Icahn’s ‘Beautiful Trade’ Pays Off Early With Malls Shut (Bloomberg)
Eastview Mall, 14 miles southeast of downtown Rochester, New York, was a rare bright spot among regional shopping centers. A fixture in the area for almost 50 years, it served a thriving community, with jobs in health care and at the nearby university. And it had so far managed to survive the trends that were killing off other malls: the relentless rise of online shopping, over-leveraged retail chains and shifting populations.
US Officials should Bargain Like Warren Buffett When They Strike Bailout Deals, Investor Bill Ackman Says (Business Insider)
Public officials should drive as hard a bargain as Warren Buffett when they bail out big companies, billionaire hedge fund manager Bill Ackman said in the latest episode of The Knowledge Project podcast. “The government shouldn’t come in on terms that are more favorable than where Warren Buffett would provide the company with capital,” the Pershing Square Capital boss told host Shane Parrish. The “big four” US airlines, bleeding cash as authorities restrict travel and people stay at home to slow the spread of coronavirus, are set to receive billions in government loans and grants.
Hedge Funds Outperformed the S&P 500 in the First Quarter. Here’s Why. (Barron’s)
Hedge funds may have been bullishly positioned as the first coronavirus cases were reported in January, but they quickly lowered their exposure to risk in February, data from Jefferies shows. As of January 31, hedge funds’ net long exposure was 205% but it quickly fell to 182% in February, just below the long-term average of 185%. The de-risking appeared to pay off. The hedge fund industry was down 9.4% in the first quarter—negative, to be sure, but far better than the 20% drop in the S&P 500, according to HFR data.
Activist Hohn Calls on Wirecard to Remove CEO Markus Braun (Bloomberg)
Billionaire activist investor Christopher Hohn has called on Wirecard AG to remove Chief Executive Officer Markus Braun after an independent audit of past revenues criticized the German payments processor for internal “shortcomings.” The probe by KPMG was unable to obtain the data needed to verify revenues of 1 billion euros ($1.1 billion) in transactions with third parties. Wirecard hired the accounting firm in October to look into its third-party partner business as well as operations in India and Singapore following a series of reports by the Financial Times that accused the company of accounting fraud in several countries.
These are the Companies Profiting from the COVID Economic Collapse (TheLondonEconomic.com)
In any crisis there is opportunity: opportunity to learn and grow, but also opportunity to profit and exploit. Globally, big corporations are doing the latter. In the UK, asset firms like Jacob Rees-Mogg’s Somerset Capital Management hold the key to where post-crisis investments will be made. Hedge funds, including the Brexiteer and Tory donor Crispin Odey’s eponymous company, have already profited by short-selling shares in failing businesses. Taking advantage of low Bank of England interest rates, high-street banks have not given up on their plans to charge up to 40 percent interest rates on customer overdrafts. Meanwhile, small businesses are going under.
Startups Offset Growing Number of Closures (Hedge Nordic)
Stockholm (HedgeNordic) – Fund closures and startups are an integral part of any hedge fund industry’s evolution. The number of Nordic hedge funds declined severely in 2019 as a result of 29 closures and fewer startups. The number of active funds remained relatively stable so far in 2020, as four new launches offset a growing number of closures. In the Nordic hedge fund universe, a total of seven funds closed down or are in the process of closing down so far this year. Announced in late March, the liquidation of Swedish hedge fund manager Bodenholm Capital is the highest-profile closure in the Nordics this year. DNB Asset Management has liquidated DNB ECO Absolute Return, a market-neutral equity fund focused on the renewable energy and energy efficiency sectors, due to its small size and unsatisfactory performance.
Medalist Chases Underpriced Securitizations (HFAlert.com)
Medalist Partners is starting a new structured-product fund, even as it blocks redemptions from its main vehicle. The New York firm plans to launch its Medalist Partners ABS Special Opportunities Fund by the end of June, raising only a small pool of capital without conducting a broad marketing campaign. The vehicle would aim to exploit pricing dislocations that have occurred amid the coronavirus crisis by buying senior securities underpinned by assets including residential mortgages, commercial mortgages, corporate loans, aircraft receivables and consumer cashflows. “Increased market volatility, price declines and forced selling due to market disruptions and increased discount rates caused by the Covid-19 pandemic are resulting in billions of assets trading below the present value of their expected future cashflows,” Medalist wrote in a pitchbook distributed this month.
Preqin’s House View: COVID-19’s Impact on Alternative Assets (Preqin.com)
COVID-19 is affecting all six alternative asset classes we track: private equity (including venture capital), private debt, hedge funds, private real estate, infrastructure, and natural resources. In this publication we take stock of key developments across each of these asset classes, and draw inferences from our data to suggest how the market could respond in future.