WellPoint CEO Angela Braly quits, bowing to investor pressure (LATimes)
Bowing to intense investor pressure, the chairwoman and chief executive of health insurance giant WellPoint Inc. abruptly resigned and the company named an interim CEO. The nation’s second-largest health insurer, which runs Anthem Blue Cross in California, announced late Tuesday that Angela Braly, 51, had stepped down effective immediately. WellPoint, which runs Blue Cross plans in 14 states and has more than 33 million customers nationwide, named John Cannon, its general counsel, as interim CEO.
Ackman: $900M Penney markdown (NYPost)
Activist investor Bill Ackman has been beating the drums for a sale of mall owner General Growth Properties in recent days, but it’s his stake in JCPenney that’s really causing him grief. The popular hedge-fund manager confessed to investors that his 18 percent stake in Penney had lowered returns by about $900 million this year, The Post has learned. In the latest quarterly investor letter of his $10.5 billion Pershing Square firm, he said Penney “has cost us more than nine percentage points of gross return this year.”
Hedge-Fund Marketing Could Begin New Era As SEC Set For Proposal (Bloomberg)
Hedge funds may go from soliciting individual investors behind closed doors to conducting wide advertising campaigns under a rule set for proposal today by the U.S. Securities and Exchange Commission. SEC commissioners will decide whether to invite public comment on a proposal for how to end decades of restrictions on how private funds and startups can pursue investors. The proposal is driven by a law that repealed a ban on pitching such investments to all but a select few investors, such as those accustomed to pumping cash into hedge funds.
Bank Said to Tell Clients Paulson More Aggressive (BusinessWeek)
John Paulson, the billionaire hedge- fund manager coming off record losses in 2011, is a more aggressive risk-taker than his peers, Spencer Boggess, Bank of America Corp. (BAC)’s director of hedge-fund investments, told clients invested with Paulson. Boggess made the comments yesterday while introducing Paulson on a conference call, according to a person on the call who asked not to be identified because the information is private.
First Trust To Launch VIX ‘Tail Hedge’ Fund (Barrons)
The rise of volatility trading products continues. First Trust Advisors is set to launch what it’s calling the First Trust CBOE S&P VIX Tail Hedge Fund on Thursday, according to an NYSE Arca trader notice this afternoon. The fund will trade under the ticker VIXH. Here’s the link to the prospectus, which shows the strategy revolves around owning the Standard & Poor’s 500-stock index (SPY) plus call options on the CBOE Volatility Index, commonly dubbed the “fear gauge.”
U.S. Files New Charges in Hedge Fund Insider Trading (Nasdaq)
Federal prosecutors filed new charges Tuesday against employees at three hedge funds accused of making improper trades on inside information. The new charges relate to short sales of NVIDIA Corp. (NVDA) stock in April and May 2009. Those charged Tuesday were Todd Newman, a former portfolio manager with hedge-fund firm Diamondback Capital Management; Anthony Chiasson, a former hedge-fund manager at Level Global Investors LP; and Jon Horvath, a technology analyst with SAC Capital Advisors LP’sSigma Capital Management division.
Hedge Fund Assets Climbed During First Half of 2012: Study (AdvancedTrading)
Hedge fund assets grew during the first half of the year, as single-manager hedge funds managed to withstand market swings, economic uncertainty and regulatory reform to grow their assets by 5.23 percent to $1.89 trillion, according to a study by analytics provider PerTrac. The study also found that the fund of hedge funds model continues to fall out of favor, with the amount of money invested in these vehicles shrinking by 4.9 percent to $495 billion. Yet despite this drop, the total amount of money invested in hedge funds – whether in a single-manager fund or fund of hedge funds – rose to $2.3 trillion over the first six months of the year, PerTrac said.
Forget Underperforming Hedge Funds — Track Your Own Way to Profits (InvestorPlace)
Hedge funds are notorious market underperformers — a fact bandied about seemingly every couple months, via survey, study or story. The latest bit of news isn’t any different. According to Goldman Sachs (NYSE:GS) research, the hedge fund industry is continuing its dry spell. The average return among 699 hedge funds (aggregating $1.2 trillion in assets) is 4.6% year-to-date, and only 11% beat the S&P 500!
De Shaw Flaship Hedge Fund Oculus up 10% Through July (ValueWalk)
D.E Shaw & Co. , one of the world’s largest hedge funds with a total portfolio valued at over $39 billion, added Coca-Cola Company (NYSE:KO) and the hedge fund favorite, News Corp (NASDAQ:NWSA) (NASDAQ:NWS), among others, to its portfolio during the June quarter. In the month of July, D E Shaw’s flagship Oculus fund was up 0.4 percent while the year-to-date returns were 9.7 percent. The total value of Oculus fund is more than $9 billion, with the major chunk of the capital invested in international assets. About half of Oculus fund’s capital is allocated in Discretionary macro strategies.
