A $4.1 Billion Fund is Buying These Stocks

Passport Capital’s John Burbank is famous for having predicted the subprime crisis. Passport’s flagship fund returned 219% in 2007. Burbank bet against the US housing market at the end of 2005. He was very skeptical about US equities so he also invested in emerging markets and commodities. These bets backfired in 2008. In a matter of few months, his funds lost more than 50%. Passport I, L.P. gained 23% in 2005, 14% in 2006, 220% in 2007, and then lost 51% in 2008. Burbank trailed the S&P 500 (NYSE:SPY) index in 2009, returning only 19%. In 2010, Passport Capital returned 18.3%, beating the SPY.

Burbank maintains a long bias in his portfolios as one can guess from his returns. Instead of investing in highly liquid and well-researched developed markets, he prefers investing in under-researched companies in fast growing developing markets. This helped Burbank achieve 23% annual returns since 2000.  This is how Passport describes its investment focus:

“Passport Capital LLC is a San Francisco based, global investment firm founded by John H. Burbank III in 2000. The firm manages approximately $4.1 billion in assets.  Passport’s investment process uses a combination of macroeconomic analyses to develop major themes and rigorous fundamental research on individual companies to create global portfolios.  The firm’s investment team focuses on the following areas: Agriculture, Basic Materials, Consumer, Energy, Financial Services, Healthcare, India & Capital Markets, Internet / Technology, and Middle East & North Africa.”

During the fourth quarter Burbank started using put options on several SPDR sector ETFs, including Materials, Retail, and Industrials. He also shorted MSCI Emerging Market ETF (NYSE:EEM), Powershares’ QQQQ, Russell 2000 ETF (NYSE:IWM), and SPY using put options. It’s clear Burbank uses put options on the broad market indices and sector ETFs to hedge his positions.

Insider Monkey, your source for free insider trading data, will compare Burbank’s 13F portfolio returns to his actual returns.

Burbank’s biggest new stock purchase is a $81 Million Apple (NASDAQ:AAPL) position initiated by using call options. With this purchase, he joins Lee Ainslie, David Einhorn, George Soros,  Jim Simons, Dan Loeb, Andreas Halvorsen, Joseph DiMenna, Chase Coleman, Stephen Mandel, Barry Rosenstein, and Craig Effron. John Burbank also initiated a $61 Million Cisco (NASDAQ:CSCO) position using stocks and call options. David Tepper’s Appaloosa and Leon Cooperman’s Omega Advisors are other hedge funds with Cisco positions.

Here are Burbank’s other large new or significantly increased positions:

Company Ticker Return Value (Million)
UNITED STATES STEEL CORP (NYSE:X) 8.5% 80
CYTEC INDUSTRIES INC (NYSE:CYT) 8.2% 73
APPLE COMPUTER INC (NASDAQ:AAPL) 12.6% 51
MONSANTO CO (NYSE:MON) 5.2% 45
WENDY’S/ARBY’S GROUP INC-A (NYSE:WEN) 8.2% 37
ATMEL CORP (NASDAQ:ATML) 27.5% 34
BARCLAYS BK PLC (NYSE:BCS) 29.2% 31
HANSEN NATURAL CORP (NASDAQ:HANS) 9.5% 30
BLACKROCK INC (NYSE:BLK) 7.7% 30
MASTERCARD INC-CLASS A (NYSE:MA) 13.6% 29
TRANSOCEAN LTD. (NYSE:RIG) 15.8% 28
ROCKWELL AUTOMATION INC (NYSE:ROK) 27.4% 27
POTASH CORP (NYSE:POT) 19.9% 25
ALCON INC (NYSE:ACL) 0.9% 22
VIACOM INC-CLASS B (NYSE:VIA) 13.1% 22
VULCAN MATERIALS CO (NYSE:VMC) 2.4% 22
CHEMTURA CORP (NYSE:CHMT) 9.6% 21
CISCO SYSTEMS INC (NASDAQ:CSCO) -8.2% 21
VODAFONE GROUP PLC-SP ADR (NASDAQ:VOD) 12.1% 20
SANDRIDGE ENERGY INC (NYSE:SD) 22.5% 20
WATSON PHARMACEUTICALS INC (NYSE:WPI) 9.3% 20
CLIFFS NATURAL RESOURCES INC C (NYSE:CLF) 19.2% 19
SUNCOR ENERGY INC (NYSE:SU) 15.1% 19
DENDREON CORP (NASDAQ:DNDN) -2.5% 19
ANHEUSER-BUSCH INBEV SPN ADR (NYSE:BUD) -3.7% 19
ALLERGAN INC (NYSE:AGN) 9.0% 19
RESEARCH IN MOTION (NASDAQ:RIMM) 17.6% 18

