$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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