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Despite the problems the industry faces from fractures in the sub-prime mortgage sector, some hedge funds continue to rake in big profits through astute stock trading,
according to Hedge Fund Trades, the weekly e-newsletter from Dow Jones.
In the July 9 issue, the editors of Hedge Fund Trades highlight five of the best hedge fund trades -- dubbed the "Fab Five" -- from the first half of 2007.
Top Trade #1: Martin Marietta Materials Inc.
Lone Pine Capital and Third Point LLC have made more than $500 million between them from a rally in the stock of this owner and operator of quarries, thanks to a run-up in demand for construction materials and regulatory limits on new quarries.
Lone Pine has cashed out around $248 million and is sitting on another $60 million in paper gains, according to Hedge Fund Trades. Third Point has booked at least $82 million from sales of Martin Marietta stock and its remaining holding is carrying a $115 million paper gains.
Top Trade #2: CF Industries Holdings Inc.
Despite bad press from its losses tied to sub-prime mortgage lender New Century Financial Corp., Greenlight Capital has raked a healthy profit or $113 million so far this year from its holdings in the fertilizer company, which has benefited from the ethanol production boom.
Top Trade #3: M&F Worldwide Corp.
Continuing the trend of big gains from below-the-radar companies, hedge fund Bay Harbour Management has made about $51 million on the trade of M&F Worldwide Corp., a check-printing and licorice company.
Top Trade #4: Onyx Pharmaceuticals Inc.
U.K. hedge fund Meditor Capital Management has made upwards of $50 million in the stock of Onyx Pharmaceuticals Inc. on the back of positive trial results for its cancer drug Nexavar.
Top Trade #5: Crocs Inc.
Some people may dislike the company's bright-colored plastic clogs, but investors love its stock. A sharp rally in the first half of the year generated a profit of about $42 million for hedge fund Blue Ridge Capital Holdings. -Dow Jones & Company
Posted July 9th, 2007 by Anastvatz
