Hedge Fund News: David Shaw, Daniel Loeb, Seth Klarman

David ShawDE Shaw Founder Building $75M Mansion (HedgeFund)
A sprawling mansion on a hill is in the works for D.E. Shaw & Co. founder David Shaw and his family. The New York Post reported that five estate homes in the New York City suburb of Hastings-on-Hudson were demolished to make space for the construction of the $75 million residence.

Loeb hedge fund makes big bet on Kraft (ChicagoTribune)
Hedge fund manager Daniel Loeb made a big wager on Kraft Foods in July, telling investors in his $8.7 billion firm that a stake in the food maker is now one of the firm’s largest positions. Loeb’s Third Point listed Kraft as its fifth largest position as of July 31 in a monthly investor report obtained by Reuters.

Hedge-Fund Investor Jen, a Euro Bear, Gives Draghi Thumbs Up (WSJ)
Stephen Jen is a pronounced euro bear, but he gave a ringing endorsement of Mario Draghi’s new game plan for the euro zone’s debt crisis Thursday, even as markets were disappointed that the European Central Bank president delivered little. U.S. stocks sold off while yields on 10-year government bonds in Spain and Italy rose as investors fretted over what many saw as Mr. Draghi’s failure to live up to his promise last week to do “whatever it takes” to preserve the euro.

A tech hedge fund reveals latest picks (MarketWatch)
Intrepid Capital Management is a midsize, tech-focused hedge fund founded in 1998 and managed by Steve Shapiro in New York City ( you can view the company’s portfolio here ). Previously, Shapiro ran Fidelity’s Select Electronic fund before joining Tiger Management Corporation. As a Tiger Cub, Shapiro carries on much of the investing techniques of hedge fund legend Julian Robertson ( see billionaire’s stock picks here ).

Oil bull Hall’s hedge fund makes first gain in five months (Reuters)
Billionaire oil trader Andy Hall’s hedge fund has made money for the first time since February, aided by a rebound in oil prices he pinned on tightening sanctions on Iran and stalling production growth from Brazil to North Dakota. Astenbeck, the 61-year-old’s Connecticut-based commodities fund, gained 4 percent in July, ending a string of monthly declines, according to data he shared with investors this week and obtained by Reuters.

U.S. hedge fund wants Telus voting shareholders to have ‘acceptable’ premium (CanadianBusiness)
A dissident investor has requested a meeting of Telus’s voting shareholders to call for a premium for their support in consolidating the telecom company’s shares, a proposal Telus dismissed as the U.S. hedge fund’s latest “nuisance play” to interfere with its plans. U.S. hedge fund Mason Capital has requested a special meeting to allow the voting shareholders to approve a minimum acceptable premium of 4.75 per cent.

Hedge funds buffetted by volatility (FT)
Alternative asset managers were buffeted by volatile markets in the second quarter as hedge funds struggled to perform while weaker stock prices put private equity valuations under pressure for some and discouraged deal making. Hedge fund specialist Och Ziff Capital Management produced the best all round investment performance of the three listed asset managers to report on Thursday, with all four of its main hedge funds in positive territory for the year at the end of June.

IndexIQ Announces July 2012 Performance of Its IQ Hedge Family of Investable Benchmark Hedge Fund Replication Indexes (MarketWatch)
IndexIQ, a leading developer of index-based alternative investment solutions, today announced the performance of its proprietary family of hedge fund replication and alternative beta indexes. Designed as investable benchmarks that replicate the performance characteristics of sophisticated hedge fund strategies, the IQ Hedge(TM) benchmark indexes were originally introduced on March 30, 2007, and have been calculating live since that date. IQ Hedge is the first family of investable benchmark indexes covering hedge fund replication/alternative beta strategies.