John Burbank’s new stock purchases performed spectacularly, returning 11.5% vs. SPY’s 6.4% since the end of December.

Thirteen of his top fourteen picks managed to beat the SPY, which is very impressive. He has a lot of underfollowed stocks in his portfolio. One popular stock in his portfolio is Potash. David Einhorn’s Greenlight, Thomas Steyer’s Farallon Capital, Jim Simons’ Renaissance, Dan Loeb’s Third Point, Andreas Halvorsen’s Viking Global, Richard Perry’s Perry Capital, and Mohnish Pabrai have large Potash investments.

We are also curious about the performance of John Burbank’s top 30 long positions. Here are his top stock holdings:

Company Ticker Return Value (Million)
UNITED STATES STEEL CORP (NYSE:X) 8.5% 80
CYTEC INDUSTRIES INC (NYSE:CYT) 8.2% 73
CISCO SYS INC (NASDAQ:CSCO) -8.2% 61
APPLE COMPUTER INC (NASDAQ:AAPL) 12.6% 51
SUNCOR ENERGY INC (NYSE:SU) 15.1% 50
CLIFFS NATURAL RESOURCES INC (NYSE:CLF) 19.2% 49
MONSANTO CO (NYSE:MON) 5.2% 45
WENDY’S/ARBY’S GROUP INC-A (NYSE:WEN) 8.2% 37
ATMEL CORP (NASDAQ:ATML) 27.5% 34
WALTER INDUSTRIES INC (NYSE:WLT) -0.8% 32
BARCLAYS BK PLC (NYSE:BCS) 29.2% 31
HANSEN NATURAL CORP (NASDAQ:HANS) 9.5% 30
BLACKROCK INC (NYSE:BLK) 7.7% 30
MASTERCARD INC-CLASS A (NYSE:MA) 13.6% 29
TRANSOCEAN LTD. (NYSE:RIG) 15.8% 28
ROCKWELL AUTOMATION INC (NYSE:ROK) 27.4% 27
CUMMINS INC         COM (NYSE:CMI) 1.1% 25
POTASH CORP (NYSE:POT) 19.9% 25
ALCON INC (NYSE:ACL) 0.9% 22
VIACOM INC-CLASS B (NYSE:VIA) 13.1% 22
VULCAN MATERIALS CO (NYSE:VMC) 2.4% 22
AK STEEL HOLDING (NYSE:AKS) 3.2% 21
CHEMTURA CORP (NYSE:CHMT) 9.6% 21
VODAFONE GROUP PLC-SP ADR (NASDAQ:VOD) 12.1% 20
SANDRIDGE ENERGY INC (NYSE:SD) 22.5% 20
WATSON PHARMACEUTICALS INC (NYSE:WPI) 9.3% 20
HSN INC (NASDAQ:HSNI) -2.2% 19
DENDREON CORP (NASDAQ:DNDN) -2.5% 19
ANHEUSER-BUSCH INBEV SPN ADR (NYSE:BUD) -3.7% 19
ALLERGAN INC (NYSE:AGN) 9.0% 19

Burbank’s top 30 stock holdings returned 9.8% so far in 2011, vs. SPY’s 6.4%. Fifteen of his top 20 holdings managed to beat the SPY. It seems Burbank’s focus on under-researched companies is paying off handsomely.

This is a guest post written by Insider Monkey.

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