Friday . Are wearing white sneakers. Usually he wears shoes with matching shoelaces for his tie. But today you have sneakers on. That is how we know it is friday. There they are. There they are. Lets get to the stories from around the world. Chiquita is rejecting an unsolicited takeover bid. Chiquita will stick with its planned purchase of an average competitor price. Credit card data may have been stolen from june to july at supervalu. Car that wentc for a classic price. A 1962 ferrari sold for more than 38 million. That is the most a car has ever sold for at auction. No word so far on who bought it. That is a really good looking car. You have just gotten your roadmap and lesson plan. It is 13 f season, where we learn what Hedge Fund Managers bought and sold last quarter. Julie hyman has been digging through the filings. Mind our to wrap your around all of these buying and selling from Hedge Fund Managers. It is always interesting to start with apple and see what they are doing with this huge stock. Apple is really popular. Really popular even after all the debate of whether it is still worth it or what is going to happen with upcoming products or how the dividend is going. The stock did very well in the quarter. That helps when youre looking at whether you want to buy and sell it. You had a balance of managers buying and selling. Greenlight capital trimming its stake in apple. Einhorns firms are taking profit off the table. It might not be that you no longer believe in this investment, but you made some money and you want to take some profit cash to use elsewhere. The motivation is still unclear. It is aut is is snapshot of where they were at a certain point in time. If you are talking about Berkshire Hathaway, chances are, they are still in the stock. If youre looking at dan loeb or David Einhorn who are more ,imble and tend to trade more they might not even be in a particular stock anymore. Theyre more active on a daily basis. You see some of the decreases we have in the number of shares about which firms have cut their stakes. Comee flipside, you have adding. Funds it is much more relevant about certain firms buying than others. A lot of them are quantitative or algorithmic or computerdriven. Certainly if they are driven by quantitative strategies, the my be out of it already. Gannetticahns stake in called for activist investing that has not has already happened. Carl icahn is more of an emotional sort of guy when we hear from him. Annett Just Announced it is going to be spinning off its Publishing Business in a taxfree business. Ironically, that is exactly what carl icahn has been going to ask for. He said he was going to push for exactly this. He said he still wants to talk to the company. Gannett said they are happy to talk to him as they do with all of their shareholders, but they beat him to it. That stock is done well because of those plans. Talking earlier today, trying to figure out how much carl icahn has made on this trade because his stake is a combination of stock and call options. I took a few minutes to try to figure out if there is a way to price these options. Make ist i wanted to that these were overthecounter trades. This was a custom transaction that carl icahn built with some counterparty and that is really what is worth thinking about here. These options are so far in the money that whoever was on the other side of the trade just got royally screwed. He did very well without having to do very much of anything about putting pressure on the board. This was maybe some easier money in the spectrum for carl icahn. Youre going to stick with us because we are going to talk more about these 13 fs. It is so tempting to buy and the sell stocks by like the step fund Hedge Fund Managers. Your to walk us through his don steinberger. Don, why dont we start with the glass halffull . Howexplain explain to us an investor could use 13 fs to build a sound strategy that follows was some of the Hedge Fund Stars do. Justrst of all, it is not small investors focusing on 13 fs. It is also hedge funds. One of the hardest things is figuring out where theyre going to focus their time. Look at what their competitors are doing. Over the past 24 hours, 85 of hedge funds have issued a 13 f. They are all very busy analyzing what their competitors are doing. For small investors, there are a couple of strategies. One is holding the most commonly held stocks. There have been studies that show that the most commonly held stocks by how hedge funds outperform the s p 500, this is small and true of stocks. Another thing investors do is invest in best ideas. Hedge funds do not equally weights securities in the portfolio. They overweight the ideas that they have the highest conviction on and they think will generate the highest risk of returns. Some people will identify five or 10 hedge funds by their Top Five Holdings across all of those and rebalance each quarter. The final thing a call this the walmart approach to investing they identify hedge funds they really like and they just replicate with the 13 f has, same weighting, same stocks, and rebalance on a quarterly basis. Just because they have worked historically doesnt mean they will work going forward. Some managers have strategies that are based on these. What you have to think about is that the data is stale. The stock could have doubled in price over the past 45 days. Or the news has come out that the product they get most revenue from hertz children. You have to make sure you do not blindly invest in these companies. You have to make sure that you know what you are investing in. These also do not include shorts. When they put their portfolios together, they are putting together securities to offset one another and generate the highest risk and adjusted return. They dont include stocks trading outside the u. S. London,ck is traded in hong kong, tokyo, it is not going to be part of it. The Global Equity portfolio you will be missing a lot of the story if you just focus on 13 fs. Little bit to get a of an idea