Apple at the root of Tiger profits (NYPost) New York star hedgie Chase Coleman is on his way to a standout year — but a good chunk of his returns are supported by one very Main Street investment: Apple. Coleman’s Tiger Global has racked up gains of 21.4 percent through July, according to investor letters obtained by The Post, after posting a stellar 45 percent return in 2011, a year when most hedge funds lost money. ...Apple was Tiger’s biggest public position at June 30, at $1.3 billion worth — almost double the value at Dec. 31. Apple shares have gained 62 percent this year.
Dan Loeb Quit A Think Tank Because The Co-Founder Bashed Paul Ryan (BusinessInsider) Dan Loeb, the founder of Third Point LLC who is known writing scathing letters to companies and CEOs, quit a political think tank after the co-founder bashed Republican VP pick Paul Ryan. The Weekly Standard's Arthur C. Brooks reports: (emphasis ours)
Telus renews fight with hedge fund Mason Capital (TheGlobeAndMail) Telus Corp. is escalating its war with a U.S. hedge fund by reviving a plan to give all of its shareholders equal voting rights, despite the failure of a similar proposal in the spring. The Vancouver-based telecommunications firm said Tuesday it will ask investors to cast ballots on a plan to collapse its dual-class share structure at a special meeting on Oct. 17. This time, however, it is lowering the bar for success: A simple majority of votes cast by owners of voting shares will be enough for the measure to pass, rather than the previous hurdle of two-thirds.
UBS’s Rosen Said To Be Departing To Start Credit Hedge Fund (Bloomberg) Eric Rosen, the co-head of UBS AG (UBSN)’s fixed-income, currencies and commodities business for the Americas, is leaving the bank next month, about a year after he joined, to start a hedge fund. Matthew Zola, who is now co-head with Rosen, will become sole head of the unit after the departure in September, according to a person familiar with the matter who asked not to be identified because it hasn’t been announced. Rosen, 42, who worked at JPMorgan Chase & Co. (JPM) from 1997 to 2010, didn’t return messages to his office or mobile phones. The Zurich-based firm has said it will reduce the fixed-income trading business, which will be less profitable under stricter capital rules.
Cautious investors may tame hedge funds, at a cost (CNBC) An academics' pension fund, the Church of Sweden and a biomedical charity are among conservative investors breaking with tradition and piling into hedge funds who are willing to curb their highest-risk bets to attract their cash. Five years into the financial crisis, volatile markets and rock-bottom interest rates have crushed the returns of charities and pension funds, making it harder to meet their liabilities in paying for their members' retirements.
Panic in Hedge Fund Land (CNBC) According to a new study just 11 percent of hedge funds are beating the S&P 500 this year. We can't help but think that there must be panic in hedge fund land! Specifically, BarclayHedge says only 81 out of 736 long/short equity hedge funds they track were beating the S&P 500 as of the end of July. That's 11 percent. And with the historically turbulent months of September and October right around the corner, we can only imagine what’s happening behind closed doors.
Hedge fund investors opt for credit strategies, redemptions continue in July (Opalesque) Hedge fund assets increased 2.1% in July to $2.53tn , but investor redemptions persisted for the fourth month in the last five, accounting for outflows of $9.2bn, according to new data from eVestment. Traditional institutional account inflows were light in Q2 and investors favored credit strategies across both universes. The data shows clearly that investor confidence in equity strategies has hit a new low. The report notes, "directional equity focused hedge funds continued to be a primary source of the industry’s redemptions in July as $4.4bn exited. This marks the fifth consecutive month, twelfth in the last thirteen, that equity hedge funds have recorded outflows. The trend is similar on the traditional institutional account side where investors redeemed a net $52.4bn from equity strategies in Q2 following light Q1 inflows."
Goldman Sachs: How to Invest Like a Hedge Fund (TheStreet) If you've ever wanted to invest like a hedge fund, Goldman Sachs is giving you a chance to do so. The New York-based investment bank has put out its "hedge fund 'very important position' (VIP) list," which is made up of the stocks that hedge funds have taken large stakes in, specifically betting on the fundamental outlook for a select group of companies.
