Paul Tudor Jones II is the president and founder of Tudor Investment Corporation, and was featured in Jack D. Schwagers classic "Market Wizards". In his third quarter letter, he quoted net rate of returns of +14.88% Class A, +14.90% Class B, +7.83% Class D, +7.82% Class E.
He divides his investment strategies into the following categories: Discretionary Macro, Qualitative Macro, and Equity Strategies. Jones gave examples of three investment schemes (Exhibits pg 7-9):
| Exhibit A | Exhibit B | Exhibit C | |||
| Discretionary Macro | 75% | Global Opportunities | 53% | ||
| Quantitative Macro | 13% | Quantitative Macro | 15% | Quantitative Equity Systems | 48% |
| Discretionary Equity Long/Short | 6% | Commodities | 14% | Long/Short Asia/Emerging Mkts | 32% |
| Equantitative Equity Systems | 6% | Fixed Income | 8% | Long/Short Europe | 20% |
| Foreign Exchange | 6% | ||||
| Emerging Markets | 4% | ||||
| 100% | 100% | 100% |
3Q Letter: “Investor appetite for risk assets in the 3Q was evident in the strong performance of global equity markets and the tightening of corporate credit spreads, particularly for lower quality names. The market rally which began in mid-Mar. gained steam in the 3Q as the economy showed additional signs of ability and corporations, generally through cost cutting, reported earnings above lowered expectations…DJ was up 15% the quarter, U.S. dollar continued to weaken against most major currencies, while yield curves generally flattened and precious metals prices increased.”
Here is main investment perspective and outlook of Paul Tudor’s short The Great Liquidity Race. The title of his essay reveals how the “financial crisis has unleashed a wave of liquidity which is probably greater than that of 2001-2003.” Jones believes, “At present, it appears those assets are gold, emerging market equities denominated in local currencies, and commodity related stocks.” He thinks that 2010’s Q2 could be the strongest growth quarter, especially with the following trends: decline of the dollar, buildup of capital into the international reserves & emerging markets, reduction of inventory.
Paul Tudor Jone has top holdings in a few technology ETFs. Microsoft has introduced Windows 7 operating system to follow Windows XP. Windows 7 will be loaded on all new PCs of 2011. Many investors like Jones want to take advantage of this launch and invest in funds like SPDR, iShares, and Semiconductor Holders.
No. 1: HewlettPackard Company (HPQ, Financial), Weightings: 15.81%
Hewlett-Packard Company has a market cap of $124.36 billion; its shares were traded at around $52.45 with a P/E ratio of 13.7 and P/S ratio of 1.1. The dividend yield of Hewlett-Packard Company stocks is 0.6%. Hewlett-Packard Company had an annual average earning growth of 25.8% over the past 5 years.This week, HP has unveiled their tablet computer ahead of their rival, Apple. Apple is rumored to unveil its tablet gadget January 27, 2010. HP & Microsoft’s joint venture tablet will be available on the market by June. Last Wednesday, HP, Yahoo, and Power Assure won a $47 million energy grant from the Dept of Energy.
Paul Tudor Jones owns 1,384,000 shares of HewlettPackard stock as of September 2009.
No. 2: Semiconductor HOLDRs Trust Semiconductor (SMH, Financial), Weightings: 8.91%
Semiconductor Holdrs Trust Semiconductor has a market cap of $1.94 billion; its shares were traded at around $28.41. The dividend yield of Semiconductor Holdrs Trust Semiconductor stocks is 1.2%.This is a U.S. listed exchange-traded fund. SMH’s top three holdings are Intel Corp (22%), Texas Instruments (20%), and Applied Materials (13%). See all their Holdings. SMH is managed by Merrill Lynch, Pierce, Fenner & Smith HOLDRs.
Paul T. Jones owns 1,437,500 shares of Semiconductor Trust.
No. 3: ISHARES TR FTSE INDX (FXI, Financial), Weightings: 6.73%
Ishares Tr Ftse Indx has a market cap of $10.26 billion; its shares were traded at around $43.14. The dividend yield of FXI stocks is 1%.Another EFT held by Paul Jones. iShares top holdings are Microsoft Corp (11.90%), Apple Inc (9.27%), IBM (8.56%), Google Inc-Cl A (7.18%), and Cisco Systems Inc. (7.10%). Click here to see all Holdings. According to its homepage, 54% of its holdings are in hardware & equipment, and 44% in software & computer services.
Paul T. Jones owns 680,000 shares of FXI as of September 2009.
No. 4: Select Sector SPDRHealth Care (XLV, Financial), Weightings: 3.24%
Select Sector SPDRhealth Care has a market cap of $2.47 billion; its shares were traded at around $31.61. The dividend yield of Select Sector SPDRhealth Care stocks is 1.8%.This fund consists mostly of health care equipment & supplies, health providers & services, and pharmaceuticals. Among the top holdings are Johnson & Johnson (13.82%), Pfizer (11.85%), and Merck (9.01%). Healthcare reform bill is in the making. The bill aims to emphasize a government-run insurance plan. Its will subsidize insurance and put regulations on insurance companies. Also, the bill makes it mandatory for everyone to have access to health insurance.
Paul T. Jones owns 467,344 of Select Sector SPDRHealth Care as of September 2009.
No. 5: Progenics Pharmaceuticals Inc. (PGNX, Financial), Weightings: 2.75% - 2,342,388 Shares
Progenics Pharmaceuticals Inc. has a market cap of $140.9 million; its shares were traded at around $4.45 with and P/S ratio of 2.1.The company lost $13.0 million or $0.41, basic and diluted, per share for 3Q 2009, compared to loss of $12.2 million or $0.40, basic and diluted, 3Q of 2008. Revenue fell to $5.4 million from $17.5 million in the same period. For $10 million, Progenics bought back their market rights to the constipation drug Relistor from partner company, Wyeth. The biopharmaceutical company’s main programs are directed toward symptom management and supportive care and the treatment of HIV infection and cancer. The Company has four product candidates in clinical development and several others in preclinical development. The Company in collaboration with Wyeth, is developing methylnaltrexone for the treatment of opioid-induced side effects, including constipation and post-operative ileus. In the area of HIV infection, the Company is developing the viral-entry inhibitor PRO one hundred forty, a humanized monoclonal antibody targeting the HIV coreceptor CCR5. In addition, the Company is conducting research on ProVax, a novel prophylactic HIV vaccine.
Paul T. Jones owns 2,342,388 shares of Progenics Pharm as of September 2009.
Sources
https://www.tudorfunds.com
3Q Letter
