA 0.01% New $584,000 16,868 174 Columbia Sportswear Co COLM 0.01% Added 81% $460,000 6,399 175 MicroStrategy Inc. MSTR 0.00% Cut -97% $94,000 717

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Q4 2017 www.hedgefundwisdom.com 24 Fourth Quarter 2017 Portfolio: Maverick Capital …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares Ollie's OLLI Sold Ulta Salon ULTA Sold Toro Co TTC Sold Vulcan Materials Company VMC Sold CIGNA Corp. CI Sold AutoZone Inc. AZO Sold Ralph Lauren RL Sold American Airlines AAL Sold Philip Morris PM Sold Abercrombie & Fitch Co. ANF Sold Juniper Networks Inc JNPR Sold Big Lots Inc BIG Sold Brookdale Senior Living BKD Sold Express Inc EXPR Sold Qualcomm QCOM Sold J.C. Penney JCP Sold Xilinx, Inc XLNX Sold LPL Financial LPLA Sold HCA Holdings, Inc. HCA Sold C.R. Bard BCR Sold Knight Transportation Inc. KNX Sold The Gap GPS Sold Sears Holdings SHLD Sold Under Armour, Inc. Class C UA Sold Travelers TRV Sold CBS Corp CBS Sold OReilly Automotive Inc. ORLY Sold Comcast CMCSA Sold BofI Holding Inc BOFI Sold IDEXX Laboratories Inc. IDXX Sold Sinclair Broadcast SBGI Sold Dominos Pizza Inc DPZ Sold Ryanair Holdings ADR RYAAY Sold SLM Corp SLM Sold U.S.Concrete Inc USCR Sold Wal-Mart Stores WMT Sold Momo MOMO Sold Jack In The Box, Inc JACK Sold Fidelity National Info FIS Sold Macys Inc M Sold HDFC HDB Sold Texas Roadhouse TXRH Sold Delta Air Lines DAL Sold V.F. Corp. VFC Sold

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Q4 2017 www.hedgefundwisdom.com 25 Fourth Quarter 2017 Portfolio: Maverick Capital …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares Parexel PRXL Sold Xencor Inc XNCR Sold Hologic Inc. HOLX Sold Tractor Supply Company TSCO Sold NetApp Inc. NTAP Sold Broadcom Limited AVGO Sold Pfizer, Inc. PFE Sold Netease Inc ADR NTES Sold Sony Corp. Sponsored ADR SNE Sold Smart & Final SFS Sold Newell Brands NWL Sold

Next Page: Third Point

Q4 2017 www.hedgefundwisdom.com 26 Dan Loeb Third Point Has generated annualized returns of 15.8% over the past 20 years

Focuses on event-driven and distressed plays

View his recommended reading list Key Takeaways

New Positions: benign environment can persist. While growth is Intercontinental Exchange (ICE) unlikely to accelerate much further, easy financial Netflix (NFLX) conditions and pending fiscal stimulus can sustain growth around current levels. Inflation is likely to Time Warner (TWX) Calls drift up only modestly and remain at or below Lennar (LEN) central bank targets. In the US, where we are Aetna (AET) primarily focused, we see indications that the Dentsply (XRAY) favorable backdrop for our investment approach will General Dynamics (GD) continue due to a variety of factors: easy financial MGM Resorts (MGM) conditions, tax cuts and fiscal spending, increased capex, and deregulation.” Sold Out: Keep in mind that Third Point holds a very Bank of America (BAC) large activist stake in Nestle that’s not disclosed on T-Mobile (TMUS) the next page. They want the company and new Banco Macro (BMA) CEO to take a few steps to better align itself for Alexion Pharma (ALXN) future prosperity. Shire (SHPG) The hedge fund wants the company to clarify Marathon Petroleum (MPC) its corporate strategy (i.e. don’t make forays into businesses that are unrelated to Nestle’s core business like skin health). They also want the company to accelerate portfolio change by increasing exposure to high-growth categories like Like many other hedge funds profiled in coffee, pet care, water, and nutrition. Third Point this issue, Dan Loeb was out buying Alphabet has also called for the company to accelerate its (GOOGL) shares in a big way during the fourth stock buyback program given its unlevered balance quarter. He doubled his position size and it’s now sheet. Also, the investment firm wants to see Nestle his fifth largest holding worth over $726 million. monetize its L’Oreal stake. This was by far one of the most popular tech trades Lastly, it’s been reported by Reuters that in a while, as many investors have viewed shares as Third Point is taking a position in Pinnacle Foods cheap on a valuation basis. (PF) and sought a meeting with management. The Loeb’s firm also allocated almost $1 billion company houses brands such as Vlasic pickles, equally across three new positions: Intercontinental Birds Eye frozen vegetables, and Duncan Hines Exchange (ICE), Netflix (NFLX), and Time Warner baking products, as well as various gluten free (TWX) call options. It should be noted, however, brands like Udi’s via a previous purchase of Boulder that Third Point already owned equity in TWX and Brands. cut its exposure to common stock by 27%. Third Point returned 18.1% in 2017. Their fourth quarter letter outlines their current thinking: “For 2018, the key question is to what extent the View Third Point’s Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 27 Third Point Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Baxter International Inc. BAX 16.80% Cut -12% $2,327,040,000 36,000,000 2 DowDuPont DWDP 7.70% Cut 0% $1,066,520,000 14,975,000 3 Alibaba Group BABA 7.47% Cut -9% $1,034,580,000 6,000,000 4 BlackRock Inc. Class A BLK 5.75% Unchanged $796,250,000 1,550,000 5 Alphabet GOOGL 5.25% Added 119% $726,846,000 690,000 6 Facebook Inc FB 4.33% Unchanged $599,964,000 3,400,000 7 Constellation Brands, Inc. STZ 4.12% Unchanged $571,425,000 2,500,000 8 IntercontinentalExchange ICE 2.80% New $388,080,000 5,500,000 9 Netflix Inc NFLX 2.77% New $383,920,000 2,000,000 10 Time Warner, Inc. TWX CALL 2.64% New $365,880,000 4,000,000 11 Sothebys Holdings Inc. BID 2.48% Unchanged $343,739,000 6,661,604 12 Lennar Corp. Class A LEN 2.42% New $335,172,000 5,300,000 13 Vulcan Materials Company VMC 2.41% Added 11% $333,762,000 2,600,000 14 Aetna AET 2.41% New $333,722,000 1,850,000 15 Danaher Corp. DHR 2.22% Added 0% $307,234,000 3,310,000 16 S&P Global, Inc SPGI 2.20% Added 44% $304,920,000 1,800,000 17 Worldpay, Inc. Class A WP 2.12% Added 45% $294,200,000 4,000,000 18 Mohawk Industries Inc. MHK 1.99% Added 11% $275,900,000 1,000,000 19 NXP Semiconductors NV NXPI 1.82% Cut -20% $251,744,000 2,150,000 20 Sherwin-Williams Co. SHW 1.78% Unchanged $246,024,000 600,000 21 FMC Corp. FMC 1.50% Unchanged $208,252,000 2,200,000 22 Dell Technologies Inc DVMT 1.47% Unchanged $203,200,000 2,500,000 23 Honeywell HON 1.41% Unchanged $195,534,000 1,275,000 24 RSP Permian RSPP 1.35% Unchanged $187,128,000 4,600,000 25 Time Warner, Inc. TWX 1.32% Cut -27% $182,940,000 2,000,000 26 Parsley Energy PE 1.22% Added 7% $169,280,000 5,750,000 27 Dover Corp. DOV 1.20% Unchanged $166,634,000 1,650,000 28 Dentsply XRAY 0.95% New $131,660,000 2,000,000 29 Grupo Finan Galicia GGAL 0.87% Added 9% $120,176,000 1,825,000 30 General Dynamics Corp. GD 0.81% New $111,898,000 550,000 31 Pampa Energia S.A. ADR PAM 0.79% Add 1812% $109,330,000 1,625,000 32 MGM Resorts MGM 0.72% New $100,170,000 3,000,000 33 Macerich Company MAC 0.68% Cut -17% $93,594,000 1,425,000 34 Green Brick Part GRBK 0.66% Unchanged $91,338,000 8,083,022 35 Anthem Inc ANTM 0.61% Cut -70% $84,379,000 375,000 36 Southwestern Energy Co. SWN 0.60% New $83,700,000 15,000,000 37 Pinnacle Foods, Inc. PF 0.43% New $59,470,000 1,000,000 38 Nexa Resources SA NEXA 0.42% New $58,830,000 3,000,000 39 PG&E Corp. PCG 0.40% New $56,038,000 1,250,000 40 Altaba, Inc. AABA 0.38% Unchanged $52,388,000 750,000 41 Grupo Supervielle SA SUPV 0.32% Unchanged $43,980,000 1,500,000 42 Kadmon Holdings KDMN 0.25% Unchanged $34,056,000 9,407,745 43 Monsanto MON 0.17% New $23,356,000 200,000 44 Treasury Bond Fund SHY 0.01% New $838,000 9,995 Alexion Pharma ALXN Sold Shire Plc ADS SHPG Sold Bank of America Corp. BAC Sold Marathon Petroleum Corp. MPC Sold Exela Technologies, Inc. XELA Sold Banco Macro S.A. Class B BMA Sold T-Mobile USA Inc TMUS Sold

Q4 2017 www.hedgefundwisdom.com 28 John Griffin Blue Ridge Capital Classifies investments as catalyst driven or time arbitrage & previously was Julian Robertson’s right-hand man

View his recommended reading list Key Takeaways

New Positions: quarter. While the vast majority of positions were Blue Buffalo Pet Products (BUFF) trimmed, there are a few buys. Notably, he disclosed a brand new position in Blue Buffalo Pet CarGurus (CARG) ~ IPO Products (BUFF), making it his 11th largest holding.

Additionally, Blue Ridge added to its Amazon Sold Out: (AMZN) position by 10%, increased its Transunion CSX (CSX) (TRU) stake by 23% and boosted its Alibaba TransDigm Group (TDG) (BABA) exposure by 18%. Priceline (PCLN) At the end of 2017 and in its final full Platform Specialty Products (PAH) snapshot, Blue Ridge’s top ten holdings were: Visa Kraft Heinz (KHC) (V), Charter Communications (CHTR), HD Supply O’Reilly Auto (ORLY) (HDS), CDK (CDK), Sensata Technologies (ST), MGM Resorts (MGM) Alnylam Pharmaceuticals (ALNY), JD.com (JD), Range Resources (RRC) Pioneer Resources (PXD), Facebook (FB), and Bank of America (BAC). Next quarter we’ll unfortunately have to replace Blue Ridge in the newsletter with another manager going forward. Some managers that have been requested by readers in the past include Lou Blue Ridge Capital is shutting down, John Simpson’s SQ Advisors (he previously worked at Griffin announced in a letter to investors. The $6 Berkshire Hathaway), and Stan Druckenmiller’s billion firm is in the process of winding down its , Duquesne. We’ll be gauging reader portfolio and expects that to be completed at the end feedback before next issue so please feel free to of the first quarter of this year. Griffin writes, ‘This suggest other funds you’d like to see included by can be a humbling business, and many times we emailing us: [email protected]. were tested, especially on the short side, but we have remained committed to the long-short portfolio strategy that has been our founding philosophy since we launched over 21 years ago.” Blue Ridge averaged 15.4% returns since inception. Griffin notes that he plans to start ‘a new chapter’ but doesn’t leave any clues as to what exactly that means. As such, this is the last real look at what stocks Griffin was betting on. He’s a longer-term focused investor and so there’s still insight to be gleaned from this portfolio, as it’s not yet completely wound down. Given that it’s likely he was already starting the selling process, it’s worth paying more View Blue Ridge Capital’s Updated attention to companies he was actually buying in the Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 29 Blue Ridge Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Visa V 8.42% Cut -34% $253,238,000 2,221,000 2 Charter Communications CHTR 7.28% Cut -25% $218,710,000 651,000 3 HD Supply Holdings, Inc. HDS 6.42% Cut -29% $192,973,000 4,820,700 4 Cdk Global Inc CDK 6.32% Cut -32% $189,933,000 2,664,600 5 Sensata Technologies ST 6.14% Cut -19% $184,420,000 3,608,300 6 Alnylam Pharmaceuticals ALNY 5.66% Cut -13% $170,031,000 1,338,300 7 JD.com JD 5.22% Cut -25% $156,998,000 3,790,400 8 Pioneer Natural Resources PXD 4.85% Cut -23% $145,868,000 843,900 9 Facebook Inc FB 4.78% Cut -57% $143,586,000 813,700 10 Bank of America Corp. BAC 4.59% Cut -63% $138,038,000 4,676,100 11 Blue Buffalo Pet Products BUFF 3.75% New $112,798,000 3,440,000 12 Lamb Weston Holdings Inc LW 3.27% Cut -30% $98,223,000 1,740,000 13 Adient Plc ADNT 3.12% Cut -39% $93,653,000 1,190,000 14 W.R. Grace GRA 3.06% Unchanged $91,947,000 1,311,100 15 TransUnion TRU 2.67% Added 23% $80,242,000 1,460,000 16 Wayfair W 2.64% Cut -9% $79,467,000 990,000 17 Amazon.com Inc. AMZN 2.49% Added 10% $74,846,000 64,000 18 MasterCard Inc. Class A MA 2.32% Cut -32% $69,625,000 459,998 19 Danaher Corp. DHR 2.22% Cut -36% $66,830,000 720,000 20 ZTO Express ZTO 2.14% Cut -12% $64,351,000 4,060,000 21 Alphabet GOOGL 2.10% Unchanged $63,204,000 60,000 22 Ultra Petroleum Corp UPL 1.68% Cut -41% $50,624,000 5,587,665 23 Devon Energy DVN 1.65% Cut -11% $49,473,000 1,195,000 24 Ulta Salon ULTA 1.43% Cut -82% $42,943,000 192,000 25 Alibaba Group BABA 1.26% Added 19% $37,917,000 219,900 26 Liberty Global LatAm LILAK 1.20% Cut -59% $35,965,000 1,808,214 27 Allergan AGN 1.17% Cut -83% $35,170,000 215,000 28 Citigroup, Inc. C 1.15% Cut -88% $34,601,000 465,000 29 Oasis Petroleum Inc OAS 0.90% Cut -9% $27,164,000 3,230,000 30 CarGurus Inc Class A CARG 0.10% New $2,998,000 100,000 MGM Resorts MGM Sold Transdigm Group Inc TDG Sold Range Resources Corp. RRC Sold Priceline Group Inc PCLN Sold PlatformSpecialtyProducts PAH Sold Kraft Heinz KHC Sold OCH-Ziff Capital OZM Sold CSX Corp. CSX Sold Social Capital Hedosophia IPOA Sold OReilly Automotive Inc. ORLY Sold Whiting Petroleum Corp WLL Sold GNC Holdings, Inc. GNC Sold

Next Page: Paulson & Co

Q4 2017 www.hedgefundwisdom.com 30 John Paulson Paulson & Co Predicted & profited from the subprime crisis

Featured in the book The Greatest Trade Ever

Key Takeaways owns hotels such as Caesars Palace, The Cromwell, New Positions: The LINQ, Planet Hollywood, Bally’s, Rio, Paris, Scripps (SNI) Harrah’s, Nobu, and Flamingo. Apart from MGM CenturyLink (CTL) Resorts (MGM), CZR definitely has the biggest Viacom (VIAB) footprint in Las Vegas. Sucampo Pharma (SCMP) The second big move John Paulson made in 21st Century Fox (FOX) his portfolio was drastically ramping up his Newmark (NMRK) exposure to NXP Semiconductors (NXPI). This was previously a tiny position and he boosted his stake Hain Celestial (HAIN) by 11,500%, making it his 11th largest holding now.