Morgan Stanley Hedge-Fund Capital Raiser Said To Leave (Bloomberg)
Morgan Stanley (MS)’s David Barrett, who oversaw a unit that raised money for hedge funds and private companies, is leaving after 22 years to look for a job outside banking, two people with knowledge of the matter said. Barrett ran the New York-based firm’s private capital markets business, where he reported to client-solutions head Wylie Collins and equity capital markets co-heads John Moore and Paul Donahue. Barrett is considering positions at several hedge funds, said one of the people, who asked not to be identified because the information hasn’t been made public.
Fledgling hedge fund grabs pricey perch (CrainsNewYork)
Panning Capital signs on at 510 Madison where the asking rent is $128 per square foot. The tower is the last one built by Harry Macklowe before the financial crisis. Panning Capital, a new hedge fund, leased 4,500 square feet at 510 Madison Ave., between East 52nd and East 53rd streets.
Here’s What This $12 Billion Hedge Fund Company Has Been Buying (DailyFinance)
Every quarter, many money managers have to disclose what they’ve bought and sold, in “13-F” filings. Their latest moves can shine a bright light on smart stock picks. Today let’s look at Viking Global Investors, founded in 1999 by Andreas Halvorsen and David Ott, who had previously worked together at Julian Robertson’s respected Tiger Management firm. Viking is known as a long-short global equity fund, meaning that it aims to maintain long positions in companies on which it’s bullish, and short positions in those where it’s bearish.
Madison Avenue’s Advice to Hedge Funds: Open Up (WSJ)
“Transparency,” “access” and “performance” are among the buzzwords that hedge funds may want to highlight as they step out of the shadows and start marketing to a broader audience, advertising executives said. “They have to find a way to be more transparent,” said Rob Reilly, chief creative officer of Crispin, Porter & Bogusky, a unit of MDC Partners Inc. MDZ.A.T +1.69% “They need to be honest and show how the money is made and how their process works.”
Top five European hedge funds increase market share (LondonLovesBusiness)
Europe’s top five largest hedge funds increased their share of the market over the last year, according to a report. The continent’s leading managers now control 40% of the hedge fund assets of those surveyed by The Hedge Fund Journal, up from 38% last year. London-headquartered Man Investments tops the list of Europe’s 50 leading hedge fund managers, followed by Brevan Howard. London-based BlueCrest Capital Management and Winton Capital Management are also in the top five, along with Standard Life Investments.
Hedge funds up 1.42 per cent in July (HedgeWeek)
Hedge funds, as measured by the Dow Jones Credit Suisse Hedge Fund Index, finished July up 1.42 per cent with eight out of 10 strategies in positive territory. In total, the industry saw estimated outflows of approximately USD8.5bn in July, bringing overall assets under management for the industry to approximately USD1.75trn.
Deutsche Bank’s Pande to Depart for Hedge Fund (ai-CIO)
Vinay Pande, the chief investment advisor of Deutsche Bank, is set to leave for Brevan Howard Asset Management, a $36.7 billion hedge fund. Pande served as chief investment advisor of Deutsche Bank since 2006, based in London and New York. “He hasn’t done exceptionally well this year, with performance being flat. Given cost-cutting at the bank, I’m not surprised by his departure,” a Deutsche employee, who agreed to comment on anonymity, told aiCIO, adding that London-based Brevan Howard, a global alternative asset manager, is a Deutsche Bank client.
An Investor’s Guide To Fees And Expenses (Bloomberg)
About 140 years ago, a retailer named John Wanamaker figured his customers and salesmen had better things to do than spend hours haggling. His invention: Assigning one price, “plainly marked,” to every product. The price tag caught on nearly everywhere with one major exception: financial services. Investors still have a surprisingly difficult time figuring out what they’ll pay for financial advice, for mutual funds and especially for their retirement plans.
Hedge Funds Are Selling These 6 Industrials Stocks Trading Near Highs (SeekingAlpha)
Do you consider the buying trends of “smart money” investors when comparing stocks? We ran a screen with this idea in mind. We began by screening the industrial goods sector for stocks with strong upward momentum, trading within 5% of their 52-week highs. …1. Avery Dennison Corporation (AVY): Produces pressure-sensitive materials, office products, tickets, tags, labels, and other converted products.
