How to Short Like David Einhorn (Minyanville)
I recently came across an old transcript of a David Einhorn speech at the Value Investing Congress in 2006. In case you didn’t know, Einhorn is not only a famous hedge fund manager, but a big-time poker player as well. In the speech, Einhorn speaks of his experience at the World Series of Poker and how his poker traits are very similar to his methods as an investor. In the speech Einhorn also reveals a few tricks that some hedge funds use in finding long and short candidates. Here’s the quote from Einhorn that caught my attention: I recently met a smart hedge fund manager who has built a $10 billion fund around screening for companies with high ROEs and low P/E multiples for longs and low ROEs and high P/E multiples for shorts. The manager adds human analytical effort to confirm that the screened results are not anomalous accounting figures but instead generally confirm the performance of the business. This has been a successful approach.
York Capital may seek control of Israel’s IDB: report (Reuters)
New York-based hedge fund York Capital Management has been buying up bonds in debt-ridden Israeli conglomerate IDB Development and could lead a hostile takeover of the company, TheMarker financial newspaper reported on Wednesday. York, which specializes in distressed debt, has spent 400 million shekels ($103 million) buying 800 million shekels worth of IDB Development bonds, which are trading at a 50 percent discount. York is now the biggest holder of IDB’s bonds with about 20 percent of the total, according to the report.
Third Point Re and Hiscox team up on new cat fund (InsuranceInsider)
Third Point Re’s first managed cat fund will include a “significant” investment from Hiscox and write a quota share of the London-listed (re)insurer’s cat exposure. As previously reported, hedge fund-backed Third Point Re is looking to build a platform to write cat risk off its main balance sheet. And in a joint statement with Hiscox, the start-up revealed an “initial agreement in principle” under which the Lloyd’s (re)insurer will become a shareholder in recently established cat fund manager Third Point…
Allied World makes $500mn private equity investment (InsuranceInsider)
Allied World has bought a substantial minority stake in private equity firm and hedge fund MatlinPatterson and pledged to invest $500mn through its funds, according to reports. The deal was revealed by the New York Times following briefings from sources involved with the transaction. MatlinPatterson is a New York-based private equity group that invests in distressed assets, and was spun out of Credit Suisse First Boston in 2002. Company founder Mark Patterson was a non-executive director at Allied World until…
Hedge fund Japan Advisory gets hearing for insider trading charge – regulator (Reuters)
Japan Advisory will have the opportunity to challenge insider trading charges against the Tokyo-based hedge fund at a hearing on October 17, the country’s financial regulator said on its website on Wednesday. The case against Japan Advisory was one of five announced this year by the securities watchdog, the Securities Exchange and Surveillance Commission (SESC), in a high-profile crackdown on insider trading ahead of public share offerings, a near endemic problem that had gone unchecked in Japan for years.
Alternative Liquidity to place up to 250m shares (ShareCast)
Alternative Liquidity Solutions (ALS), an investment company which hoovers up secondary hedge fund positions, has announced plans to place 250m ordinary shares. The placing will allow it to raise funds to pursue the revised investment objective of targeting a gross IRR on investments of at least 20% per annum over the lifetime of the investment. The company intends to achieve this by purchasing illiquid hedge fund assets through the secondary market at substantial discounts to reported net asset value.
Ex-Lehman Trader Beats Hedge Funds With 500% Gain (BusinessWeek)
Deepak Narula hit bottom in 2007 when investors pulled cash from his hedge fund, leaving him to unwind mortgage bond bets in a frozen market that would have made money if he’d just held on a few more months. Five years later, Narula, 49, is at the top of the best- performing category of funds. Metacapital Management LP, the New York-based firm he founded in 2001 after leaving Lehman Brothers Holdings Inc. (PINK:LEHMQ), is up 34 percent this year, almost 10 times the industry average. Since restarting in July 2008, returns exceed 500 percent and the firm has expanded to oversee $1.4 billion.
Securitized credit funds returned +13.73% YTD versus +4.94% for the hedge fund aggregate (Opalesque)
eVestment|HFN today announced that securitized credit funds are among the hedge fund industry’s best performing sub classification in 2012, according to their latest sector focus report. Securitized credit funds returned +13.7 percent year-to-date (YTD) through September compared to +4.9 percent for the HFN Hedge Fund Aggregate Index. Among securitized credit funds, the best performing sub-group YTD has been those investing specifically in asset-backed securities (ABS), up +14.5 percent. Only funds focused on India, and the healthcare sector have produced better average returns in 2012.
