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Jonathan Auerbach’s Hound Partners Bets on Micro Cap Companies

Jonathan Auerbach’s Hound Partners disclosed a 10.79% stake (2.8 million shares) in Network-1 Security Solutions (NSSI.OB). On January 13th, Hound Partners Offshore Fund Ltd. disclosed the ownership of 1.6 million shares on Form 4. These are indirectly owned by Jonathan Auerbach. Yesterday, Hound Partners Offshore Fund disposed of 100,000 shares so that it doesn’t have to be subject to Section 16 anymore.

According to Yahoo Finance, Network-1 Security Solutions, Inc. engages in the acquisition, development, licensing, and protection of intellectual property and proprietary technologies in the United States. The company owns six patents covering various telecommunications and data networking technologies, including patents covering the control of power delivery over Ethernet networks for the purpose of remotely powering network devices and systems, and methods for the transmission of audio, video, and data over local area networks. Network-1 Security Solutions, Inc. was incorporated in 1990 and is based in New York, New York.

In a separate 13D filing, Jonathan Auerbach revealed that he spent nearly $15 Million on another microcap stock: Avantair Inc (AAIR.OB)

Since these stocks trade over the counter, Hound Partners won’t report them on 13F filings. They revealed these positions in 2010 and current filings pretty much show a reshuffling of these shares among different funds controlled by Auerbach. Nevertheless, this gave us an opportunity to look into some of their “hidden” investments.


Jonathan Auerbach is seeded by Julian Robertson. He reported a total of $381 Million worth of stocks in his portfolio at the end of September. His largest holdings were W.R. Grace & Co (GRA), Transdigm Group (TDG), Ensco Plc (ESV), Google (GOOG), Liberty Media Starz Group (LSTZA), and Compass Minerals Intl (CMP). Ensco is also owned by Greenlight’s David EinhornSeth Klarman owns Liberty Media Starz.

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