Paulson’s legacy strategy is Sold Out: and this is exactly the kind of situation he plays in Caesars Acquisition (CACQ) that fund. Qualcomm (QCOM) is trying to close its Bank of America Warrants (BAC/WS) acquisition of NXPI while QCOM itself fends off a Teva Pharma (TEVA) takeover attempt by Broadcom (AVGO). QCOM Cobalt Energy (CIE) Notes has been trying to acquire NXPI for a year now, but Realogy (RLGY) AVGO raised its bid for QCOM from $105 billion Calpine (CPN) to $121 billion. Qualcomm rejected the revised bid, EQT (EQT) and Chinese regulators are still reviewing QCOM’s C.R. Bard (BCR) own acquisition of NXPI. Sprint (S) All three companies have previously signaled that QCOM’s purchase of NXPI at $110 per share seems to be fair. That said, NXPI has traded above the offer price for some time now (and aulson & Co made a couple of notable currently trades around $117). This is because P activist investor Elliott Management is trying to get moves in the fourth quarter of 2017. First, they other investors to push for a $135 per share price. show a larger Caesars Entertainment (CZR) position. The thinking is that if QCOM is looking to It’s now their seventh largest holding worth over fend off AVGO’s bid, then it should pay a higher $237 million. The casino/hotel operator famous for price for NXPI. Given the prices at which Paulson its Las Vegas properties recently emerged from a & Co was buying NXPI shares, it seems like they complex bankruptcy and is now in much better too are betting on an increased offer price from shape. QCOM. And CNBC just reported that Qualcomm is The gambling and entertainment hub of Las trying to figure out what price will get major Vegas as a whole has rebounded nicely since the shareholders to sign off on the deal, floating a ‘low financial crisis, but the city saw a tragic shooting $120’s’ offer as a possibility. The situation remains incident at the Mandalay Bay resort recently that has fluid. affected tourism a bit. Bulls are looking for the company to continue its improvement in occupancy and room rates and point to the company’s View Paulson & Co’s Updated successful loyalty program, Total Rewards. CZR Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 31 Paulson & Co Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 SPDR Gold Trust ETF GLD 10.52% Unchanged $539,080,000 4,359,722 2 Mylan Inc MYL 10.27% Cut -16% $525,871,000 12,429,000 3 Shire Plc ADS SHPG 9.24% Cut -3% $473,457,000 3,052,200 4 Valeant Pharmaceutical VRX 8.45% Unchanged $433,035,000 20,839,035 5 Allergan AGN 6.06% Cut -13% $310,593,000 1,898,724 6 T-Mobile USA Inc TMUS 5.55% Cut -14% $284,106,000 4,473,400 7 Caesars Entertainment CZR 4.63% Added 30% $237,152,000 18,747,200 8 Time Warner TWX 4.59% Added 6% $235,307,000 2,572,500 9 Dish Network DISH 3.89% Cut -11% $199,437,000 4,176,700 10 Vistra Energy VST 3.58% Cut -13% $183,200,000 10,000,000 11 NXP Semiconductors NV NXPI 3.31% Add 11500% $169,781,000 1,450,000 12 Anglogold Ashanti Ltd ADS AU 2.54% Unchanged $130,253,000 12,782,400 13 Altaba, Inc. AABA 2.27% Cut -56% $116,398,000 1,666,400 14 Horizon Pharma, Inc. HZNP 2.24% Added 41% $114,912,000 7,870,700 15 TIM Participacoes TSU 2.09% Unchanged $107,182,000 5,550,600 16 Novagold Resources Inc. NG 1.69% Unchanged $86,432,000 21,992,896 17 Mallinckrodt PLC MNK 1.62% Cut -45% $82,818,000 3,670,992 18 Intl Seaways Inc INSW 1.25% Unchanged $63,812,000 3,456,773 19 Endo Internation ENDP 1.09% Unchanged $55,602,000 7,174,490 20 Monsanto MON 0.96% Added 94% $49,164,000 421,000 21 Brookdale Senior Living BKD 0.94% Unchanged $48,368,000 4,986,400 22 Randgold Resources GOLD 0.83% Unchanged $42,691,000 431,700 23 Scripps Networks SNI 0.83% New $42,690,000 500,000 24 Oasis Petroleum Inc OAS 0.80% Unchanged $40,886,000 4,861,561 25 Rockwell Collins, Inc. COL 0.69% Added 133% $35,587,000 262,400 26 Office Depot, Inc. ODP 0.69% Unchanged $35,400,000 10,000,000 27 Agnico-Eagle Mines AEM 0.68% Unchanged $34,986,000 757,600 28 Extended Stay America STAY 0.67% Unchanged $34,288,000 1,804,652 29 Centurylink Inc CTL 0.65% New $33,360,000 2,000,000 30 Viacom VIAB 0.60% New $30,810,000 1,000,000 31 Sucampo Pharmaceuticals SCMP 0.56% New $28,720,000 1,600,000 32 21st Century Fox FOX 0.53% New $27,296,000 800,000 33 Newmark Group NMRK 0.50% New $25,440,000 1,600,000 34 Enzymotec Ltd ENZY 0.49% Unchanged $24,920,000 2,102,990 35 International Tower Hill THM 0.47% Unchanged $23,860,000 55,487,842 36 IAMGold Corp. ADR IAG 0.44% Unchanged $22,527,000 3,863,912 37 Hain Celestial Group HAIN 0.43% New $22,194,000 523,564 38 Discovery Communications DISCK 0.41% New $21,170,000 1,000,000 39 Bank of America Warrants BAC/WS/B 0.35% Cut -7% $17,817,000 8,325,894 40 Xcerra Corp XCRA 0.29% Cut -12% $14,910,000 1,523,000 41 Bob Evans Farms, Inc. BOBE 0.29% Added 78% $14,897,000 189,000 42 SandRidge Energy Inc SD 0.27% Unchanged $14,044,000 666,535 43 Dova Pharmaceuticals DOVA 0.26% Unchanged $13,192,000 550,681 44 Trilogy Metals Inc.. TMQ 0.25% Unchanged $12,607,000 11,566,126 45 Gannett Co. TGNA 0.21% Unchanged $10,958,000 778,300

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Q4 2017 www.hedgefundwisdom.com 32 Paulson & Co Fourth Quarter 2017 Portfolio: …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 Cavium Inc CAVM 0.19% New $9,640,000 115,000 47 Aetna AET 0.18% New $9,020,000 50,000 48 Synergy Pharmaceuticals SGYP 0.17% Cut -83% $8,920,000 4,000,000 49 Seabridge Gold Inc SA 0.15% Unchanged $7,910,000 700,000 50 Kamada Ltd KMDA 0.07% Added 7% $3,731,000 785,525 51 Synthesis Energy Systems SES 0.07% Unchanged $3,550,000 1,250,000 52 Moneygram International MGI 0.06% New $2,943,000 223,300 53 CalAtlantic CAA 0.06% New $2,876,000 51,000 54 Qualcomm QCOM 0.05% New $2,561,000 40,000 EQT Corporation EQT Sold Realogy Holdings Corp RLGY Sold Calpine CPN Sold Sprint Corp S Sold Cobalt Energy Notes CIE Sold Bank of America Warrants BAC/WS/A Sold Huntsman Corp HUN Sold Teva Pharmaceutical TEVA Sold Treasury Bond Fund IEF Sold Caesars Acq CACQ Sold C.R. Bard BCR Sold Cobalt Intl Energy CIE Sold Loxo Oncology LOXO Sold

Next Page: Tiger Management

Q4 2017 www.hedgefundwisdom.com 33 Julian Robertson Tiger Management Mentored the ‘Tiger Cub’ hedge funds & seeded other talented up & coming managers

Featured in the book A Tiger in the Land of Bulls and Bears Key Takeaways

New Positions: size was eBay (EBAY). The e-commerce platform QQQ (QQQ) Calls is now Tiger’s 8th largest holding. While Amazon eBay (EBAY) (AMZN) continues to be top dog in the space, Comcast (CMCSA) EBAY has performed well and continues to grow its Cisco (CSCO) listings and auctions. Recently, the company Agilent (A) announced that it would start to allow sellers on its PayPal (PYPL) platform to use other payment processing besides S&P 500 Index (SPY) Puts PayPal (PYPL). Previously, PYPL was the defacto S&P Retail ETF (XRT) Calls payment solution for all transactions on EBAY and Altria (MO) Calls PYPL used to be a part of EBAY before it was spun- off into a separate company. Robertson was also out buying shares of Sold Out: PYPL during Q4. This is now a top 20 holding for Celgene (CELG) him but this stake was acquired well before the Boston Scientific (BSX) recent news of EBAY’s payments decision. While Broadcom (AVGO) bulls argue that PYPL will continue to diversify into JD.com (JD) other areas with other partners, as of right now Enzymotec (ENZY) EBAY still represents a decent slice of its revenue. Momo (MOMO) It will be interesting to see how the change affects Bank of NT Butterfield (NTB) both parties in the coming years as they had once been attached at the hip but nowadays are growing their separate ways. ulian Robertson’s firm started a copious The other big buy in Robertson’s portfolio J this time around was a new stake in Comcast amount of new positions during the fourth quarter, (CMCSA), now Tiger’s tenth largest position. too many to list. Not to mention, many of these bets During the quarter, shares traded down to what were expressed via options rather than straight many bulls feel is fair valuation. The company has a equity and the vast majority were very small position few different segments: internet and TV distribution sizes. The biggest of these bets, however, was a (Comcast Xfinity), television content (NBC brand new call position on the technology Universal), as well as theme parks (Universal index (QQQ). With a notional value of over $71 Studios). It is the largest internet provider in the million, this is now Tiger Management’s top US. That fact has been a big draw to CMCSA position. While they were out boosting exposure to shares as of late, given that internet access has a broad number of tech names via the index, they become a daily necessity and CMCSA operates in interestingly also trimmed many of their top an oligopoly in many of its markets against inferior individual tech holdings. While these are all still top products. five holdings, Tiger trimmed exposure to Adobe Systems (ADBE), Microsoft (MSFT), Facebook (FB), and Alphabet (GOOG). View Tiger Management’s Updated One tech stock that Tiger was out buying in Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 34 Tiger Management Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 QQQ Trust QQQ CALL 11.19% New $71,650,000 460,000 2 Adobe Systems, Inc. ADBE 5.26% Cut -15% $33,699,000 192,300 3 Microsoft Corp. MSFT 5.14% Cut -13% $32,885,000 384,440 4 Blackstone Group LP BX 4.75% Cut -5% $30,406,000 949,600 5 Facebook Inc FB 4.70% Cut -22% $30,088,000 170,510 6 Alphabet GOOG 4.47% Cut -22% $28,643,000 27,373 7 Bank of America Corp. BAC 4.03% Cut -5% $25,809,000 874,300 8 eBay Inc. EBAY 4.03% New $25,784,000 683,200 9 IQVIA Holdings, Inc. IQV 3.99% Cut -13% $25,562,000 261,100 10 Comcast CMCSA 3.74% New $23,930,000 597,500 11 JPMorgan Chase & Co. JPM 3.61% Cut -10% $23,088,000 215,900 12 Royal Caribbean RCL 3.54% Cut -29% $22,641,000 189,810 13 Apollo Global APO 3.53% Cut -8% $22,608,000 675,481 14 Anthem Inc ANTM 3.43% Cut -5% $21,938,000 97,500 15 Cisco Systems, Inc. CSCO 3.31% New $21,218,000 554,000 16 Controladora Vuela Co VLRS 3.25% Added 147% $20,807,000 2,594,405 17 Agilent Technologies A 2.99% New $19,153,000 286,000 18 Ooma Inc OOMA 2.37% Added 4% $15,171,000 1,269,522 19 PayPal Holdings Inc PYPL 1.95% New $12,494,000 169,710 20 Norwegian Cruise NCLH 1.82% Cut -12% $11,662,000 219,000 21 S&P 500 Index SPY PUT 1.67% New $10,674,000 40,000 22 Ryanair Holdings ADR RYAAY 1.58% Unchanged $10,137,000 97,296 23 T2 Biosystems TTOO 1.49% Added 16% $9,566,000 2,321,800 24 Retail ETF XRT CALL 1.41% New $9,036,000 200,000 25 Delta Air Lines DAL 0.90% Unchanged $5,789,000 103,375 26 Altria Group, Inc. MO CALL 0.84% New $5,356,000 75,000 27 Sea Ltd SE 0.80% New $5,092,000 382,000 28 Regional Banking ETF KRE CALL 0.69% New $4,414,000 75,000 29 Alibaba Group BABA 0.61% Cut -88% $3,914,000 22,700 30 Nutanix Inc NTNX CALL 0.55% New $3,528,000 100,000 31 Alphabet GOOGL 0.45% Unchanged $2,892,000 2,745 32 Gilead Sciences Inc. GILD 0.43% Unchanged $2,759,000 38,511 33 MacroGenics Inc MGNX 0.38% Cut -47% $2,431,000 127,967 34 Wynn Resorts Ltd WYNN 0.37% Unchanged $2,360,000 14,000 35 TJX Companies TJX CALL 0.36% New $2,294,000 30,000 36 Hanesbrands, Inc. HBI CALL 0.33% New $2,091,000 100,000 37 Alpine Immune Sciences ALPN 0.28% Unchanged $1,823,000 162,728 38 Aptiv PLC Ordinary APTV PUT 0.27% New $1,747,000 20,600 39 MGM Resorts MGM 0.27% Cut -24% $1,736,000 52,000 40 Anheuser-Busch Inbev BUD 0.26% Cut -25% $1,673,000 15,000 41 Scientific Games Corp SGMS 0.26% Added 7% $1,642,000 32,000 42 Activision Blizzard Inc ATVI CALL 0.25% New $1,583,000 25,000 43 Activision Blizzard Inc ATVI 0.25% New $1,583,000 25,000 44 ConAgra Foods, Inc. CAG 0.24% New $1,507,000 40,000 45 Lowes Companies, Inc. LOW 0.22% New $1,394,000 15,000

Continued on next page…

Q4 2017 www.hedgefundwisdom.com 35 Tiger Management Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 NetApp Inc. NTAP 0.22% New $1,383,000 25,000 47 Treasury Bond Fund SHY 0.21% Unchanged $1,357,000 16,187 48 Mondelez International MDLZ 0.20% New $1,284,000 30,000 49 General Motors GM 0.19% New $1,230,000 30,000 50 Aptiv PLC Ordinary APTV 0.17% New $1,103,000 13,000 51 PVH Corp PVH 0.17% Cut -27% $1,098,000 8,000 52 Southwest Airlines Co. LUV 0.15% New $982,000 15,000 53 Ambev S.A. ADR ABEV 0.15% Added 200% $969,000 150,000 54 Papa Johns PZZA CALL 0.15% New $931,000 16,600 55 The Gap GPS CALL 0.13% New $852,000 25,000 56 Papa Johns PZZA 0.13% New $842,000 15,000 57 Wingstop Inc WING 0.12% Unchanged $780,000 20,000 58 Colgate-Palmolive Co. CL 0.12% New $755,000 10,000 59 Melco Resorts MLCO 0.11% Unchanged $726,000 25,000 60 Penske Automotive Group PAG 0.11% New $718,000 15,000 61 Altria Group, Inc. MO 0.11% New $714,000 10,000 62 Best Buy Co., Inc. BBY 0.11% New $685,000 10,000 63 VMWare, Inc. VMW PUT 0.10% New $627,000 5,000 64 L Brands Inc LTD 0.09% New $602,000 10,000 65 Sealed Air SEE 0.09% Unchanged $590,000 11,963 66 Hertz Global HTZ CALL 0.09% New $553,000 25,000 67 Nutanix Inc NTNX 0.08% New $527,000 14,945 68 Dicks Sporting Goods, Inc DKS 0.08% New $517,000 18,000 69 ElDorado Resorts ERI 0.08% New $497,000 15,000 70 Carnival Corp. CCL 0.08% Unchanged $488,000 7,350 71 Dominos Pizza Inc DPZ 0.07% New $472,000 2,500 72 Ulta Salon ULTA 0.07% New $447,000 2,000 73 HD Supply Holdings, Inc. HDS 0.06% New $400,000 10,000 74 Itau Unibnco ADR ITUB 0.06% Cut -50% $390,000 30,000 75 Skechers USA, Inc. Class A SKX 0.06% New $378,000 10,000 76 Macys Inc M 0.06% New $378,000 15,000 77 Simply Good Foods SMPL 0.06% New $357,000 25,000 78 Delphi Technologies PLC DLPH 0.04% New $227,000 4,333 Celgene Corp. CELG Sold Momo MOMO Sold Hostess Brands, Inc. TWNK Sold JD.com JD Sold ICICI Bank Ltd. ADS IBN Sold Bank of NT Butterfield NTB Sold Broadcom Limited AVGO Sold Enzymotec Ltd ENZY Sold Inspired Entertainment INSE Sold Boston Scientific Inc. BSX Sold Express Inc EXPR Sold

Next: ValueAct Capital

Q4 2017 www.hedgefundwisdom.com 36 Jeff Ubben ValueAct Capital Activist investor that runs a concentrated portfolio

Truly long-term focused; often holds positions for many years

Key Takeaways them for a few years. New Positions: ValueAct’s top holding continues to be 21st Express Scripts (ESRX) Century Fox (FOX) and they own over $1.8 billion Citigroup (C) worth of shares. The company has agreed to sell numerous assets to Walt Disney (DIS): Fox’s movie Sold Out: and television studios, its regional sports channels, Baker Hughes (BHGE) cable entertainment brands (FX and National Willis Towers Watson (WLTW) Geographic), and Fox’s international operations. Bioverativ (BIVV) Fox would then retain Fox News, the Fox broadcast network, television stations and Fox Sports 1 & 2. Various reports indicated that Comcast (CMCSA) was also interested in some of the assets but it remains to be seen if they’ll submit a higher bid. During the fourth quarter, Jeff Ubben’s Post the Disney deal (assuming it’s approved ValueAct Capital initiated two very small positions: and CMCSA doesn’t succeed) bulls are pointing to Express Scripts (ESRX) and Citigroup (C). At the remaining standalone Fox entity as very cheap around $80-90 million each, these stakes are a long on a valuation basis. The terms of the deal are that way off from the $1 billion core position size they Fox shareholders receive 0.2745 of a DIS share for normally take. As such, it will be interesting to see each Fox share they own. Disney also has agreed to if they continue to build either of these stakes over a steep $2.5 billion break-up fee if regulatory time, as it’s quite plausible they’re simply toe-hold approvals aren’t reached. Disney expects the deal to positions while they continue their due diligence. be completed in 2019. Apart from this, the only other noticeable Ubben is said to have in the past pushed Fox changes in ValueAct’s portfolio were on the selling to go for a more ‘direct to consumer’ offering. side. They trimmed 13% of their stake in CBRE While it doesn’t seem Fox itself is pursuing that, (CBG), but still own over $1 billion worth of shares Disney is lining up the pieces for its own streaming and it’s their third largest holding. service. Fox’s regional sports networks complement More noticeably, Jeff Ubben’s firm exited its Disney’s ESPN networks, and Fox’s television and entire stake in Baker Hughes (BHGE) during the movie studios offer Disney even more content to quarter. Shares fell during the entirety of 2017 and add to their growing arsenal of Disney, Pixar, ValueAct finally threw in the towel before the end of Marvel, and LucasFilm offerings. Assuming a DIS- the year. This was their third largest position just a FOX deal goes through, it will be interesting to see quarter ago and they’d owned a stake since 2014, so if ValueAct holds on to both entities post this is a notable development. transaction, or if they favor one over the other. Also, after dumping half of its stake in Willis Towers Watson (WLTW) last quarter, ValueAct liquidated the rest of the stake in Q4. This had previously been a small-to-mid sized position for View ValueAct Capital’s Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 37 ValueAct Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 21st Century Fox FOX 18.41% Unchanged $1,819,494,000 53,326,334 2 Alliance Data Systems ADS 15.07% Unchanged $1,489,803,000 5,877,400 3 CBRE Group Inc. Class A CBG 10.92% Cut -14% $1,079,151,000 24,916,923 4 KKR KKR 10.18% Added 5% $1,005,615,000 47,750,000 5 Morgan Stanley MS 9.53% Added 0% $942,341,000 17,959,620 6 Seagate Technology plc STX 9.08% Unchanged $897,827,000 21,458,600 7 Microsoft Corp. MSFT 7.80% Added 0% $771,062,000 9,014,063 8 Trinity Industries TRN 7.05% Added 8% $697,031,000 18,607,352 9 ArmstrongWorldIndustries AWI 5.64% Unchanged $557,218,000 9,202,612 10 Valeant Pharmaceuticals VRX 3.79% Unchanged $374,248,000 18,010,027 11 Express Scripts Inc. ESRX 0.91% New $89,568,000 1,200,000 12 Citigroup, Inc. C 0.83% New $81,851,000 1,100,000 13 Armstrong Flooring Inc AFI 0.79% Unchanged $77,985,000 4,609,071 Bioverativ Inc BIVV Sold Baker Hughes Inc. BHGE Sold Willis Towers Watson WLTW Sold