Analysis: Drought dampens Jana's case in Agrium fight (Reuters) If Jana Partners fails in its bid to shake things up at Canada's Agrium Inc (AGU.TO), the New York hedge fund can always blame the weather. The hedge fund bought into Agrium - the biggest U.S. farm products retailer and a major fertilizer producer - just before the worst U.S. drought in a half century sent grain prices surging. Jana, Agrium's largest shareholder and known for its aggressive actions as an activist investor, wants the company to boost shareholder value by spinning off its retail arm.
Latest Picks from Hedge Fund Blue Ridge Capital (Nasdaq) This is the latest portfolio update from hedge fund Blue Ridge Capital. Blue Ridge was founded by John Griffin , the prot�g� of the legendary Julian Robertson . John Griffin runs a long-short portfolio, but is generally net long. The shorts help the portfolio because they can go to zero in a poor market, whereas the longs may go down a lot, but they will come back based on the strength of the underlying businesses. Constructing the portfolio this way makes it perform in a neutral fashion in a down market and gives Griffin the luxury of being somewhat indifferent to the macro environment. [Note: this is very similar to the approach that Buffett took in running his partnership, although in lieu of shorting, Buffett primarily relied on other forms of hedging (arbitrage, control investing, etc.) to protect his downside risk.]
Lippmann's LibreMax gains 10 percent through July (Reuters) Hedge fund manager Greg Lippmann, made famous in journalist Michael Lewis's book "The Big Short," beat many rivals with a double-digit gain in the first seven months of the year due to bets on subprime and asset-backed securities. Lippmann's LibreMax Capital, founded with three former colleagues from Deutsche Bank, posted a 10.12 percent gain for the year through the end of July, according to a letter to the fund's investors obtained by Reuters.
Cable Co. Attacks Tribune's 'Hedge Fund Owners' (Finalternatives) Angelo Gordon & Co. and Oaktree Capital Management don't own the Tribune Co. just yet, but the hedge funds are already being blamed for its problems by a New York cable television company. Cablevision Systems, which has customers in New Jersey and Connecticut as well as New York, pulled several Tribune-owned stations from customers last week, including WPIX, New York's CW Television Network affiliate, which carries some New York Mets games. In a statement, Cablevision blasted Tribune and its creditors, naming the hedge funds and accusing them of trying to extort tens of millions of dollars from Cablevision customers.
Texas Employees reveals hedge fund hires (PIOnline) Texas Employees Retirement System, Austin, announced its first six hedge fund managers and approved investing up to $405 million total with them, according to a webcast of the Tuesday board meeting. As of Aug. 1, the $21.2 billion system has invested $300 million in the new hedge fund program. It invested, or committed, $80 million each to a multistrategy hedge fund managed by Arrowgrass Capital Partners, a macro fund managed by MKP Capital Management, an event-driven fund managed by Southpaw Asset Management and a relative value fund managed by Claren Road Asset Management; $50 million to a long/short fund managed by Walker Smith Capital and $35 million to a macro fund managed by Aspect Capital.
Hedge Funds Double Down on U.S. Debt (TheStreet) Hedge fund trading of U.S. government bonds has practically doubled in the past year, according to a report published Tuesday by financial services consulting firm Greenwich Associates. The report, based on interviews with nearly 1100 institutional investors active in fixed income, including more than 300 hedge funds, found the hedge funds generated 24% of U.S. trading volume in U.S. government bonds over the twelve month period ending at the close of the second quarter in 2012. By contrast, hedge funds accounted for 13% of trading volume in U.S. government debt over the same period a year earlier.
Hayman: Safe-haven status of United States intact (MarketWatch) Don’t count out the United States just yet. With the euro zone in crisis and Japan hurtling toward a fiscal cliff of its own, the allure of the United States as a safe haven can only grow in the coming months, Richard Howard, a global strategist at hedge-fund firm Hayman Capital Management, said in an interview with MarketWatch this week.
California hedge fund firm Evolved Alpha closes down, returns capital to investors (Opalesque) Montecito, California-based hedge fund house Evolved Alpha, LLC announced it would close the firm and has already returned investor’s capital. Evolved Alpha provides transparent, liquid and secure access to specialized alpha-return strategies trading liquid financial instruments. In an emailed statement, Jesse J. Redmond, Founder and Co-Portfolio Manager at Evolved Alpha, said that the firm was finalizing details before winding up the four strategies: Specialized Strategies, Total Return, Global Equities and Global Futures.
