Kenneth Heebner Adds Herbalife Shares, Buys AIG and Sells Google

Kenneth Heebner, who ranked as America’s No. 1 stock picker before losing his touch, added to his stake in Herbalife Ltd., while taking a new position in American International Group Inc. and selling out of Google Inc.

Heebner’s Capital Growth Management LP purchased 980,000 shares of Herbalife during the fourth quarter, even as the marketer of nutritional supplements tumbled 31 percent, based on a filing with the Securities and Exchange Commission. The money manager bought 710,000 shares of insurer AIG and sold $123.7 million of Google stock.

Heebner, whose CGM Focus Fund topped all diversified U.S. stock mutual funds in the decade through 2007, has returned 11.3 percent this year and is ranked in the 99th percentile versus peers, according to data compiled by Bloomberg. The Boston-based fund’s assets plunged to $1.5 billion at the end of October from the June 2008 peak of $10.3 billion, as it lost an annual 7.8 percent in the past five years, Bloomberg data show.

The firm also bought stock in Delta Air Lines Inc. and United Continental Holdings Inc. after exiting from airlines in the third quarter as the shares tumbled. Delta and United made up Heebner’s two biggest new purchases in the fourth quarter.

Capital Growth sold 164,000 Google shares as the owner of the world’s largest search engine lost 6.3 percent in the fourth quarter. The money manager bought AIG stock as it gained 7.7 percent during the last three months of 2012. The insurer finished repaying its $182.3 billion bailout in December.

Heebner increased his total position in Herbalife to $110.2 million in the fourth quarter and the investment firm is the company’s seventh-biggest shareholder. Herbalife plunged after hedge-fund manager Bill Ackman accused the company of illegally operating a pyramid scheme. The shares have rallied 11 percent this year through yesterday.

Capital Growth’s stake in financial companies still made up the biggest allocation out of 10 industries, with Citigroup Inc. and Morgan Stanley its largest holdings in the fourth quarter. The company increased ownership of industrial shares the most and also boosted holdings of consumer discretionary and raw material producers.

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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