im a little bit of a cynic 10 hedge funds profit off of when they release their 13 fs . Of course they can. You can look at it two different ways. Can be really upset that they are giving away their intellectual capital or if theyre heavily followed, the stock can take a big pop right after it is released. It definitely it is a strategy that some are implementing. I guess one of the points that you made earlier had me thinking. The 13 fs to use follow what other hedge funds ,re doing in trading strategies doesnt that create a serious possibility for overcrowded trades . No doubt. There are hedge fund names that are commonly held across managers. One of the things investors are doing is focusing on what the top named hedge funds hold. If the Hedge Fund Manager holds too many of the commonly held ares, a lot of investors getting out of those hedge funds. You dont want to allocate to exposure th luger loser exposure. When you are taking a look , whatwhat is excluded about if they are still building a position . Talk about how they can stay dark on that. What they do is they fill out a form with the fdic and they say we are building up this position, we would like permission to excluded until we reach a full position. You will not see every single security and someones portfolio until the security is fully built out. That is the thing about activists. They start small and plan to invest more in it and they do not want to let everyone know. Based on your experience and the data you have studied, does it make more sense to follow an individual manager, to study how time, orperforms over does it make more time to go with a strategy built on aggregate data, the net purchased by hedge funds, or net sales by hedge funds . Or basket of stocks . I think the more knowledge you have, the better. There are programs out there that aggregate this information and you can do scenario analysis. You can see where your performances over time by investing in longs of various hedge funds, punching them together. I would do as much analysis as you can. Everybody has their opinion on what strategy works better. The strategy i prefer to focus on is the best ideas. I think hedge funds overweight the ideas that they are most confident in. I would focus on their biggest weightings. Thank you so much. Great to see you this morning. Have a great weekend. My pleasure. Cheers. Coming up, coax monster deal, betting big on the future of monster deal, betting big on the future. You will hear from the ceo of pemex coming up. Itsocacola is pumping up business with a 17 stake in monster beverage. The deal tightens the bond between the two companies. They will share marketing, production, and distribution. Bill chappell joins us now. Bill, you have a bye on both these stocks. Who do you think this is better for . It is better for monster. From the size and scale and what it does in the nearterm. It really transforms the market. It transforms their profitability overseas. It validates their market in the u. S. By having coke make this investment and invest behind the Energy Drink Category for the longterm. I think they are the big winner. Coke will see a lot of benefits over the next few years. Problems of lot of its own. People are drinking less soft drinks. It seems that what kind of desperation can learn about this from coke . Maybe you can look at it the other way. If coke was fully desperate, if they really need something, they probably would have bought the whole thing. Billion acquisition price, they can do that. It shows that they want a put option, they see the Energy Market is here to stay in the u. S. For a long period of time. ,aving a Strong Partnership they are also getting rid of thatof the Energy Brands have not been growing overseas and market helps them focus on their brands that need extra help. Is it fair to describe this as a capitulation of sorts . They could not figure the Energy Drinks business out. Could say know if you capitulation because it was really never a nonstarter. Fulls like nos and throttle were good brands in certain markets. They were never that big. Even those brands in the u. S. Were less than 10 total share. They have always partnered with monster. It was a realization that monster was not going away. It was just not a good use of their time and resources to bet on a bunch of small horses when they could bet on this big course. But surely cocacola with all of its marketing and advertising muscle could have made something of those lesser brands if it wanted to or not. I clearly dont understand energy junks well enough to know what the magic Energy Drinks well enough to know what the magic of monster is. Unfortunately, im not in the target demographic either. [laughter] i think the issue is that it is millenials. 20 years ago, 30 years ago, after you played basketball, you are grabbing a coke. Today, youre grabbing a monster. Dollars how many no matter how many dollars, you cannot make a brand overnight. That is a monster has done over the past decade and that is what coke is investing in. With that comes regulatory risk. Links to somehow questionable deaths . There are investigations going on. His coke taking on needless risk by diversifying . I think that is part of the reason why it is structured this way. They could have bought the whole thing. By keeping it as a Standalone Company where they are just a partner in a 15 20 owner, it lets them keep that up they at bay. The big part of this transaction is coke taking total distribution rights in the u. S. Right now, they distribute 50 of monsters business in the u. S. Coke does not see it as a longterm issue. What does that do to cokes bottom line . , they the core business have not quantified it. It will help it some. It would help it more if they bought the whole thing. The real interesting part is that coke eventually is going to spin out or do something with the bottling business. They bought that for five years ago in the u. S. To fix it. They will spin that out in the next few years. Gives the