24/7 on Ken Heebner's 6/30 Holdings

Below is a blog entry on Ken Heebner's (he of CGM Funds) holdings as of 6/30/08. Funds are required to post their holdings with the SEC quarterly but are allowed quite a great delay. Due to Heebner's track record, it is worth noting what he is doing even if one agrees or disagrees with him. He had a great 2007 in his Focus fund specifically, but has had some market trailing years as well (he avoids technology so he missed the internet bubble years and the tremendous gains - and subsequent losses there).... but he goes specific (narrow), he goes hard (big weightings), he makes changes quickly when necessary, and he gets it right more often than not. So one must absolutely respect the 20+ year track record even if he has a bad quarter or year. Also he is one of the few funds out there that has any short exposure. (keep in mind he actually has multiple funds but the great performance of "Focus" has gotten all the attention and money have flooded in) So aside from that, we have similar styles - so it's always interesting to read up on what he is doing.

Knowing how heavy he has been in commodities, I've watched his fund performance the past 8 weeks especially - he was letting up blood left and right and is down 20% in the past 3 months, and in fact 17% in the past 4 weeks. So it's tough everywhere, even for the best. But there was a day last week when commodities surged upward, and that evening his NAV barely budged. This tells me he has already made changes to the 6/30/08 holdings so while I'm presenting the information below - I believe it's already "old". So we know where he came "from", but it will be interesting to find out in 3 months where he went "to" - unless he flips his entire portfolio once more by then ;)

Ironically, his fund topped out within 4 weeks of his cover story on Fortune magazine [May 28: Ken Heebner - America's Hottest Investor] - who knew the "magazine cover" indicator even worked on humans, and not just sectors or trends? Not to self: never, ever agree to appear on a magazine cover ;)

• While many funds and money managers are under watch, Ken Heebner and the investments in his CGM FOCUS FUND (CGMFX) are perhaps more closely watched than any other in today's current market. Some may love Warren Buffett and his no non-sense approach, but Ken Heebner actually has a better track record since inception and he is known for blowing out of sectors when he feels he should or can. In fact, you could almost think of the FOCUS FUND as being run more and more like a hedge fund with very loose guidelines on which stocks he can or can't pick from.
  
• The fund also noted about 14% of the total assest that were sold short, so he does make bets against sectors as well. As of June 30, Heebner was still extremely focused on the commodity and global growth stories.
• We went through to look for his positions in the Focus Fund that are worth more than $500 Million. Keep in mind that several other positions were just shy of the mark, so the overall values and holdings are better compared down further on at the full list. Here were his top holdings in the CGM FOCUS FUND: CONSOL Energy Inc. (NYSE: CNX), Peabody Energy Corp. (NYSE: BTU), Freeport-McMoRan (NYSE: FCX), Petroleo Brasileiro S.A. (NYSE: PBR), Hess Corporation (NYSE: HES), Schlumberger Limited (NYSE: SLB), Weatherford International (NYSE: WFT), and United States Steel Corp. (NYSE: X).
• On June 30, 2008 the fund's share price went out at $61.46. It was listed as of the August 14 close at $47.12. That is a drop of 23.3%. Conversely, the Vanguard 500 Index Fund that tracks the S&P 500 Index actually rose 1.3%
• We would caution that just because the markets in commodities and global growth have given back many gains in recent weeks, that is not an assurance that Ken Heebner is still active in all of these names. The losses are sharp in some of the names and Heebner is known for hitting the ejection seat without prejudice if he feels something has topped or if something has changed. It would lead one to believe that Heebner has stuck with the commodity stocks and global growth stocks or that his short sales aren't working.

I found this blurb interesting as Heebner has been much more bullish on the US economy than I have

• In the quarterly filing with the SEC, CGM's team noted "We believe the worst of the current financial ordeal is behind us though it is still too early to expect a broad recovery in the economy. Fortunately, we believe there are bright spots in the economy, areas of strength to provide select investment opportunities in an otherwise difficult market."

All his holdings are listed here - interesting to see him jump into one of our favorites - Cummins Engine (CMI) in a big way and while he was a coal investor before, he really upped the ante of late. But again that was in the last quarter so that could of changed significantly, and when someone tries to sell a $500M position it's going to cause major havoc in the stock prices.

He also added to his excellent short of Washington Mutual (WM) and added a short of Wachovia (WB) - hey I thought the financial crisis was in the 8th inning? Also dropped a lot of agriculture exposure. He also shorted General Motors (GM). Ironically shorting financials and auto makers have hurt him the past month as these are among the hottest sectors. Oh market - so cruel. But I think as the Kool Aid of 50 cent lower gasoline saving the US economy wears off he will be proven correct. But it is all about timing in this market. A few weeks early and you get sand blasted to the next zip code.