Editor’s Note: Related Ticker: Citigroup Inc. (NYSE:C), Morgan Stanley (NYSE:MS), Credit Suisse Group AG (ADR) (NYSE:CS), JPMorgan Chase & Co. (NYSE:JPM), Herbalife Ltd. (NYSE:HLF), Berkshire Hathaway Inc. (NYSE:BRK.B), Apple Inc. (NASDAQ:AAPL)
Third Point, the $11.6 billion hedge fund run by billionaire Dan Loeb, has hired banks for an initial public offering of its reinsurer business, according to three sources familiar with the matter. Bermuda-based Third Point Re is working with Morgan Stanley (NYSE:MS), Credit Suisse Group AG (ADR) (NYSE:CS) and JPMorgan Chase & Co. (NYSE:JPM) on a public float that could raise around $250 million later this year, the sources said. Reinsurers act essentially as insurance for insurance companies. Third Point launched its reinsurer arm last year with $750 million in capital. The company is led by prominent industry executive John Berger, who was the former CEO of Alterra Capital Holdings Ltd (NASDAQ:ALTE)’s reinsurance business.
ResCap’s Marano May Look to Form Hedge Fund or Mortgage REIT (Wall Street Journal)
Thomas Marano, the outgoing head of Ally Financial Inc.’s subprime lender, Residential Capital, is pursuing other opportunities in the mortgage business that could include starting a hedge fund or real-estate investment trust. Mr. Marano, the former Bear Stearns executive who has led ResCap since 2008, said he is also talking to private-equity firms about starting a mortgage-related business. ResCap said Mr. Marano has agreed to stay on as an outside director to help facilitate a smooth transition for the bankruptcy estate, while he pursues other interests. Tammy Hamzehpour, the company’s former general counsel, will function as ResCap’s chief business officer.
Man Announces FUM of $54.8 Billion for 1st Quarter (HedgeCo.net)
Hedge fund giant Man Group says that their funds under management (FUM) at 31 March 2013 are at $54.8 billion ( compared with $57.0 31 December 2012). “The world economy still faces significant challenges but with reduced correlation between major asset classes and the reassertion of trends, we have seen a somewhat more stable market environment. Against this background, we saw solid performance across our three investment engines.” Manny Roman, Chief Executive Officer of Man, said. “However, this was a disappointing quarter from a flows perspective with sales at a similar level to the previous quarter and increased redemptions.”
Apple Inc. (AAPL) And The Rest Of Billionaire Julian Robertson’s Long Term Picks (Insider Monkey)
Julian Robertson has become a legendary investor both because of his success as a hedge fund manager at Tiger Management- which made him a billionaire- and his ability to groom “Tiger Cubs” who have gone on to become successful managers themselves. Robertson has owned Apple Inc. (NASDAQ:AAPL) for the last couple of years, though he has been adjusting his position considerably over time and cut his stake by 58% in Q4. Apple Inc. lost its place as the most popular stock among hedge funds in the last three months of 2012, with American International Group Inc (NYSE:AIG) being the new #1. Falling gross margins have caused Apple Inc. (NASDAQ:AAPL)’s earnings to decline despite higher revenues.
As Fund Administrator, Citi Answers the Data Question with OpenAi (waterstechnology)
Citigroup Inc. (NYSE:C) recently launched OpenAi, which provides complete data aggregation and transparency for its alternative investment clients. Since 2008, buy-side firms’ appetite for clean data delivered quickly has been insatiable. As a result, the demands that have been put on fund administrators have increased exponentially.
Image: Citigroup Inc. (NYSE:C)
Herbalife Makes Cameo During Berkshire Hathaway Weekend (Wall Street Journal)
New York Times journalist Andrew Ross Sorkin, tasked with filtering shareholder questions, on Saturday asked Warren Buffett about activist investor Bill Ackman’s negative wager on Herbalife Ltd. (NYSE:HLF) in light of Berkshire Hathaway Inc. (NYSE:BRK.B)’s ownership of Pampered Chef, another multilevel marketing company that sells kitchen tools ranging from bakeware to cutlery. While Buffett said he has never looked at an Herbalife annual report and does not know about its operation, he went on to describe why he feels Pampered Chef is a legitimate company. “Pampered Chef’s business is based on selling to the end user, and we have thousands and thousands and thousands of parties every week where people who are actually going to…
…use the product buy from somebody,” he said. “We are not making the money by loading up people and then having them leave the sales force….That should be the distinguishing characteristic if I were regulating the industry.”