Next Page: Bridger Capital

Q4 2017 www.hedgefundwisdom.com 38 Roberto Mignone Bridger Capital Typically focuses on the healthcare sector

Known for his sleuthing abilities on the short side Key Takeaways

New Positions: after previously owning it since 2014. Laboratory Corp (LH) Laboratory Corp provides diagnostic DaVita (DVA) outsourcing to the healthcare industry (blood tests, Dexcom (DXCM) urine samples, etc). The industry is largely a Wellcare Health (WCG) duopoly with Quest Diagnostics (DGX) being the Viasat (VSAT) other major player in the space. During the quarter when Bridger would have been buying, LH shares Sold Out: traded between $147 and $165 and they currently Alexion Pharma (ALXN) trade around $176. S&P Biotech (XBI) Puts Other notable portfolio activity from Bridger Aetna (AET) includes starting new core positions in dialysis Allergan (AGN) specialist DaVita (DVA) as well as a new stake in Merck (MRK) Dexcom (DXCM). At the same time, the hedge Ironwood Pharma (IRWD) fund firm exited its previously core stakes in Molina Healthcare (MOH) Alexion Pharmaceutical (ALXN), Aetna (AET), Impax Labs (IPXL) Allergan (AGN), and Merck (MRK). While biotech and healthcare plays have long been Roberto Mignone’s primary focus, Bridger’s top holding is now GoDaddy (GDDY), a website domain registrar. When someone wants to register a custom The fourth quarter was seemingly a time for website address, they utilize a service such as Bridger Capital to reverse many of the trades it put GDDY (or rivals like NameCheap) to buy the rights on just one quarter prior. In the third quarter, they to the name for a small fee, around $12 for a typical purchased a noticeable hedge to their biotechnology .com name per year, while other extensions such as exposure via put options on a biotechnology index .org, .co, or .biz can be acquired for cheaper. exchange traded fund (XBI puts). In the fourth GoDaddy also offers other premium services such as quarter, they quickly turned right around and hosting, web security, and marketing, among others. removed that hedge. Shares performed quite well in 2017 as GDDY was In another reversal trade, after jettisoning up around 51%. Laboratory Corp (LH) from its portfolio the quarter prior, Bridger jumped back into shares in a big way during the fourth quarter. They acquired $100 million worth of shares and it’s now their second largest holding (and just shy of being their largest holding overall). Last quarter’s issue drew attention to their LH sale at the time, as it had previously been a core position for Bridger. And now one quarter View Bridger Capital’s Updated later they’ve re-established the name as a top holding Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 39 Bridger Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 GoDaddy Inc GDDY 6.76% Unchanged $102,400,000 2,036,589 2 Laboratory Corp LH 6.67% New $100,996,000 633,162 3 ElDorado Resorts ERI 5.44% Cut -8% $82,478,000 2,488,027 4 Nektar Therapeutics, Inc. NKTR 5.39% Cut -40% $81,647,000 1,367,171 5 Post Holdings Inc POST 5.22% Cut -14% $79,057,000 997,816 6 Medicines Company MDCO 5.07% Unchanged $76,797,000 2,808,954 7 Humana, Inc. HUM 4.98% Added 37% $75,518,000 304,424 8 Alnylam Pharmaceuticals ALNY 4.19% Added 30% $63,553,000 500,219 9 Morgan Stanley MS 4.19% Unchanged $63,508,000 1,210,359 10 Incyte Corp INCY 3.89% Added 97% $58,924,000 622,152 11 ArmstrongWorldIndustries AWI 3.49% Cut -30% $52,950,000 874,481 12 DaVita HealthCare DVA 3.45% New $52,339,000 724,416 13 MGM Resorts MGM 3.36% Unchanged $50,864,000 1,523,332 14 Dexcom Inc DXCM 3.22% New $48,826,000 850,775 15 Tempur Sealy TPX 3.12% Cut -28% $47,284,000 754,258 16 Atara Biotherapy ATRA 3.10% Added 57% $47,035,000 2,598,599 17 Wellcare Health Plans Inc. WCG 3.06% New $46,287,000 230,159 18 Wright Medical Group WMGI 2.96% Cut -21% $44,888,000 2,021,979 19 Charter Communications CHTR 2.57% Unchanged $39,008,000 116,109 20 Envision Healthcare EVHC 2.50% Unchanged $37,815,000 1,094,194 21 TG Therapeutics, Inc. TGTX 2.38% Cut -17% $36,011,000 4,391,634 22 Viasat Inc. VSAT 2.37% New $35,880,000 479,356 23 Liberty Broadband LBRDA 2.19% Unchanged $33,194,000 390,292 24 Facebook Inc FB 2.04% Cut -23% $30,833,000 174,731 25 Cabot Oil & Gas Corp. COG 1.74% Unchanged $26,286,000 919,090 26 Pretium Resources Inc PVG 1.24% Unchanged $18,842,000 1,651,328 27 Chipotle Mexican Grill, Inc. CMG 1.06% Unchanged $16,104,000 55,716 28 VeriSign Inc. VRSN 1.01% Cut -58% $15,273,000 133,456 29 Teva Pharmaceutical TEVA 0.94% Unchanged $14,213,000 750,000 30 Wave Life Sciences Pte Ltd WVE 0.78% Added 16% $11,862,000 337,949 31 Zimmer Holdings Inc. ZBH 0.75% Cut -78% $11,335,000 93,930 32 Dicerna Pharmaceuticals DRNA 0.54% New $8,181,000 905,998 33 Denali Therapeutics Inc DNLI 0.32% New $4,888,000 312,500 Molina Healthcare Inc MOH Sold Alexion Pharmaceuticals ALXN Sold Aetna AET Sold Allergan PLC AGN Sold Impax Laboratories, Inc. IPXL Sold Merck & Co MRK Sold Biotech ETF XBI PUT Sold Ironwood Pharmaceuticals IRWD Sold

Next Page: Omega Advisors

Q4 2017 www.hedgefundwisdom.com 40 Leon Cooperman Omega Advisors Has generated an annualized net return of 12.5%

Prior to founding Omega, he spent 25 years at Goldman Sachs and was Chief Executive Officer of Goldman’s Asset Management division Key Takeaways

“I think we’re heading to a normalization. We have New Positions: been living through a very strange period … What’s Humana (HUM) normalization? In the U.S., it’s about 50 bps of Wells Fargo (WFC) growth in the labor force and 150 bps of labor CBS (CBS) productivity. Let’s assume 2% inflation. That’s 4% Gilead Sciences (GILD) nominal growth. The Fed funds rate will be around Regional Bank ETF (KRE) 2% and we’ll be there soon. The 10-year bond will Cemex (CX) be at about 4%, and will take three to four years to get there. In that world, a multiple of about 17x Sold Out: seems fair. It’s high relative to history but low Fidelity National Financial (FNF) relative to interest rates. Using 17x our S&P 500 AIG (AIG) earnings estimate for next year of $138, that’s about Energy Transfer Partners (ETP) 2385. That doesn’t include any benefit from the tax Aetna (AET) package. The tax package could add as much as $10 New Residential Investment (NRZ) to S&P 500 earnings.” Covanta (CVA) Cooperman went on to point out that bull Schulman (SHLM) markets die on euphoria, but he doesn’t really see Gigamon (GIMO) signs of that. While optimism is high, there’s no exuberance yet. In portfolio activity since the end of the quarter, Cooperman recently filed a Form 4 with the SEC regarding his position in Ocwen Financial In the fourth quarter, Lee Cooperman was (OCN). Per the filing, Cooperman was buying just under a half million shares OCN in late January at out buying many of the same stocks he was in the $3.1582. In an additional 13G, Cooperman third quarter. After previously ramping up stakes in disclosed he now owns 10.5289% of the company AMC Networks (AMCX), Shire (SHPG), and United with over 14 million shares. Continental (UAL), Omega Advisors was again amassing more shares. They boosted position sizes by 113%, 49%, and 26% respectively. These stocks are also now some of Omega’s five largest holdings. It’s also worth flagging that Cooperman exited a longstanding position during the quarter: AIG (AIG). Cooperman had owned the insurance giant since 2012 and undoubtedly made a solid profit, but decided to sell out as AIG traded sideways throughout 2017. Cooperman was recently interviewed by Columbia Business School’s Graham & Doddsville View Omega Advisors’ Updated newsletter. In it, he talked about the markets, noting: Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 41 Omega Advisors Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Alphabet GOOGL 6.41% Unchanged $171,109,000 162,435 2 AMC Networks AMCX 5.84% Added 113% $156,022,000 2,885,028 3 Shire Plc ADS SHPG 5.70% Added 50% $152,073,000 980,356 4 United Continental UAL 5.67% Added 27% $151,470,000 2,247,329 5 First Data Corp Cl A FDC 5.05% Cut -11% $134,778,000 8,065,713 6 Microsoft Corp. MSFT 3.59% Cut -4% $95,725,000 1,119,070 7 DowDuPont DWDP 3.43% Cut -6% $91,596,000 1,286,100 8 Aercap Holdings N V AER 3.04% Cut -28% $81,117,000 1,541,846 9 Hess Corp HES 2.97% Added 70% $79,256,000 1,669,600 10 WPX Energy Inc WPX 2.41% Cut -2% $64,298,000 4,569,898 11 Sinclair Broadcast Group SBGI 2.35% Added 16% $62,685,000 1,656,154 12 PVH Corp PVH 2.22% Cut -3% $59,390,000 432,838 13 Valvoline Inc VVV 2.09% Unchanged $55,712,000 2,223,140 14 Dish Network Corp DISH 1.99% Added 1% $53,033,000 1,110,641 15 Parsley Energy PE 1.95% Added 520% $52,041,000 1,767,694 16 Dell Technologies Inc DVMT 1.94% Added 26% $51,768,000 636,914 17 Ashland Inc. ASH 1.88% Added 30% $50,125,000 704,000 18 Facebook Inc FB 1.86% Added 19% $49,621,000 281,200 19 MaxLinear Inc MXL 1.84% Unchanged $49,215,000 1,862,795 20 Trinity Industries TRN 1.82% Unchanged $48,513,000 1,295,049 21 Synchrony Financial SYF 1.80% Cut -5% $47,976,000 1,242,567 22 Keane Group Inc FRAC 1.77% Unchanged $47,223,000 2,484,100 23 Loral Space & Comm LORL 1.76% Cut -12% $47,009,000 1,067,180 24 Nabors Industries Ltd. NBR 1.71% Added 164% $45,771,000 6,701,414 25 New Media NEWM 1.65% Cut -4% $43,990,000 2,621,581 26 Eastman Chemical Co. EMN 1.61% Unchanged $43,060,000 464,813 27 Humana, Inc. HUM 1.59% New $42,508,000 171,353 28 Zynga, Inc. ZNGA 1.53% Added 11% $40,915,000 10,228,806 29 Wells Fargo WFC 1.39% New $36,990,000 609,700 30 PayPal Holdings Inc PYPL 1.38% Cut -44% $36,781,000 499,600 31 Adobe Systems, Inc. ADBE 1.36% Added 43% $36,275,000 207,000 32 Ocwen Financial Corp OCN 1.30% Added 28% $34,595,000 11,052,744 33 AltisourcePortfolioSolutions ASPS 1.29% Cut -7% $34,427,000 1,229,540 34 PennyMac Financial PFSI 1.24% Cut -9% $33,122,000 1,481,975 35 MGM Resorts MGM 1.04% Added 7% $27,780,000 831,990 36 DXC Technology DXC 0.98% Added 38% $26,098,000 275,000 37 Ally Financial ALLY 0.95% Cut -2% $25,438,000 872,368 38 Navient Corp NAVI 0.90% Unchanged $23,992,000 1,801,188 39 Expedia EXPE 0.88% Unchanged $23,415,000 195,497 40 Ball Corp. BLL 0.71% Cut -60% $18,999,000 501,955 41 CBS CBS 0.70% New $18,762,000 318,000 42 Energy Transfer Equity LP ETE 0.67% Added 106% $17,980,000 1,041,700 43 Autodesk, Inc. ADSK 0.66% Added 80% $17,653,000 168,400 44 SPDR Gold Trust ETF GLD 0.65% New $17,311,000 140,000 45 Regional Banking ETF KRE 0.55% New $14,713,000 250,000

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Q4 2017 www.hedgefundwisdom.com 42 Fourth Quarter 2017 Portfolio: Omega Advisors … Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 Harbinger Group Inc. HRG 0.54% Cut -24% $14,528,000 857,100 47 Cemex CX 0.48% New $12,750,000 1,700,000 48 Netflix Inc NFLX 0.47% Unchanged $12,477,000 65,000 49 Amazon.com Inc. AMZN 0.47% Unchanged $12,443,000 10,640 50 TIME INC TIME 0.42% Cut -88% $11,234,000 608,913 51 Gaming & Leisure Prop GLPI 0.38% New $10,175,000 275,000 52 Mylan Inc MYL 0.38% New $10,027,000 237,000 53 NY Community Bancorp NYCB 0.37% New $9,765,000 750,000 54 Citigroup, Inc. C 0.36% New $9,673,000 130,000 55 AIG Warrants AIG-W 0.36% Cut -1% $9,535,000 526,237 56 American Airlines AAL 0.35% Unchanged $9,282,000 178,400 57 Blueprint Medicines Corp BPMC 0.21% New $5,656,000 75,000 58 Insmed Inc INSM 0.18% Added 3% $4,833,000 155,000 59 MongoDB Inc Cl A MDB 0.17% New $4,452,000 150,000 60 GW Pharmaceuticals GWPH 0.15% New $3,960,000 30,000 61 Orion Engineered OEC 0.14% Cut -40% $3,840,000 150,000 62 Acceleron Pharma Inc XLRN 0.08% Unchanged $2,122,000 50,000 63 MVC Capital Corp. MVC 0.08% Unchanged $2,112,000 200,000 64 Amicus Therapeutics Inc FOLD 0.05% New $1,439,000 100,000 65 THL Credit Inc. TCRD 0.05% Added 25% $1,358,000 150,000 66 Chimera Investment Corp CIM 0.04% Unchanged $1,109,000 60,000 67 Intelsat S.A. I 0.04% Cut -69% $1,035,000 305,187 68 Proteostasis Therapeutics PTI 0.03% New $875,000 150,000 69 Ellington Financial EFC 0.03% Unchanged $871,000 60,000 70 Arbor Realty Trust, Inc. ABR 0.03% Unchanged $700,000 81,000 71 New Senior SNR 0.02% Unchanged $529,000 70,000 72 MDC Partners MDCA 0.02% Unchanged $439,000 45,000

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Q4 2017 www.hedgefundwisdom.com 43 Fourth Quarter 2017 Portfolio: Omega Advisors … Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares New Residential NRZ Sold Portola Pharmaceuticals PTLA Sold Covanta Holding Corp. CVA Sold Beacon Roofing Supply Inc BECN Sold Costar Group Inc. CSGP Sold Aetna AET Sold Cotiviti COTV Sold Wildhorse Resources WRD Sold Norwegian Cruise NCLH Sold Fidelity National Financial FNF Sold PQ Group Holdings Inc PQG Sold Incyte INCY Sold Gigamon, Inc. GIMO Sold Catalent CTLT Sold Real Estate Index IYR Sold Ramaco Resources Inc METC Sold William Lyon WLH Sold AIG AIG Sold Kratos Defense & Security KTOS Sold TAL International Group TRTN Sold Zayo Group Holdings ZAYO Sold Energy Transfer Partners ETP Sold GoDaddy Inc GDDY Sold Schulman SHLM Sold Athene ATH Sold Foundation Building FBM Sold Berry Plastics Group, Inc. BERY Sold

Next Page: Coatue Management

Q4 2017 www.hedgefundwisdom.com 44 Philippe Laffont Coatue Management Net annualized return of 14.1% since inception in 1999

