Ray Dalio Says He wouldn’t Rule Out China Weaponizing its Massive US Treasury Holdings (CNBC)
Hedge fund titan Ray Dalio said he wouldn’t rule out China using its Treasury holdings to gain an upper hand against the U.S. in the trade war — a view that contrasts with many other observers. “We have a debtor-creditor relationship, not just a trade relationship. And (that) can be a dangerous thing,” Dalio, founder of the world’s largest hedge fund Bridgewater Associates, told CNBC’s “Managing Asia” in Singapore.
Billionaire Bill Ackman Explains Why He Invested 11% Of His Fund In Berkshire Hathaway (Forbes)
Hedge fund billionaire Bill Ackman of Pershing Square Capital Management is riding high after a multiyear stretch of trouble. A publicly traded vehicle that houses the vast majority of his fund’s assets is up 48% net of fees as of August 13, about triple the return of the S&P 500 Index. Big turnaround investments in Chipotle Mexican Grill and Starbucks are trouncing the market in 2019, as is his return to familiar holdings like Hilton Worldwide and even a highly speculative bet to back mortgage giants Fannie Mae and Freddie Mac, both of which remain in government conservatorship.
Hedge Funds Binged on GE Shares Before Worst Rout in 11 Years (Bloomberg)
General Electric Co.’s biggest plunge in 11 years came at an awkward time for some of Wall Street’s savviest investors, after a recent buying spree by the likes of Renaissance Technologies, Citadel Advisors and Adage Capital Management. Hedge funds added more shares of GE than any other company to their industrial investments in the second quarter, according to an initial analysis of U.S. regulatory filings compiled by Bloomberg Global Data. Their holdings increased by 25% to a total of 199.3 million shares, valued at $2.09 billion at the quarter’s end.
Chicago Titan Citadel Just Keeps Growing. The Rest of the City’s Hedge Fund Industry, Not So Much (ChicagoBusiness.com)
Tired of paying hefty fees for mediocre returns, investors have pulled money out of hedge funds in recent years. With less capital to go around, Chicago’s hedge funds are caught in the $3.1 trillion industry’s consolidation that increasingly favors megafirms. Many of the local firms, including No. 2 Magnetar Capital Partners, have fewer assets today than at their peak, and one returned investors’ money this year as it shut down trading for outside clients. At the same time, few new hedge funds have sprung up. Citadel, a notable exception, spawned much of the Chicago industry, with managers breaking away to start new firms, but now those smaller players are having a harder time attracting capital and talent for expansion.
Hedge Fund in Bond Lawsuit Owns Derivatives that will Pay Off if Illinois Defaults on the Debt (CapitolFax.com)
Warlander Asset Management, the hedge fund seeking to invalidate $14.3 billion of Illinois bonds, bought derivatives that will pay off if the state defaults on the debt. An attorney for Warlander’s co-plaintiff, John Tillman, the chief executive officer of the Illinois Policy Institute, disclosed the firm’s derivative wager at a hearing in Springfield on Thursday. That confirms the assertion made by two big bond investors, Nuveen Asset Management LLC and AllianceBernstein, in a brief arguing that the case should be tossed out — saying it raises questions about Warlander’s motives.
Ackman Protégé’s Activist Hedge Fund Loses 90% of Assets (FNLondon.com)
A well-known activist hedge fund that had the backing of billionaire William Ackman has lost more than 90% of its assets. Marcato Capital Management’s assets fell to around $250m at mid-year from $3.2bn in 2015, people familiar with the numbers said. Marcato’s decline in assets is due to poor performance and client redemptions, the people familiar said. In recent months, Marcato founder Richard “Mick” McGuire sold investment positions to meet redemption requests, though he has no plans to shut his firm, according to a person familiar with his thinking.
Equity Hedge Funds Are Riding the Bullish Wave Sweeping Bonds (Bloomberg)
(Bloomberg) — Wall Street has been sounding alarm bells all year over swelling valuations and overcrowding in stocks tracking the fortunes of government bonds. The smart money kept the faith, and it’s paying off. Equity hedge funds have gained 7% in 2019 as exposure to the momentum factor — which buys the winners and dumps the losers over the past 12 months — jumps to the highest in two years, according to Sanford C. Bernstein citing Hedge Fund Research.
SS&C GlobeOp Hedge Fund Performance Index at 0.42 per cent in July (HedgeWeek.com)
The gross return of the SS&C GlobeOp Hedge Fund Performance Index for July 2019 measured 0.42 per cent. Hedge fund flows as measured by the SS&C GlobeOp Capital Movement Index advanced 0.38 per cent in August. “SS&C GlobeOp’s Capital Movement Index for August 2019 was 0.38 per cent, reflecting increased net inflows compared to 0.21 per cent net inflows for the same period a year ago,” says Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies. “The hedge fund sector’s ability to attract and retain assets in the current highly volatile market environment is truly impressive.”