Hedge Fund Calls New York Times Article a ‘Distortion’ (The New York Times)
Bridgewater Associates, the world’s largest hedge fund, released a statement on Thursday taking issue with what it called “significant mischaracterizations” and a “distortion” of some of its business practices and culture that were described in an article in The New York Times. Ray Dalio, the founder and chairman of Bridgewater, said in a statement that the article “intentionally strung together a series of misleading ‘facts’” in order to “create the most sensationalistic story.” The Times article reported on the culture at Bridgewater as detailed in a sexual harassment complaint and a National Labor Relations Board filing, as well as in interviews with seven former employees or people who have done work for the firm. The article described how the firm’s policy of recording meetings and surveillance had a chilling effect on employees bringing grievances or complaints, according to those people.
Howard Marks Says Hedge Fund ‘Geniuses’ Spawned Too Many Firms (Bloomberg)
Investor appetite for hedge funds has waned after too many managers started such vehicles in the past decade, Oaktree Capital Group LLC’s Howard Marks said. “People have grown appropriately skeptical,” the billionaire investor, whose firm doesn’t manage hedge funds, said Thursday when asked about the $2.9 trillion industry on an earnings conference call. “The performance of the greatest hedge funds, run by geniuses, created a huge umbrella over this industry, which permitted the other 9,990 hedge fund managers to start hedge funds and command hedge fund fees.”
Hedge Fund Reveals Losses After Brexit Vote (The Wall Street Journal)
A London-based hedge fund whose chief economist argued vocally for Brexit sustained heavy losses in its main fund following last month’s vote by the U.K. to leave the European Union. Toscafund Asset Management LLP, founded by trader Martin Hughes and with more than $4 billion in assets, told clients in a note this month that its flagship Tosca fund lost 14.7% in June. U.K.’s surprise decision to leave the EU. The fund was caught off guard by the sharp selloff that followed the U.K.’s surprise decision to leave the EU, the firm said. “We expected a close-run Brexit referendum but believed that ‘Remain’ would ultimately prevail. Clearly, we were wrong,” the firm said in the note reviewed by The Wall Street Journal. “We were not well set up for such an outcome.”
Marcato Capital Takes Stake In Crane Manufacturer Terex (CNBC)
Just days after announcing a substantial new position in the restaurant chain operator Buffalo Wild Wings (BWLD), the hedge fund Marcato Capital Management plans to announce a new 5.1 percent position in the crane maker Terex Corporation (NYSE:TEX), according to someone familiar with the matter. Shares of Terex jumped more than 4 percent to around $24 on CNBC’s televised report of the stake. Shares were very briefly halted after the report but resumed trading almost immediately. That stake, which could be announced as early as Thursday afternoon, is based on Marcato’s belief that Terex is worth more than its current price — and that selling certain parts of its industrial business and streamlining others through restructuring, cost savings, and other measures could improve margins substantially, this person added.
Aurelius Said to Amass Oi Stock as Bankruptcy Battle Deepens (Bloomberg)
Aurelius Capital Management is scooping up shares of Oi SA to bolster the hedge fund’s position in negotiations to restructure $19 billion of debt at the struggling Brazilian telephone company, people with knowledge of the matter said. Aurelius, which last week pushed back against a debt reorganization plan proposed by a group of Oi’s biggest creditors, started buying stock about the time that Oi sought bankruptcy protection in Brazil on June 20, said the people, asking not to be named because the matter is private. Brazil’s largest bankruptcy filing came amid heavy trading in Oi’s stock, with daily volume on the common and preferred shares surging to more than double recent levels in the days before and after the filing.
Hedge Fund Lansdowne Snaps Up U.K. Stocks After Brexit (The Wall Street Journal)
LONDON—Lansdowne Partners, one of the world’s biggest hedge fund firms, has been buying U.K. stocks in recent weeks saying some prices have been pushed too low following last month’s Brexit vote. “Current valuations present a significant opportunity,” wrote Peter Davies and Jonathon Regis, managers of the firm’s flagship fund, in a letter to investors seen by The Wall Street Journal. “We suspect that current share prices are meaningfully over-discounting the medium-term impact for the U.K. and are comfortable adding a bit to exposures.”
Steve Cohen and the Infinite Monkey Theorem (BloombergGadfly)
There’s a famous theory that you’ve probably already heard about, and it involves monkeys and Shakespeare. The idea behind the “infinite monkey theorem,” depending on the variation, is that if you put a monkey in front of a typewriter and give it enough time — or put a bunch of monkeys in front of a bunch of typewriters — eventually the monkey(s) will bang out some Shakespeare. This is obviously a high bar and no one’s yet been able to get a monkey to type out Shakespeare, as far as I know. (Maybe if the bar were set lower, say to get a monkey to bang out a witty, 500-word financial-news column? Wait, never mind. Let’s move on.) Anyway, this theory came to mind while reading a Wall Street Journal article about how Steve Cohen is investing in a hedge fund run by investment firm Quantopian, which provides money to amateur quants who come up with profitable computerized trading strategies. These aren’t exactly monkeys, of course; they’re obviously much smarter.