Manages a long/short fund focused on technology, media, & telecom

Key Takeaways AAPL will be able to bring its massive overseas New Positions: cash balance to the US and will be able to return Microsoft (MSFT) even more cash to shareholders via buybacks and VMWare (VMW) dividends. NetEase (NTES) The bear case is that AAPL goes as the Charter Communications (CHTR) iPhone goes and the smartphone market has hit a Dell (DVMT) supercycle peak. The company needs to continue to innovate in other product lines. While they just

released a HomePod smart speaker, they were late to Sold Out: the game behind Amazon and Google, and many Symantec (SYMC) reviews point to Apple’s Siri assistant having American Tower (AMT) inferior performance to the likes of Amazon’s Salesforce (CRM) Alexa. Apple has in the past been rumored to have Tableau Software (DATA) been working on an autonomous car project, a Twilio (TWLO) television project, and various augmented reality applications. It’s hard to know exactly why Coatue reduced its stake, but the iPhone X cycle playing out could certainly be one reason. After all, Coatue still oatue Management trimmed four of their C owns over $730 million worth of shares. largest holdings during the fourth quarter. They sold Last quarter’s issue flagged Coatue’s big buy 25% of their Facebook (FB) stake, though it’s still in shares of Shopify (SHOP) ahead of time and now their second largest holding. They sold 21% of their that position size is reflected in their latest portfolio Alibaba (BABA) position, though it’s still their sheet. It’s now their seventh largest holding and is fourth largest position. They also dumped 39% of the dominant e-commerce software platform that their Apple (AAPL) stake and 20% of their many small and medium sized businesses are using. Activision Blizzard (ATVI) position. Some of these Coatue also shows a large increase in their adjustments are likely for risk management reasons, Twitter (TWTR) stake. They’re not the only hedge as these stocks have advanced higher and swelled fund in this issue to build a stake, as David Coatue’s position sizes. Einhorn’s Greenlight Capital also owns a decent Of these changes, their AAPL adjustment is chunk of shares. The dichotomy in investing styles most notable as it was previously their second largest is interesting here. While Coatue is known for its holding. The bull argument is that Apple is not a cutting edge technology focus, Greenlight is more of hardware company but rather a software company a traditional value investor. So to see both now in that just happens to sell hardware. People are buying TWTR shares is intriguing. The company trades at the products because of the software and are being a discount to other social media giants as it has halo’d into the product ecosystem and using the underperformed, but Greenlight sees that as an various services that Apple also takes a cut on. Once opportunity. customers buy iPhones, it’s highly likely they’ll become recurring customers. Given the vast amount of cash it generates, Apple is cheap on a valuation View Coatue Management’s basis. Not to mention, with the recent tax cuts, Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 45 Coatue Management Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Broadcom Limited AVGO 7.51% Added 28% $959,768,000 3,735,957 2 Facebook Inc FB 6.76% Cut -26% $863,500,000 4,893,461 3 NVIDIA Corp. NVDA 6.20% Cut 0% $792,179,000 4,093,945 4 Alibaba Group BABA 6.15% Cut -22% $785,629,000 4,556,219 5 Liberty Broadband LBRDK 5.77% Unchanged $737,004,000 8,654,352 6 Apple Inc AAPL 5.71% Cut -40% $730,209,000 4,314,889 7 Shopify Inc SHOP 5.54% Added 167% $707,668,000 7,006,613 8 Activision Blizzard Inc ATVI 4.71% Cut -20% $601,467,000 9,498,840 9 Amazon.com Inc. AMZN 4.59% Added 26% $586,602,000 501,596 10 Twitter Inc TWTR 4.58% Added 210% $584,745,000 24,354,222 11 Netflix Inc NFLX 4.39% Cut 0% $561,190,000 2,923,474 12 JD.com JD 4.10% Unchanged $523,579,000 12,640,721 13 Electronic Arts, Inc. EA 3.55% Cut 0% $453,043,000 4,312,233 14 Bank of America Corp. BAC 3.20% Unchanged $408,940,000 13,852,992 15 Alphabet GOOG 3.18% Cut -5% $406,135,000 388,126 16 Snap Inc Class A SNAP 3.13% Added 16% $400,176,000 27,390,619 17 Microsoft Corp. MSFT 3.07% New $391,850,000 4,580,902 18 PayPal Holdings Inc PYPL 2.97% Cut 0% $379,720,000 5,157,829 19 Time Warner TWX 2.00% Unchanged $255,907,000 2,797,714 20 Equinix EQIX 1.88% Unchanged $240,459,000 530,558 21 Formula 1 FWONK 1.60% Unchanged $204,960,000 6,000,000 22 VMWare, Inc. VMW 1.23% New $156,584,000 1,249,472 23 Alphabet GOOGL 0.97% Cut -16% $124,394,000 118,088 24 Cognex Corp CGNX 0.97% Cut 0% $124,232,000 2,031,260 25 Netease Inc ADR NTES 0.96% New $122,844,000 355,998 26 Teradyne Inc. TER 0.81% Cut 0% $103,828,000 2,479,769 27 Liberty Global Inc. LBTYK 0.81% Unchanged $103,001,000 3,043,764 28 Adobe Systems, Inc. ADBE 0.78% Cut -15% $99,212,000 566,149 29 Liberty Global Inc, Class A LBTYA 0.62% Unchanged $79,152,000 2,208,488 30 Charter Communications CHTR 0.59% New $74,945,000 223,077 31 Hain Celestial Group HAIN 0.33% Unchanged $42,084,000 992,774 32 Dell Technologies Inc DVMT 0.31% New $40,175,000 494,280 33 Qudian Inc QD 0.22% New $27,591,000 2,200,259 34 Fitbit Inc FIT 0.20% Cut -15% $25,569,000 4,477,953 35 Chipotle Mexican Grill, Inc. CMG 0.19% New $24,626,000 85,200 36 Overstock.Com Inc OSTK 0.12% New $15,932,000 249,333 37 Zillow Group Z 0.11% New $13,807,000 337,424 38 FireEye Inc FEYE 0.10% Unchanged $12,535,000 882,755 39 Cheetah Mobile CMCM 0.05% Unchanged $6,171,000 510,803 40 Stratasys Ltd SSYS 0.02% Cut -70% $2,698,000 135,181 41 3D Systems Corp. DDD 0.02% Cut -70% $2,513,000 290,888 42 Acacia Communications ACIA 0.02% Unchanged $2,241,000 61,864 43 Frontier Communications FTR 0.00% Cut -84% $521,000 77,037

Continued on next page…

Q4 2017 www.hedgefundwisdom.com 46 Coatue Management Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares Seadrill Ltd. SDRL Sold Nutanix Inc NTNX Sold Allegiant Travel Co ALGT Sold Salesforce.com Inc. CRM Sold NutriSystem Inc. NTRI Sold Mellanox Technologies Ltd. MLNX Sold Tableau Software, Inc. DATA Sold Wix.com Ltd WIX Sold Symantec Corp. SYMC Sold Twilio Inc Cl A TWLO Sold American Tower Corp AMT Sold

Next Page: Fairholme Capital

Q4 2017 www.hedgefundwisdom.com 47 Bruce Berkowitz Fairholme Capital Named Morningstar’s Fund Manager of the Decade

A long-term investor who runs a highly concentrated portfolio

View his checklist for investing Key Takeaways

New Positions: argues that both should be public utilities with None regulated rates of return. Treasury Secretary Steve Mnuchin has said 2018 is the year for Fannie and Sold Out: Freddie reform and Berkowitz feels they must be None returned to their private owners. Fairholme also has 8.8% of its portfolio in debt and stock of Imperial Metals. The company owns the Red Chris mine in British Columbia, Canada. The thesis seems to be that industrial demand for copper is increasing but mine supply growth is not. During the fourth quarter, Fairholme trimmed its stakes in Seritage (SRG) by 13%, Sears airholme finished the year down 5.96% F (SHLD) by 11%, and Sears warrants (SHLDW) by but since inception has returned 460.74% versus 12%. 158.91% for the S&P 500. Bruce Berkowitz They also slightly increased their stake in St. addressed the poor performance in his annual report: Joe (JOE). Of the stake, Berkowitz writes, “St. Joe “The securities of Sears Holdings Corporation is building a vibrant economic region and (“Sears”) and Sears Canada wrecked the Funds’ sustainable corporate profits with its communities performance. Sears realized billions of dollars from across coastal Walton and Bay counties in asset sales, as we predicted, but I did not foresee the Northwest Florida. The company is doing it the operating losses that have significantly reduced right way, with little debt, low fixed expenses, low- values. Getting the asset values largely correct, but cost land, and $300 million of cash for the inevitable missing the company’s inability to stop retailing surprises of real estate development. Entitled to losses, has been hugely frustrating and fatiguing for develop 178,000 homes and 22 million square feet me to watch. Today Sears is a much diminished of commercial space over 122,000 acres, St. Joe has position and nowhere as relevant to our financial a bright future.” position.” Berkowitz also notes in the letter that he has a large cash balance on hand as he awaits attractively priced investment opportunities. He currently has almost 26% of assets in cash. Additionally, it’s worth remembering that Fairholme has 23% of its portfolio in preferred stock of Fannie Mae and Freddie Mac that doesn’t show up on the next page as they’re not required to disclose them. Of the stakes, Berkowitz notes that these entities have shipped the entirety of their profits, around $275 billion, to the US Treasury. He View Fairholme Capital’s Updated Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 48 Fairholme Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 St. Joe Corp JOE 69.36% Added 3% $503,550,000 27,897,499 2 Seritage Growth Properties SRG 18.24% Cut -13% $132,442,000 3,273,398 3 Sears Holdings SHLD 11.88% Cut -16% $86,222,000 24,084,301 4 Sears Holdings Warrants SHLDW 0.28% Cut -12% $2,041,000 5,830,968 5 Leucadia National Corp. LUK 0.24% Unchanged $1,748,000 66,000

Next Page: Tiger Global

Q4 2017 www.hedgefundwisdom.com 49 Chase Coleman Tiger Global CAGR since inception: 18.3% net of all fees

Descendant of Peter Stuyvesant, the man who built the ‘wall’ in Wall St

Key Takeaways segment. This is the second big bet Tiger has made New Positions: in the financial sector. As highlighted in the Alphabet (GOOG & GOOGL share newsletter previously, Tiger has also built up a stake classes plus GOOG call options) in private equity giant Apollo Group (APO), now Salesforce.com (CRM) their fourth largest position. Tiger Global also shows a new stake in Sold Out: Alphabet, Google’s parent company. They’ve Priceline (PCLN) Calls acquired both share classes: GOOG and GOOGL, as Armstrong World Industries (AWI) well as call options on GOOG. All-in, their notional Weibo (WB) exposure to the company is worth over $205 million, which would make it one of their top 20 holdings. In a recent letter to investors, Coleman noted that, “Our short portfolio consists largely of Tiger Global returned 28% last year. businesses we believe are on the wrong side of During the fourth quarter, the hedge fund noticeably change, frauds, and cyclical assets that are over- reduced its position sizes in its top holdings. Their earning and trading at peak multiples.” The letter reported holdings decreased from $14.74 billion notes that six of their shorts were acquired and that down to $12.66 billion during Q4 (13F filings don’t it was negatively impacted by shorts of Whole include cash balances). Given the market’s Foods and General Growth Properties. “As our relentless rise in 2017, this could perhaps simply be mentor Julian Robertson used to say, short-selling is a case of profit taking in some of their holdings that a bit like going to the gym. You’re not just going to have rallied. As position sizes swell due to show up one day and become powerful; you have to appreciation, hedge fund managers will often reduce put in the reps on a consistent basis.” them back down for risk management purposes. In recent months, Tiger Global has also Tiger sold between 16% and 41% of the disclosed some short selling activity in international following top holdings: JD.com (JD), Priceline.com markets. This is rare, as it’s been reported in the (PCLN), Amazon (AMZN), Alibaba (BABA), past that the firm uses various shell companies to TransDigm Group (TDG), and Netflix (NFLX). hold their short positions, rather than shorting Chase Coleman’s firm has been active in UK directly under the Tiger Global name. As such, markets, as the FT reported the fund has taken a getting a glimpse as to what companies they’re stake in Barclays worth around $1 billion which betting against is hard to do. However, in France won’t show up on their portfolio on the next page as they’ve disclosed they were short 0.77% of Michelin they’re not required to disclose foreign market as of December 26th, 2017. Also, they’ve disclosed holdings. they were short 1.50% of Hugo Boss AG in Reportedly, the fund acquired around a 2.5% Germany as of January 22nd. stake in November when Barclays shares traded down. This would make it around their fifth largest holding. Barclays’ CEO, Jes Staley, has been fixated on the company’s US-focused investment View Tiger Global’s Updated bank and its UK-focused consumer banking Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 50 Tiger Global Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 JD.com JD 13.34% Cut -17% $1,689,128,000 40,780,493 2 Priceline Group Inc PCLN 11.01% Cut -23% $1,394,731,000 802,612 3 Amazon.com Inc. AMZN 10.31% Cut -27% $1,305,304,000 1,116,150 4 Apollo Global APO 9.05% Added 1% $1,145,437,000 34,222,807 5 Despegar.com Corp DESP 6.55% Unchanged $830,011,000 30,204,172 6 Microsoft Corp. MSFT 6.48% Cut -9% $820,062,000 9,586,886 7 Alibaba Group BABA 5.18% Cut -16% $655,500,000 3,801,545 8 Transdigm Group Inc TDG 4.16% Cut -41% $527,162,000 1,919,605 9 Facebook Inc FB 3.38% Added 34% $427,594,000 2,423,177 10 Fiat Chrysler Au FCAU 3.12% Cut -11% $394,710,000 22,125,000 11 Dominos Pizza Inc DPZ 3.10% Cut -11% $392,168,000 2,075,400 12 Netflix Inc NFLX 2.66% Cut -43% $336,755,000 1,754,299 13 TAL Education Group TAL 2.36% Added 2% $299,098,000 10,067,238 14 New Oriental Education EDU 2.13% Added 27% $269,781,000 2,870,008 15 FleetCor Technologies, Inc. FLT 2.09% Cut -51% $265,197,000 1,378,146 16 Redfin Corp RDFN 1.90% Unchanged $240,854,000 7,690,091 17 Autodesk, Inc. ADSK 1.79% Added 77% $226,488,000 2,160,523 18 Comcast CMCSA 1.59% Cut -31% $201,051,000 5,020,000 19 Restaurant Brand QSR 0.92% Cut -24% $116,812,000 1,900,000 20 MasterCard Inc. Class A MA 0.91% Cut -28% $114,934,000 759,341 21 ServiceNow, Inc. NOW 0.85% Added 56% $107,741,000 826,300 22 eHi Car Service EHIC 0.76% Unchanged $96,434,000 8,334,863 23 Visa V 0.71% Cut -31% $90,418,000 793,000 24 Etsy Inc ETSY 0.67% Cut -45% $85,434,000 4,177,723 25 Alphabet GOOG 0.61% New $76,722,000 73,320 26 Salesforce.com Inc. CRM 0.60% New $76,161,000 745,000 27 Alphabet GOOGL 0.60% New $76,150,000 72,290 28 Netshoes NETS 0.55% Unchanged $70,041,000 8,865,903 29 Alphabet GOOG CALL 0.41% New $52,320,000 50,000 30 Charter Communications CHTR PUT 0.36% New $45,355,000 135,000 31 Charter Communications CHTR 0.36% Cut -86% $45,332,000 134,934 32 MasterCard Inc. Class A MA PUT 0.19% New $23,703,000 156,600 33 Atlassian Corporation Plc TEAM 0.18% Unchanged $22,760,000 500,000 34 Switch SWCH 0.13% New $16,371,000 900,000 35 Pure Storage PSTG 0.13% Unchanged $15,860,000 1,000,000 36 ZTO Express ZTO 0.12% Unchanged $15,761,000 994,400 37 VIX Short Term Futures VXX 0.11% Added 71% $14,545,000 520,969 38 Sina Corp SINA 0.11% Cut -74% $13,542,000 135,000 39 Ctrip.com CTRP 0.10% New $13,010,000 295,000 40 JD.com JD CALL 0.08% New $9,941,000 240,000 41 Teladoc Inc TDOC 0.06% Cut -87% $8,209,000 235,558 42 RISE Education REDU 0.06% New $7,395,000 500,000 43 Shopify Inc SHOP 0.06% Unchanged $7,070,000 70,000 44 Qudian Inc QD 0.03% New $4,138,000 330,000 45 Fitbit Inc FIT 0.02% Unchanged $2,855,000 500,000

Continued on next page…

Q4 2017 www.hedgefundwisdom.com 51 Tiger Global Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 FireEye Inc FEYE 0.02% Unchanged $2,840,000 200,000 47 J.C. Penney JCP 0.02% Unchanged $2,686,000 850,000 48 Sogou Inc ADS SOGO 0.01% New $1,736,000 150,000 49 Okta Inc OKTA 0.01% Unchanged $1,537,000 60,000 50 MongoDB Inc Cl A MDB 0.01% New $1,484,000 50,000 51 LendingClub LC 0.01% Unchanged $1,136,000 275,000 52 Cloudera Inc CLDR 0.01% Unchanged $826,000 50,000 53 Farmland Partners FPI 0.00% Unchanged $386,000 44,502 Priceline Group Inc PCLN CALL Sold Altice USA Inc ATUS Sold RYB Education Inc ADS RYB Sold Weibo Corporation WB Sold Jumei JMEI Sold ArmstrongWorldIndustries AWI Sold Roku Inc ROKU Sold

Next Page: Hound Partners

Q4 2017 www.hedgefundwisdom.com 52 Jonathan Auerbach Hound Partners Runs a concentrated, long-term oriented portfolio; Generated a cumulative return (compounded geometrically) of 426% since 2005

Originally seeded by Julian Robertson; operates a long/short hedge fund and a long-only vehicle Key Takeaways