ALM’s Corporate Counsel Hosts 6th Annual Hedge Fund General Counsel Summit (MarketWatch)
ALM’s Corporate Counsel magazine will present the 6th Annual Hedge Fund General Counsel Summit, a two-day examination of the most pressing legal and regulatory issues facing the hedge fund industry, on September 18th-19th at The University Club in New York City. The event will bring together industry thought leaders and regulators for in-depth discussions, as well as interactive seminars involving presenters and attendees. The agenda will focus on recent SEC enforcement actions, the nuts and bolts of a successful compliance program, and best practices in hedge fund governance.

Love launches hospice hedge fund (ODT)
When it comes to Chris and Lois Skellett’s enduring romance, their hedge says it all. Etched into the end of their neatly groomed macrocarpa are the words “I Love Lois”, which have remained as perfect as the day they were first pruned, 10 years ago. “When it does get a bit woolly, people come and say ‘are you all right’,” Mrs Skellett said. They are all right and now the Warrington couple have little bits of their love hedge to give away, on cards, in exchange for a donation to the Otago Community Hospice.

Tiberius Hedge Fund Trader Benedix Quits After Commodity Losses (SFGate)
Thomas Benedix, Tiberius Asset Management AG’s head of portfolio management, resigned after its flagship commodity hedge fund declined 8.2 percent this year through June, adding to losses in 2011. Jeremy Gatto, a portfolio manager at the Zug, Switzerland- based money manager also quit, Chief Executive Officer and founding partner Christoph Eibl said today in a telephone interview. Tiberius hired Paul Ticu from Morgan Stanley as head of portfolio management last month, and Roxana Mohammadian- Molina from Barclays Plc as a metals analyst, Eibl said July 12 by e-mail. Benedix and Gatto declined to comment today when reached on their mobile phones.

Northern Trust names Tony Glickman to global client solutions role (HedgeWeek)
Northern Trust has hired Tony Glickman in a global client solutions role focusing on its hedge fund services, custody, banking and operations platform on behalf of asset managers and institutional investors worldwide. Glickman (pictured) has more than 30 years of financial market-related experience as a banker, treasurer, hedge fund manager and, most recently, as head of risk services for GlobeOp Financial Services.

China introduces schemes to boost investment in foreign hedge funds (HedgeFundsReview)
China is introducing schemes and expanding the QFII quota in an attempt to boost investment into the hedge fund industry. However, more details are needed before hedge fund managers can take action. Measures to open up the mainland Chinese market to hedge funds are being met with excitement by those monitoring developments. The changes include three initiatives. The first is the qualified domestic limited partner programme (QDLP), a pilot scheme to be launched by the Shanghai municipal government’s financial services office. The programme will permit qualifying foreign hedge funds to establish subsidiaries in China to raise renminbi-denominated investment in their vehicles through private placements. The money raised must be invested in foreign markets.

Credit Suisse Liquid Alternative Beta (“LAB”) Index Up 0.96% in July (MarketWatch)
The Credit Suisse LAB Index was up 0.96% in July according to Dr. Jordan Drachman, Head of Research for Alternative Beta Strategies at Credit Suisse. Dr. Drachman noted, “The Credit Suisse Liquid Alternative Beta Index (“CSLAB”), which aims to reflect the performance of the overall hedge fund industry, finished up 0.96% in July. The Managed Futures strategy was the most significant contributor to performance, finishing up 1.32% for the month. The Event Driven strategy was the second-highest contributor to performance, finishing up 1.16% for the month, and bringing performance to 5.92% year-to-date.”

Relative value hedge funds experience major inflows as total AUM rises to over $555bn (HedgeFundsReview)
Assets managed by relative value hedge funds have grown by over 20% since 2007 as investors seek alternatives to directional long/short strategies. Investors allocated $22bn in the first half of 2012. Relative value strategies are poised to become the largest segment of the hedge fund industry in terms of assets under management (AUM) as long/short equity managers continue to struggle with lacklustre per­formance and investor redemptions.

