Hedge Fund News: David Einhorn, John Paulson, Agrium Inc (AGU)

Another hedge fund manager weighs in on Herbalife (BizJournals)
Another day, another hedge fund manager weighs in on nutritional products company Herbalife Ltd. This time several media outlets are reporting that David Einhorn‘s Greenlight Capital Re, Ltd. (NASDAQ:GLRE) closed short on the company last year, but holds no position on the company now. Einhorn raised questioned questions about Herbalife Ltd. (NYSE:HLF) in May, long before hedge fund manager Bill Ackman called the company’s business model a pyramid scheme and the company announced it was opening a manufacturing hub in Winston-Salem.

David Einhorn GREENLIGHT CAPITALBrevan Howard’s new breed helps macro fund overcome major drawdown (CityWire)
BH Macro has overcome the second biggest drawdown in its history to end the year in positive territory. Giving a candid review of the listed hedge fund’s performance, Alan Howard, Brevan Howard’s founder, revealed that on the back of simultaneous losses across its strategies BH Macro has seen one of the heaviest drawdowns since its inception in 2007. ‘The macro picture remained highly stressed throughout 2012, with concerns about peripheral Europe in the first half and the US fiscal cliff in the second half creating significant potential event risks,’ Howard said.

Diapason launches hedge fund strategy playing energy arbitrage opportunities in liquid futures (HedgeFundsReview)
An innovative strategy exploiting arbitrage opportunities in the energy market is being opened for investment by Diapason Commodities Management, an independent commodity asset management company with more than $7 billion of assets in commodities. Diapason Relative Value Petroleum Industry Fund, due to start live trading in the first week of February, trades spreads between commodity future contracts using a proprietary model of the refining industry to determine the equilibrium relationship between crude oil and refined product prices.

Einhorn’s poor fourth quarter hits annual returns (MarketWatch)
Hedge fund Greenlight Capital fell 4.9% in the fourth quarter of 2012, but held on to an annual gain of 7.9%, according to a letter to investors from fund manager David Einhorn. In the letter, which was obtained by MarketWatch, Einhorn wrote that the investing climate last year was one in which the fund should have been able to do better. “The disappointing fourth quarter result reduced our year from good to pedestrian,” Einhorn wrote. “While it is hard to view our performance last year as a catastrophe, it nonetheless falls short of our goals.”

Business school offers new course (TheIthacan)
The Business School is offering a new course in the investment track that provides students with the opportunity to invest money in hedge funds. The new course, which began this semester, will teach students how to operate a hedge fund by compiling market research and investing in real stocks. The students have $100,000 to invest as they see fit, thanks to a donation from an anonymous alumnus. Any profits or losses will only affect the fund, protecting the students from having to reimburse Ithaca College, Mary Ellen Zuckerman, dean of the School of Business, said.Activist shareholder Jana Partners LLC said Wednesday it is taking its case for splitting up Agrium to the fertilizer company’s Canadian investors, just ahead of an Agrium move to solidify its support among sell-side analysts. Jana, a New York-based hedge fund, wants Agrium to split its farm retail division from its wholesale operations and make other changes to improve returns to shareholders. Agrium Inc. (NYSE:AGU), headquartered in Calgary, has steadfastly refused to consider spinning off its retail arm while seeking to placate disgruntled shareholders by raising its dividend last year and completing a share buyback.

KKR Buys 24.9% Stake in Nephila Capital (PEHub)
Private equity company KKR & Co LP said on Wednesday it acquired a 24.9 percent stake in Nephila Capital Ltd, an investment management firm that focuses on natural catastrophe and weather risk. Terms of the deal were not disclosed. KKR obtained shares from Nephila’s management as well as from hedge fund manager Man Group Plc, which retained an 18.75 percent stake in the firm. The move comes as KKR, best known for its corporate buyouts, pushes further into asset management. Last June, KKR acquired Prisma Capital Partners, an investment firm focused on hedge funds.