New Positions: agency TransUnion (TRU) during the third quarter, Nexstar Broadcasting (NXST) Hound took their quick gains and exited the stake in Broadcom (AVGO) the fourth quarter. TRU shares sold off initially in Jeld-Wen (JELD) conjunction with competitor Equifax’s (EFX) huge Roku (ROKU) Puts data breach. TransUnion itself was not impacted by Realty Income (O) Puts the breach, though some believe the industry will be Intel (INTC) Puts hit with increased security and/or regulatory costs going forward. Shares quickly recovered from the

sell-off and Hound exited its stake. Sold Out: Hound also bought a stake in EFX at the TransUnion (TRU) same time as TRU. However, instead of exiting that S&P 500 (SPY) position entirely, they trimmed 20% of the stake and S&P 500 (SPY) Calls retain the position. It’s currently their 13th largest holding. There’s still a lot of unknowns surrounding the data breach and its implications, especially considering it was recently revealed that the breach Hilton (HLT) remained Hound Partners’ was worse than first thought. top individual equity holding at the end of the fourth During the fourth quarter, Hound initiated a quarter despite the fact that they sold 27% of their brand new position in Nexstar Broadcasting position. After completing its three-way split into (NXST). It’s worth over $285 million and is now separate companies, HLT is left with an asset light their fifth largest holding. Additionally, they hotel management company. Shares were up over boosted their exposure to Facebook (FB) by 82%, 35% in 2017, so perhaps Hound was merely making it their 8th largest holding. managing its position size as it grew. (They still One other thing worth mentioning is that own $425 million worth of shares.) Hound has exposure to Charter Communications The company has performed well as of late, (CHTR) via common stock but also via the Liberty with revenue up 24% recently and solid growth in its Broadband (LBRDK) entity that holds a large loyalty program, Hilton Honors. The company has ownership stake in CHTR. Hound boosted its been pushing a ‘direct booking’ campaign that LBRDK holdings by 31% during Q4. If you sum up encourages customers to sign up for their loyalty Hound’s LBRDK and CHTR stakes, the combined program to receive ‘member only’ rates on hotel exposure would make it their largest holding. rooms and to discourage customers from booking Hound also appears to have revealed some of rooms via third party platforms like online travel its alpha short positions during Q4. They disclosed agencies (OTA’s) that are typically more costly for put options on a handful of stocks that they don’t hotels. The Hilton chain continues to expand own corresponding long positions in: Roku internationally and includes brands such as Hilton, (ROKU), Realty Income (O), and Intel (INTC). Waldorf Astoria, Conrad, Embassy Suites, and DoubleTree, among others. The company has been investing in digital offerings around its brands. View Hound Partners’ Updated After initiating a stake in credit reporting Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 53 Hound Partners Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Hilton Worldwide HLT 11.67% Cut -27% $425,503,000 5,328,112 2 LKQ Corp LKQ 10.69% Cut -2% $389,486,000 9,576,751 3 Spirit Aerosystems SPR 10.08% Cut -11% $367,482,000 4,211,824 4 Expedia EXPE 8.18% Added 1% $298,275,000 2,490,402 5 Nexstar Broadcasting NXST 7.84% New $285,716,000 3,653,653 6 Liberty Broadband LBRDK 6.51% Added 32% $237,101,000 2,784,184 7 Charter Communications CHTR 5.96% Added 0% $217,309,000 646,829 8 Facebook Inc FB 5.92% Added 82% $215,757,000 1,222,697 9 Mohawk Industries Inc. MHK 5.51% Cut -8% $200,870,000 728,053 10 Credit Acceptance Corp. CACC 5.05% Cut -38% $184,223,000 569,504 11 Restaurant Brand QSR 4.94% Cut -6% $180,188,000 2,930,833 12 Alphabet GOOG 4.30% Added 1% $156,703,000 149,754 13 Equifax Inc. EFX 2.98% Cut -20% $108,615,000 921,094 14 SPS Commerce SPSC 2.27% Unchanged $82,731,000 1,702,632 15 Fortinet Inc FTNT 2.22% Cut -72% $80,802,000 1,849,445 16 Broadcom Limited AVGO 1.53% New $55,711,000 216,858 17 Andeavor ANDV 1.51% Cut -82% $55,089,000 481,804 18 Altice USA Inc ATUS 1.19% Cut -1% $43,282,000 2,038,730 19 Liberty Brdbnd A LBRDA 0.60% Added 0% $22,042,000 259,160 20 Cimpress N V CMPR 0.53% Cut -91% $19,224,000 160,359 21 JELD-WEN Holding Inc JELD 0.31% New $11,285,000 286,639 22 Roku Inc ROKU PUT 0.14% New $5,178,000 100,000 23 Realty Income Corp. O PUT 0.04% New $1,426,000 25,000 24 Intel Corp. INTC PUT 0.03% New $923,000 20,000 S&P 500 Index SPY CALL Sold Century Aluminum Co. CENX Sold S&P 500 Index SPY Sold Applied Optoelectronics AAOI Sold TransUnion TRU Sold Acacia Communications ACIA Sold Redfin Corp RDFN Sold

Next Page: SPO Advisory

Q4 2017 www.hedgefundwisdom.com 54 John Scully SPO Advisory SPO Advisory is replacing Perry Capital in the newsletter going forward since Perry is shutting down

SPO are long-term oriented investors running a concentrated portfolio of equities

Key Takeaways surprising to see ATUS either pursue further deals in New Positions: the future or potentially even be swallowed up Altice USA (ATUS) themselves. For the second straight quarter, SPO was out Sold Out: slightly trimming its Liberty Global (LBTYK) position but it remains their top holding and they’ve Oasis Petroleum (OAS) owned a stake since 2010. The company has Liberty Global Latin America (LILAK) struggled but has been rumored in on-off conversations with Vodafone (VOD) regarding some sort of asset swap or combination. The caveat, though, is that this rumor has come and gone in the past before as well. SPO also liquidated the remaining portion of its Liberty Global Latin America tracker (LILAK). This marks three consecutive quarters of selling in John Scully’s firm only made a few small the name, and now they no longer hold any shares. changes to its portfolio during the fourth quarter. Another notable position that Scully’s firm First, to the new buys: they initiated a new stake in scaled back is Charles Schwab (SCHW). They sold Altice USA (ATUS). It’s a small position by their 27% of their position and it’s now their third largest standards, but they now own $89 million worth of holding as they retain $527 million worth of shares. shares. The company is Patrick Drahi’s expansion The sale, though, is notable because SPO has owned into the US cable and internet market. He is known SCHW shares since 2011. for his European cable empire that various hedge Rounding out the rest of SPO’s minor funds have been owners of in the past. activity, they sold 3% of their stake in Charter The US entity was created when Altice Communications (CHTR), sold 6% of their Zayo bought Cablevision and Suddenlink and merged their Group (ZAYO) stake, and shed 12% of their operations under one roof. Since completing its holdings in Pioneer Resources (PXD). intial public offering (IPO), ATUS shares have cascaded from a high of $35 down to a low of $18 before slightly rebounding to current levels of around $20. The precipitous selling must have attracted SPO, who are no stranger to cable assets. SPO also owns large stakes in Liberty Global (LBTYK), John Malone’s European cable giant, as well as Charter Communications (CHTR), John Malone’s big cable bet in the US. Altice is far behind in terms of scale in the US market, as Comcast (CMCSA) is the biggest player, followed by CHTR. Scale is everything in View SPO Advisory’s the cable business so bulls say it would not be Updated Portfolio on the

Q4 2017 www.hedgefundwisdom.com 55 SPO Advisory Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Liberty Global LBTYK 19.20% Cut -10% $925,792,000 27,357,907 2 Pioneer Natural Resources PXD 11.45% Cut -12% $552,333,000 3,195,446 3 Charles Schwab Corp SCHW 10.95% Cut -28% $527,998,000 10,278,324 4 Charter Communications CHTR 10.74% Cut -4% $517,943,000 1,541,680 5 Zayo Group Holdings ZAYO 9.56% Cut -7% $461,084,000 12,529,441 6 LPL Financial Holdings LPLA 8.25% Unchanged $397,776,000 6,961,426 7 Formula 1 FWONK 7.03% Unchanged $338,744,000 9,916,400 8 Alphabet GOOG 6.63% Unchanged $319,675,000 305,500 9 Equinix EQIX 5.58% Unchanged $269,110,000 593,773 10 Laredo Petroleum LPI 4.67% Added 25% $225,029,000 21,209,105 11 Zillow Group Z 2.86% Added 0% $138,056,000 3,373,800 12 Altice USA Inc ATUS 1.86% New $89,695,000 4,224,900 13 Liberty Global LBTYA 0.77% Unchanged $37,024,000 1,033,059 14 Zillow Group ZG 0.45% Added 10% $21,576,000 529,600 Oasis Petroleum Inc OAS Sold Liberty Global LatAm LILAK Sold

Next Page: Glenview Capital

Q4 2017 www.hedgefundwisdom.com 56 Larry Robbins Glenview Capital

Known for taking concentrated positions in large caps

Previously a trader at Leon Cooperman’s Omega Advisors Key Takeaways believe that Newell is deeply undervalued and that New Positions: significant opportunities exist to create value for the Newell Brands (NWL) benefit of all shareholders.” They’ve proposed a Allergan (AGN) new slate of directors to join the board and look to Charter Communications (CHTR) implement a few former Jarden executives. Delphi (DLPH) Glenview Capital ramped up another Michaels (MIK) position during the fourth quarter: Walgreens Boots Aramark (ARMK) Alliance (WBA). This was previously a tiny stake and they boosted their holdings by 13,725% to make Sold Out: it their sixteenth largest position worth over $495 Zimmer Holdings (ZBH) million. They’ve been involved in shares in the past Nike (NKE) so they’re quite familiar with the name. Reports Twitter (TWTR) indicate that Walgreens is also in talks to acquire the Wyndham (WYN) rest of AmerisourceBergen (ABC) that it doesn’t already own (they currently own around 26% of ABC). In general, it seems that Glenview is bullish on pharmacy plays, as they also ratcheted up their exposure to competitor CVS Caremark (CVS) as Glenview Capital initiated a new position well. They increased their position size by 398% in Newell Brands (NWL) during the fourth quarter. and it’s now their seventeenth largest holding, just It’s now their 12th largest holding worth over $525 behind WBA. During the quarter, it was announced million. Last quarter’s newsletter featured NWL in that CVS was acquiring health insurer Aetna (AET) the investment thesis summary section if you want to in a $68 billion deal. play catch-up on the background. The situation has Shares of both CVS and WBA traded escalated in recent weeks, however. sideways for the bulk of 2017 until October and Activist investor Jeff Smith and his firm November when they sold off. WBA fell from Starboard Value have teamed up with former Jarden almost $83 down to a low of $63 before recovering executives to try and oust the entire board of Newell to currently levels of $71. Similarly, CVS fell from Brands. Newell previously purchased Jarden in a high of almost $83 down to a low of $66 and 2016 and became one of the largest providers of currently trades around $72. If you summed consumer and commercial products with brands such Glenview’s pharmacy exposure into one basket as Rubbermaid, Sharpie, Crockpot, Graco, Elmer’s, position, it would be their fourth largest holding. Yankee Candle, and many more. The activist team feels that Newell’s management has done quite a poor job of integrating and operating the businesses. NWL shares have fallen 53% since July of 2017. Starboard currently owns 4% of the company View Glenview Capital’s Updated and in a recent letter to the board wrote that, “We Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 57 Glenview Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 HCA Holdings, Inc. HCA 5.86% Cut -19% $1,084,923,000 12,351,122 2 DowDuPont DWDP 5.75% Cut -8% $1,063,561,000 14,933,459 3 FMC Corp. FMC 5.46% Cut -9% $1,009,869,000 10,668,384 4 Shire Plc ADS SHPG 4.81% Cut -2% $890,173,000 5,738,610 5 IQVIA Holdings, Inc. IQV 4.54% Cut -4% $839,682,000 8,576,935 6 Flextronics FLEX 3.83% Unchanged $709,395,000 39,432,751 7 Anthem Inc ANTM 3.72% Cut -20% $687,967,000 3,057,497 8 DXC Technology DXC 3.55% Cut -11% $656,972,000 6,922,784 9 Thermo Fisher Scientific TMO 3.42% Added 22% $631,840,000 3,327,576 10 McKesson MCK 3.21% Added 40% $592,917,000 3,801,966 11 CIGNA Corp. CI 2.88% Cut -15% $531,909,000 2,619,078 12 Newell Brands NWL 2.84% New $525,700,000 17,012,932 13 Alphabet GOOGL 2.80% Cut -19% $518,012,000 491,752 14 Aetna AET 2.80% Cut -24% $517,622,000 2,869,460 15 eBay Inc. EBAY 2.71% Added 27% $500,775,000 13,269,082 16 Walgreens Boots Alliance WBA 2.68% Add 13725% $495,973,000 6,829,696 17 CVS Caremark Corp CVS 2.67% Added 398% $494,568,000 6,821,631 18 Universal Health Services UHS 2.53% Added 79% $467,745,000 4,126,555 19 First Data Corp Cl A FDC 2.48% Added 62% $459,073,000 27,472,976 20 Laboratory Corp LH 2.30% Cut -8% $425,960,000 2,670,426 21 CBS Corp CBS 2.16% Added 3% $399,179,000 6,765,742 22 Avis Budget Group Inc CAR 1.80% Unchanged $333,400,000 7,598,004 23 Williams Companies WMB 1.67% Added 35% $309,455,000 10,149,408 24 Tenet Healthcare Corp. THC 1.47% Added 0% $271,293,000 17,895,314 25 Aptiv PLC Ordinary APTV 1.35% Added 4% $249,037,000 2,935,720 26 Liberty Global Inc, Class A LBTYA 1.33% Cut -11% $246,453,000 6,876,465 27 Apple Inc AAPL 1.15% Cut -49% $213,503,000 1,261,612 28 Liberty Global LBTYK 1.14% Cut -4% $211,132,000 6,239,140 29 Allergan PLC AGN 1.02% New $188,866,000 1,154,576 30 Visa V 0.99% Cut -21% $182,753,000 1,602,813 31 Brookdale Senior Living BKD 0.96% Added 16% $177,032,000 18,250,718 32 Charter Communications CHTR 0.87% New $160,229,000 476,929 33 Vereit Inc VER 0.86% Added 7% $159,486,000 20,473,142 34 Pentair Plc PNR 0.85% Added 26% $157,818,000 2,234,747 35 Worldpay, Inc. Class A WP 0.83% Added 1176% $153,827,000 2,091,464 36 Endo Internation ENDP 0.81% Added 76% $149,098,000 19,238,422 37 PlatformSpecialtyProducts PAH 0.77% Unchanged $142,140,000 14,328,633 38 FedEx Corporation FDX 0.71% Added 315% $132,038,000 529,127 39 AbbVie Inc ABBV 0.71% Cut -74% $131,956,000 1,364,449 40 Dun & Bradstreet DNB 0.71% Cut -39% $130,874,000 1,105,262 41 Lowes Companies, Inc. LOW 0.68% Cut -68% $125,593,000 1,351,331 42 Delphi Technologies PLC DLPH 0.66% New $122,078,000 2,326,629 43 CocaCola Europea Partners CCE 0.63% Cut -8% $116,278,000 2,917,898 44 Meritor Inc MTOR 0.62% Cut -17% $114,089,000 4,863,111 45 Comcast CMCSA 0.60% Added 20% $110,633,000 2,762,360

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Q4 2017 www.hedgefundwisdom.com 58 Glenview Capital Fourth Quarter 2017 Portfolio: …Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 Realogy Holdings Corp RLGY 0.56% Unchanged $103,261,000 3,896,651 47 Hertz Global HTZ 0.51% Cut -15% $95,193,000 4,307,353 48 Michaels Companies MIK 0.48% New $87,975,000 3,636,818 49 Conduent Inc CNDT 0.44% Added 27% $82,121,000 5,081,773 50 Mohawk Industries Inc. MHK 0.44% Cut -31% $80,715,000 292,551 51 Aramark ARMK 0.40% New $73,304,000 1,715,109 52 Cardinal Health, Inc. CAH 0.25% New $46,015,000 751,018 53 LyondellBasell LYB 0.23% New $43,160,000 391,230 54 Monsanto MON 0.21% Cut -9% $37,971,000 325,149 55 Kinder Morgan KMI 0.18% Unchanged $32,881,000 1,819,630 56 Kindred Healthcare Inc KND 0.10% Cut -53% $19,305,000 1,990,247 57 Tailored Brands TLRD 0.02% Cut -94% $2,893,000 132,517 58 Citigroup Warrants C/WS/A 0.00% Unchanged $804,000 8,031,020 MGM Resorts MGM Sold Nike NKE Sold Praxair, Inc. PX Sold Zimmer Holdings Inc. ZBH Sold Wyndham Worldwide WYN Sold Twitter Inc TWTR Sold

Next Page: Viking Global

Q4 2017 www.hedgefundwisdom.com 59 Andreas Halvorsen Viking Global Returned an average of 13% annually over the past decade

Has been directing more capital to Viking’s ‘best ideas’ & is taking a more concentrated portfolio approach than in the past Key Takeaways

