Billionaire John Paulson, the hedge-fund manager trying to recover from losses related to bullion this year, posted a 13 percent decline in his Gold Fund last month, according to a letter to investors. The drop brings losses in the strategy to 54 percent since the start of the year, the firm said in the letter, a copy of which was obtained by Bloomberg News. The Gold Fund is the smallest strategy of the $19 billion money manager, with about $360 million, or 2 percent of assets, most of it Paulson’s own money.
Hennessee Hedge Fund Index up 1.79% in May, Lagging Market Advances (WSJ)
Hedge funds gained 1.79% in May, again lagging broader market advances, according to a monthly report from industry adviser Hennessee Group LLC. Outpacing the Hennessee Hedge Fund Index, the Standard & Poor’s 500-stock index rose 2.08% in May, the Dow Jones Industrial Average climbed 1.86% and the Nasdaq Composite Index climbed 3.82%. Bonds fell, as the Barclays Aggregate Bond Index declined -1.78%. “At month end, managers saw significant increases in volatility, a significant drop in the dollar, especially against the Japanese Yen, the Japanese market experienced a major pullback which were compounded by global GDP, employment, housing, and consumer spending disappointments,” said Charles Gradante, co-founder of Hennessee.
Houston hedge fund raises millions (BizJournals)
Motion Capital Partners LP, a Houston-based hedge fund, recently raised $15.9 million in capital, regulatory filings showed Tuesday. The fund had 20 investors after the date of first sale, June 1, in pooled investment fund interests, according to the U.S. Securities and Exchange Commission filing. David Fulghum, manager of Motion Capital Management LLC, declined to comment on the raise. The SEC filing indicated the offering would last more than one year.
‘Little reason’ for lack of transparency in hedge funds (FTAdviser)
There is “very little reason” for hedge fund traders to be so opaque, according to the chair of one hedge fund investment company. Speaking at a press event focused on listed credit, Charlotte Valeur, chair of Brevan Howard Credit Catalysts, said she has been trying for 10 years to increase transparency in the sector. “For me, transparency is everything,” she said. “We are pretty transparent with everything. I see very little reason to not be transparent with people.” Hedge funds are known for being more secretive than other fund types. Despite calling for greater transparency, Ms Valeur said there was a logic in traders’ mindsets prior to executing a trade.
Metacapital in Worst Slide as Bloodbath Roils Funds: Mortgages (BusinessWeek)
Deepak Narula rose to fame as manager of the best-performing hedge fund last year by navigating the government’s stimulus efforts. He’s having a far harder time as the Federal Reserve moves closer to an exit. Metacapital Management LP’s flagship $1.5 billion fund lost an estimated 6.4 percent last month, the worst decline since it started in 2008, according to a letter to investors obtained by Bloomberg News. That followed drops of 0.5 percent in April and 0.1 percent in March, after 17 months of consecutive gains including a 41 percent return last year.
Severn Trent deal blow hits “merger arb” funds (Reuters)
Hedge funds that bet Severn Trent would agree to a Canadian-led takeover are reeling from losses after the water company refused to talk, casting further doubt on their money-making abilities in an anaemic M&A environment. The LongRiver consortium walked away after the British utility let the bid deadline expire on Tuesday, ignoring an effective invitation to negotiate on price. That sent Severn Trent shares down 8.3 percent on Wednesday, adding to falls on Monday and leaving it below its pre-bid price, piling up the losses for hedge funds that bought stock in the past three weeks expecting a deal to be sealed.
Warren Buffett Becomes a Cheap(er) Lunch Date (BusinessWeek)
How to explain the dramatic drop in bids for a lunch with billionaire Warren Buffett? An online auction for the chance to break bread with the Oracle of Omaha took in just over $1 million this past week. That’s the lowest price since investor Mohnish Pabrai and two friends won with a $650,100 bid in 2007, and an astonishing 71 percent discount below the $3.45 million paid by last year’s winner for lunch at a Manhattan steakhouse. This year’s winner—one of eight contenders—chose to remain anonymous. Proceeds go to Glide, a San Francisco charity supported by Buffett’s first wife for many years. “It’s a sad day for Glide and for all of us,” Pabrai said Monday of this year’s more modest auction result. “Our hero got beat down.”