Gazing into ‘dark pools,’ the tool that enables anonymous insider trading (NBCNews)
While federal authorities aggressively pursue individual insider stock trading cases – including an ongoing investigation of Wall Street titan Steven A. Cohen’s SAC Capital hedge fund – financial regulators remain years away from being able to peer into “dark pools,” the high-tech mechanism that insiders use to conduct secret, advantageous transactions. Federal prosecutors have been circling Cohen, 56, the founder and owner of one of the largest and most profitable U.S. hedge funds and one of the richest men in America, since at least late last year, when an indictment was unsealed against former SAC employee Mathew Martoma. He was the fifth SAC employee accused of insider trading while at the firm; four others have pleaded guilty.

Simple Alternatives seeking 6th manager for hedge fund of funds (PIOnline)
Simple Alternatives is searching for a long/short equity manager with a fundamental approach as the sixth hedge fund manager to manage $10 million to $15 million for its S1 Fund. Simple Alternatives manages about $70 million in a hedge fund-of-funds strategy in a mutual fund structure for small institutional and retail clients, said Josh Kernan, founding partner. “We like small- and midcap managers that manage between $100 million and $500 million,” Mr. Kernan said. “We are convinced that smaller hedge fund managers have better performance potential. We also aren’t afraid to be a ‘day one’ investor if it’s in a fund managed by a portfolio manager with a good track record elsewhere.”

Paulson, Rubin Divided on Economic Outlook (TheEpochTimes)
Famous hedge fund manager John Paulson and former Treasury Secretary Robert Rubin could not agree on a uniform outlook for the U.S. economy. Paulson and Rubin discussed their views at an event hosted by 92Y in New York City, Jan. 22. “I think the U.S. economy is doing better,” said Paulson, who is particularly optimistic about the housing market. “It is well off the bottom and is showing a relatively strong recovery,” he said. Paulson is the president and founder of Paulson & Co., a New York based hedge fund. Paulson is most famous for making $3.7 billion betting against the U.S. subprime mortgage market in 2008.

Herakles Unveils Trend-Following Hedge Fund (Finalternatives)
Herakles Capital Management has launched a new trend-following equity hedge fund. The Herakles Trend Fund I debuted on Jan. 4, the firm said. The fund’s proprietary model will focus initially on three indices—the Standard & Poor’s 100, German DAX and German MDAX—putting its money in large- and mid-cap stocks that offer liquidity. The model returned 20.74% in simulated trading last year.

Fund Manager Doug Whitman, Prosecutors Spar Over Sentencing (WSJ)
A war of words has broken out between federal prosecutors and lawyers for hedge-fund manager Doug Whitman as he prepares for sentencing following his insider-trading conviction last year. In a series of court filings, lawyers for Mr. Whitman, the founder of Whitman Capital say their client should be sentenced to no more than six months in prison and he “has been punished enough.” Prosecutors say he should receive a sentence of up to five years and three months in prison. . .

Why Do Rich People Love Hedge Funds? (NYMag)
Carl Richards has a post over at the New York Times’ Bucks blog in which he puzzles over the enduring appeal of hedge funds, despite the fact that they have historically underperformed the S&P 500. Why, he asks, are people paying exorbitant fees to hedge-fund managers who don’t even make money for them? Richards takes a stab at the answer in a few ways. First, he implies that there’s an element of groupthink in Hedgistan, with investors all chasing increasingly complex hedge-fund strategies because “the more complicated and secretive and exclusive it is, the better.” He also gets at the false correlation between exclusivity and superior returns: “People want to believe there’s a better way of investing that’s only available to a select few.”

Are the Big Banks Too Opaque to Invest In? (Dailyfinance)
Opaque or not opaque, that is the question. At least that’s how JPMorgan Chase CEO Jamie Dimon and hotshot hedge-fund investor Paul Singer of Elliot Capital Management see it at the World Economic Forum, currently taking place in Davos, Switzerland. Singer called the big banks’ financial disclosures “too big, too leveraged, [and] too opaque,” to which an energetic Dimon retorted: “Our 10K (S.E.C. filing) is 400 pages long. What would you like to know?”

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