New Positions: and Turner Networks, and it could also be a Time Warner (TWX) takeover target for other media or technology Netease (NTES) companies. TransDigm Group (TDG) The second position Viking entered in a meaningful way was Netease (NTES). This is a ThermoFIsher Scientific (TMO) Chinese gaming company that is largely thought of Paccar (PCAR) as the number two player in China’s huge gaming Diamondback Energy (FANG) market. While Tencent (700.HK) is the dominant Travelers (TRV) force in gaming but also has other businesses, NTES is more of a pure gaming play and some argue it is a Sold Out: cheaper way to play the huge trend in China. Its John Deere (DE) mobile games have included Fantasy Westward Mastercard (MA) Journey, Invincible, Chrono Blade and more. It also st 21 Century Fox (FOXA) has licensed popular PC games from Blizzard Rice Energy (RICE) Entertainment like World of Warcraft, Starcraft, and Bank of America (BAC) Diablo. Verizon (VZ) Viking also has exposure to all of the FleetCor (FLT) ‘FANG’ stocks in a big way: Facebook (FB), Anadarko Petroleum (APC) Amazon (AMZN), Netflix (NFLX), and Google JD.com (JD) a.k.a. Alphabet (GOOGL). They were trimming Newell Brands (NWL) their positions in all of these names except for Cabot Oil & Gas (COG) AMZN. Despite this, all are still in their top ten Shire (SHPG) holdings, but their largest exposure is to GOOGL Albemarle (ALB) with a $1 billion position, followed by NFLX with a D.R. Horton (DHI) $716 million stake. GOOGL was close to being a consensus buy in the fourth quarter among hedge funds, but Viking was ahead of the game as they actually built their stake in Q3, as highlighted in last quarter’s issue. iking Global initiated two sizable V During the fourth quarter, they trimmed their positions during the fourth quarter. First, they show GOOGL holdings by 32% but it’s still their second a new stake in Time Warner (TWX). As detailed largest holding. throughout this issue, this was quite a popular play among hedge funds. The company is being acquired by AT&T (T), pending regulatory approval. While the Department of Justice has sued to block the deal, many bulls feel that their argument is weak, as there’s not much precedent to block it. And even if it is blocked, bulls feel that the company is cheap on View Viking Global’s Updated a standalone basis given its various assets like HBO Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 60 Viking Global Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 EnCana Corp. ECA 7.65% Unchanged $1,244,820,000 93,384,875 2 Alphabet GOOGL 6.43% Cut -33% $1,045,620,000 992,614 3 Visa V 5.34% Cut -25% $869,258,000 7,623,731 4 United Technologies Corp. UTX 4.68% Added 43% $760,721,000 5,963,163 5 Microsoft Corp. MSFT 4.66% Cut -12% $757,412,000 8,854,482 6 Netflix Inc NFLX 4.40% Cut -5% $716,206,000 3,731,016 7 Facebook Inc FB 4.19% Cut -12% $681,165,000 3,860,165 8 Broadcom Limited AVGO 3.90% Added 14% $633,730,000 2,466,836 9 Amazon.com Inc. AMZN 3.73% Added 30% $606,043,000 518,220 10 Anthem Inc ANTM 3.51% Added 191% $570,980,000 2,537,576 11 Parsley Energy PE 3.28% Added 130% $534,183,000 18,144,801 12 Toronto-Dominion Bank TD 3.21% Cut -8% $521,360,000 8,898,168 13 Lennar Corp. Class A LEN 2.91% Cut -23% $473,397,000 7,485,715 14 Canadian Pacific Railway CP 2.72% Cut -29% $442,955,000 2,423,698 15 Autodesk, Inc. ADSK 2.64% Added 69% $429,177,000 4,094,027 16 Raymond James Financial RJF 2.61% Added 49% $425,072,000 4,760,050 17 Time Warner, Inc TWX 2.58% New $420,390,000 4,595,932 18 Formula 1 FWONK 2.52% Added 0% $410,359,000 12,012,852 19 Dominos Pizza Inc DPZ 2.39% Added 474% $388,968,000 2,058,468 20 Dentsply XRAY 2.18% Added 52% $355,331,000 5,397,707 21 Netease Inc ADR NTES 2.09% New $339,240,000 983,105 22 UnitedHealth Group Inc. UNH 2.02% Cut -29% $328,231,000 1,488,844 23 Wells Fargo WFC 1.99% Added 181% $323,857,000 5,338,016 24 Anheuser-Busch Inbev BUD 1.96% Added 82% $318,636,000 2,856,181 25 Equifax Inc. EFX 1.69% Added 334% $275,550,000 2,336,753 26 Salesforce.com Inc. CRM 1.44% Cut -36% $233,805,000 2,287,053 27 Lincoln National Corp. LNC 1.03% Added 119% $167,801,000 2,182,923 28 Transdigm Group Inc TDG 0.97% New $157,994,000 575,317 29 Thermo Fisher Scientific TMO 0.95% New $154,660,000 814,517 30 EQT Corporation EQT 0.81% Cut -7% $131,066,000 2,302,644 31 Molina Healthcare Inc MOH 0.79% Cut -14% $128,272,000 1,672,822 32 Jazz Pharma Plc JAZZ 0.75% Cut -25% $121,365,000 901,337 33 Align Technology Inc ALGN 0.74% Cut -7% $120,545,000 542,532 34 Nuvasive Inc NUVA 0.64% Cut -18% $104,773,000 1,791,291 35 Paccar PCAR 0.49% New $80,152,000 1,127,627 36 Diamondback Energy Inc FANG 0.48% New $78,139,000 618,923 37 Universal Health Services UHS 0.47% Cut -44% $76,393,000 673,955 38 Inc Research INCR 0.42% New $67,951,000 1,558,512 39 Travelers TRV 0.41% New $67,245,000 495,762 40 HDFC Bank HDB 0.41% Added 15% $67,187,000 660,838 41 Abeona Therapeutics ABEO 0.39% Added 80% $64,046,000 4,040,727 42 Progressive Corp. PGR 0.34% New $55,771,000 990,261 43 Deciphera Pharmaceuticals DCPH 0.33% Cut -4% $54,286,000 2,394,625 44 AveXis Inc AVXS 0.33% Cut -19% $52,938,000 478,338 45 Editas Medicine Inc EDIT 0.32% Unchanged $52,530,000 1,709,401

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Q4 2017 www.hedgefundwisdom.com 61 Fourth Quarter 2017 Portfolio: Viking Global … Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 Lowes Companies, Inc. LOW 0.29% New $47,815,000 514,470 47 RSP Permian RSPP 0.29% New $46,798,000 1,150,398 48 Marsh & McLennan MMC 0.24% New $39,335,000 483,287 49 Union Pacific Corp. UNP 0.24% New $39,095,000 291,533 50 Qualcomm QCOM 0.24% New $38,725,000 604,892 51 Mohawk Industries Inc. MHK 0.21% Cut -18% $33,980,000 123,161 52 GW Pharmaceuticals GWPH 0.17% Cut -70% $27,969,000 211,869 53 PioneerNaturalResources PXD 0.11% New $18,005,000 104,166 54 Jianpu Technology JT 0.10% New $16,963,000 2,617,818 55 Qudian Inc QD 0.10% New $16,930,000 1,350,114 56 Calithera Biosciences CALA 0.08% Cut -37% $13,725,000 1,643,681 57 Lennar Corp. Class B LEN.B 0.04% New $6,200,000 119,978 58 aTyr Pharma Inc LIFE 0.03% Cut -22% $4,845,000 1,384,300 59 Alliance Data Systems ADS 0.02% New $3,621,000 14,286 JD.com JD Sold Spark Therapeutics Inc ONCE Sold MasterCard Inc. Class A MA Sold Deere & Co. DE Sold D.R. Horton, Inc. DHI Sold Shire Plc ADS SHPG Sold Johnson Controls JCI Sold Newell Brands NWL Sold Verizon Communications VZ Sold Anadarko Petroleum Corp. APC Sold Parker-Hannifin Corp. PH Sold FleetCor Technologies, Inc. FLT Sold Rice Energy RICE Sold Bank of America Corp. BAC Sold Chubb Limited CB Sold Walgreens Boots Alliance WBA Sold Albemarle Corp. ALB Sold 21st Century Fox, Class A FOXA Sold Cabot Oil & Gas Corp. COG Sold

Next: Farallon Capital

Q4 2017 www.hedgefundwisdom.com 62 Andrew Spokes Farallon Capital Typically focuses on risk arbitrage strategies

Founder Tom Steyer stepped down and key-man Andrew Spokes has taken the helm Key Takeaways

New Positions: Farallon has done that since they don’t disclose any Aetna (AET) put options and aren’t required to show short sales. The Department of Justice (DOJ) has Rockwell Collins (COL) requested more information on the merger and CVS

and Aetna have obviously been cooperating. Back Sold Out: under the Obama administration, AET’s previous C.R. Bard (BCR) deal with HUM was blocked, as that was a major HD Supply (HDS) horizontal merger of two companies in the same Kite Pharma (KITE) space. CVS is a drug store chain and pharmacy Alere (ALR) benefit management company while Aetna is a Constellation Brands (STZ) health insurer, so this is a different type of Herbalife Notes (HLF) combination. Herbalife (HLF) CVS is looking to merge in order to spawn SolarCity Notes an integrated health company that can halo patients Gilead Sciences (GILD) into its pharmacy network and clinics in its retail Comcast (CMCSA) stores. The DOJ’s request for more info pushes Brocade (BRCD) back the waiting period on the deal but the Ensco (ESV) companies are scheduled to vote on March 20th on whether to approve the deal or not. During the fourth quarter, Farallon also cut its exposure to Time Warner (TWX) in half. The company is being acquired by AT&T (T), pending regulatory approval. After the DOJ sued to block During the fourth quarter, Farallon Capital the deal, shares of TWX sold off as investors and entered shares of Aetna (AET) in size. They built a arbitrageurs adjusted the likelihood of the deal $940 million position and it’s now their top closing. It appears Farallon was one of those that individual equity holding. Farallon mainly pursues a de-risked their exposure to the situation, though we merger arbitrage strategy, and this falls right in their can’t see how they’ve hedged this trade, if at all. playbook. While the reduction is notable, they still own $390 Pharmacy chain CVS Caremark (CVS) million worth of shares and it’s still their fifth recently announced it would be acquiring Aetna largest individual equity holding. (AET) for $68 billion. This comes after Aetna had Lastly, Farallon increased its hedging to call off its previously announced merger with activity in the fourth quarter. They boosted their Humana (HUM) and pay a $1 billion breakup fee. exposure to put options on the S&P 500 index (SPY) AET’s new deal with CVS sees Aetna by 32%. The notional value of this position is over shareholders receiving $145 per share in cash and $2.3 billion and that certainly came in handy given 0.8378 CVS shares for each Aetna share. The the recent volatility the markets have seen. typical risk arbitrage move would be to short some CVS shares against the long AET position to lock-in View Farallon Capital’s Updated the deal spread, but there’s no way to know if Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 63 Farallon Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 S&P 500 Index SPY PUT 18.78% Added 33% $2,311,915,000 8,663,400 2 Aetna AET 7.64% New $940,734,000 5,215,000 3 NXP Semiconductors NV NXPI 7.43% Added 1% $915,058,000 7,815,000 4 Altaba, Inc. AABA 6.67% Cut -3% $821,258,000 11,757,457 5 Wabtec Corp. WAB 3.58% Added 22% $440,494,000 5,409,481 6 Time Warner TWX 3.17% Cut -49% $390,120,000 4,265,000 7 Dell Technologies Inc DVMT 3.11% Added 4% $382,296,000 4,703,440 8 Rockwell Collins, Inc. COL 2.78% New $342,853,000 2,528,044 9 Playa Hotels PLYA 2.68% Unchanged $330,249,000 30,606,930 10 Visa V 2.47% Added 13% $304,661,000 2,671,998 11 IQVIA Holdings, Inc. IQV 2.36% Cut -5% $290,072,000 2,962,944 12 Alphabet GOOG 2.22% Cut -33% $273,856,000 261,713 13 Facebook Inc FB 2.19% Cut -18% $269,261,000 1,525,903 14 TransUnion TRU 1.68% Added 62% $206,334,000 3,754,262 15 Microsoft Corp. MSFT 1.60% Cut -11% $197,224,000 2,305,634 16 Citrix Systems Inc. CTXS 1.59% Cut -24% $195,394,000 2,220,383 17 Fidelity National Info FIS 1.55% Added 29% $191,132,000 2,031,376 18 IHS Markit Ltd. INFO 1.55% Added 33% $190,439,000 4,217,914 19 Anthem Inc ANTM 1.50% Added 292% $185,183,000 823,000 20 Biogen BIIB 1.40% Added 14% $172,028,000 540,000 21 Monsanto MON 1.37% Add 1506% $168,747,000 1,445,000 22 Anheuser-Busch Inbev BUD 1.33% Added 63% $164,015,000 1,470,192 23 Calpine CPN 1.33% Added 67% $163,425,000 10,801,403 24 Verisk Analytics VRSK 1.30% Added 2% $159,687,000 1,663,403 25 Charter Communications CHTR 1.27% Added 142% $155,759,000 463,625 26 Equifax Inc. EFX 1.24% Added 1% $153,199,000 1,299,175 27 Liberty Global Inc. LBTYK 1.13% Added 33% $138,816,000 4,102,123 28 AstraZeneca plc ADR AZN 1.06% Added 18% $130,646,000 3,765,000 29 Radius Health RDUS 1.02% Unchanged $125,056,000 3,936,300 30 Liberty Global Inc, Class A LBTYA 0.95% Added 9% $117,203,000 3,270,180 31 Veon VEON 0.92% Unchanged $113,025,000 29,433,518 32 Huntsman Corp HUN 0.66% Cut -31% $80,728,000 2,425,000 33 Fibrogen FGEN 0.64% Added 51% $78,566,000 1,657,500 34 Bristol-Myers Squibb BMY 0.59% Cut -12% $73,076,000 1,192,500 35 Akorn, Inc. AKRX 0.59% Cut -1% $72,559,000 2,251,300 36 AbbVie Inc ABBV 0.55% Added 20% $67,697,000 700,000 37 Sage Therapeutic SAGE 0.54% Added 64% $65,884,000 400,000 38 General Communications GNCMA 0.52% Unchanged $64,141,000 1,643,800 39 Ablynx NV ABYLY 0.48% New $58,727,000 2,350,000 40 AnaptysBio Inc ANAB 0.46% Added 128% $56,504,000 561,000 41 Enanta Pharmaceuticals ENTA 0.44% Added 124% $54,279,000 925,000 42 Qualcomm QCOM 0.41% Added 829% $50,562,000 789,783 43 Acceleron Pharma Inc XLRN 0.38% Added 13% $46,175,000 1,088,000 44 Amicus Therapeutics Inc FOLD 0.33% Cut -45% $40,019,000 2,781,000 45 MyoKardia Inc MYOK 0.30% Added 117% $36,363,000 863,732

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Q4 2017 www.hedgefundwisdom.com 64 Farallon Capital Fourth Quarter 2017 Portfolio: … Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 46 Zogenix Inc ZGNX 0.28% Added 166% $34,043,000 850,000 47 Sutherland Asset Mgmt SLD 0.27% Cut -5% $33,330,000 2,200,007 48 Savara Inc SVRA 0.27% Unchanged $33,019,000 2,225,000 49 Ionis Pharmaceuticals IONS 0.26% Added 43% $32,444,000 645,000 50 Grifols GRFS 0.26% Cut -1% $32,289,000 1,408,760 51 Galapagos GLPG 0.22% Added 23% $27,190,000 290,000 52 NovoCure Ltd NVCR 0.19% New $23,533,000 1,165,000 53 Intellia Therapeutics Inc NTLA 0.18% New $21,911,000 1,140,000 54 CRISPR Therapeutics AG CRSP 0.16% New $20,160,000 858,602 55 Harbinger Group Inc. HRG 0.16% Added 16% $19,357,000 1,142,000 56 Spectrum Brands SPB 0.16% Added 16% $19,108,000 170,000 57 Centurylink Inc CTL PUT 0.16% Unchanged $19,082,000 1,144,000 58 Protagonist Tpts PTGX 0.15% New $18,720,000 900,000 59 Editas Medicine Inc EDIT 0.13% New $15,826,000 515,000 60 Cavium Inc CAVM 0.12% New $15,089,000 180,000 61 Iovance Biotherapeutics IOVA 0.12% Added 120% $14,935,000 1,866,900 62 Global Blood Therapeutics GBT 0.11% New $13,379,000 340,000 63 Hain Celestial Group HAIN 0.10% New $12,293,000 290,000 64 Akebia Therapeutics AKBA 0.10% Added 13% $12,268,000 825,000 65 Assembly Bioscie ASMB 0.09% New $11,313,000 250,000 66 Voyager Therapeutics Inc VYGR 0.09% Added 291% $10,870,000 654,812 67 Cymabay Therapeutics CBAY 0.08% New $10,120,000 1,100,000 68 Audentes Therapeutics Inc BOLD 0.08% New $9,989,000 319,662 69 Zealand Pharma ADS ZEAL 0.07% Unchanged $8,840,000 650,000 70 WGL Holdings, Inc. WGL 0.07% Cut -17% $8,584,000 100,000 71 XPO Logistics XPO 0.07% New $8,243,000 90,000 72 MARINUS PHARMA MRNS 0.06% Cut -24% $7,303,000 895,000 73 Bunge Ltd. ADR BG 0.06% New $7,043,000 105,000 74 NuCana plc ADS NCNA 0.03% Unchanged $4,044,000 400,000 75 Tronox TROX 0.03% New $3,884,000 189,375 76 Kala Pharmaceuticals Inc KALA 0.03% Added 85% $3,421,000 185,000 77 Scripps Networks SNI 0.03% Cut -83% $3,415,000 40,000 78 Brookdale Senior Living BKD 0.03% Unchanged $3,201,000 330,000 79 Bemis Company Inc. BMS 0.02% New $2,867,000 60,000 80 Sanofi Oyj CVR GCVRZ 0.02% Unchanged $2,595,000 6,827,805 81 Changyou.com Limited CYOU 0.02% Cut -71% $2,550,000 70,000

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Q4 2017 www.hedgefundwisdom.com 65 Farallon Capital Fourth Quarter 2017 Portfolio: … Continued

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares Nightstar Therapeutics Plc NITE Sold HD Supply Holdings, Inc. HDS Sold Gilead Sciences Inc. GILD Sold Ryanair Holdings ADR RYAAY Sold Herbalife Notes HLF Sold REGENXBIO Inc RGNX Sold Comcast CMCSA Sold C.R. Bard BCR Sold Kite Pharma KITE Sold Herbalife Ltd HLF Sold Ensco Plc ADR ESV Sold Alere Inc ALR Sold SBA Communications SBAC Sold Constellation Brands, Inc. STZ Sold SolarCity Corp Notes SCTY Sold Brocade Communications BRCD Sold Deciphera Pharmaceuticals DCPH Sold Exelixis Inc EXEL Sold Cellectis S.A. CLLS Sold Pendrell Corp. PCO Sold Stemline Therapeutics STML Sold