bottling business 100 rights to monster. ,t enhances the spin out value which enhances the total coke worth. Bachus done the road a little bit. A monsterlso building internationally walk us down the road a little bit. They are also building a monster internationally. Out monster internationally. I think it is a put option. Internationally, if you look at monster, they have in the u. S. Probably a 35 market share. Internationally, it ranges from 0 to maybe a size 20 . By partnering with coke, by being the only energy drink in their bag, it is going to supercharge bad. By coke using the distribution, the manufacturing, the scale, this could be a lot more profitable, a lot faster. Re are some companies countries, monster has no presence in china. It barely has a presence in india. That is going to change shortly. Arehe ponds are puns aplenty. Supercharged. The price of Airline Tickets are heading in the same direction as the aircraft. Straight up. Time for on the markets. Carson block has come out railing against the stock, accusing it of massive fraud. The ceo is resigning. Citing Family Reasons. We are still waiting for annual reports. Part of the reason why carson block is saying there is something seriously wrong with the company. Bethe Family Reason could his wife saying, get out of the company. [laughter] lets talk about applied materials. This is the Worlds Largest manufacturer of semiconductor equipment. Companies like intel use it to make chips. Sales may top analyst estimates. It is a range of approximately point 2 billion 2. 2 billion. It is in the process of buying one of its largest rivals, tokyo electron. Once that happens, applied will have 30 of the market share. They are firing on all cylinders, you could say with that. Trying to turn boxing into a real knockout. You will love this. 1 live from bloomberg headquarters in new york, this is market makers. With Erik Schatzker and stephanie ruhle. It is friday in new york city. Im alix steel in for stephanie ruhle. Mexicos state owned Energy Company pemex is preparing for the end of its monopoly on the countrys energy sector. Bloombergs Olivia Sterns spoke to the 38yearold charged with guiding the company transition. Here is what he had to say. We have many types of players approaching us to partner with deep waters, shallow waters, shale plates. Come on, name a few. There are dozens and hundreds of companies we have met over the last year and we look forward to landing some Business Opportunities that are profitable for mexico, for our partners, and for the company and the next year. Is already public you have been in talks with chevron. How are those talks going . Have mous with all the Major International oil companies. Areously, the majors interested mostly to invest in the deep waters of the gulf of mexico. X, we have had exploratory success. Withve been very efficient our exploratory wells. But we do not necessarily have the expertise to develop those projects and bring them into production in a relatively quick period of time. Done up onnies have the northern side of the gulf of mexico, the american side, and these are players suitable for us to work with on this. Joins us now. Ns it is interesting when i think about the possibility of mexican oil. Where do they wind up selling it . It used to be the u. S. We are pumping so much of our own oil now. It is still going to sell to the u. S. They are a net exporter. Here is what he had to say. He is not too concerned. We have unique infrastructure that allows us to export our own crude from the gulf of mexico to the pacific like no other country in the americas. We are utilizing and increasing infrastructure more and more to export to china. We are not concerned about that. We believe that the synergies coming from the north American Energy revolution are great for great for the united states, and great for canada. The oil mexico is producing is a much heavier crude. We need a mix. We are not in direct competition. He says he is pulling oil out of the ground for 20 a barrel. That is very cheap. 20 per barrel . He makes 80 per barrel . Decline rate for existing wells is so extreme. We are down to 1990 levels. Despite the fact that they have been pouring more into investment and exploration every year. They have a significant deficit of infrastructure, pipelines, and defining capacity refining capacity. He said those are big Business Opportunities for foreign companies, oil services to come in there. He is talking about exporting, going big, going global, going asia. That requires a lot of money. Billion to start really ramping up production, considering that they report revenues as about 100 20 billion. How are they going to do that . 120 billion. How are they going to do that . They are hoping to get some outside money. The need for an money, foreign expertise. It is going to be an enormous challenge. He is only 38 years old. He is a close friend of the president. He has no experience in the oil industry. He has been tapped with this task of turning around an ocean liner, trying to transform this bloated statement operably and all of its tension liabilities, 180,000 people and staff, and turning it into a profitable company. He is very excited about it. It is going to be a very fascinating decade. , theythey get it right have to award about 100 contracts, they have to ensure it is transparent and fair, if they get it right, it really will be a huge tailwind for the. Exican economy i was very fascinated. Phone ins now from the houston is Oil Consultant christopher robards. Good to have you on the perspective. You just are the ceo say that they plan to partners exxon and chevron and shell and bp. Do you believe that is in the cards . Good morning. Thanks for having me. Absolutely. I think it is in the cards. Ceo and thosemex in leadership are all saying the right things to encourage foreigners to look at this as an investment opportunity. What about oil services i wonder . They are so deep in the country already. 35 of the market share is an oil