Agecroft to add new hedge fund to platform in Q4 (HedgeWeek)
Agecroft Partners, the hedge fund consulting and third party marketing firm, plans to add an additional hedge fund manager to the platform of hedge funds it represents during the fourth quarter. While many competitors and hedge fund managers have struggled to raise assets, Agecroft Partners is on track to raise over a billion dollars in 2012.
Muller’s PDT Hedge Fund Said to Get $500 Million From Blackstone (SFGate)
Peter Muller, founder of the Morgan Stanley trading group being spun out this year as a stand-alone hedge fund, raised more than $500 million from Blackstone Group LP, said two people with knowledge of the matter. Muller, 49, whose proprietary trading group returned more than 20 percent a year over the past decade, started his first fund in July at New York-based PDT Partners LLC, according to one of the people, who asked not to be named because the information is private.
Beach Horizon Adopts Navatar Hedge Fund CRM for Cloud Computing to Manage Investor Relations and Fundraising (Equities)
Navatar Group, a leading cloud provider for financial services, today announced that Beach Horizon, a London based hedge fund trading a global portfolio of commodity, financial and foreign exchange markets, has deployed Navatar Hedge Fund Cloud to manage their fundraising and investor relations. “Beach Horizon uses state-of-the-art technology for all aspects of its operations,” said Edward Sutro, Head of Investor Relations. “Navatar’s CRM for Hedge Funds provides us the best tools to efficiently serve our investors.”
Goldman backs Nine’s equity proposal (Farmonline)
Deal scramble: Adrian MacKenzie exits Nine board Nine tables proposal in bid to avoid administration Nine Entertainment’s junior lenders, led by Goldman Sachs, have agreed to the media group’s proposal to end the deadlock that is threatening to send the company into administration. Nine’s board was informed this morning that Goldman Sachs has agreed to the deal under which mezzanine debt holders would emerge with 7.5 per cent of Nine’s equity and warrants that would give them upside to any future sale of Nine above the current estimates of its value.
Safran under fire from rebel investor (FT)
The Children’s Investment Fund, the hedge fund controlled by Christopher Hohn, has launched a fierce attack on Safran, criticising the French aerospace manufacturer over its acquisition policy. In a letter sent on Tuesday to Safran’s two most senior executives, TCI – which controls either directly or indirectly about 3 per cent of the company’s stock – said its recent track record on deals outside of civil aerospace was “one of failure”. It called for the immediate appointment of new independent board members to review all proposed mergers and acquisitions.
Hedge Funds May Be Venture Capital Game Changers (InstitutionalInvestor)
It’s been a struggle of late for large institutional asset owners to invest in venture capital. Although some university foundations and endowments did well investing with key Silicon Valley–based venture capital firms during the dot-com boom of the late 1990s, over the past decade venture capital has not seen the same inflows or interest from large institutional investors as, say, the hedge fund industry has. Some of these investors question the risk profile of venture capital, their ability to put significant assets to work and their ability to get access to top-tier mangers. As a result, commitments from this investor base remain limited. Large U.S. pension plans allocated an average of 8.9 percent of their assets to buyout funds, a small subsection of which is believed to be venture capital, compared with 7.4 percent for hedge funds. (Assets dedicated to venture capital itself aren’t broken out.) The five funds that make up the $122 billion New York City pension system have exited their venture capital portfolio, which was started in the late 1990s, after deciding that the asset class was not for them. That there is little reliable data on venture capital investing alone demonstrates how venture capital has yet to be firmly established by institutional asset owners as a separate, and sizable, asset class.