Which Giant Institutional Investor Has Joined the Gold Bug Club? (Forbes)
The ranks of investors betting on gold is growing. John Paulson raised his stake in SPDR Gold Trust (GLD) and bought more shares of NovaGold Resources (NG) last quarter. George Soros more than doubled his stake in SPDR Gold Shares. And thanks to the Wall Street Journal, we know it’s not just day traders and hedge fund kings loading up –- also the world’s biggest bond investor, PIMCO. The Journal reports that PIMCO’s $21 billion Commodity Real Return Strategy Fund has also been buying gold, up to 11.5% of assets from 10.5% in June. The attraction: the managers expect inflation and expect that gold will benefit.
IRS hedge fund audits (Lexology)
The IRS has allocated significant resources to increase the number and scope of audits of hedge funds. IRS hedge fund audits are conducted by large audit teams that include specialists, technical advisors and IRS counsel. The IRS also applies an “enterprise” approach in which it simultaneously audits a related group of entities. In the case of hedge funds, this means that the IRS may simultaneously audit master funds, feeder funds, and fund manager entities. Hedge fund audits also commonly include IRS interviews of key officers and employees. In addition, the IRS may seek information directly from the hedge fund’s prime brokers and counterparties.
Court denies challenge in Tribune Co. case (MenaFN)
An emergency motion by Aurelius Capital Management to stay Tribune Co.’s emergence from bankruptcy for six months — without putting up a required $1.5 billion bond — was denied by a U.S. District Court in Delaware Monday. That decision gives Aurelius, a New York-based hedge fund and junior creditor in the nearly four-year-old bankruptcy case, until Wednesday to come up with the money. If that deadline passes, Tribune Co. can begin to move forward under the reorganization plan confirmed last month by U.S. Bankruptcy Judge Kevin Carey to hand ownership to its senior creditors.
Shanghai bourse may allow sunshine funds to list (Opalesque)
The Chinese official newspaper China Securities Journal has reported that the Shanghai Stock Exchange (SSE) is mulling allowing so-called “sunshine” private trust funds to list on the exchange under certain conditions, in a move to further boost the bourse away from retail investors. In a report, Reuters said that these “sunshine” private trust funds, also known as the prototype for hedge funds but more transparent, might be allowed to list with the Shanghai Stock Exchange and sell their products and services after meeting some conditions. Some of these funds may also be allowed to list.
Romney’s hidden tax plan (StarTribune)
Mitt Romney has been specific about all the taxes he wants to abolish and reduce. He’s a lot vaguer about how he would keep this from bankrupting the Treasury. His easy answer is he would “broaden the base” of taxable revenue. This sounds easy — plug an oil company loophole here, shut down a hedge fund dodge there. As Sen. Rob Portman, an Ohio Republican and Romney supporter, told reporters at the Republican convention on Tuesday, “it would be paid for by getting rid of a lot of the underbrush in the code.” Clear out the underbrush! Who could oppose that?
Wet Seal is Clinton Group’s new hobby horse (TheDeal)
Not everyone on Wall Street agrees with Clinton Group Co.’s belief that teen apparel retailer Wet Seal Inc. is undervalued and ripe for a sale, but it’s hard to argue with the New York hedge fund’s M&A instincts. Clinton Group, which led activist fights involving bedmaker Select Comfort Corp. and fast-food franchiser Red Robin International Inc., pressed toymaker Jakks Pacific Inc. in March to explore a sale. On Aug. 24, Los Angeles private equity firm Oaktree Capital Management LP made a new, undisclosed bid for Jakks.
Key events involving Yahoo and its performance (MSNBC)
Yahoo Inc. says co-founder Jerry Yang will step down as CEO as soon as a replacement is found. It ends a rocky reign marked by Yang’s refusal to sell the Internet company to Microsoft Corp. for $47.5 billion, or $33 per share, in May 2008. Yahoo’s board had been facing pressure to push him out as its stock plunged to its lowest levels since early 2003 and well below Microsoft’s last offer price. Jan. 13, 2009: Yahoo names technology veteran Carol Bartz as its new chief executive, bringing in a no-nonsense leader known for developing a clear focus.
Ampio Pharmaceuticals’ Pipeline Doesn’t Look Good (SeekingAlpha)
As shown in the following 5-day chart, Ampio Pharmaceuticals (AMPE) has rocketed from a close of $2.80 on Thursday, August 23rd, to $3.25 at the time of writing, for a gain of about 20%. …The article implies that a Pre-IND meeting with the FDA increases the chances of a drug’s approval. Nothing could be further from the truth. That’s like saying if a student goes to a professor’s office hours, he will probably get an A in the class.