Next: Icahn Capital

Q4 2017 www.hedgefundwisdom.com 66 Carl Icahn Icahn Capital Activist investor / “corporate raider”

Known for taking large stakes in companies and pushing for change

Key Takeaways

New Positions: company with 38.77 million shares. Of that stake, SandRidge Energy (SD) 15.3 million shares are attributable to Deason. In a 13D filed with the SEC, Icahn shows his latest Sold Out: portfolio activity in the stock was actually selling None some shares in late January and the first week of February between $32.50 and $35.05 per share. Icahn recently submitted an open letter to Xerox shareholders, dated February 12th: “Last week, Xerox and Fuji announced a scheme to transfer majority ownership and control of Xerox to Fuji in a transaction that dramatically undervalues Carl Icahn has made four notable portfolio Xerox and disproportionately favors Fuji.” You can changes recently. First, he started a brand new $101 read the full letter here. million position in SandRidge Energy (SD) in the The Fuji takeover would require Fuji to sell fourth quarter. This is an activist investment for its 75% stake in the Fuji Xerox joint venture back to Icahn, and in January he sent a letter to the board Xerox. Then Fuji would use the proceeds to acquire commending them for the choice to terminate the 50.1% of Xerox. Icahn and Deason have blasted Bonanza Creek Energy merger agreement. Fuji’s $2.5 billion special dividend to be paid to That said, Icahn still has issues with existing XRX shareholders as “financed with our management and the board. His letter outlined three own assets.” steps he’d like to see taken: 1) two of the five board Third, Icahn trimmed his position in online members should resign and be replaced by directors payments firm PayPal (PYPL) by around 20%. He selected by shareholders, 2) any major new still owns $588 million worth of shares, but this is a transactions the company makes should be approved smaller position relative to the rest of his portfolio. by a super-majority vote by the board, and 3) And fourth, in activity since the end of the Sandridge should terminate its ‘poison pill’ quarter, Icahn has been selling down his Freeport agreement now that the Bonanza merger is off. McMoran (FCX) stake. Per a 13D filed with the The company then rejected Icahn’s proposal SEC, Icahn now only owns 4.14% of FCX with just to replace two board members. And now as of over 60 million shares. This means he sold around February, SandRidge has ousted its CEO and CFO 17 million shares in recent months. The SEC filing after Icahn’s agitation. The company also said it notes he was selling between $17.60 and $18.25 per would reduce its capital spending by 23% compared share. to last year. And then smaller firm Midstates Petroleum offered to buy SandRidge in an all-stock deal. This is still a fluid situation. Second, Icahn has been active in Xerox (XRX), where he has teamed up with Darwin Deason and affiliates as a joint filer. Their View Icahn Capital’s Updated cumulative ownership represents 15.2% of the Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 67 Icahn Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Icahn Enterprises LP IEP 36.93% Added 3% $8,368,624,000 157,898,582 2 CVR Energy Inc CVI 11.70% Unchanged $2,651,440,000 71,198,718 3 AIG AIG 11.30% Unchanged $2,560,666,000 42,978,619 4 Cheniere Energy Inc LNG 7.76% Unchanged $1,759,518,000 32,680,490 5 Herbalife Ltd HLF 6.84% Unchanged $1,548,914,000 22,872,324 6 Freeport-McMoRan FCX 6.46% Unchanged $1,462,867,000 77,155,435 7 Xerox Corp. XRX 3.18% Unchanged $721,681,000 24,757,502 8 Navistar International NAV 3.17% Unchanged $717,381,000 16,729,960 9 Hertz Global HTZ 2.85% Unchanged $646,731,000 29,263,869 10 PayPal Holdings Inc PYPL 2.60% Cut -20% $588,960,000 8,000,000 11 AmericanRailcarIndustries ARII 2.18% Unchanged $494,320,000 11,871,268 12 Conduent Inc CNDT 1.41% Unchanged $320,065,000 19,806,000 13 Herc Holdings HRI 1.24% Unchanged $281,419,000 4,494,789 14 Welbilt, Inc. WBT 1.05% Cut -5% $237,044,000 10,082,660 15 Manitowoc Co. Inc. MTW 0.46% Cut 0% $104,080,000 2,645,657 16 SandRidge Energy Inc SD 0.45% New $101,533,000 4,818,832 17 CVR Refining L.P. CVRR 0.42% Unchanged $95,163,000 5,750,000

Next: Brave Warrior Advisors

Q4 2017 www.hedgefundwisdom.com 68 Glenn Greenberg Brave Warrior Advisors Runs a concentrated portfolio focused on free cash flow generation and growth

Was previously the co-founder of Chieftain Capital from 1984-2009 before founding Brave Warrior Key Takeaways

New Positions: print money, the company is also always looking for Alphabet (GOOGL) the next big thing. Their ‘Other Bets’ segment Express Scripts (ESRX) includes divisions like Waymo, their autonomous car project. This segment has been in the media the Sold Out: most and it’s been reported that the company will Axalta Coating Systems (AXTA) eventually be launching a ride-hailing service that would compete directly with the likes of Uber. Some investors have derided the company’s ‘wasteful’ spending on bets that aren’t core to their main business. Other investors point to Alphabet’s focus on innovation and finding the next big thing should the day come where their search platform isn’t printing money like it is now. Glenn Greenberg’s Brave Warrior Advisors During the quarter, Brave Warrior also flip- started a sizable new stake in Alphabet (GOOGL) flopped its top two holdings. They sold 11% of their during the fourth quarter. As has been highlighted Charles Schwab (SCHW) stake, previously their top throughout the issue, Google’s parent company was holding. And at the same time, they boosted their a popular tech buy among hedge funds. Greenberg exposure to Alliance Data Systems (ADS) by 19%, acquired $254 million worth of shares and it’s now making it their new largest position. his fourth largest position. Two other notable portfolio movements Bulls have viewed GOOGL shares as cheap worth highlighting are the fact that Greenberg sold recently and point out that the company is still half of his position in IQVIA (IQV), the new brand growing much faster than some companies that trade name of the entity that was created when IMS at similar valuations. Some investors have labeled Health and Quintiles merged. Also, Brave Warrior the core Google search business as the ‘best business liquidated its stake in Axalta Coating Systems on earth.’ (AXTA) during the fourth quarter after holding it for The company has also built out a dominant almost two years. position in email via Gmail and mapping via Google Maps. It’s also continued to build upon its very successful acquisition of YouTube (it’s been reported that younger generations are spending more time on YouTube than they are watching traditional linear TV). Google’s Android operating system gives them a strong presence in mobile. And their burgeoning cloud computing unit, Google Cloud Platform, has also made inroads. And of course CEO Sundar Picchai has been very focused on AI and machine learning at the company as he looks to the future. View Brave Warrior’s Updated And while their search business continues to Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 69 Brave Warrior Advisors Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 Alliance Data Systems ADS 17.90% Added 19% $419,946,000 1,656,724 2 Charles Schwab Corp SCHW 13.84% Cut -12% $324,665,000 6,320,124 3 HCA Holdings, Inc. HCA 10.88% Cut 0% $255,243,000 2,905,777 4 Alphabet GOOGL 10.84% New $254,195,000 241,309 5 Liberty Global Inc. LBTYK 10.08% Added 0% $236,520,000 6,989,361 6 Antero Resources Corp. AR 8.95% Cut -1% $209,844,000 11,044,402 7 JPMorgan Chase & Co. JPM 8.26% Cut -10% $193,684,000 1,811,149 8 Brookfield Asset Mgmt BAM 7.13% Cut -1% $167,311,000 3,842,693 9 Primerica, Inc. PRI 6.05% Cut -6% $141,923,000 1,397,564 10 Sensata Technologies ST 3.57% Cut -1% $83,843,000 1,640,438 11 IQVIA Holdings, Inc. IQV 2.02% Cut -49% $47,273,000 482,866 12 Liberty Global Inc, Class A LBTYA 0.39% Cut 0% $9,166,000 255,747 13 Comcast CMCSA 0.05% Unchanged $1,289,000 32,194 14 Express Scripts Inc. ESRX 0.02% New $528,000 7,080 15 Bank of America Corp. BAC 0.02% Unchanged $429,000 14,532 Axalta Coating Systems AXTA Sold

Next: Pennant Capital

Q4 2017 www.hedgefundwisdom.com 70 Alan Fournier Pennant Capital Pursues a long/short equity strategy

Before founding Pennant in 2001, he was responsible for the global equity portfolio for David Tepper’s Appaloosa Management Key Takeaways

New Positions: (FLT), TransDigm Group (TDG), NRG Energy Comcast (CMCSA) (NRG), Athene (ATH), Acadia Healthcare (ACHC), st 21 Century Fox (FOXA) and Dycom (DY). While all of these are top 11 Caesars Entertainment (CZR) holdings, the sheer amount of reductions is Caesars Entertainment Notes noteworthy. Bank of America (BAC) In terms of new buys, Pennant Capital FGL Holdings (FG) jumped into shares of Comcast (CMCSA), 21st Century Fox (FOXA), and Caesars Entertainment Sold Out: (CZR). Comcast sold off in the quarter, prompting Constellation Brands (STZ) Calls a few managers to acquire shares at a fair valuation. QQQ (QQQ) Puts Fox has basically become an arbitrage play as the Michaels (MIK) company is selling assets to Walt Disney. And Home Depot (HD) Calls Caesars has become a turnaround story, as the Spirit Airlines (SAVE) Puts company emerged from bankruptcy a restructured Dycom (DY) Calls entity and Las Vegas has been recovering. Forest City Enterprises (FCE.A) One pre-existing position that Pennant Capital was also out buying was CDK Global Hostess Brands (TWNK) (CDK). They boosted their exposure by 48% during the quarter. The company specializes in automotive and retail software solutions. CDK has been part of the rumor mill lately as a report indicated private equity firms Carlyle Group and Silver Lake have been looking to buyout the company. Yet, shares Alan Fournier’s firm seemed to reduce recently sold off on reports that firms ‘paused work’ long exposure in the fourth quarter. Their reported on the buyout. 13F assets fell from $1.62 billion down to $1.1 billion most recently. 13F filings don’t reveal cash positions, international holdings, or short sales, so it’s hard to say how this has impacted Pennant Capital’s net exposure. That said, a lot of the reduced exposure comes in the forms of options positions they exited. Given that 13F’s use the notional value of these options rather than the capital used to purchase them, that explains a portion of the drop. But at the same time as you’ll see on the next page, Pennant was definitely out reducing many of their top holdings. Some of the stocks that Pennant cut by 20%- View Pennant Capital’s Updated 40% include the likes of FleetCor Technologies Portfolio on the Next Page

Q4 2017 www.hedgefundwisdom.com 71 Pennant Capital Fourth Quarter 2017 Portfolio:

% of Rank Company Name Ticker Put/Call Portfolio Activity Value # of Shares 1 FleetCor Technologies, Inc. FLT 6.04% Cut -34% $66,666,000 346,443 2 Transdigm Group Inc TDG 5.90% Cut -21% $65,078,000 236,973 3 NRG Energy Inc NRG 5.58% Cut -35% $61,585,000 2,162,397 4 Cognizant Tech Solutions CTSH 5.14% Cut -6% $56,780,000 799,497 5 Ultra Petroleum Corp UPL 4.79% Cut -4% $52,876,000 5,836,226 6 Athene Holding Ltd Class A ATH 4.16% Cut -24% $45,933,000 888,278 7 NXStage Medical Inc NXTM 3.86% Added 8% $42,556,000 1,756,354 8 Acadia Healthcare ACHC 3.79% Cut -20% $41,881,000 1,283,514 9 Dycom Industries DY 3.77% Cut -32% $41,612,000 373,438 10 Anthem Inc ANTM 3.74% Cut -5% $41,262,000 183,379 11 Huntsman Corp HUN 3.73% Cut -44% $41,134,000 1,235,635 12 Allegheny Technologies Inc ATI 3.71% Cut -37% $40,936,000 1,695,792 13 PTC Inc. PTC 3.63% Added 58% $40,022,000 658,587 14 Cdk Global Inc CDK 3.58% Added 48% $39,496,000 554,103 15 Zayo Group Holdings ZAYO 3.56% Added 7% $39,319,000 1,068,438 16 Conduent Inc CNDT 3.38% Cut -35% $37,278,000 2,306,823 17 Comcast CMCSA 3.31% New $36,588,000 913,562 18 Antero Resources Corp. AR 3.11% Cut -41% $34,354,000 1,808,082 19 21st Century Fox, Class A FOXA 2.71% New $29,927,000 866,686 20 CIGNA Corp. CI 2.45% Cut -39% $27,049,000 133,187 21 Caesars Entertainment CZR 2.45% New $27,022,000 2,136,087 22 Antero Midstream AMGP 2.35% Cut -26% $25,885,000 1,312,610 23 Caesars Ent Notes CZR 2.31% New $25,519,000 13,158,171 24 E*Trade Financial Corp. ETFC 2.02% Cut -46% $22,313,000 450,124 25 Cision Ltd CISN 1.96% Cut -1% $21,586,000 1,818,574 26 Bank of America Corp. BAC 1.89% New $20,862,000 706,721 27 Extraction Oil & Gas Inc XOG 1.88% Cut -29% $20,790,000 1,452,841 28 Ultra Petroleum Corp UPL CALL 1.64% Unchanged $18,120,000 2,000,000 29 Terex TEX PUT 0.96% Unchanged $10,608,000 220,000 30 Universal Stainless & Alloy USAP 0.77% Cut -13% $8,484,000 396,084 31 FGL Holdings FG 0.71% New $7,881,000 782,660 32 Micro Focus Intl Plc MFGP 0.64% Cut -63% $7,048,000 209,836 33 Team Health Holdings Inc TMH 0.49% Unchanged $5,370,000 1,158,131 Ciena Corp CIEN Sold Home Depot HD Sold MICHAELS COMPNS MIK Sold QQQ Trust QQQ PUT Sold NXP Semiconductors NV NXPI CALL Sold Spirit Airlines, Inc. SAVE PUT Sold Apache Corp. APA Sold Dycom Industries DY CALL Sold Hostess Brands, Inc. TWNK Sold Goodyear Tire and Rubber GT Sold Constellation Brands, Inc. STZ CALL Sold Forest City Enterprises FCE.A Sold Fly Leasing Ltd FLY Sold NXP Semiconductors NV NXPI Sold Home Depot HD CALL Sold Knowles Corp. KN Sold AK Steel Holding Corp. AKS Sold Equifax Inc. EFX PUT Sold

Q4 2017 www.hedgefundwisdom.com 72 Investment Thesis Summaries

Overview

These summaries examine what a hedge fund’s potential investment thesis could be. This section focuses on stocks that saw notable hedge fund activity during the quarter.

When presenting an investment idea to a fund manager, an analyst outlines numerous aspects of a thesis. This section aims to briefly summarize the following bullet points:

- Company background - The business model & current situation - The bull case versus the bear case - Market valuation - Potential catalysts - Hedge fund activity in the stock

Featured In This Issue

- Brighthouse Financial (BHF): BHF is a pure-play US retail annuities business that was spun off in mid-2017 from MetLife (MET) because the risk of higher SIFI capital requirements would have made the capital- intensive annuities business un-competitive. BHF is well-capitalized to weather a low interest rate environment while higher rates and equities will accelerate management’s plan to return capital to shareholders and act as a catalyst. At the current valuation of ~0.5x P/BV the downside seems limited, whereas the stock could have a potential 60% upside to 0.8x P/BV justified by its 8% ROE guidance and comps’ valuation in that range.

- Ensco (ESV): In the second quarter of 2010, David Einhorn took advantage of a market selloff in ESV’s shares in reaction to the BP oil spill and 6-month moratorium in deepwater drilling in the Gulf of Mexico. Back then, ESV was viewed by bulls as a conservative way to play an economic recovery: the stock was trading at book value, which was artificially depressed since some of its assets had been fully depreciated but were still generating revenue and getting sold for gains. On the other hand, there were no catalysts, so it was a good vehicle only for investors betting on higher oil prices. ESV stock traded up 50% in the next 9 months and then continued to trade in a range of $40-60 until 2014. Since then, ESV started a steady decline and has now lost about 90% of its value, trading under $5.

Next: Brighthouse Financial (BHF)

Q4 2017 www.hedgefundwisdom.com 73 Investment Thesis Summary Brighthouse Financial (BHF)

Hedge Fund Activity

In the fourth quarter, BHF traded in the range of $53-63, reached $67.50 in late January 2018 and is currently at $56.80, after dipping briefly down to the same low-point as in Q4. David Einhorn’s Greenlight increased its position substantially to 9% ownership, which is 12% of its portfolio, up from 6.6% in Q3. BHF is Greenlight’s second largest US equity position worth approximately $650 million.

Greenlight bought at an average price of $57.92 so investors have an opportunity to accumulate at a price below Greenlight’s cost in Q4.

Greenlight called BHF a traditional “underperforming and unloved” spinoff, as the company recently separated from Metlife (MET). It’s over-capitalized and trades at approximately half of book value and 6-7x forward earnings, a >40% discount to peers. One of the key reasons for this seems to be management’s conservative approach to capital (they want to continue building capital and don’t expect returning capital to shareholders until 2020).

There were no other major buyers or sellers in Q4, but a number of funds started new positions in the stock: RR Partners, Sanoor Capital, Pekin Singer Strauss, Scoggin Management, and Carlson Capital, among others.

Company Background

Charlotte, NC-based BHF is comprised of MET’s US retail annuities & life insurance business units, which were spun off in August 2017. These divisions accounted for 20% of MET’s operating earnings (in 2015). At the time of the spinoff, BHF had $219 billion in assets and 2.8 million policies. 60% of its assets were variable annuities, 15% fixed and index-linked annuities, 5% life insurance (term, whole, universal life), and 20% in a run-off portfolio (products not actively sold; including structured settlements, universal life policies with secondary guarantees, etc.).