Hedge Fund Honcho John Thaler Makes 3.4% Annual Return on the Upper East Side (New York Observer)
Hedge fund Mariner navigates turbulent markets (Risk.net)
Faced with paltry bond yields and the risk of severe losses when interest rates inevitably rise, large institutional investors are stepping up their search for alternative sources of diversification. Mariner Investment Group, which manages around $10 billion in hedge fund assets together with its associated advisors, could be one of the main beneficiaries. While equities are enjoying a bull run, many of the big pension plans Mariner serves are fretting over the fate of their fixed income investments. “Pension funds face a real challenge,” says Bracebridge Young, Mariner’s CEO. “They need to maintain a relatively high allocation to equities to have any chance of meeting their return targets but none of them really like their fixed income exposure. They’re concerned about the duration of their bond portfolios and are looking for other ways to diversify their equity risk.”
HFRX: Hedge Funds Up 0.62% In April (FINalternatives)
Hedge funds continue to lag as stocks continue to surge, according to an industry index. Hedge Fund Research’s HFRX Global Hedge Fund Index rose 0.62% in April, a month that saw the Standard & Poor’s 500 Index add a further 1.81% to its double-digit returns for the year. By contrast, the HFRX benchmark is up only 3.77% in the first third of 2013. Emerging markets funds did best in April, rising 2.32% (3.38% year-to-date). Convertible arbitrage funds returned 2.2% (5.97% YTD), special situations funds 1.2% (8.65% YTD) and credit funds 1.12% (4.2% YTD). Master-limited partnerships rose an average of 0.51% on the month to hit 15.98% on the year, by far the best return of any strategy tracked by HFR.
Hedge fund manager convicted in fraud case (The Virginian-Pilot)
The former head of a Newport News-based investment group was found guilty today by a jury on 17 criminal counts in a fraud trial in U.S. District Court. Jeffrey A. Martinovich, who led the now-defunct MICG Investment, was indicted last year on charges including mail fraud, wire fraud, unlawful monetary transactions and bankruptcy fraud. In addition to returning a guilty verdict on 17 counts, the Newport News jury found him not guilty on three counts and couldn’t reach a verdict on five others. U.S. District Judge Robert Doumar set sentencing for Aug. 7 in Norfolk. There is a maximum penalty of 20 years in prison for each count.
Hedge fund manager warns US housing crisis ‘not over’ (Investment Week)
Alistair Lumsden, the London hedge fund manager who foresaw the US sub-prime mortgage crash that led to the credit crunch, has warned the US housing crisis begun in 2007 is far from over. He said the large inventory of US homes expected to be offloaded by distressed sellers, coupled with constrained financing from US banks and agency lenders, means there are more problems to come in the housing market. The manager has predicted US home prices could fall up to a further 10% in 2012, denting confidence among American homeowners. Along with veterans such as John Paulson, Lumsden, of $11bn asset manager CQS, was among the few portfolio managers to predict and correctly bet on the US sub-prime crisis, delivering 179% through his $1.5bn ABS fund in the two years to June 2009.
Threadneedle Maintains Bullish Gold Outlook on Stimulus Programs (Bloomberg)
The London-based fund has not changed its positioning in gold after the slump, according to David Donora, a fund manager for commodities at Threadneedle Investments, which managed 84 billion pounds ($131 billion) in assets, including equities and fixed income, as of March 31. Their top pick is oil-based energy such as Brent crude, gasoline, gasoil and heating oil, Donora said. Threadneedle joins John Paulson’s Paulson & Co. and hedge- fund firm Elliott Management Corp. in staying with bullion, which has slumped 12 percent this year as investment holdings contracted at a record pace. Prices had the biggest two-day drop in more than three decades last month.
