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Hedge Fund and Insider Trading News: Warren Buffett, Citadel LLC, CPI Aerostructures, Inc. (CVU), Costco Wholesale Corporation (COST), and More

Citadel Loses Distressed Debt Manager and Some Team Members (The Wall Street Journal)
Citadel LLC, a hedge fund founded by billionaire investor Ken Griffin, recently lost Barrett Eynon, a portfolio manager focused on investing in distressed debt, as well as a few members of Mr. Eynon’s team, according to people familiar with the matter. Since Mr. Eynon’s departure several weeks ago, Citadel has unwound its positions in the distressed debt of companies such as Breitburn Energy Partners LP, coal miner Murray Energy Corp. and Windstream Services LLC, people with knowledge of the matter said.

Warren Buffett Wants to Make an ‘Elephant’-Sized Acquisition (CNN Business)
New York (CNN Business)Investing legend Warren Buffett is looking for an “elephant” of a deal to help Berkshire Hathaway‘s portfolio fly higher. The Oracle of Omaha wrote in his latest annual shareholder letter in February that he’s itching to make a sizable acquisition . Buffett conceded that the likelihood of an imminent deal is remote because the stock market rally has made most takeover targets prohibitively expensive. “Prices are sky-high for businesses possessing decent long-term prospects,” he wrote, adding that this “disappointing reality” will likely mean that Berkshire will add to its pile of cash. “We continue, nevertheless, to hope for an elephant-sized acquisition,” Buffett said.

Insider Trading Wall Street Trader Panic

Luis Louro / shutterstock.com

Chris Hohn’s TCI Lets Investors Pull Some Cash Out (Institutional Investor)
The concentrated activist fund, which returned 18 percent in the first quarter, is calling the move “a modest rebalancing opportunity.” One of the most successful hedge fund managers in the past few years is offering its investors the opportunity to redeem some of their capital.In a letter to investors dated March 29 and obtained by Institutional Investor, TCI Fund Management offered all investors in its hedge funds – The Children’s…

Billionaire’s Hedge Fund Bets £60m Shares in Ryanair will Fall (The Guardian)
The hedge fund founded by billionaire investor Ken Griffin has made a £60m bet that the share price of Ryanair will fall, the first time a short position of this size has been reported for the budget airline. Citadel Europe took a 0.56% short position in Ryanair in early February, according to short selling data reported to the Central Bank of Ireland. Ryanair’s market value was €12.9bn (£11bn) at the close of trading on Wednesday, meaning Citadel’s short position was equivalent to €72.4m. Citadel’s bet is the only short disclosed in Ryanair shares since 2012, when European regulations required all positions equivalent to 0.5% of shares to be published.

New Hedge Fund Study Shows Funds Placing Premium on Strong Start (HedgeWeek)
Hedge funds established in 2018 undertook concerted efforts to launch their enterprises on a stable foundation, including raising minimum investment levels significantly over prior years, according to The Seward & Kissel 2018 New Hedge Fund Study, an annual analysis of new hedge funds performed by the leading law firm to the hedge fund industry. In 2018, higher asset levels were sought in order to manage increasing costs and better attract institutional capital. From 2017 to 2018, the minimum investment accepted by new hedge funds shot up dramatically. The full study is available here.

SEC Filings Paint Bleak Picture for Startups (HFAlert)
The pace of hedge fund launches so far this year is even slower than it was in 2018, when fund-formation activity reached its lowest level since 2000. The SEC processed Form D filings for only 439 hedge funds in the first three months of the year – the lowest first-quarter total since the global financial crisis, according to a Hedge Fund Alert analysis. The finding follows a March 21 report from hedge fund tracker HFR that showed the number of fund launches last year at an 18-year low. The volume of Form D filings in the first quarter was about 20% less than the average for the same period in 2015-2017. And it was down 27% from the first quarter of 2018.

Hedge Funds are Loading Up to Bet Against Lyft (CNBC)
The four-day-old Lyft stock has encountered a new threat: Short-sellers. Tuesday marks the first settlement day for Lyft shares, allowing hedge funds to begin borrowing shares to settle short sales. And they came in full force — short sellers have borrowed $455 million worth of Lyft shares, or 6.61 million shares, according to IHS Markit.

