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Hedge Fund News: Jeffrey Ubben, George Soros & Marc Faber

Jeffrey Ubben’s Hedge Fund Is The Big Microsoft Winner (Forbes)
Nearly one year ago, Jeffrey Ubben showed up at a New York investment conference with news: His San Francisco-based ValueAct Capital Management hedge fund had taken a $2 billion position in Microsoft Corporation (NASDAQ:MSFT) -0.23%. The investment was an exceptionally contrarian bet. Microsoft’s stock had essentially gone nowhere for years. The big software company and its longtime CEO, Steve Ballmer, appeared to be plodding their way from one failed strategy to the next. The investment also seemed audacious because ValueAct is an activist investor that likes to agitate for change at companies, a strategy that had rarely worked at tech companies, particularly a huge one like Microsoft. ValueAct’s $2 billion position barely added up to a 1% stake in Microsoft.

VALUEACT CAPITAL

Ackman’s Pershing Square Hedge Fund Fell 0.6% in March (WSJ)
Hedge-fund manager Bill Ackman’s flagship Pershing Square L.P. fell 0.6% last month, according to an investor update sent Wednesday. Constraining performance were declines in the shares of government-controlled mortgage companies Fannie MaeFNMA -0.38% and Freddie MacFMCC -0.25%, while negative developments at nutritional-supplement maker Herbalife Ltd. (NYSE:HLF) +0.33% helped his high-profile bet that Herbalife shares will decline. Across its various investment strategies, Pershing Square Capital Management, L.P. now manages $13.1 billion, the letter said.

Bank Vets Ready European Event-Driven Hedge Fund (Finalternatives)
A quartet of former bankers is set to launch an event-driven hedge fund to take advantage of Europe’s economic recovery. Andrea Angelone, Amit Jain, Guido Miani and Simone Russo have founded Amagis Capital in London. The strategy, which will debut on May 1, seeks to benefit from increasing corporate activity in Europe and opportunities created by banks’ exit from proprietary trading. “There is an opportunity right now in the European market to deliver superior returns because of recovering activity,” Angelone, a JPMorgan Chase & Co (NYSE:JPM) veteran and CEO of the new firm, told Bloomberg News. “After many years on the sell-side, we have the experience and knowledge to be able to deploy a slightly different approach in the event-driven space.”

Duke University wins Atlanta Hedge Fund Challenge (BizJournals)
In a near tie, students from Duke University edged over a team from The Georgia Institute of Technology to win the 2014 Atlanta Hedge Fund Challenge. The winning team, three students from Duke, Timothy Evans, Dylan Gamret and Wesley Koorbusch, presented as Stonehenge Capital Partners on the idea of buying out student loans in exchange for a percentage of their future earnings. …Adrian Cronje, chief investment officer of Balentine and a judge for the competition said he chose Stonehenge because “they articulated a very creative and inherently repeatable investment idea that tackles a massive inefficiency in our credit markets today.”

Lewis Likens Einhorn to ‘Dumb Tourist’ in Fixed Card Game (Bloomberg)
In today’s “rigged” U.S. stock market, large investors such as Greenlight Capital Re, Ltd. (NASDAQ:GLRE)’s David Einhorn are like “dumb tourists” led to a casino where the card games are fixed, according to Michael Lewis, whose book “Flash Boys” has touched off a national debate about high-frequency trading. “It’s very clear people are being front-run,” Lewis, whose book paints a portrait of markets rigged by insiders with advanced computers, said in a Bloomberg Television interview today with Erik Schatzker and Stephanie Ruhle. Einhorn, whose Greenlight Capital hedge fund manages billions of dollars, didn’t initially understand what was going on, Lewis said. Einhorn’s reaction when he learned: “Oh my God. This I did not know,” Lewis said. Einhorn declined to comment on Lewis’s analogy.

How to end high frequency trading: Make fast traders pay for each bid or order, says Leigh Drogen (Yahoo)
Is the stock market rigged in favor of those who exploit computerized, fast trading? Is it leaving the average investor behind? Michael Lewis, author of the new book, Flash Boys: A Wall Street Revolt, thinks so. And the CFTC and New York Attorney General are investigating high-frequency trading, which now accounts for about half U.S. stock trades on any given day. Former hedge fund manager Leigh Drogen, CEO of Estimize, a financial research firm, tells The Daily Ticker that while it isn’t fair to call the market rigged, he’s no fan of high frequency trading. “They’re extracting a tax every single time you have to trade. That’s not rigged. That’s just unfair.”

