Hedge Funds May Rebound and Spoil Buffett’s Bet (WSJ)
Timing isn’t everything, but it sure helps. Six years ago, Warren Buffett, chairman of Berkshire Hathaway Inc. (NYSE:BRK.B) +1.48% made a $1 million bet with hedge-fund manager Protégé Partners that a simple stock-index fund would beat their handpicked stable of five funds of hedge funds over a decade. Then 2008 happened and the funds, though they declined, lived up to their names and trounced the market. Having reached the halfway point at the end of 2012, though, Mr. Buffett had a substantial lead, with a total return of 8.69% to just 0.13% for the masters of the universe. That looks set to widen further in 2013: Through November, a weighted index maintained by Hedge Fund Research Inc. was up by just 8.31% compared with nearly 29% for the S&P 500.
Managers turn to mind over money for profits (eFinancialNews)
Against this backdrop, managers are exploring a new frontier: behavioural finance. They are becoming introspective, attempting to get into the minds and psyches of the traders and key decision makers who generate their profits. Buoyed by the greater acceptance of social, cognitive and emotional factors in the study of financial markets in the aftermath of the financial crisis, and boosted by cheap and efficient ways of harvesting data, hedge fund managers are turning to specialist coaches. They are seeking to gain a better understanding of the trading process, the way the mind works and the behavioural biases that affect us all, with one clear goal: gaining a performance edge. Steven Goldstein, a trader performance coach at BGT Edge, said: “Returns have declined over recent years. It’s more competitive and it’s more difficult so people are looking for every advantage they can get.”
Activist Investor Plans to Increase Pressure on Bob Evans (NYTimes)
Last week, Bob Evans Farms announced that it had declined to make strategic changes recommended by one of its biggest investors. Now that investor, the hedge fund Sandell Asset Management, plans to turn up the heat on the restaurant operator. Sandell intends to announce Monday that it will move for change at Bob Evans, potentially including replacing its directors, according to people briefed on the matter who spoke on condition of anonymity because they were not authorized to speak publicly about the fund’s plans. The hedge fund will begin a so-called consent solicitation, which will let investors vote on changes at Bob Evans outside an annual meeting, the people said. The fund could also seek to amend the restaurateur’s bylaws.
Herbalife Said to Use Moelis in Effort to Sway Ackman Investors (BusinessWeek)
Herbalife Ltd. (NYSE:HLF) is taking a page from Bill Ackman’s playbook. Ackman has spent the past year urging Herbalife shareholders to sell their stock, saying the marketer of vitamins and weight-loss shakes is a pyramid scheme. Now Herbalife is approaching investors in Ackman’s hedge fund, suggesting they pull their money from the $12 billion firm, according to three people with knowledge of Herbalife’s strategy. Herbalife’s argument: Ackman’s bet, which has lost as much as $500 million, is risky and irresponsible, said the people, asking not to be named because the campaign is private. Moelis & Co., an investment bank working for Herbalife, arranged a meeting with Cliffwater LLC, which advises clients on hedge-fund investments, and Herbalife executives, according to two people with knowledge of the gathering…
Former Perry Asia Head Said to Raise $1.1 Billion New Fund (Bloomberg)
Alp Ercil, a former regional head of New York-based hedge fund Perry Capital LLC, won $1.1 billion of investor commitments for his second Asia distressed-assets fund, according to two people with knowledge of the matter. ARCM Master Fund II will focus on three- to five-year investments in credit and equity securities, said the people who asked not to be identified because the information is private. The amount of capital committed made it the largest hedge fund started in Asia this year, according to data from Singapore-based Eurekahedge Pte. Global banks have scaled back lending and distressed investments in Asia after the global financial and European debt crises led to tighter regulatory scrutiny of their investments since 2008…
Trading Led by Funds as Collusion Probes Roil Market: Currencies (BusinessWeek)
Fund managers and electronic traders for the first time account for more than half the $5.3 trillion-a-day currency market as regulators investigate at least 11 dealers for alleged collusion on benchmark rates. Hedge funds, pension managers, central banks and smaller lenders made up 67 percent of the increase in daily trading, from about $4 trillion in 2010, the Bank for International Settlements said in its quarterly review yesterday. Their share rose to 53 percent from 48 percent, while dealer banks, which buy and sell from clients, held steady with 39 percent.