Paulson’s Big Long: A Bet On Trump Yields Power And Profit (BloombergMarkets)
John Paulson went long Donald Trump when much of Wall Street went short. Now, he’s reaping the rewards. Since making a fortune on the U.S. housing collapse a decade ago, the hedge-fund billionaire’s company has played a key role in lobbying in Washington. Much of it is directed at Fannie Mae and Freddie Mac, the giants at the heart of the nation’s mortgage market. With Trump’s victory, Paulson — a political donor and economic adviser to the president-elect — is already seeing a payoff. His funds have a stake in Fannie Mae and Freddie Mac, once virtually worthless, whose common-class shares have roughly doubled since Election Day.
The Next Big Short’? Eisman Warns That Europe And Its Banks ‘Are Still Screwed’ (CNBC)
Eight years after the 2008 financial crisis, European banks remain in trouble as their balance sheets continue to feature a high level of non-performing loans, Steve Eisman, the hedge fund manager who famously predicted the crash,has told the U.K.’s Guardian newspaper. The state of Italian banks is one of the main problems, but the German lender Deutsche Bank, which is seen as one of the most important institutions in Europe, also raises concerns, Eisman added. “Europe is screwed. You guys are still screwed,” Eisman told the newspaper in an interview published over the weekend. “In the Italian system, the banks say they are worth 45-50 cents in the dollar.
Renaissance’s Skill And Facebook’s Buyback (BloombergView)
The big problem with Renaissance Technologies, the Long Island-based “pinnacle of quant investing” founded by Jim Simons, is that its Medallion fund makes too much money: Simons determined, almost from the beginning, that the fund’s overall size can affect performance: Too much money destroys returns. Renaissance currently caps Medallion’s assets between $9 billion and $10 billion, about twice what it was a decade ago. Profits get distributed every six months. Medallion was up 21.0 percent for the first six months of 2016. It was up 35.6 percent last year, 39.2 percent the year before, 46.9 percent the year before that. This keeps going. The last down year was 1989.
Chipotle And Ackman Near Settlement, But Company Continues To Face Big Problems (TheStreet)
The troubled Mexican food chain and the activist investor are reportedly close to a settlement regarding Chipotle’s board, but this is not the time to purchase shares. Shares in beleaguered Tex-Mex restaurant chain Chipotle Mexican Grill (CMG) rose more than 2% Friday following word from the company that it is close to reaching a settlement with an activist investor. But an agreement with Bill Ackman won’t make this stock any less toxic. Investors should stay away. Pershing Square Capital Management, the hedge fund run by Ackman, purchased a 9.9% stake in Chipotle in September. That made the fund the second-largest Chipotle shareholder, after Fidelity Investments.
Elliott’s Guide To Selling Your Meh Business (BloombergGadfly)
Feeling down about your software stock? Do margins need a boost? Does a takeover premium seem hopeless? Then the Elliott Management plan might be for you. Call 1-800-ACTIVIST to see if you qualify. OK, it’s not quite that easy. But Paul Singer‘s activist hedge fund Elliott Management Corp. sure does seem to have a knack for fixing up underwhelming software companies so that they can score fat takeover premiums. Elliott Effect: Most of activist Elliott Management’s software targets have ended up being acquired — and for attractive prices.