Pine River Capital Management's Major Holdings Shift: Comparing Q2 and Q3 2018

Investing is a game of strategy, and Pine River Capital Management L.P. is no stranger to it. The firm's quarterly 13F filings reveal shifts in its holdings, painting a picture of its investment priorities and market outlook. In this article, we'll compare Pine River's Q2 2018 and Q3 2018 holdings, analyzing the gains, losses, and surprises.

To start, let's look at Pine River's top three holdings in Q2 2018, based on their market value:

1. SPDR S&P 500 ETF TRUST (SPY)

2. AMYRIS INC

3. COMSTOCK RESOURCES INC

The first thing that stands out is the absence of Amaris Inc. and Comstock Resources Inc. in Q3 2018. This suggests that Pine River either sold or reduced its stake in these companies, perhaps due to poor financial performance or changes in their market outlooks.

In contrast, Pine River massively increased its holdings in SPDR S&P 500 ETF TRUST, going from zero shares in Q2 2018 to 106,000 shares in Q3 2018. The market value of this investment also surged from zero to $30,816, reflecting Pine River's bullish stance on the broad U.S. stock market.

It's worth noting that Pine River chose put options for SPY, which means that it's betting on the market to decline. This is a common hedge technique used by investors who want to minimize their losses if the market goes south. Pine River's large investment in SPY puts could be a sign that it's not entirely optimistic about the market's future, even while increasing its stake.

Moving on to Amaris Inc., Pine River reduced its holdings from 3,125,000 shares in Q2 2018 to 2,125,000 shares in Q3 2018, with a corresponding decline in market value from $3.103 million to $2.124 million. Amaris Inc. is a renewable chemicals and fuels company that's been struggling with profitability for years. In 2018, it faced operational headwinds and negative press related to a patent dispute with a competitor. Pine River's decision to cut back on its exposure to Amaris Inc. is not surprising, given the company's challenges.

The most dramatic move was Pine River's decision to ditch Comstock Resources Inc. altogether, going from 14,354 shares in Q2 2018 to zero shares in Q3 2018. The market value of this holding also dropped from a paltry $14,000 to zero. Comstock is a natural gas producer that operates in the Haynesville shale in Louisiana. Despite being one of the largest producers in the region, Comstock has been struggling with volatile gas prices, weak demand, and mounting debt. It's possible that Pine River lost faith in Comstock's ability to turn its fortunes around, prompting it to sell off its stake.

In conclusion, Pine River Capital Management's Q3 2018 holdings reveal a few shifts in its investment priorities. The firm is bullish on the broader U.S. stock market but hedging its bets by buying SPY puts. It's also shedding or reducing its holdings in companies that face operational or financial challenges, such as Amaris Inc. and Comstock Resources Inc. As always, the future remains uncertain, but Pine River's moves provide a glimpse into its strategy and outlook.