Bill Ackman Is Taking A Beating Over The Herbalife Ruling (CNBC)
Friday’s ruling that Herbalife effectively is not a Ponzi scheme adds another layer to an already brutal year for hedge fund titan Bill Ackman. The Pershing Square Capital chief has had a long-standing and very public short position on the dietary supplement company. He already had been sustaining major losses on the bet, but the Federal Trade Commission ruling is the sharpest blow yet. Though the commission found much fault with the way Herbalife operates, it stopped short of the “pyramid scheme” tag at Ackman has alleged in public statements and video presentations.
Herbalife: Ackman’s Pyrrhic Victory (Bloomberg)
On the surface, it looks like Carl Icahn came out on top in the battle over nutritional-supplements seller Herbalife. But rival Bill Ackman has reason to feel at least somewhat vindicated. Icahn has been one of Herbalife’s biggest backers (making a roughly $500 million paper profit to date), while Ackman’s Pershing Square famously bet $1 billion in 2012 that the company would be shut down by regulators. On Friday, the three-year-plus saga drew to a close as Herbalife announced a settlement with the Federal Trade Commission that allows it to keep operating. Icahn claimed victory, saying “the shorts have been completely wrong on Herbalife.” But were they really?
Impala Prepares Hedge Fund To Bet On Commodity Rebound (Reuters)
Impala Asset Management is forming a new hedge fund to bet on rising commodities prices, according to a letter sent to clients and seen by Reuters on Thursday. Impala, a $2 billion stock-focused hedge fund manager based in New Canaan, Connecticut, plans to launch the Impala Resource Fund on August 1 with no more than $125 million, according to the note, which was sent out to clients on Wednesday. Impala leader Bob Bishop expects that there will be an 18 month to 36 month “cyclical commodity rally” and believes the “timing of this opportunity is very soon” according to the note. The launch comes amid a punishing rout in commodity prices because of slowing growth in China. The price of U.S. crude oil has lost more than half its value, copper is down about 30 percent and natgas has dropped by 60 percent over the past two years.
Goldman-Backed Pelham’s Hedge Fund Said to Lose 10% in June (Bloomberg)
Pelham Capital’s main hedge fund lost about 10 percent in June as the U.K.’s shock decision to exit the European Union sparked turmoil in global equity markets, according to two people with knowledge of the matter. The losses in Pelham Long/Short Fund, which managed 3.8 billion euros ($4.2 billion) at the end of May, left it down about 9 percent in the first half of the year, the people said, asking not to be identified because the information is private. A spokesman for Pelham Capital declined to comment.
Activist Fund Barington Withdraws Nominees For Chico’s Board (Reuters)
Activist hedge fund Barington Capital Group L.P. said on Friday it was withdrawing its nominees to the board of women’s apparel retailer Chico’s FAS Inc (CHS.N), days after two major proxy advisers backed the company’s nominees. Barington, which owns 1.5 percent of Chico’s shares, said it expects the company to deliver on its promises to stockholders, adding it would monitor Chico’s performance. (prn.to/29IeV0y). Barington’s decision brings to end a vocal fight in which the hedge fund said it was responsible for the retailer’s progress, a claim which Chico’s denied saying improvements had begun well before it started “substantively engaging” with Barington.
Distressed Funds Set For Big Stakes in Gulf Keystone After Debt Swap (Reuters)
Distressed debt funds will become big shareholders in troubled oil firm Gulf Keystone (GKP.L) after bondholders agreed to swap $500 million of debt for equity, wiping out some of the world’s top funds as shareholders. Sothic Capital, a London-based fund led by former distressed specialists from JP Morgan, is among the bondholders that will end up with a significant stake, according to sources close to the company and bondholders. Other such bondholders are GLG Partners, part of hedge fund Man Group, and investment fund Taconic Capital. Sothic did not respond to telephone calls. GLG and Taconic were not available for immediate comment.
Sears Finds A New Way To Rake In Cash (New York Post)
Sears Chief Executive Eddie Lampert has finally figured out how to make money off his retail chain — and it has nothing to do with getting more fannies into stores. The hedge fund mogul, who owns Sears and Kmart, is turning a profit in a little-known company offshoot that delivers and installs appliances for its store and a handful of rivals. Innovel Solutions, which was called Sears Logistics until Lampert renamed it two years ago, is actually growing and doing something very strange for a Sears asset: It’s not losing money. The 1,100-truck delivery service has signed up Costco as a customer — so when a shopper at the wholesale club orders a washer or refrigerator and has it delivered, a Sears Holdings-operated truck and driver drops it off, though the buyer doesn’t know it.