MYOB Claims Key Shareholder Agrees with KKR Buyout Offer (Reseller News)
MYOB has said that an activist investor will support KKR & Co’s bid for the accounting software maker, an about-turn after campaigning for a higher price and coming less than two weeks since raising its stake. The decision by Manikay Partners, the Australian firm’s second-biggest shareholder, clears a significant hurdle for the marked-down $1.6 billion buyout offer, from which the U.S. private equity firm refused to budge. “We, Manikay Partners, intend to vote all the MYOB shares that we own or control FOR the upcoming Scheme,” the U.S. hedge fund wrote in a letter to MYOB, referring to a meeting on 17 April where shareholders will vote whether to accept the offer.

Starting a Hedge Fund? You’re Going To Need Even More Money Than You Thought. (Barron’s)
The hurdles for starting a new hedge fund continue to rise. The Back Story: The fourth quarter of last year was the second consecutive quarter when more hedge funds closed their doors than started up, according to a recent report by Hedge Fund Research. Only 111 new hedge funds started in the quarter, 33 fewer than in the previous quarter and 79 fewer than the same quarter the year before. An estimated 561 hedge funds started last year — the fewest since 2000, HFR data show.

Insiders Swoop on UK Industrials (City Index)
Prime Minister Theresa May’s dramatic call for “compromise” has sent sterling up as much as 185 pips since Tuesday night. The typical negative impact on giant FTSE stocks linked to non-sterling revenues is well-known. Theresa May’s definitive move towards a softer deal poses further sterling upside risk. That could weigh more on FTSE multinationals. Conservative Party fallout could unseat May, heralding an election and markets have been averse to that possibility of late. Until it crystallises though, Brexit-sensitive shares look favoured, particularly those left undervalued by economic and political uncertainty.

The President & CEO of CPI Aerostructures (NYSE MKT: CVU) is Buying Shares (AnalystRatings.com)
Today, the President & CEO of CPI Aerostructures (CVU), Douglas Mccrosson, bought shares of CVU for $165K. This recent transaction increases Douglas Mccrosson’s holding in the company by 24.53% to a total of $823.4K. Based on CPI Aerostructures’ latest earnings report for the quarter ending December 31, the company posted quarterly revenue of $26.5 million and GAAP net loss of $800K. In comparison, last year the company earned revenue of $18.19 million and had a net profit of $1.26 million. CVU’s market cap is $58.46M and the company has a P/E ratio of 23.79. Currently, CPI Aerostructures has an average volume of 7,107.

House Hearing to Probe Bill Banning Subset of Insider Trading (Bloomberg Law)
House lawmakers are taking a look at SEC Commissioner Robert Jackson’s concerns about company insiders profiting from trading while some significant corporate information isn’t public. A draft measure prohibiting executives from buying and selling company stock during an “8-K trading gap” is among securities bills scheduled to be subject of an April 3 House Financial Services subcommittee hearing.

Former CEO of Silicon Valley Startup Charged With Defrauding Investors (HedgeCo.net)
(HedgeCo.Net) The Securities and Exchange Commission has charged the founder and former chief executive of a Silicon Valley startup with defrauding investors in Jumio Inc., a private mobile payments company. The former CEO, Daniel Mattes, agreed to pay more than $17 million to settle the charges. According to the SEC’s complaint, filed in federal court in California, Mattes grossly overstated Jumio’s 2013 and 2014 revenues and then sold shares he held personally to investors in the private, secondary market. The complaint alleges that Mattes made approximately $14 million by selling his Jumio shares and hid these sales from Jumio’s board. According to the complaint, Mattes also falsely told an investor that he didn’t want to sell any of his shares because there was “lots of great stuff coming up,” and that “he’d be stupid to sell at this point.” Jumio restated its financial results in 2015, wiping out most of its revenue, and the shares became worthless after it filed for bankruptcy in 2016.

Wednesday 4/3 Insider Buying Report: COST, RAVN (Nasdaq.com)
Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned dollars to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys. On Monday, Costco Wholesale Corp (COST)’s Director, John W. Meisenbach, made a $727,935 purchase of COST, buying 3,000 shares at a cost of $242.65 a piece. So far Meisenbach is down about 0.7% on the purchase, with shares changing hands as low as $241.02 in trading on Wednesday. Costco Wholesale Corp is trading up about 0.3% on the day Wednesday. This purchase marks the first one filed by Meisenbach in the past twelve months.

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