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TheStreet Open House

$22 Billion Hedge Fund Puts Its Money on a Stronger Economy

BOSTON (TheStreet) -- Thomas Steyer, the billionaire environmentalist and founder of hedge fund Farallon Capital Management, has made a big bet on a rebound in the economy by buying energy and industrial stocks, including El Paso (EP) and Goodrich (GR).

Steyer founded Farallon Capital in 1986 and has served as the fund's managing partner. Based in San Francisco, Farallon has about $22 billion in assets and uses numerous strategies ranging from credit to value to merger-arbitrage investments. The hedge fund has a disciplined approach to preserve capital, focusing on achieving risk-adjusted returns.

Thomas Steyer of Farallon Capital Management.

The latest merger-arbitrage investment for Steyer is El Paso, which received a $21 billion buyout offer from Kinder Morgan (KMI) in October. Farallon bought more than 14.5 million shares of El Paso, which carried a market value of nearly $390 million as of Dec. 31. That new position alone became the third largest of Steyer's disclosed holdings.

Hedge funds that manage more than $100 million are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the Securities and Exchange Commission within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines. Farallon Capital ended the third quarter with 61 reported holdings with a market value of $4 billion.

Farallon's other new buys in the most recent quarter were Pharmasset (VRUS), Check Point Software (CHKP), Qualcomm (QCOM) and Yahoo! (YHOO). In total, the hedge fund reported 12 new holdings for the fourth quarter.

Steyer also increased his stake in 16 companies, including big buys in large-cap companies like aerospace company Goodrich. Farallon more than doubled its stake in the company during the quarter, adding 2.2 million shares. Other position increases included Motorola Mobility (MMI), News Corp. (NWS), Oracle (ORCL) and eBay (EBAY).

>>View Farallon Capital's Portfolio

Steyer sold completely out of stakes in 17 companies, including Home Depot (HD), Viacom (VIA.B) and Charles Schwab (SCHW)

Farallon also cut stakes in 21 stocks in the fourth quarter, including several large-cap names like Google (GOOG), Wells Fargo (WFC), Visa (V), Comcast (CMCSA) and Target (TGT).

During the third quarter, Steyer had made a wager on Motorola and Google, which are set to merge after U.S. and European regulators gave clearance. Google offered $12.5 billion to acquire Motorola in August.

-- Written by Robert Holmes in Boston.



>To contact the writer of this article, click here: Robert Holmes.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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