Jana Partners Exceeds Expectations: Fund Up 11.2 % YTD (ValueWalk)
JANA Partners LLC released their second quarter update for their featured fund, JANA Master Fund Ltd. The fund posted an unaudited headline return of 11.2 percent for the year to date period ending June 30th, which is ahead of the S&P 500 market return of 9.5 percent. The fund was up 1.3% for June. Since inception in 2001, the hedge fund has returned 300%. In their comments on the quarter, JANA indicates that it believes that the market has fallen into a pattern, where early year returns are then wiped away amid concerns around sovereign debt and a potential recession. This increases market volatility, until investors are convinced that concerns have been pushed off far enough down the road to no longer concern them in the immediate term. The firm also remains concerned about the U.S. elections, which are now only a few months away.

Ex-Diamondback Manager Gets Probation In Insider Case (Bloomberg)
Ex-Diamondback Capital Management LLC portfolio manager Anthony Scolaro was sentenced to three years of probation for participating in an insider-trading scheme with a former Galleon Group LLC fund manager. Scolaro provided “substantial assistance” to the government in a probe of hedge-fund insider trading, including by making at least 43 calls that were monitored by the Federal Bureau of Investigation, Assistant U.S. Attorney Antonia Apps said today at a hearing in Manhattan federal court.

P&G CEO readies response to hedge fund pressure (BizJournals)
Procter & Gamble Co. CEO Bob McDonald is scheduled to break his silence on Friday after Bill Ackman and his activist hedge fund took a stake in the company, the Cincinnati Enquirer reports. McDonald will detail to financial analysts his plans to turn around the consumer products giant, which is expected to report disappointing earnings for its fiscal year ended June 30, the newspaper reports. A shakeup has been expected since Ackman’s hedge fund, Pershing Square Capital Management, took a stake in Procter & Gamble (NYSE:PG) last month.

Hinchingbrooke, Circle and the £50k a year MP – a happy story! (DailyShame)
Hey, were you fuming over Danny Boyle’s NHS dance in the opening ceremony of the Olympics? Well you’re going to love this one. I love a happy story, you see. Just love it. Makes me go all dewy-eyed. Moist in the ocular region. Once upon a time, there was a hospital in debt called Hinchingbrooke, and a group of former hedge fund managers and bankers called Circle decided they’d just love to help sick people get better, so much so that they took it over.

Volcker Rule gives rise to prop shops (FierceFinanceIT)
When talking about the many people exiting proprietary trading operation at bulge bracket firms, it’s usually noted that they are leaving for hedge funds. In many cases, they are launching brand new hedge funds. But Traders magazine notes that many have left to start their own proprietary trading firms as well. There aren’t a lot of stats to back this up, but there’s lots of anecdotal evidence.

Carey Olsen advises on the sale of FRM to Man Group plc (ISLE-News)
Carey Olsen has advised on the sale of FRM Holdings Limited (Financial Risk Management, “FRM”) to Man Group plc (Man) by way of a Jersey scheme of arrangement. FRM is one of the largest and best resourced hedge fund research and investment specialists with a global infrastructure of six offices and approximately 150 professionals in Europe, North America and Asia and it has funds under management of approximately $8 billion.

Koch brothers follow George Soros in voter-turnout push (Newsday)
The door-knockers wearing matching T-shirts and carrying electronic tablets loaded with maps and survey scripts fanned out on a recent evening across Hillsborough County, a Florida enclave that has backed the winning presidential candidate in each of the last three elections. Their mission: Find residents who share the small- government philosophy of Americans for Prosperity, a nonprofit group founded by billionaire industrialists and Republican donors Charles and David Koch.

Repair costs rise at Crystal River nuclear plant (TampaBay)
The cost to fix the broken Crystal River nuclear plant appears to be on the rise. The previous top estimate of $1.3 billion is likely too low, Duke Energy CEO Jim Rogers confirmed in an interview Thursday. The utility has not decided whether to repair or permanently shut down the plant. An independent technical evaluation commissioned on the facility by Duke’s board is expected to be complete in about a month, Rogers said.