Business Overview

Q4 2017 www.hedgefundwisdom.com 74 Investment Thesis Summary Brighthouse Financial (BHF)

Business Overview

One of BHF’s key products is the Shield annuity, the answer to “can you get downside protection AND growth?” BHF has been focusing on selling more of its Shield index-linked product to diversify away from variable annuities. And here’s why... Variable vs Index-Linked Annuities When an annuitant purchases a variable annuity, the insurance company sets up a sub-account with the annuitant’s premiums and invests these premiums based on the annuitant’s wishes into a selection of available funds (the increasingly limited pool of funds, which have been underperforming markets, has drawn criticism).

Since annuitants don’t want market volatility to expose them to losses upon retirement, variable annuities often come with guaranteed minimum interest rates. And annuitants are “incentivized” to seek the highest return (risk) investments available.

Let’s say you invest $100,000 and after 10 years it’s worth $150,000 but has a 6% minimum interest guarantee. You can opt for the annuitized amount (approx $180,000), and the higher value would be the loss to the insurance company. This makes variable annuities with guarantees a very risky (= capital intensive) product.

In the case of an index-linked annuity, the insurer decides how to invest your premiums and your return is based on a reference stock market index (BHF offers an option among the S&P500, Russell 2000 and MSCI EAFE). Here, too, you get downside protection but it comes at the expense of your upside.

If you want 10% downside protection, you may be capping your gains at 8.5% (per example on BHF’s website). How does it work? If the index drops 15%, the first 10% of loss is absorbed by the insurer so you only lose 5%. But if the index gains 30% you only get 8.5% upside in your account.

This is still a capital-intensive product but can be more beneficial to insurers because:

• The insurer decides how to invest your money, and • Your upside is capped (whereas in a variable annuity you participate in all of the upside).

So, in variable annuities, the annuitant’s funds go into actually investing in stocks and bonds, whereas in linked-index annuities the insurer uses their discretion to replicate the index returns, often utilizing options.

The tradeoff of the uncapped upside potential is what makes the big difference for insurers. Instead of putting their into more volatile assets, they can manage them more conservatively, especially since they’re not on the hook to pay out high returns in case a volatile index delivers them. This reduced volatility in the insurers’ income enables them to often provide a better downside guarantee, making index- linked products very popular in recent years.

Spin-Off

Q4 2017 www.hedgefundwisdom.com 75 Investment Thesis Summary Brighthouse Financial (BHF)

Spin- Off

BHF’s spinoff from MET was announced in January 2016 and completed on August 4, 2017 when more than 80% of the shares were distributed to MET investors (MET retained 19.2% and will sell the stake entirely within 5 years). The stock started trading on August 7th with the first sale at $61.45. The first couple of days of trading, the stock was down 4.5% (from the Friday close on a “when issued” basis, which means that the shares started trading conditionally upon the offering completion) and then another 8%, settling at a market value of around $7 billion.

BHF is largely driven by variable annuities, which is a fundamentally too volatile and risky product. It was the source of very large losses at insurers during the financial crisis, and it has very high capital requirements.

The reason for the spinoff was that BHF is highly capital markets sensitive, had been a source of high profit variability for MET, and also correlated MET’s stock too much to bond prices. MET wanted to focus on more diversified, less capital intensive, and higher-growth businesses with long term strategic value to the enterprise (many insurers have been cordoning off or outright selling their annuities businesses). Since MET was deemed by regulators as a systemically important financial institution (SIFI), there were concerns around the impact of higher capital requirements on the competitiveness of this capital-intensive business. The Financial Stability Oversight Council (FSOC) of the Treasury Department designated MET a SIFI in 2014. MET appealed the decision in 2016. And in January 2018, an appeals court dismissed MET’s “too big to fail” tag so MET is no longer a SIFI.

Recent News

Q4 2017 www.hedgefundwisdom.com 76 Investment Thesis Summary Brighthouse Financial (BHF)

Recent News

February 12, 2018 : A week ago, BHF reported Q4 normalized EPS of 37 cents versus analyst expectations of $2.11 (earnings adjusted for some unfavorable items were $45 million + $152 million = $197 million or $1.65 per share). The next day, shares dropped more than 8% from $58.25 to $53.50. Book value excluding accumulated other comprehensive income (AOCI, which primarily reflects unrealized gains or losses on securities held that are available for sale) and accounting for an upcoming FASB reclassification was $107 at the end of 2017. Management continues to expect an average 8% return on equity (ROE) over time.

December 8, 2017 : Voya (VOYA) was reportedly in talks with Apollo to sell its retirement annuities business, a product that’s turned out to be too favorable to consumers. MET effectively accomplished the same thing by spinning off BHF.

December 4, 2017 : The Hartford Financial Services Group (HIG) sold its low-ROE, runoff variable annuities business to Talcott Resolution.

November 1, 2017 : Q3 results were $2.45 adjusted EPS, and BHF ended with $104 in book value.

August 8, 2017 : On its 2nd day of trading, BHF fell another 8%. That day, Barclays initiated BHF with a price target of $72.

October 5, 2016 : MET (up 2%) announced the spinoff of BHF, which would be a top-15 life insurer in the US, while continuing to examining a sale or initial public offering (IPO) for the business.

Bulls vs. Bears

Q4 2017 www.hedgefundwisdom.com 77 Investment Thesis Summary Brighthouse Financial (BHF)

Bull Thesis

The opportunity is two-prong: a) BHF should perform well in an environment where US interest rates rise (already underway); and b) due to management’s conservative view on capital, bulls argue that investors have penalized the stock too much so it trades at a discount to peers. If interest rates continue to rise, the Company should be able to return capital to investors sooner, and the low price/book ratio will get rationalized faster. BHF will be returning capital at 1x book, and its remaining book will be generating substantially higher ROE so it will be valued at a premium from current levels. At the current valuation of ~0.5x P/BV the downside seems limited, whereas the stock could have a potential 60% upside to 0.8x P/BV justified by its 8% ROE guidance and comps’ valuation in that range.

Bear Thesis Bearish investors point to 3 main issues: a) inferior ROE/profitability now that BHF is functioning as a , b) high capital intensity means that BHF will be a highly volatile / high- stock, and c) that BHF needs to establish essentially a new brand through third party distribution channels.

Summary

BHF is facing a few headwinds in winding down its substantial runoff portfolio and costly TSA transition service arrangements with MET while refocusing its annuities and life insurance businesses so they’re more capital-conservative and more competitive in a tough market. However, if the markets continue to cooperate, it can quickly start returning capital to shareholders, which would unlock the value from its depressed P/BV of 0.5x.

Next: Ensco (ESV) 78 Q4 2017 www.hedgefundwisdom.com

Investment Thesis Summary Ensco (ESV)

Hedge Fund Activity

In the fourth quarter of 2017, Greenlight Capital started a new 1% portfolio position in ESV at an average cost of $5.72, noting that after oil prices collapsed in 2014 offshore drilling budgets were cut and the industry has already scrapped a lot of rigs. The result is much lower capacity, which Greenlight thinks won’t be enough to satisfy increasing demand.

Other asset managers that bought ESV include: Majedie Asset Management bought an incremental 11.6 million shares and brought its exposure to 9% of its portfolio, a position worth over $100 million; and Van den Berg Management increased its 2% portfolio position to 5%, worth almost $50 million. On the other side, Luminus and TVR sold meaningful stakes.

Company Background

London, UK-based ESV is a contract offshore oil drilling company with a fleet of shallow-water jack-up rigs and newer deepwater rigs. Oil companies like Total, BP, Petrobras and ConocoPhilips contract drillers like ESV to dig up oil from wells in the sea. These oil companies accounted for 25%, 15%, 11%, and 3% of ESV’s business, respectively.

Contract drillers have relatively fixed operating costs and contract out their drills and crews at day-rates that fluctuate with oil prices (the rental contracts are often for 1, 2, or 3 years with extension options).

The goal is to contract out your fleet as far as possible when oil rates are high and with high-quality clients, but also to keep upgrading your fleet to stay differentiated. Shallow-water drilling is performed with jack-up rigs, which are less expensive, have a shorter manufacturing cost & timeframe, and are more commoditized. Early in the decade, ESV invested heavily in deepwater rigs, which are less commoditized and thus have considerably higher operating margins. However, the bet didn’t pay off for investors as deepwater drilling is marred by significant overcapacity, and recent re-rentals have been at 75% lower dayrates than prior contracts.

ESV currently has 62 rigs (and 3 under construction) consisting of 12 drillships, 11 dynamically positioned semi-submersible rigs (that means that the submersible parts use motors and telemetry to keep the rig stable), four moored semi-submersible rigs (these use multiple anchors to stay stable), and 38 jackup rigs (shallow- water drilling because of extension legs that need to reach the seafloor). Drillships can typically carry more equipment, whereas semi-submersibles are considered the most stable and are chosen for areas with rougher waters.

In declining order, the biggest geographic regions of ESV’s business were: Angola (predominantly Floaters), Egypt (Floaters), Brazil (Floaters), UK (Jackups), Australia (Floaters), US Gulf of Mexico (mixed Floaters and Jackups).

High Operating Leverage

Q4 2017 www.hedgefundwisdom.com 79 Investment Thesis Summary Ensco (ESV)

High Operating Leverage The combination of relatively quick-to-adjust day -rates and relatively fixed operating costs yields high operating leverage. Just as an example, comparing the results of Q3 2017 to Q3 2016, revenue was down 16% but opex was down only 2%. Operating income (after depreciation) was down almost 70% from $115 million to $36 million (compared to interest expense of $48 million ).

ESV has approximately $100 million of depreciation every quarter embedded in its operating income, so on a cashflow/EBITDA basis it’s covering interest payments. Operating leverage was even more pronounced over the 9-month period. Revenue was down 40% but opex declined only 10%, so operating income dropped by 85% and fell short of interest payments again by 25%, resulting in losses. The revenue decline was the result of lower day-rates, fewer contracted days, and early contract terminations. Opex was managed by selling jackups or cold stacking them (semi-retiring them).

Shallow vs. Deepwater Drilling

The Company reports results under Floaters (drillships and semisubmersibles - deepwater drilling) and Jackups (shallow-water rigs with “legs” that go down to the seafloor and support the rig, which isn’t feasible for deep-sea drilling). The average day-rate and utilization for a Floater rig was approximately $340,000 and 45%, whereas for Jackups it was $90,000 and 63%.

Due to the higher costs of deep-sea drilling, the Floaters segment is more cyclical and sensitive to oil prices. Jackups have a much tighter day-rate and utilization band.

Floaters account for 2⁄3 of ESV’s revenue. Year-over-year for the 9-month period, revenue was down 43% but opex was also down considerably (by 28%). Operating income excluding depreciation was down 55% and the margin was down from 60% to slightly below 50%.

In comparison, Jackups exhibited much higher operating leverage because of the lower margin. Revenue was down a little over 30% but opex was down only 15%. As a result, the 48% margin was halved to 24%.

Market Conditions

Q4 2017 www.hedgefundwisdom.com 80 Investment Thesis Summary Ensco (ESV)

Market Conditions Even though oil prices bottomed in 2016 and seem to have stabilized, contract rates are still pressured because there’s an oversupply of rigs in the market. Therefore, higher oil prices don’t translate into higher contract rates. As contracts roll off and rig contractors have no pricing power, rates keep going down. Impacting the Floater segment, there are 45 drillships and semi-subs under construction with 25 of them to be delivered by the end of 2018. These are uncontracted drillships, coming in a market with very soft pricing, especially for Floaters because oil companies are postpon ing the larger projects. There are currently 95 jackups under construction with 70 of them to be delivered by the end of 2018, though most likely many of them will get delayed since there aren’t opportunities to contract them out. Since the beginning of the downturn, 30 rigs have been retired, 100 rigs that are older than 30 years are idle, and 60 rigs older than 30 years have contracts expiring in 2018. These rigs may be cost-prohibitive to re-certify and thus may be unable to get re-contracted so could get scrapped or cold-stacked. Liquidity and M&A Activity

Cash and short term investments of $1.8 billio n give ESV some room to weather the current environment but its liquid assets are dwindling, down from $2.6 billion at the end of 2016, and it has $4.7 billion of long-term debt. Still, it has an undrawn $2 billio n credit facility with a restriction that debt can only go up to 60% of total capitalization. As of Q3 2017, it was at 34% pro forma for the Atwood merger/acquisition. Atwood Merger On May 29, 2017 ESV agreed to acquire Atwood Oceanics (ATW). The deal was completed on October 6th by which time ESV’s stock had fallen by about 1⁄3 while other drillers had dropped too, but only by about 5-10%. ESV paid Atwood’s shareholders 1.6 shares of ESV per Atwood share, which was equivalent to $9.33 per share, or $782 million in total market value. The deal added six floating rigs and five jackups, making ESV the largest offshore driller by number of rigs operated.

Due to the depressed market valuations of offshore drillers, the transaction resulted in a ‘bargain purchase gain’, which means that the fair value of the assets, less liabilities assumed, was less than the total consideration of the deal (by $168 million). The gain will be recorded in Q4 2017 results.

Atwood Merger (continued)

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Investment Thesis Summary Ensco (ESV)

Atwood Merger (continued) According to analysts, Atwood needed to make a deal due to its heavy debt load (some analysts expected it could run out of liquidity to pay for new-builds in mid-2018). But ESV was deemed one of the most defensible drillers and didn’t have to make an acquisition, so the move was interpreted as ESV’s management seeing it’s the right time before the cycle turns.

Others - especially ESV’s bond holders - criticized management that the deal came too early and the down-part of the cycle is far from over. Even though analysts have been looking for M&A in the space since 2015 as a sign that the industry was bottoming, ESV’s shares were off 5% the next day. Why would deals signal a potential near-bottom? The management teams of the buyers may be seeing optimistic signs in the market (an inflection point in E&P companies’ optimism?), so they’re buying weaker competitors that can help position them better to capitalize on the eventual recovery. The deal kicked off some more M&A in the space. In the following months, Transocean (RIG) agreed to acquire Songa Offshore (harsh-weather rig owner) in mid -August for $3.4 billion (a 37% premium and 8.5x EBITDA) and fell 9% the next couple of days, and Rowan (RDC) was said to be interested in acquiring Maersk's drilling business.

Recent News

December 21, 2017 : Transocean (RIG) got a 33-month contract starting in 2 years for a floater at a higher day- rate than recent deals, sending RIG’s and ESV’s stocks up about 5%. It’s a positive development, but it left analysts split about whether it meant that market dynamics are actually improving or if it was more consistent with a longer-term recovery (after 2019). December 1, 2017 : OPEC and Russia agreed to continue oil production cuts into late 2018, sending oil up more than 2% and drillers up 7-8%. October 26, 2017 : ESV was down 1% after reporting Q 3 EPS of 5 cents loss. Revenue was down 15% year- over-year as a result of lower utilization and day-rates (down from a blended average of $184,000 to $166,000).

October 18, 2017 : ESV and RIG were both down almost 4% after RIG announced that it had contracted its ultra deepwater drillship with BHP for 2 years at a 75% lower dayrate (from $592,000 to $145,000), with some analysts claiming it’s a breakeven rate and a great deal for BP. September 25, 2017 : UBS upgraded the drillers with an expectation that utilization rates will start picking up in 2018, sending stocks up 5-11%.

Bulls vs. Bears

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Investment Thesis Summary Ensco (ESV)

Bull Thesis

The more optimistic investors are pointing at some new contracts as an indication the market is starting to turn. Regardless though, ESV seems to have adequate liquidity to continue weathering the storm. Also, in Q4 it closed on the acquisition of a major driller for a bargain price.

As the economy continues to improve, oil prices should theoretically continue heading higher and ESV would be a major beneficiary. And since utilization is tied to E&P companies’ capex plans (which are projected to bottom out in 2018) shares of drillers could see an inflection point this year.

Bear Thesis

2010-2012 saw the biggest fleet additions over the past 30 years with 195 rigs added. The collapse in oil prices only a couple of years later sent capacity utilization all the way down from 90% to less than 60%, a level last seen in the mid-1980s. The huge overcapacity in supply is taking a long time to correct with most investors and analysts expecting a recovery in 2019-2020. Even though many rigs have been retired and oil prices seem to have stabilized, the market is still in oversupply with lots of deliveries of uncontracted rigs scheduled for 2018, as well as many rigs waiting on the sidelines. Therefore, it will take some time and materially higher oil prices for the offshore drillers to start making more money. In the short term, it’s more likely that their revenue will keep falling as contracts roll off and given the oversupply pressure. Drillers have high operating leverage and very high beta, so continued losses are likely to continue pressuring the stocks. Summary Everyone is expecting an eventual recovery in market dynamics for drillers, but the question is when? M&A during 2017 indicates that the buyers’ management teams are getting more optimistic and want to position themselves for the recovery, but recent contracts haven’t confirmed that. ESV’s management concedes that the oversupply headwinds will drive backlog, revenues, and profits lower in the near term, so there doesn’t really seem to be any good reason to jump in early. On the other hand, based on ESV’s high operating leverage and beta, the stock is likely to move fast once it happens. Is Greenlight using a small position size to wait and see how market dynamics play out, or to limit risk? Greenlight’s Q4 letter outlines their thesis: “ESV is a leading operator of offshore rigs. After oil collapsed in 2014, offshore exploration and development budgets were severely cut and the industry responded by scrapping rigs, cutting costs, and engaging in M&A. At the same time, drilling costs have fallen, cash flows at customers have risen, and structurally, we think that shale oil supply growth will be unable to meet global demand, leaving offshore drilling to fill that gap. ESV trades at 4x EBITDA and 2.5x free cash flow on our mid-cycle estimates.”

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