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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9836)	8/15/2008 6:51:41 PM
From: John Pitera	Respond to of 33421

CGM's Heebner Sold Monsanto Stake, Shorted Washington Mutual By Sree Vidya Bhaktavatsalam Aug. 15 (Bloomberg) -- Kenneth Heebner, manager of the top- performing U.S. mutual fund, sold agriculture stocks Monsanto Co. and Mosaic Co. as they reached records, while tripling bets against banks Wachovia Corp. and Washington Mutual Inc. Heebner's CGM Focus Fund sold its 2.7 million shares in Monsanto, the world's biggest seed producer, and its 3.1 million shares of fertilizer company Mosaic in the second quarter, according to a regulatory filing today by the Boston-based fund manager. The $10.4 billion fund also sold short 100 million shares of Washington Mutual and 32 million shares of Wachovia, trades that will profit if the stocks fall. CGM Focus Fund is the top-returning fund in the past five years, gaining an average of 28 percent. Heebner has bet heavily on commodities, putting 86 percent of the fund's assets in oil, metals, materials and related stocks. ``A sputtering domestic economy notwithstanding, it is to a large extent world market forces that determine rising commodity prices, not solely U.S. consumer demand,'' according to a commentary by the fund's owner, Capital Growth Management LP, in today's filing. Heebner wasn't available for comment, spokeswoman Martha McGuire said. Heebner sold more than half of his stake in Potash Corp. of Saskatchewan Inc., the Saskatoon, Saskatchewan-based fertilizer company, leaving him with 890,000 shares. Potash more than doubled in the past year on soaring costs of wheat, corn, rice and soybeans. St. Louis-based Monsanto's shares have surged 75 percent in the past year, while Plymouth, Minnesota-based Mosaic more than doubled. Quick Moves Heebner, known for his rapid moves in and out of the market, concentrated on homebuilders from 2001 to 2005, exiting the stocks before the start of the U.S. real-estate slump. He bought airline stocks in the late 1990s, and bet against technology companies in 2000. There were signs last month that Heebner had changed his portfolio because the fund's performance diverged from the holdings he reported as of March 31. CGM Focus has declined 22 percent since June 30. Heebner is one of the few mutual-fund managers who employs short selling, the practice of selling borrowed shares in anticipation of making a profit by paying for them after their price has fallen. Heebner's short positions in financial stocks might have contributed to his fund's decline, as banks rallied in mid-July. Wachovia has gained 77 percent and Washington Mutual 26 percent since July 15. The Standard & Poor's 500 Financials Index has advanced 23 percent in that time. Oil Falls Heebner also wagered against General Motors Corp. in the second quarter by shorting 21.5 million shares of the Detroit- based automaker. GM shares fell 53 percent this year as sales declined and the company lost market share. Declining oil prices also hurt the fund. Oil has fallen 24 percent from the record $147.27 a barrel reached on July 11. Heebner added more than 1 million shares of Petroleo Brasileiro SA, Brazil's state-controlled oil company, bringing his stake to 7.4 million shares. Petrobras has dropped 31 percent since June 30 in New York trading. The fund started a new position in Houston-based Halliburton Co., the world's second-largest oilfield-services provider, by buying 9.27 million shares. Halliburton has declined 18 percent in July and August. The fund's largest holding as of June 30 was oilfield- services company Weatherford International Ltd. The second- biggest holding was Schlumberger Ltd., the world's biggest oilfield contractor. Both companies are based in Houston. Assets in Heebner's fund have doubled since the end of 2007, driven by investor deposits and investment gains. Heebner's bets fueled an 80 percent return in 2007, the most by any U.S. fund manager. Heebner co-founded Boston-based Capital Growth Management in 1990. In addition to CGM Focus, Heebner manages CGM Realty Fund and CGM Mutual Fund. To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net. Last Updated: August 15, 2008 13:11 EDT