Hedge Fund Highlights: Michael Karsch, David Tepper, Whole Foods Market, Inc. (WFM)

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Editor’s Note: Herbalife Ltd. (NYSE:HLF), Whole Foods Market, Inc. (NASDAQ:WFM), Delta Air Lines, Inc. (NYSE:DAL), J.C. Penney Company, Inc. (NYSE:JCP)

Karsch Returns Client Capital in $1.8 Billion Hedge Fund (Bloomberg)
Michael Karsch is returning client money in his $1.8 billion hedge-fund firm after 13 years, saying he wants to take time to contemplate the next stage of his career, according to a letter sent to investors. Karsch, 45, plans to return 95 percent of client assets in New York-based Karsch Capital Management LP by Sept. 30 and the remainder no later than January, according to the letter, a copy of which was seen by Bloomberg News.

APPALOOSA MANAGEMENT LP

Hedge Funds And Insiders Are Buying These 5 Stocks (Seeking Alpha)
According to economic theory, company insiders are incentivized against buying stock as it increases their company-specific risk. Therefore, in theory, observing purchases should mean that these insiders are confident enough in the business’s prospects to overcome this factor; in fact, studies do generally show an outperformance effect for stocks bought by insiders, particularly if multiple insiders have been buying. Multiple insiders have been buying Delta Air Lines, Inc. (NYSE:DAL), including one purchase which came after federal regulators’ recent decision to challenge the merger of US Airways and American Airlines (markets, which had expected the deal to increase industry consolidation, sent airline stocks generally down on the news). Billionaire David Tepper‘s Appaloosa Management has been bullish on the industry, and owned over 10 million shares of Delta in its most recent filing.

Whole Foods Market, Inc. (WFM): 4 Reasons Hedge Fund Billionaires Are Wrong About 62% Gain (iStockAnalyst)
In 13-F filings from the second quarter, Insider Monkey reveals that Whole Foods Market, Inc. (NASDAQ:WFM) is falling out of favor with Hedge Funds, held in 39 funds in the first quarter but just 25 in the second quarter. That hedge fund exodus from Whole Foods has been driven by shares jumping 62% in the last 2 years, pushing Whole Foods Market, Inc. (NASDAQ:WFM) valuation to a 4-year high. But even though I’m a big fan of following hedge funds, in this case I believe the smartest money on the street is wrong.

In N.Y. Mayoral Race, Small Checks From Hedge Fund Giants (New York Times)
Hedge fund titans are making a $170,336 bet that Christine C. Quinn is the best candidate to run New York. Ms. Quinn, a Democrat and the City Council speaker, has received that amount in donations from the hedge fund industry. Paltry though the sum seems, it is more than twice the amount received by the next closest recipient in the mayoral race, Joseph J. Lhota, a Republican, according to records compiled by the public affairs lobbying organization Common Cause.

Seggerman Pleads Guilty to Conspiracy in Tax Evasion Case (Bloomberg)
Henry Seggerman, accused with other family members of hiding from federal authorities millions of dollars in his father’s estate, pleaded guilty in Manhattan federal court to conspiracy and tax crimes. The U.S. claimed Seggerman’s father, Harry G.A. Seggerman, a New York businessman who died in 2001, left a $24 million estate, more than half of which was held in undeclared Swiss accounts. Henry Seggerman, 60, is listed on the website of his father’s hedge fund management firm, International Investment Advisors LLC, as the chief investment officer.

SEC Probes Soros About Herbalife Purchase (HLF) (Dividend.com)
It was reported on Wednesday that an SEC lawyer had started digging into Bill Ackman’s claims that Herbalife Ltd. (NYSE:HLF) shares have been manipulated by other hedge funds, namely Soros Fund Management. Liora Sukhatme, SEC enforcement lawyer, recently spoke with Bill Keep, the dean at the College of New Jersey who is also an expert on pyramid schemes. This investigation is a result of Bill Ackman’s accusations against Soros Fund Management for tipping off other hedge funds about the fund’s long position in Herbalife shares; Ackman has voiced his concerns surrounding the company, calling it a scam, and also disclosed his short position.

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