How To Invest For The Global Food Crisis (SeekingAlpha)
Jim Rogers has said for years that the best career choice for many would be to find a way to get involved in agriculture. He said in a recent interview with Steve Forbes: There’s going to be a huge shift in American society, American culture, in the places where one is going to get rich. The stock brokers are going to be driving taxis. The smart ones will learn to drive tractors so they can work for the smart farmers. The farmers are going to be driving Lamborghinis. I’m telling you. You should start Forbes Farming.

Duke begins settlement talks with N.C. regulators (CharlotteObserver)
Duke Energy has begun settlement talks with the N.C. Utilities Commission, which is investigating its abrupt change of CEOs following the merger with Progress Energy. “Our goal is to continue to work closely with them to try to resolve these issues,” chief executive Jim Rogers said Thursday.

Bull Market In Crops Extends With Drought: Commodities (Bloomberg)
Corn and soybean traders are bullish for a 15th consecutive week on speculation that the drought spreading across fields in the U.S. will spur the government to make more cuts to its production forecasts. Fourteen analysts surveyed by Bloomberg predicted soybeans will climb next week and a further seven were bearish. Twelve expect gains in corn, six saw a decline and three anticipated little change. Hedge funds are holding the biggest bet on higher corn prices since September and almost the largest wager on costlier soybeans since at least 2006, U.S. Commodity Futures Trading Commission data show.

Nomura turns one corner with light sanction in insider case (Reuters)
Japan’s financial regulator handed Nomura Holdings the lightest possible sanction on Friday for its involvement in a string of insider trading cases, marking a key turning point in a costly scandal for the country’s largest investment bank. The so-called business improvement order from the Financial Services Agency (FSA) will require Nomura to report regularly on its efforts to shore up compliance after it admitted to leaking information on three share offerings it underwrote in 2010.

Knight Capital Staring at Bleak Deal Environment (WSJ)
Knight Capital, after admitting its capital was severely impacted by Wednesday’s trading glitches, is looking for alternatives. …Competition has grown in prop trading and there are a range of competitors in the wings trying to attack Knight’s core business, trading with the retail brokers. Goldman Sachs, Cantor Fitzgerald and the hedge fund firm Two Sigma have been gearing up in the business. Trading with the retail brokers takes money. Market makers like Knight pay fees to get their orders. If a firm is impaired, that gets harder.

Japanese equities offer value investing opportunities (Opalesque)
Based in Tokyo, Arcus Research is the research arm of Arcus Investment Limited, a London investment firm. Mark Pearson and Peter Tasker are the two co-founders. They founded the firm together in 1998, after having worked together in various capacities since the 1980s. They have a flagship Japan Long/Short fund – the Zensen Fund that has been active for the last ten years. They were recently interviewed by Matthias Knab for Opalesque TV. Over the past ten years, the flagship fund has been up 110% while the broad markets were down an average of 20%. The men owe this outperformance to a careful, disciplined approach to stock selection.

Commodity Trading Advisors offer opportunities from Euro breakup (Opalesque)
Commodity Trading Advisors or CTAs’ strategies will deliver positive results irrespective of which direction the markets would go, said Paul Netherwood, one of the founding partners at Beach Horizon LLP, a London-based CTA and a systematic fund manager that trades a portfolio of global commodities during the latest Opalesque London Roundtable. …Netherwood made the statement as he discussed future trading opportunities, particularly for the Deutsche Mark, Frank, Lira, Drachma.

Deputy Director of Division of Investment Management Robert E. Plaze Retiring After Almost 30 Years at SEC (SEC)
The Securities and Exchange Commission today announced that Robert E. Plaze, the Deputy Director of the Division of Investment Management, is retiring from public service at the end of August after almost 30 years at the SEC. Mr. Plaze has been a key architect of the rules governing investment advisers, investment companies, and private fund advisers. He joined the SEC in 1983 as an attorney in the Division of Investment Management, which oversees the multi-trillion dollar investment management industry, and went on to become a Special Counsel, Assistant Director, Associate Director for Regulatory Policy, and Deputy Director.