FSA Report Says Hedge Funds Pose 'Limited' Risk (Finalternatives) Britain's financial regulator called into question the very basis of the European Union's impending hedge fund regulations in a report that shows that the industry poses little risk to the global financial system. The Financial Services Authority survey found that hedge funds have a "strong ability to manage the liquidity of their assets and liabilities." Combined with counterparties' "increased margining requirements and tightened other conditions on their exposures to hedge funds since the financial crisis," this has blunted the risk to financial stability.
HedgeServ Receives Top Rankings in 2012 Global Custodian Survey (SacBee) HedgeServ, an independent global fund administrator, achieved top rankings in the 2012 Global Custodian Hedge Fund Administration Survey. HedgeServ's performance included 130 Best-in-Class awards, as well as "Top Rated" distinctions for both North America and Dublin. HedgeServ, for the second consecutive year, received the highest overall score of any administrator with greater than $100 billion of assets under administration. In 2010 HedgeServ earned the highest overall score at that point in the survey's history.
P&G Waiting on Action From Ackman (InvestorPlace) Hedge fund manager Bill Ackman recently disclosed a $2 billion position in shares of Procter & Gamble (NYSE:PG). P&G is a longtime staple on my Common Stock Monster Master List. Ackman pursues an activist investment strategy, whereby he often takes a large stake in a firm and agitates for change with the obvious goal of unlocking shareholder value. Ackman’s recent successes include an effort to split up conglomerate Fortune Brands (NYSE:FBHS) which resulted in a near doubling in the company’s stock price. Ackman also agitated for change at my favored Canadian Pacific (NYSE:CP). Canadian Pacific shares are up more than 50% since the hedge fund manager first disclosed a position in the stock last October.
Brooks Brothers Meets Battle of the Bands (WSJ) Is it just us or does it feel like Wall Street is always trying to go out of its way to show everyone else that it can "rock"? As if working in financial services or at a hedge fund or in emerging foreign markets or in the technology sector wasn't cool enough, Wall Streeters have to strap on a guitar, plug into a speaker and take us all home with "Paradise City." I mean, really. What are they trying to prove?
Finance: Stirrers and shakers (VCCircle) Canadian Pacific Railway can claim, with some justification, to be the company that built Canada. It was only with the promise of the tracks it laid from the west coast to the east in the 1880s that the territories of Nova Scotia, New Brunswick and British Columbia agreed to join the budding nation. Yet this national treasure no longer has a Canadian at its helm. In May, a board packed with the great and good of the country’s business elite was infiltrated by Bill Ackman, a brash activist hedge fund manager from New York, and his preferred candidates. Less than a year after Mr Ackman’s hedge fund became Canadian Pacific’s largest shareholder, Pershing Square Capital nominees fill eight of the 14 seats and his preferred candidate, the American E. Hunter Harrison, is chief executive.
China Easing Moves 'A Mistake': Jim Rogers (CNBC) China may be under pressure to cut interest rates and boost a slowing economy, but further monetary tightening would be unwise and China should keep credit tight in order to keep a lid on house prices, says billionaire investor Jim Rogers. “I think they’re a mistake and there’s still inflation in China,” said Rogers on CNBC Asia’s “Squawk Box” on Wednesday, referring to cuts in China’s reserve requirement ratios (RRR) and interest rates earlier this year.
Awaiting the Crash (Social-Europe) Nouriel Roubini famously described the long decline of the euro as a ‘slow motion train wreck’. Mind you, economists disagree on exactly when the wreck will happen. Vicente Navarro has argued on this site that the euro will survive for as long as it serves the purposes of the German (and European) elite while, in the Financial Times, Wolfgang Muenchau thinks the crisis will last another 20 years given Germany’s proclivity for muddling through. By contrast, Megan Green at RGE sees the confluence of crises in Greece, Spain, and Italy during September and October 2012 as potentially lethal. But all agree that—sooner or later—it will happen.
