What began as a $6 million endeavor in 1996 is coming to a (partial) close. Atticus Capital is shuttering two of its three hedge funds and is returning $3 billion to shareholders. The move is strictly a personal one, according to CEO Timothy Barakett in a letter to investors. Atticus is slicing its flagship fund and a smaller one, but is keeping its European Fund, which has $1.2 billion under management.

Prevailing market conditions led Barakett to begin liquidating many of the Atticus Global portfolio's holdings, an effort he expects to be complete by the end of September. Investors can expect to receive around 95% of their money in early October, with the rest being disbursed after the fund's final audit later in the year.

While Atticus Capital isn't a household name for most people, the hedge fund's ability to find undervalued and mismanaged names is undeniable. The $13 billion fund run by Timothy Barakett performed extraordinarily last year, booking net gains of 45% in 2005 and, according to a variety of sources, more than 30% net for 2006. The firm's strategical focus on concentrated bets has clearly been paying off.

As I discussed in my "Introduction to Piggyback Investing" post, the focus on these columns will be to analyze positions held in a smart money fund via its 13F-HR filing and other sources. According to the fund's 13F-HR, Atticus Capital's fund has several interesting "core" ideas, as well as an interesting sector bet developing.

One large position in the fund is Eagle Materials (NYSE: EXP), a seller of gypsum wallboard and cement. Eagle Materials is certainly an interesting stock, but it's also very cyclical. With a clean balance sheet and an EV/EBITDA multiple of less than 7, the stock could potentially be undervalued at these levels. However, I'd choose to buy USG (NYSE: USG) over Eagle Materials because SHEETROCK is a very powerful brand and the stock appears cheaper than EXP (cheaper on pretty much every multiple, e.g 5.7 EBITDA vs. 7x EBITDA for EXP). Throw in the Buffett/Tilson/Fairholme/Weitz/Berkowitz/Whitman/Janus Contrarian ownership factor, and I think USG is remarkably attractive.