SEC Charges Bristol-Myers Squibb Executive With Insider Trading in Stock Options of Potential Acquisition Targets (SEC)
The Securities and Exchange Commission today charged an executive at Bristol-Myers Squibb with insider trading on confidential information about companies being targeted for potential acquisitions. His illegal trading took place as recently as just weeks ago. The SEC alleges that Robert D. Ramnarine, who lives in East Brunswick, N.J., made more than $300,000 in illegal profits by misusing nonpublic information he obtained while helping Bristol-Myers Squibb evaluate whether to acquire three other pharmaceutical companies. He used multiple personal brokerage accounts to illegally trade in stock options of these potential target companies.

SEC Names John Cross Director of Municipal Securities Office (SEC)
The Securities and Exchange Commission today announced that municipal securities expert John J. Cross III has been named the director of the agency’s new Office of Municipal Securities. The office was previously part of the Division of Trading and Markets until the Dodd-Frank Wall Street Reform and Consumer Protection Act called for the creation of a stand-alone office that reports directly to the Chairman and administers Commission rules regarding advisors, issuers, broker-dealer practices, and investors in the municipal securities market. The office also will coordinate with the Municipal Securities Rulemaking Board.

Credit Suisse: Overall Hedge Fund Industry Up 0.96% in July (HedgeCo)
The Credit Suisse Liquid Alternative Beta Index (“CSLAB”), which aims to reflect the performance of the overall hedge fund industry, finished up 0.96% in July. The Managed Futures strategy was the most significant contributor to performance, finishing up 1.32% for the month. The Event Driven strategy was the second-highest contributor to performance, finishing up 1.16% for the month, and bringing performance to 5.92% year-to-date.

Ex-Morgan Housing Expert Wins Backing For Buy-To-Rent Fund (Finalternatives)
A private equity firm has ponied up $300 million to back a new foreclosed home fund planned by Morgan Stanley’s former chief housing strategist. The undisclosed firm has committed the seed capital to Sylvan Road Capital, which founder Oliver Chang officially opened yesterday. The new firm plans to launch a buy-to-rent fund that will spend as much as $1 billion acquiring foreclosed homes and then renting them out.

New Jersey commits $1.745 billion in alternatives (PIOnline)
New Jersey Division of Investment, Trenton, committed a total of up to $1.745 billion to new and existing alternatives investments, confirmed spokesman Andrew Pratt. The division, which oversees the state’s seven pension funds with a combined $69.9 billion, committed an additional $600 million in total to an existing separate account and four new separate accounts managed by Och-Ziff Capital Management Group.

Doubting the LabCorp ‘buyout’ (Fortune)
If private equity firms are considering a mega-buyout of Laboratory Corp. of America (LH), someone might want to tell the private equity firms. The medical testing company saw its stock rise by nearly 5% at one point yesterday, after Mergermarket reported that several large buyout firms were preparing an acquisition offer. And that’s no small bump, since we’re talking about a company with a market cap in excess of $8 billion.

Klarman Compares Treasuries Bunds and JGBs to Subprime and Greek Debt (ValueWalk)
Seth Klarman’s Baupost Group has returned 1.39% year to date, according to our sources with direct knowledge of the matter. The fund had a better return for Q1, before experiencing a 1.2% decline in the second quarter. In terms of allocation, we have the first detailed insight into what assets the famous value hedge fund manager’s portfolio consists of: Cash is 28%, compared to 25% in Q1, as we reported earlier. Klarman is waiting for opportunites to deploy the cash, and notes that having patience is crucial.

Richemont: waiting for the bullet (BronteCapital)
At my hedge fund we usually short frauds. Stuff with dodgy accounts and dodgy prospects promoted by people who would be car salesmen if stock promotion were less lucrative. But sometimes, just sometimes we find ourselves aching to short a real company with fine management where business prospects are going south very fast. Richemont – the mega-luxury good maker with a focus on watches and jewellery is the latest example. We are waiting for a highly valued high quality company producing spectacular goods to have a similarly spectacular earnings miss.