Carl Icahn Cancels Offer for Rest of CVR He Hasn’t Already Acquired (WSJ) The long meandering story of Carl Icahn and refining company CVR Energy took yet another surprise turn today as Icahn cancelled his plan to buy the rest of the company he hasn’t yet acquired. In one very short letter to the board of CVR, Icahn says he is pulling his offer for the company because the deal isn’t “feasible.” He already owns 80%, which he acquired in several stages amid promises to sell the company to a higher bidder. But that sales process failed and his offer for the rest of the company at $30 a share was cut to $29 a share and now cancelled.
Allianz Cuts Pimco-Driven Asset Management Target (Bloomberg) Allianz SE (ALV), owner of the world’s second-biggest asset management business after BlackRock Inc., is trimming targets for that unit as Europe’s debt crisis crimps investment returns. The company is targeting annual asset growth of 5 percent to 10 percent “over a full market cycle,” Jay Ralph, Allianz management board member responsible for asset management, said in an interview in Munich. The previous target of 10 percent, derived equally from market gains and client inflows, is no longer achievable, he said.
Looking back on SAC’s multistrat reopening and an executive departure from Claren Road (Absolutereturn-Alpha) Suzanne Murphy, head of strategic development (a newly created role) at then-$5.1 billion long/short credit shop Claren Road Asset Management, left the firm. She resurfaced two weeks later as a partner at $3.9 billion Ares Management (see performance here), based in the Los Angeles firm’s New York office. She was at the firm for less than a year. An Ares spokesman confirmed she is no longer employed there (he declined to say when she left) and her responsibilities have been assumed by senior partner David Reilly.
SEC Brings Charges in Puerto Rico-Based Ponzi Scheme Targeting Evangelical Christians and Factory Workers (SEC) The Securities and Exchange Commission today charged a Puerto Rico resident and his company with conducting a Ponzi scheme that targeted evangelical Christians and factory workers in Puerto Rico. The SEC alleges that Ricardo Bonilla Rojas and his firm Shadai Yire raised at least $7 million from as many as 200 investors living primarily in Puerto Rico but also on the U.S. mainland in such states as Florida, New York, and North Carolina.
SEC Issues First Whistleblower Program Award (SEC) A whistleblower who helped the Securities and Exchange Commission stop a multi-million dollar fraud will receive nearly $50,000 — the first payout from a new SEC program to reward people who provide evidence of securities fraud. The award represents 30 percent of the amount collected in an SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed by the whistleblower law.
Hedge Fund People: KPMG Expands with Five New Additions to Team (HedgeCo) Hedge fund audit, tax and advisory firm, KPMG, announced today that it is continuing its investment in its Alternative Investment Funds practice by bringing on board several new partners and managing directors to bolster the firm’s initiative into the growing sector. ...Ted Carreiro, a former managing director at State Street Bank and Trust’s AIF group, he has served many of the top hedge fund and private equity fund clients in the industry.
New derivatives and CPO rule changes to impact fund managers (Opalesque) The Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) in the US have finalized new derivatives rules and issued new guidance on the types of exemptions available to commodity pool operators (CPOs). As Opalesque reported in July, both regulators issued definitions for the terms "swap" and "security-based swap." These rules have now been officially entered into the federal register and will trigger additional provisions outlined in the Dodd-Frank Act. The definitions themselves are designed to establish the products that make up "mixed swaps," mixed swaps will be monitored and regulated by the commissions going forward. The new rules effective date will be October 12, 2012. The gap accounts for a window in which those effected by the new rules will be given time to comply.
Hankar relative value hedge fund (+3.8% YTD) awaits right credit opportunities to seize best value (Opalesque) HanKar Capital, a US based asset manager that invests in relative value and arbitrage strategies within the global equity and hybrid equity universe, announced that its flagship, the HanKar Partners Master Fund LP, was down 1.56% in Q2-2012 and up 3.81% YTD. That’s compared to the HFRX Relative Value index, which was down 1.39% in Q2 and up 2.12% YTD, and the HFRX Convertible Arbitrage index which was up 0.16% in Q2 and up 3.98% YTD (the HFRX Global Hedge Fund Index was down 1.87% in Q2 and up 1.22% YTD).