Cramer’s Mad Dash: AAPL & MNKD (CNBC)

March tech losses burn hedge funds (CNBC)
Betting on the growth of technology companies proved to be a dangerous game in March as sharp stock declines burned some prominent hedge fund investors. Hedge fund firms that suffered stinging losses last month included Viking Global Investors, Coatue Management, JAT Capital and Jericho Capital Partners. Well-known tech investors like Lone Pine Capital, Blue Ridge Capital and others are also now down for the year, likely in part because of investments in the sector. Morgan Stanley (NYSE:MS)‘s prime brokerage unit said in a report Tuesday that hedge funds focused on technology, media and telecommunications—the “TMT” strategy—were likely down about 4 percent in March with returns for most funds ranging from no loss to down 7 percent or 8 percent.

‘Youngest African-American Hedge Fund Founder’ Gets Five Years (Finalternatives)
The boy-wonder hedge fund manager who wasn’t will have more than five years to reinvent himself—although the sentencing judge would prefer it not be as a finance teacher. Frederick Scott pleaded guilty charges that he defrauded clients of $1.3 million. Prosecutors said he went to great lengths to convince victims that he was the “youngest African-American hedge fund founder in history,” despite a period of homelessness, and all before he turned 30. Few if any of Scott’s claims, however—including the claim to manage $3.7 billion—proved true, and rather than investing his clients’ money, Scott spent it on himself.

Judges Junk Soros Ex Apartment Lawsuit (Finalternatives)
Adriana Ferreyr may indeed have been distressed by her ex-boyfriend’s backing out of a promise to buy her a Manhattan apartment. But George Soros isn’t legally liable for it, an appeals court ruled yesterday. The New York State Supreme Court Appellate Division said that Soros’ change of heart—he eventually bought the East 85th Street home for his new girlfriend, whom he married last year—“cannot be said to be extreme and outrageous.” Nor did the hedge fund billionaire act “with disinterested malevolence” or cause “unconscionable injury,” any of which may have supported Ferreyr’s claim of “intentional infliction of emotional distress.”

Don’t Keep Your Gold and Silver in the US, Says Marc Faber (GoldSeek)
Gloom Boom & Doom Report publisher Marc Faber discusses the fragile state of the US and global financial systems… how rising inflation will affect the average American… how soon the bubble will burst… and why gold and silver will triumph. …The US is a country that likes to create trouble, but they don’t like to clean up things.” “We’ve now been five years into the bull market and the US economy bottomed out in June 2009. We already had a crack-up boom—not in the economy of the typical household, but in the economy of the super-well-to-do people, whose asset prices rose dramatically and as a result created a huge wealth inequality.”

Lyft raises $250 million for smartphone ride booking service (BizJournals)
Lyft, the smartphone ride booking service that connects passengers with drivers in personal vehicles, has raised $250 million to continue expansion of its fast growing, 20-month-old platform, which is known for the fuzzy, pink mustaches that Lyft drivers put on their cars. One of a slew of controversial new mobile apps that have proven popular with users despite opposition from taxi interests and efforts to restrict them by some local regulators, San Francisco-based Lyft launched to the public in 2012. It competes with UberX, a similar service owned by Uber Technologies, which also dispatches limos and taxis, and a number of smaller San Francisco-area startups, including Sidecar, Summon and Wingz, which focuses on airport rides.

The Frackers reveals how wildcatters spawned an energy revolution in the United States (Straight)
WALL STREET JOURNAL reporter Gregory Zuckerman thought he had found a phenomenal story when he wrote a book about a little-known hedge-fund manager who, in 2007, bet that the overheated housing market would bring down the financial industry. His book, The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History, was described by writer Malcolm Gladwell as the “easily best of the post-crash financial books”. But Zuckerman recently told the Georgia Straight that he came across an even better story when he began to investigate how the United States suddenly became an energy superpower following the 2008 global meltdown.

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