SEC charges 23 hedge funds with illegal short sales (New York Post)
The SEC crackdown on rogue hedge funds continues. The federal regulator on Tuesday charged 23 funds with stock manipulation — improperly profiting from a company’s stock by shorting it five days before a secondary offering, and then buying shares in the offering. The $23 billion D.E. Shaw fund, one of the largest hedge funds in the country, was one of 22 firms settling with the Securities and Exchange Commission. D.E. Shaw paid $667,000 to settle the charges it improperly pocketed profits of $447,794. It did not admit or deny wrongdoing. The SEC has been trying to stop improper short-selling for years, and previously brought similar cases against such big names as Harbinger Capital, Touradji Capital, Level Global, Carlson Capital and Appaloosa Management.
Hedge fund head: Microsoft will beat Apple (CNN)
A top hedge fund manager said Tuesday that Microsoft Corporation (NASDAQ:MSFT) has a business model that makes it a better company than Apple Inc. (NASDAQ:AAPL) for the long-term. Jeffrey Ubben of ValueAct made the comments at the Value Investing Conference in New York. Ubben’s firm announced a $2 billion position in Microsoft earlier this year and is thought to be a driving force behind CEO Steve Ballmer’s decision to retire as well as Microsoft Corporation (NASDAQ:MSFT)’s new stock buyback and dividend increase announced earlier Tuesday. Ubben said he likes that Microsoft charges a lot of money, makes a lot of money, and has enterprise contracts that will last for years. He noted that Microsoft Corporation (NASDAQ:MSFT) is “in the plumbing” of big corporations.
Safeway Puts Up Defense After Hedge Fund Amasses Stake (New York Times)
The grocer Safeway Inc. (NYSE:SWY) has gone on the defense days after the activist hedge fund Jana Partners declared a 6.2 percent stake in the company. Safeway, based in Pleasanton, Calif., said on Tuesday that it had put into place a “poison pill” to prevent investors from acquiring more than 10 percent of the company. Its shares rose on Tuesday by 10.5 percent to $30.99, their highest level in more than a year. The $6 billion hedge fund Jana Partners is known for taking a behind-the-scenes approach to its campaigns, amassing large stakes in companies and agitating for change through talks with management.
Judge OKs U.S. SEC’s Falcone settlement (Hedgeworld)
A federal judge on Monday [Sept. 16] approved the U.S. Securities and Exchange Commission’s $18 million settlement with hedge fund manager Philip Falcone, the regulator’s first big case to include an admission of wrongdoing since a recent policy change. U.S. District Judge Paul Crotty in Manhattan called the civil sanctions, which include a five-year securities industry ban, “appropriate and proportionate to defendants’ admitted wrongful conduct,” and a “fair and appropriate resolution.” The settlement resolved SEC civil charges over Falcone’s management at his hedge fund, Harbinger Capital Partners.
U.S. hedge fund manager Tilson bets against K12, stock dips (Reuters)
Hedge fund manager Whitney Tilson said on Tuesday he is betting against online education giant K12 Inc. (NYSE:LRN), pushing the shares lower. “This is a growth story that is about to crash,” Tilson, who runs Kase Capital, said at the Value Investing Congress where he spoke publicly about his short betfor the first time. Tilson has been short the stock, where he borrowed the shares in the hopes of repaying the loan for less after the shares drop, for roughly a year. The bet has clearly weighed on his returns as the company’s stock price has shot up 70 percent this year.