There Are Still A Bunch Of Hedge Funders Raising Money For Obama (BusinessInsider) Even though most of the hedge funder's political contributions have gone to Republican candidate Mitt Romney, there are still a bunch that are donating to Obama's re-election campaign. Absolute-Return Magazine's Lawrence Delevingne has compiled an updated list of hedge fund bundlers using the Center for Responsive Politics and a list of fundraisers on BarackObama.com.
Knight Capital’s Woes Chip Away At Wall Street Confidence (WSJ) Are you worried about safety and integrity of the U.S. stock market? You’re not alone. Thanks in part to the recent parade of spectacular market blow-ups — from Facebook’s and BATS’ IPOs earlier this spring to the Knight Capital debacle — confidence has ebbed to its lowest in years.
London Firm Launching Commodity Hedge Fund (HedgeFund) Trading and investment firm CF Partners is launching a commodity hedge fund later this year. Environmental Finance reported that the launch is London-based CF Partners meeting the demands of clients who want “broader access to the commodities markets.”
Richard Gere’s Brilliant Tycoon Portrayal in ‘Arbitrage’ (TheDailyBeast) Guys who are a bit of a mess are just more fun. “Those roles are easier to play,” says Richard Gere, sipping a glass of water at a restaurant in Sag Harbor, N.Y., where he spends the summer and is doing the junket for his new film, Arbitrage (in theaters Sept. 14). “There are so many more colors. As actors, we’re a bit of showoffs emotionally. You have to have a bit of that ability, and those characters kind of call on that. It’s much harder to play closer to normal and likable and a good citizen and keep that interesting for two hours. That’s really hard. That’s super-hard.” ...Which is precisely the point, Gere goes on to say. He wanted his hedge-fund magnate to be as un–Bernie Madoff–like as possible, even though he cheats his clients, two-times his wife, and eventually winds up in an incredibly baroque cover story to keep his world from coming apart.
New Mexico PERA searching for equity, growth manager (PIOnline) New Mexico Public Employees Retirement Association, Santa Fe, expects to launch an RFP for an active domestic small/midcap growth equity manager on Sept. 4, said Joelle Mevi, chief investment officer for the $12 billion pension fund, in an e-mail. The board is searching for one or two managers to manage a total of $300 million. Selection of a manager or managers is targeted for the board's Dec. 20 meeting.
BofAML: Hedge Funds Up 0.25% Mid-Aug (Finalternatives) Bank of America Merrill Lynch’s investable hedge funds index is up 0.25% month-to-date. The best performers, as of August 15, were equity long/short funds, up 1.05% while the worst performers were CTAs, which were flat. BofAML analyst Mary Ann Bartels says market neutral funds bought market exposure to 2% from 0.5% net long during the monitored period while equity long/short increased market exposure to 28% from 26% net long.
The New Citigroup Isn’t Your Father’s Citicorp (NYTimes) Vikram S. Pandit, Citigroup‘s chief executive, has entered the debate over splitting up big banks. But did he overstate one of his key points? For supporters of separating investment banking activities from more traditional banking businesses, Citigroup makes an attractive target. At the bank, Wall Street and Main Street businesses were brought under the same roof through a series of over ambitious mergers.
Citic Capital Sells Stake to Qatar Fund (NYTimes) The Chinese asset management firm Citic Capital Holdings is taking on a new shareholder by agreeing to sell a 22 percent stake to a unit of Qatar’s sovereign wealth fund. The deal with Qatar Holding, the value of which was not disclosed, raises the profile of Citic Capital, one of China’s biggest investment firms. Citic, which manages more than $4.4 billion and also counts China’s sovereign wealth fund among its backers, has lately been showing an appetite for deals.
Hedge Funds, Grimacing, Open the Kimono (BusinessWeek) It’s late August. And they’re groaning about a stack of homework that is causing an early, cruel end to beach season. High schoolers? Nope—the managers of America’s largest private investment funds, who on Aug. 29 must file a new form providing federal regulators with detailed information on their operations. At 42 pages, with more than 1,000 data fields, Form PF is both a chore to fill out and a threat to the secrecy in which hedge funds and private equity funds prefer to operate.