Bridgewater Warns of Peak U.S. Profit Margins, Lower Stock Prices (Reuters)
(Reuters) – The major drivers of high U.S. corporate profit margins are unsustainable and “now under threat”, which will eventually result in much lower equity prices, Bridgewater Associates, the world’s largest hedge fund, said on Wednesday in a report. “Over the last two decades, U.S. corporate profit margins have surged and have contributed more than half of the excess return of equities relative to cash,” said Bridgewater, which oversees more than $160 billion in assets.
David Einhorn Goes Mano a Mano With Elon Musk (Bloomberg)
Hedge fund wunderkind David Einhorn and futurist Elon Musk are locked in a zero-sum contest. Einhorn is betting big, in reputational capital if not actual dollars, that Musk’s Tesla Inc. is doomed to fail. “We believe that right here, right now, the company appears to again be on the brink,” Einhorn declared on Friday in a letter to investors in his fund, Greenlight Capital, citing lack of demand, price cuts, layoffs, service center closings and cuts to capital expenditures as signs that Tesla is in trouble. This isn’t the first time, Einhorn added, contending that “Musk never admits the crisis in real time.”
Obama Fundraiser and Former Hedge Fund Executive Eric Mindich Plans to Help Joe Biden in 2020 Campaign (CNBC)
Eric Mindich, a former hedge fund executive who helped raise funds for former President Barack Obama’s White House campaigns, has told friends he plans to help former Vice President Joe Biden raise cash for the 2020 presidential election, according to people familiar with the matter. Mindich’s support would be a boost for Biden, who has yet to announce whether he is running and would face a crowded group of rivals in the Democratic primary race. In conversations with a few donors, Biden has been told that they aren’t yet convinced he can overtake the younger, more diverse and progressive field, and that they are going to wait to see how he competes in the race.
Hedge Fund Slammed by Oil Looks to Take Riskier Bets (The Wall Street Journal)
Pierre Andurand, a prominent oil hedge-fund manager who lost big during last year’s price slump, is launching a new fund that takes on more risk as a way to benefit from crude’s recovery. Mr. Andurand, one of the last oil hedge-fund managers standing, has recovered somewhat this year after recording his first-ever annual loss in 2018. Brent crude, the international price gauge, has rallied more than 30% this year on production cuts by major suppliers. That sharp recovery followed a dramatic slump late last year, which…
Someone Is Not Ready To Forgive Bill Ackman (DealBreaker)
As you may have heard, Bill Ackman is a new man. He’s found love again and is about to be a father again. He’s making instead of losing money for the first time in memory. He’s trying to be the best Bill Ackman he can be, taking some me time and really getting back in touch with himself. He’s even not talking to the press anymore, he tells the press. Not everyone is taking such a self-reflective and introspective approach to things, including at least one of Bill’s many, many enemies. Even though he triumphed over Ackman in the latter’s battle to remake Automatic Data Processing’s board of directors on the fly, which he said would double the company’s stock price just like that, Terry Smith’s not quite over it. What he is over are these hedge fund activists.
Elliott Made a Big Bet on Windstream Bonds (The Wall Street Journal)
Elliott Management Corp. bet big on Windstream Services LLC, the rural telecom company that filed for bankruptcy in February, court filings show. Paul Singer’s activist hedge fund owns over $1 billion in Windstream Services notes, making it by far the largest holder of Windstream bonds with disclosed holdings, according to a bankruptcy court filing on Tuesday.
Hedge Funds Had Their Best First Quarter in 13 Years to Start 2019 (CNBC)
This year is off to a roaring start for hedge funds, which turned in their strongest first quarter in 13 years according to data released on Wednesday. “Hedge fund capital posted sharp gains to begin 2019 as investor risk tolerance increased,” said Kenneth Heinz, President of Hedge Fund Research, a Chicago-based provider of hedge fund data and analysis.
Global Hedge Funds Record Net Growth with $55bn Performance Gains and $32.3bn Investor Redemptions in First Quarter (Opalesque.com)
The global hedge fund industry assets under management (AUM) has grown by $22.7bn as of March 2019, said the April 2019 Eurekahedge Report. Redemption pressure eases as quarter-on-quarter investor flows from the hedge funds industry dropped by 65.9%. Investors redeemed $32.3 bn in Q1 2019, compared to $94.7bn in Q4 2018. Final asset flow figures for February showed that hedge fund managers generated performance-based gains totalling $12.4bn, offset by investor redemptions of $17.5bn. Following a similar trend, preliminary data for March showed that the industry saw $9.8 bn of performance-driven gains, counterbalanced by $8.0bn of net investor outflows.
Family Offices Bypassing Fund Managers (HFAlert.com)
In a potentially troubling trend for hedge funds, family offices are increasingly willing to invest directly in alternative assets and complex situations. The world’s wealthiest families have long been among the most prolific allocators to hedge funds, with some surveys indicating family offices, on average, deploy 25% of their capital to hedged strategies. But disillusionment with fund performance and fees is prompting family offices from New York to Monaco to analyze and execute alternative investments in-house – even if that means paying top dollar to hire seasoned investment professionals. “Hedge fund fees are too high and performance is too low, and family offices are less willing to throw around the large amounts of capital needed to justify getting a side letter with preferred terms,” a family office advisor said.
Preqin Quarterly Update: Hedge Funds, Q1 2019 (Preqin.com)
What a difference a quarter makes. In our Q1 2019 update, we look at how the hedge fund industry has recovered from a tough end to 2018 – the worst quarter in over a decade – by hitting the ground running in 2019. All top-level strategies made performance gains in the quarter, and yet as volatility prevails and a possible market correction looms, investors are targeting a wide split of strategies for their portfolios in the year ahead as they become increasingly bearish in their approach to hedge funds.