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Hedge Fund News: Crispin Odey, Jeffrey Vinik, Elliott Management

Brexiteer Odey’s Fund Loses 369 Million Euros (Reuters)
Hedge fund manager Crispin Odey lost about 369 million euros (313.03 million pounds) in the year to Nov. 14 despite being one of the biggest financial winners of Britain’s vote to leave the European Union. The Odey European Fund lost 44.1 percent by mid-November, reducing its assets to 468.15 million euros from more than 837 million euros in January, according to investor documents seen by Reuters. Odey’s fund had been down 29 percent leading up to the Brexit referendum but chalked up a gain of more than 15 percent on the Brexit vote from an allocation to gold and a series of short positions betting on falling share prices. One of the more lucrative of those shorts lost him money this month.

Crispin Odey

Investing Legend Jeff Vinik Is Bullish On The Stock Market For The Next Few Years (CNBC)
Investing legend Jeff Vinik shared his views on the market and economy in an interview Monday on CNBC’s “Power Lunch.” On the market: “What we have is good economic growth and relatively low inflation. … The outlook for corporate profits is good. That should be a good backdrop for good market performance in the years ahead.” From 1992 to 1996, Vinik managed the Fidelity Magellan Fund, the world’s largest mutual fund at the time with more than $50 billion under management. He then started his hedge fund Vinik Asset Management and posted annual returns of 17 percent before closing it in 2013. Vinik is the owner of the Tampa Bay Lightning of the National Hockey League.

Elliott Management Asks Marathon Petroleum To Consider Breaking Up (The Wall Street Journal)
Hedge fund Elliott Management Corp. sent a letter to Marathon Petroleum Corp.’s board on Monday saying that the company is drastically undervalued, and suggesting that breaking up the firm may be needed to unlock value. Elliott called for the company to undertake a review of its current structure and consider moves such as a full, tax-free separation of the company into three stand alone business: Speedway, the refining business and the midstream business. Elliott also called on Marathon Petroleum to simplify its midstream operations and structure, which it said would result in a lower cost of capital for the midstream business and a forced revaluation for Marathon Petroleum’s shareholders.

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.

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