Pershing Square: An Update on Herbalife and Second Quarter Results (The Wall Street Journal)
Pershing Square Holdings, the publicly traded security of activist investor Bill Ackman’s hedge fund, disclosed its second-quarter results Wednesday morning. More importantly, it updated investors on its views of Herbalife. Although the company has described its recent settlement with the Federal Trade Commission as a positive development, Mr. Ackman views it as very bad news. Pershing Square is short Herbalife, meaning it is positioned to gain if shares of Herbalife fall. The fund has had a difficult year. It lost 25.5% in the first quarter, primarily due to its 9% stake in Valeant Pharmaceuticals International.
Inside the High-Profile Downfall of a $8 Billion Hedge Fund (Bloomberg)
Long before Jacob Gottlieb was forced to unwind his Visium Asset Management last month amid insider trading allegations, red flags were emerging at the once $8 billion hedge fund. In its early days, Visium employed Gottlieb’s younger brother as compliance chief, a potential conflict of interest. The founder at one point owned shares in a company that his hedge fund invested in. And in early 2013, Visium funneled money from its main healthcare fund to its struggling credit team just before their bond fund shut down. Interviews with a dozen investors and former employees portray a company that was built on the cheap, with tight limits on compensation, and compliance that was at times lacking. Gottlieb, who had ambitions to build a firm rivaling the biggest hedge funds, all but shuttered Visium last month when the federal government accused three traders of securities fraud. While neither the company nor its founder were accused of wrongdoing, the allegations raise questions about oversight, said Tamar Frankel, a professor at Boston University School of Law.
Platinum Partners Hires Monitor For Hedge Fund Liquidation – Investor Letter (Reuters)
Platinum Partners, the hedge fund firm that was raided by federal agents in June, has appointed an independent monitor to oversee the liquidation of its main funds, according to a letter sent to investors Wednesday. Bart Schwartz of Guidepost Solutions will “assist…with the development and implementation of a plan for the orderly liquidation of the Funds under management,” according to the letter. Schwartz will also “report to the SEC at least monthly as to the status of our engagement, the consummation of any sale transactions, and the identification of any actual or potential violations of federal securities law, if any, which may come to our attention during the course of our oversight,” according to the letter.