Ugly No Barrier For Apartment Sales In German Boom: Mortgages (Bloomberg)
With small windows, low ceilings and drab facades, the concrete apartment blocks favored by East Germany’s communist regime are known as Plattenbauten for their prefabricated panel construction. Now they are hot properties, caught up in a German real estate boom driven by foreign investors seeking a safe place to put their money. A sale of 38,000 Dresden apartments owned by Fortress Investment Group LLC (FIG), many in the socialist-era estates, may be Germany’s next big residential deal after firms including New York-based Blackstone Group LP (BX) and Cerberus Capital Management LP made purchases that included Plattenbauten this year.
Fidelity’s Abigail Johnson Consolidates Control (Bloomberg)
Fidelity Investments named Abigail P. Johnson president, putting the daughter of Chairman Edward C. “Ned” Johnson III in charge of all the key businesses at the second-largest mutual-fund company in the U.S. Johnson, 50, will oversee asset management, retail and institutional brokerage, retirement and benefits services, the Boston-based firm said today in a statement. While she will report to her father, who remains Fidelity’s chief executive officer, the appointment makes Abigail Johnson the highest- ranking woman in the fund industry.
SEC Charges Eight in Georgia-Based Insider Trading Ring (SEC)
The Securities and Exchange Commission today charged eight individuals living in the Griffin, Ga., area for their involvement in an insider trading ring that generated more than $500,000 in illegal profits based on nonpublic information about an upcoming company merger. The SEC alleges that local accountant Thomas D. Melvin, Jr. exploited confidential information from a client who was on the board of directors at Chattem Inc., a Tennessee-based pharmaceutical company known for such over-the-counter products as Allegra, Gold Bond, and Icy Hot. In late 2009, after Chattem’s board was informed that French pharmaceutical manufacturer Sanofi-Aventis Inc.
Asian high yield bonds remain a solid investment choice (Opalesque)
Steven Howell is the founder of HCAP Asset Management. He launched the firm in 2008, to leverage his 25 years of financial expertise with a focus on the Asian markets. He was recently interviewed by Sona Blessing for Opalesque Radio, where he discussed the continued investment opportunities in Asian high yield bonds. Even though Asian high yield bonds have seen a somewhat lengthy rally of late, Howell says that a significant upside is still present for investors given the overall quality of the issuance’s. “Opportunities to invest in Asian high yield bonds have actually been enhanced since 2008,” he explains, noting that much of the issuance goes toward reinvestment.
Trading Coach: When the shadow boxes back (Absolutereturn-Alpha)
For 25 years now I have either been trading on a bank desk or at a hedge fund. I am successful but I could be much more successful if I didn’t always fight the trend. Within a global macro portfolio, I trade the financial futures intraday, and somehow I am always fighting the intraday moves. It’s like I’m sabotaging myself or just need the excitement. I don’t know. Have you ever known anyone who can’t stop trying to fight the market? …Now that you are asking how the heck I knew that, I’ll tell you. Every single time I work with a PM or trader who fights the trend, we deduce that what they are really up to is trying to be the first to find the bottom or the top…the first to find the turn.
Hedge funds are missing out by ignoring socially responsible investors (Absolutereturn-Alpha)
Institutional investors have the best chances for strong results when they can diversify and consider allocations to all asset classes and investment vehicles. …Most hedge funds have not employed socially responsible investment (SRI) screens; they do not want to limit their investment opportunity set. And most institutions with SRI requirements aren’t in a position to invest via customizable separate accounts due to scale. (Managers generally require a $100M minimum in order to consider a separate account.)
Just shut up and buy Apple (MarketWatch)
And if you’d like some background on this type of analysis, be sure to check out my new book which is currently the #1 best-selling Investment Education book at Amazon, “Everything You Need to Know About Investing.” In it, I explain in great detail the analysis I used to first buy Apple at $7 a share back in 2003. I like to tell the story about how a few years ago, one of the Fast Money Five sent me an email explaining in great detail why Apple was about to collapse. Something to do with the consumer being backed into a corner and a recession imminent, I believe. The more things change, the more they stay the same, huh?
Chicago Laborers pension plan conducts asset-liability study (PIOnline)
Chicago Laborers’ Annuity & Benefit Fund is conducting an asset-liability study, according to recently released minutes of the $1.4 billion pension fund’s July 17 board meeting. Investment consultant NEPC is conducting the study after recommending the pension fund make no more private equity commitments this year because of liquidity needs, according to the minutes.
S.E.C. Investigates Residential Capital for Potential Mortgage Fraud (NYTimes)
The Securities and Exchange Commission has disclosed that it is investigating Residential Capital, the home lending arm of Ally Financial, for potential instances of mortgage fraud. In a filing in Federal District Court in Los Angeles dated Monday, the S.E.C. wrote that it was looking into the lender’s originating and underwriting of mortgages that were later bundled together, or securitized, and sold to investors. The inquiry began on Feb. 22.