NJ Senator Seeks to Ban Pensions from Hedge Funds (ai-Cio)
Forget chief investment officers. One New Jersey lawmaker is pushing to legislate allocation decisions for the state’s $70 billion public pension system. The bill, introduced by Sen. Shirley Turner (D-Lawrenceville), would prohibit “the investment by the State of pension and annuity funds in hedge funds and derivative contracts.” Turner acknowledged to FINalternatives that the system is “woefully, severely underfunded because we haven’t made regular deposits for 15 years.” But, she said, it is “wrong” for the fund to attempt “to make up for those skipped payments by gambling on an aggressive, high-risk investment strategy.” In the 2011 fiscal year, the hedge fund portfolio in New Jersey’s public fund returned 10.77%, and the investment team allocated an additional $440 million to direct hedge fund strategies.
Hedge Funds Trim Trading Staff (TradersMagazine)
Here come the hedge funds. Lousy trading volumes are hurting hedge funds’ bottom lines and they are looking to cut back staff on the trading desk. The cost cutting move is being viewed as aggressive as equity trading volumes have remained anemic throughout the year and trading desks simply are not generating enough revenue to support staff, according to the results of a new study on buyside staffing by Greenwich Associates. Forty-four percent of hedge funds participating in the study said their 2012 trading desk budgets were reduced from 2011. Almost half, 43 percent of trading desks, said they were shrinking budgets. Another 40 percent said budgets were unchanged versus their 2011. Only 17 percent of hedge fund respondents said they were increasing trading desk budgets.
India-focused hedge funds on recovery path (Business-Standard)
India-focused hedge funds could be on track to ending the year on a positive note. The Eureka Hedge Fund index for India-focused funds has risen 7.4 per cent so far this year, compared with a 25 per cent fall in 2011. September was the second-best month for India hedge funds, after January. In September, the index rose eight per cent, marginally outperforming key equity benchmarks. The index is based on the net asset value (NAV) reported by 19 per cent of India hedge funds to Eureka. Experts say this is set to improve, as more data pours in. In September, the benchmark Sensex gained 7.6 per cent and the rupee rose 4.8 per cent against the dollar, aiding foreign investors who secured positions in India at lower levels this year.
Coller Capital Partners with DataArt on Custom Software (WatersTechnology)
Coller Capital, managing assets of about $10 billion, has specialized in secondaries-investments in previously-committed private equity funds-since its inception. The firm closed its sixth secondaries fund this year, winning $5.5 billion in that drive alone. The partnership with DataArt was initiated in 2011, with the provider’s staff working alongside Coller’s IT team on software and applications to support the fund’s front- and back-office operations. The development process includes an automated testing framework, and has tackled both new custom applications as well as the extension of existing functions.
AM Best affirms Greenlight’s A rating (RoyalGazette)
Ratings firm AM Best has affirmed the financial strength rating of A (excellent) and issuer credit rating of “a” of Cayman-based, hedge fund-backed Greenlight Reinsurance, Ltd. Concurrently, the company has affirmed the ICR of “bbb” of Greenlight Re’s holding company, Greenlight Capital Re, Ltd. (NASDAQ:GLRE) (Greenlight Capital Re). The ICR of Greenlight Capital Re is strictly based on the holding company’s methodology since the company does not carry debt. The outlook for all ratings is stable. All companies are domiciled in the Cayman Islands.
Big Bird is a tool for the Democrats, yes, but also for the Chinese regime (WorldTribune)
The George Soros-funded Free Press Action Fund describes itself as “a nonpartisan organization” which “does not support or oppose any candidate for public office.” But last week it announced that the “attack on Big Bird and the Corporation for Public Broadcasting” at the presidential debate had “sparked intense reactions from public media fans.” It said, “The nation is standing with Big Bird. Now it’s your turn.” The “attack,” coming in the form of Mitt Romney’s comments about the need to de-fund public broadcasting, was based on the recognition that pouring taxpayer money borrowed from China into a U.S. corporation, Sesame Workshop, doesn’t make sense.
Ron Paul Featured In Upcoming Movie “The Bubble” (BrevardTimes)
Former Presidential candidate and Texas Congressman Ron Paul is featured in a new film called “The Bubble.” The film is predicting a financial collapse even worse than the 2008 crisis and lays blame on Congress and the Federal Reserve. Other cast members include Peter Schiff, Jim Rogers, Marc Faber, Doug Casey, Jim Grant and other experts that predicted the housing bubble. The script is written by economic historian Tom Woods and based off his New York Times best seller “Meltdown.” Famous bearish investor David Tice is the Executive Producer.