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Hedge Fund News: Stephen Mandel, Louis Bacon & Starboard Value LP

Tiger Grandcub White Elm Posts Double-Digit Losses (InstitutionalInvestorsAlpha)
An up-and-coming hedge fund manager who at one time worked for Stephen Mandel Jr.‘s Lone Pine Capital has been taking a beating on a couple of stocks that have drawn widespread regulatory and investor scrutiny. The manager, Matthew Iorio, is the founder of Greenwich, Connecticut-based White Elm Capital, whose White Elm Capital Partners fund lost 3.2 percent or so in the third quarter and is down roughly 12 percent for the first three quarters of 2014, depending on the share class. White Elm declined to comment for this story.

Lone Pine Capital 2014 Q3 Investor Letter

Ex-Contrarian Executive Said Accused of Stealing $12 Mln (BusinessWeek)
Agents from the Federal Bureau of Investigation today arrested Lawrence Herzing, the former controller of Contrarian Capital Management LLC, on allegations that he embezzled as much as $12 million from the Connecticut-based hedge-fund firm, according to a person briefed on the matter. Herzing had been employed at Contrarian since 2000, most recently as controller, according to his LinkedIn profile. The hedge fund’s management said in a statement to Bloomberg that no current or former clients would be affected by Herzing’s alleged activity.

Pershing Wins Top Hedge Fund Award for the Third Year in a Row at HFMWeek Awards (HedgeCo)
BNY Mellon company, Pershing LLC’s prime brokerage unit was named ‘Best Prime Broker—Custodial Solution’ for the third time in as many years at HFMWeek’s US Hedge Fund Services Awards ceremony in New York. “To be named Best Prime Broker—Custodial Solution three years in a row by HFMWeek is a great honor,” said Gerry Tamburro, managing director of Pershing’s prime brokerage unit. “We work every day to make our customers successful and we are extremely pleased to see that effort recognized with this award.”

Carlyle Falls as Hedge Fund Weakness Shrinks Fees (BusinessWeek)
Carlyle Group LP (NASDAQ:CG), the world’s second-biggest manager of investment alternatives to stocks and bonds, fell the most in six months after reporting lower earnings outside of its leveraged-buyout unit. Economic net income after taxes, a measure of profit that includes both realized and unrealized gains, rose to $177 million, or 55 cents a share, from $160 million, or 51 cents, reported a year earlier, Washington-based Carlyle said today. The increase was driven by the firm’s private-equity business, while cash earnings fell in its hedge fund, real assets and funds-of-funds segments.

Swedish Quant To Shut After Brummer Backs Out (Finalternatives)
Brummer & Partners has pulled the plug on a quantitative hedge fund after two years of losses. Archipel Asset Management, which got some 85% of its money from the Swedish hedge-fund investor, said it would close its doors after Brummer move to redeem its investment. Brummer said that the eight-year old firm “has not met expectations over the last few years.” Archipel, led by Stefan Nydahl, lost 3% last year and is down 1.3% this year. The firm has about US$740 million in assets under management.

Cramer: Fed parlor game not making money (CNBC)

Starboard Value Losing Patience With RealD (Benzinga)
Activist hedge fund Starboard Value disclosed a 9.9 percent stake in RealD (NYSE:RLD) on October 1. At the same time, the fund offered to acquire the remainder of the company it did not already own for $12 per share, a 29 percent premium to the October 1 closing price. The following day, RealD said it will review the buyout offer with its advisers. Starboard Value has since waited patiently for a response which ultimately never came. In a letter to RealD’s Board of Directors on Wednesday, Starboard wrote that “you have neither provided us with any meaningful feedback, nor shown any willingness to engage with us, regarding our proposal.”

Under Hedge Fund Pressure, Madison Square Garden To Explore Spin-Off (Finalternatives)
Madison Square Garden said this week that it would consider separating its entertainment and sports business, two months after an activist hedge fund called for such a split. MSG owns the New York Knicks basketball team and New York Rangers hockey team, as well as the eponymous arena that they call home. It also puts on live events, such as concerts, in the building. “Investors favor companies with greater strategic focus on their core businesses,” CEO Tad Smith said.

Bankrupt Shipper Nautilus Probes Hedge Fund’s Debt Buy (Law360)
Bankrupt Nautilus Holdings Ltd. launched an investigation Wednesday into whether York Capital Management Global Advisors LLC had built up a blocking position in the debt of an operating unit in order to sabotage the container shipping venture’s restructuring efforts. Nautilus asked the judge overseeing its four-month-old bankruptcy to let it probe its suspicions that York had scooped up debt held by one of its four “silos” in order to poison the proceedings and advance the hedge fund’s equity interest in Costamare Inc (NYSE:CMRE), a competing container ship…

Judge OKs NY Discovery in Billionaires’ Beachfront Brawl (LitigationDaily)
Never underestimate how hard the rich will fight over beachfront property. That’s one takeaway from litigation now unfolding in Manhattan, California and the Caribbean, where two billionaire neighbors are locked in a nasty battle over prime oceanfront real estate in the Bahamas. In New York, Gibson, Dunn & Crutcher, representing hedge fund founder Louis Bacon, is using some of its patented moves from the Chevron-Ecuador litigation to try to dig up dirt on Bacon’s nemesis, Peter Nygard, who owns a Canadian women’s fashion company. Bacon wants to stop Nygard from further expanding the shoreline around Nygard’s 150,000-square-foot compound, where he’s known for throwing extravagant parties.

Recommended Reading:

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