Hedge Funds Struggle to Replicate Warren Buffett’s Reinsurance Success (Bloomberg)
Berkshire Hathaway Inc.’s Warren Buffett issued a warning about eight years ago: Reinsurance isn’t easy. Still, hedge fund managers – including David Einhorn of Greenlight Capital and Daniel Loeb of Third Point – have borrowed a bit from Buffett’s playbook and gone into reinsurance, which provides coverage for other insurers. Buffett had an advantage. He owned insurance companies within his conglomerate and could invest their “float” – the premiums they take in but don’t have to pay out in claims right away.
A Hedge Fund Manager Who Oversees $2 billion Lays Out the Road to Profitability for Uber and Lyft – and Explains Why They Have a Unique Bull Case Compared to WeWork (Business Insider)
Uber and Lyft have created a duopoly in the US ridesharing market that puts them on the road to profitability, according to Glen Kacher, the chief investment officer and founder of $2 billion Light Street Capital. Kacher juxtaposed their business models with WeWork’s to illustrate why they should not be lumped together with other unprofitable tech companies that are tapping the public markets for capital.
Exclusive: Hedge Fund D.E. Shaw to Push for Break-up of Emerson – Sources (Reuters)
(Reuters) – Hedge fund D.E. Shaw & Co. is building a stake in Emerson Electric Co (EMR.N) and is planning to push for changes, including a potential break-up of the U.S. industrial conglomerate, people familiar with the matter said on Friday. The sources requested anonymity because the matter is confidential. D.E. Shaw declined to comment, while Emerson did not immediately respond to a request for comment.
Herbalife Settles With S.E.C., but Too Late for Hedge Fund Investor (The New York Times)
Herbalife, a nutritional supplement company that was once the focus of attacks by a well-known hedge fund manager, reached a settlement on Friday with securities regulators over allegations it misled investors about its business practices in China. The company agreed to pay $20 million to the Securities and Exchange Commission to settle claims that it misled investors for six years and told them that its business practices in China were different from its operations in other countries. The settlement comes a little more than a year after the hedge fund manager, William A. Ackman, raised the white flag and ended a prominent bet that shares of Herbalife would collapse because he believed it was running an unsustainable pyramid scheme.
Hedge Fund Industry Divided on Advertising Rule Changes (InstitutionalInvestor.com)
Two hedge fund industry groups disagree on how the Securities and Exchange Commission should handle advertising in the industry – but they concur that the regulator should relax the so-called accredited investor standard. The SEC closed its comment period on its regulations that affect hedge fund firms and other investment groups this week. The Managed Funds Association, the industry’s largest trade organization, and the Hedge Fund Association, a lobbying group for the industry, both submitted comment letters to the SEC just in time for its deadline.
Activist Hedge Fund Urges Aareal to Weigh Software Unit Sale (Bloomberg)
Activist hedge fund Teleios Capital Partners called on German lender Aareal Bank AG to look into selling its software unit. Teleios, which owns about 3.4% of commercial real estate lender Aareal, said the software unit Aareon is a very different business than its parent, and without separate ownership it’s “in danger of failing to achieve its full potential.” The hedge fund made its case to the Aareal board in a Sept. 26 letter seen by Bloomberg. Aareal shares rose as much as 4.9% on the news.
Number of New Hedge Fund Launches Up for Second Consecutive Quarter (HedgeWeek.com)
New hedge fund launches increased for the second consecutive quarter in Q2, with launches through mid-year 2019 on a pace that could see the industry top launches from calendar year 2018. Launches totalled an estimated 153 in Q2 2019, bringing the H1 total to 289 new funds, according to the latest HFR Market Microstructure Report by HFR. The H1 2019 launches put the industry on pace to top the 561 launches from last year, which represented the lowest annual total for new funds since 2000.