Hedge Fund News: Jeffrey Ubben, Richard Perry, Marcato Capital Management

Here’s Why Hedge Fund ValueAct Bought Seagate (CNBC)
While most on Wall Street these days are huddling in yield plays, Jeff Ubben seems to be taking on more risk. His activist hedge fund ValueAct turned heads Friday with the disclosure of a new large stake in Seagate Technology. This follows the purchase of battered bank Morgan Stanley in mid-August. The ValueAct chief executive officer told CNBC PRO why his fund is buying these riskier names. Seagate announced the hedge fund will acquire a 9.5 million share stake in the company through a secondary transaction conditioned on regulatory approval.

VALUEACT CAPITAL

Perry’s Assets Plunge 60% to $4 Billion as Wagers Backfire (Bloomberg)
Perry Capital, the 28-year-old hedge fund run by Goldman Sachs Group Inc. alumnus Richard Perry, has lost more than half of its assets in less than a year after posting declines since 2014. The firm’s assets slumped to $4 billion as of the end of August compared with $10 billion in September last year, according to a person with knowledge of the matter. Perry, based in New York, has posted losses of 18.4 percent from the beginning of 2014 through July of this year, an investment document shows. The fund declined 2.6 percent in the first seven months of this year after losing 12.6 percent in 2015. Michael Neus, general counsel at Perry Capital, didn’t return calls and e-mails seeking comment.

Activist Funds Posted Gains In August; Marcato Pushed Ahead (Reuters)
Activist investors that push for better returns by urging corporate actions such as sales and acquisitions and cost cutting posted their best returns in months in August, when bets on a wide range of smaller companies paid off. Marcato Capital Management‘s International fund gained 3.1 percent while its Encore International fund climbed 4.7 percent, weeks after the firm announced two new investments in July. August’s gains, following on the heels of double-digit returns in July, put the International fund back in the black for the year with a 0.2 percent gain. The Encore fund has gained 11 percent since January, an investor said on Friday. Marcato, which invests $1.5 billion and is run by Richard McGuire, in July unveiled bets on crane and heavy equipment maker Terex Corp and sports bar chain Buffalo Wild Wings, whose share price, it said, could nearly triple if management improved the business.

An Ackman Director Contest at Chipotle Would Find Shareholder Support (TheStreet)
If activist investor Bill Ackman wants to escalate his insurgency at Chipotle Mexican Grill (CMG) by seeking to install a dissident slate of directors he likely will find many disgruntled investors who will back his efforts – especially if the embattled billionaire targets the chiefs of the burrito retailer’s audit and governance panels for replacement. Ackman, who runs Pershing Square Capital Management LP, launched an activist campaign at the restaurant chain on Tuesday, reporting a 9.9% stake and noting that he intends to engage in discussions with the company’s management about its strategic plans, capitalization and financial condition.

The Biggest Hedge Fund Donor This Election: Why It Stays So Quiet (CNBC)
Secretive money manager Robert Mercer, who has donated roughly $19 million to conservative causes during this election cycle, has emerged as a central figure in the Donald Trump presidential campaign recently. But the company where he is co-chief executive, Renaissance Technologies, may be an even bigger player in the current political topography. So far this cycle, individuals affiliated with Renaissance have donated about $34 million either to candidates running for office or groups supporting them, according to records sorted by the Center for Responsive Politics.

Corporate America Now Seeking Activist Shareholder Help (Forbes)
Corporate chiefs generally don’t like to be told what to do and traditionally they did everything in their power to resist the influence of activist shareholders, often going to battle to keep them out of the boardroom. Not long ago, the last thing an American CEO wanted to hear was that Carl Icahn, Bill Ackman or Dan Loeb was calling on the phone. But as activist investing has grown in popularity and their tactics become part of the standard executive playbook, activist hedge fund managers and billionaires have been receiving a warmer reception by corporate executives and boards that are more inclined to readily accept their proposals and demands without putting up a fight.

Hedge Fund and Cybersecurity Firm Team Up to Short-Sell Device Maker (The New York Times)
The cybersecurity firm behind a short-seller’s campaign against St. Jude Medical, a major manufacturer of pacemakers, has a curious operating history. The firm, MedSec, says it has been around 18 months. But it was incorporated in the United States in Delaware just last month. Justine Bone, its chief executive, came on board two months ago. And MedSec’s headquarters shares the same address as a virtual office in Miami that provides space to a number of companies. The start-up is at the center of an unusual story line that brings together a Wall Street short-seller and the mysterious world of computer hacking.

Private Equity Is the New Hedge Fund (Bloomberg Gadfly)
Hedge funds have served publicly as this year’s whipping boy for angry investors. They’ve been hammered with some of the biggest withdrawals since the credit crisis and are being forced to drop their fees. Less discussed, however, is just how much private-equity funds have benefited from this. A UBS study published Thursday highlighted this shift in fortunes. About one-third of family offices surveyed have reduced their hedge fund allocations. They showed a particular distaste for credit and distressed strategies, especially after the energy-led corporate-bond selloff last year.