Hedge Fund News: Dan Loeb, John Paulson’s Loss

Hedge Fund Takes Big Yahoo Stake, Calls for Board Shake-Up (Dealbook)

Daniel S. Loeb’s hedge fund, Third Point Management, disclosed in a filing on Thursday that it had acquired a 5.15 percent stake in Yahoo and hinted at a proxy challenge if changes were not made on the internet company’s board. The move by the hedge fund will add to the pressures on Yahoo to make a bold strategic move after Tuesday’s firing of its chief executive, Carol A. Bartz. In a letter to Yahoo’s board, Mr. Loeb, who is known for his often caustic pen, wrote that “it is time that certain members of this board were held accountable for its past failures and their individual roles.”


Paulson’s Fund Said to Lose 34% This Year (Bloomberg)

John Paulson, the billionaire who is betting on an economic recovery by the end of 2012, has lost 34 percent this year in his largest hedge fund, according to two people familiar with the firm. Paulson’s advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies, lost 15 percent last month, said the people, who asked not to be identified because the fund is private. That compares with a 5.7 percent decline last month in the Standard & Poor’s 500 Index. The fund’s gold-denominated share class has lost 17 percent this year, after declining 7 percent in August.

Some Hedge Funds, to Stay Nimble, Reject New Investors (Dealbook)

Since the financial crisis, big hedge funds like Paulson & Company, Millennium Management and Och-Ziff Capital Management Group have not turned away money, eagerly collecting billions of dollars from investors who have tended to stick with the industry’s marquee firms. The situation makes Anthony Bozza all the more unusual. With assets swelling, the hedge fund manager is closing the door to new investors at his four-year-old firm, Lakewood Capital Management. In a little more than a year, his fund has grown from $200 million to $900 million, according to investors in the fund.

Pershing Releases New Technology Outsourcing Guide for Hedge Funds to Improve the Strength, Safety and Scalability of Their Businesses (WSJ)

Pershing LLC, a BNY Mellon company, today announced the availability of A Guide to Technology Outsourcing for Hedge Funds. The company’s latest guidebook examines the trends in outsourcing as technology has become a strategically important differentiator for hedge funds. It provides hedge fund managers with best practices for selecting and managing technology partners to develop a reliable and scalable infrastructure while allowing them to still focus on their core money management competencies. “As hedge funds confront the need to diversify counterparty risk and build a more robust infrastructure, outsourcing to multiple technology vendors can be an efficient, cost effective approach,” said Craig Messinger, managing director at Pershing Prime Services. “With the number of technology providers increasing, prime brokers are a valuable resource that can provide guidance and well-vetted referrals to help hedge funds select solutions that will enhance their technology strategy.”

Ray Dalio Returns 25% as Markets Convulse Bloomberg)

Bridgewater Associates LP founder Ray Dalio can rattle off the investing fads he’s witnessed since he began trading as a 12-year-old golf caddie: the Nifty-50 stock craze of the 1970s, the 1980 gold bubble and even the 60-40 stock-to-bond mix. “Manias occur when there is group thinking,” Dalio says. Dalio, 62, built Bridgewater into the world’s largest macro hedge-fund firm, with $122 billion in total assets, by tacking against consensus. He’s created a distinct workplace culture and a research-driven investing process that spreads risk across scores of markets, Bloomberg Markets magazine reports in its October special issue on the 50 Most Influential people in global finance.