Even though 2007 proved a turbulent year for some hedge funds, others were able to expertly play the market, according to Dow Jones Hedge Fund Trades, which has highlighted ten of the year's best trades.
Among the top hedge fund trades were two deals by Atticus Management, which resulted in a collective profit of nearly USD1.2 billion for the firm. All told, the "Big 10" hedge fund trades garnered profits of more than USD3 billion for their respective investors.
The top ten trades named by Dow Jones in its second annual set of rankings, released this week were:
Top Trade 1: Freeport McMoran Copper & Gold
Firm: Atticus Management
Profit: USD800 million
The New York-based hedge fund hit the mother lode for the second year in a row, scoring paper gains of at least $800 million through its holding in the mining giant.
Top Trade 2: MBIA Inc., Ambac Financial
Firm: Pershing Square Capital Management
Profit: USD500+ million
William Ackman's longtime gamble that bond insurance companies would run into trouble finally paid off this year as mortgage loans to high-risk borrowers started going bad and credit markets stumbled, Dow Jones revealed.
Top Trade 3: Foster Wheeler
Firm: Tontine Partners
Profit: USD426 million
Sage investments in engineering and construction companies helped cushion the Greenwich, Conn.-based firm's losses in finance and housing.
Top Trade 4: Union Pacific, Other U.S. Railroads
Firm: Atticus Management
Profit: USD387 million
A counterintuitive bet in a sector that typically slows down as an economic cycle peaks paid off handsomely. On top of paper and actual gains, Atticus made more than $20 million in dividend earnings on its railroad holdings.
Top Trade 5: First Solar
Firm: Maverick Capital
Profit: USD350+ million
After a stormy 2006, Maverick rebounded in 2007 thanks to its investments in solar and alternative energy. First Solar was one of the sector's hottest performers.
Top Trade 6: Crown Castle International, American Tower
Firm: Glenview Capital Management
Profit: USD319 million
Larry Robbins' New York-based hedge fund got "all the right signals" when it targeted the wireless towers sector, Dow Jones punned. The trades crowned a successful year that saw the firm up 24%.
Top Trade 7: CF Industries
Firm: Dawson-Herman Capital Management
Profit: USD160 million
Ethanol companies suffered this year, but taking a long view of the biofuels sector helped the New York-based firm cultivate a neat return from the fertilizer company.
Top Trade 8: Onyx Pharmaceuticals
Firm: Meditor Capital Management
Profit: USD155 million
Having booked some profits in Onyx at the beginning of the year, the UK- based firm held on to the company's shares to benefit from a further jump when its cancer drug beat analysts' estimates.
Top Trade 9: Chipotle Mexican Grill
Firm: Tremblant Capital Group
Profit: USD95 million
When other firms were asking for the check, Brett Barakett went back for seconds in this fast-food chain that promises healthy fare and delivered a healthy profit for the $4 billion-plus firm.
Top Trade 10: United Therapeutics Corp.
Firm: Shunway Capital Partners
Profit: USD73 million
The New York-based firm gradually increased its stake in United Therapeutics during the year, gaining big-time on good news about the company's pulmonary hypertension drug.
A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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