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Hedge Fund News: Ray Dalio, John Paulson, Jeffrey Smith

Hedge Funds Had a Horrible Year, But Managers Are Billionaires (New York Post)
Hedge funds just finished one of their worst years in recent memory — but their high-paid managers are doing just fine. Some 39 hedge-fund managers made Forbes’ just-released billionaire list for 2014. Hedge funds, on average, returned just 2 percent last year, their worst performance since 2011, according to Bloomberg data. Ray Dalio, who runs Bridgewater, the world’s biggest hedge fund with more than $100 billion in assets, topped the list of active hedgies, with a net worth of $15.2 billion, despite returns on his various funds of between 3 and 8 percent. John Paulson, whose hedge funds were some of the worst performing in 2014, came in next, with $13.7 billion. Two of his funds lost 17 and 22 percent.

BRIDGEWATER ASSOCIATES

Paulson Funds Said to Shrink by $1.3 Billion After Losses (Bloomberg)
John Paulson’s hedge fund firm, which peaked at $38 billion in assets in 2011, is down to less than half because of investor withdrawals and losses. Paulson & Co. managed $17.8 billion in assets on Jan. 1, down from $19.1 billion at the start of December, according to two people with knowledge of the matter who asked not to be named because the information is private. The hedge fund firm lost money last year in three of its four main strategies, including a 36 percent drop in a fund that bets on company changes such as bankruptcies and spinoffs. The 59-year-old billionaire’s merger funds, which comprise about half of the firm’s assets, barely broke even.

Starboard Ratchets Up Its Demands For Staples Merger (Bloomberg)
Starboard Value, the activist investor with stakes in both Staples Inc. (SPLS) and Office Depot Inc. (ODP), is ratcheting up pressure on the office-supply rivals to merge. The investment firm sent a letter to Staples Chief Executive Officer Ronald Sargent Tuesday demanding that his company engage advisers to begin work on a deal. The move represents Starboard’s most public push for such a transaction following behind-the-scenes prodding. “The best way to maximize value for Staples’ shareholders is through exploring and completing a business combination with Office Depot,” Starboard CEO Jeffrey C. Smith said in the letter, which was addressed to Sargent and the rest of Staples’ board. “We believe that now is the right time to pursue such a transaction, and we urge you to immediately retain a reputable investment bank and legal advisers to assist the board in evaluating, structuring and executing a transaction.”

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