Editor’s Note: Related tickers: Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), JPMorgan Chase & Co. (NYSE:JPM), UBS AG (ADR) (NYSE:UBS), Burger King Worldwide Inc (NYSE:BKW), Lululemon Athletica inc. (NASDAQ:LULU), Dollar General Corp. (NYSE:DG)
Hedge-fund mogul Bill Ackman is once again teaming up with British investor Martin Franklin. The two previously had a successful Burger King Worldwide Inc (NYSE:BKW) investment. Ackman told his European investors last week that his $12.3 billion Pershing Square hedge fund had taken a $246 million stake in Franklin’s new $885 million Platform Acquisition Holdings. The SPAC, or special purpose acquisition company, went public on the London Stock Exchange May 17 at $10 a share, and Pershing Square took its stake on May 22. The stock closed yesterday at $10.84. Franklin’s other partner is European financier Nicolas Berggruen. A little more than two years ago, Franklin and Berggruen teamed up with Ackman to create a SPAC called Justice Holdings that ended up buying Burger King Worldwide Inc (NYSE:BKW) and taking it public last year.
RBS ‘should be more like a Canadian bank’ proposes hedge fund chief (InvestmentWeek)
The Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) should be converted so that it resembles a Canadian bank, a document created by a hedge fund boss and unwittingly shown to the press has proposed. Yesterday afternoon, Davide Serra, founder and chief executive of Algebris Investments, was pictured entering Downing Street with a presentation on Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), entitled “the case for improving viability”, which appeared to recommend that the bank become more like a Canadian bank. The front page of Serra’s presentation, entitled “the case for improving viability”, was partly visible and suggested Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), which is 81pc owned by the taxpayer, was “very similar to the large Canadian banks”.
Lone Pine’s Three Strikes: Lululemon, TripAdvisor and Dollar General (InstitutionalInvestorsAlpha)
When shares of Lululemon Athletica inc. (NASDAQ:LULU) plunged nearly 18 percent on Tuesday after the company’s CEO, Christine Day, unexpectedly resigned, one hedge fund manager who had to be shaking his head — or simply laughing with disbelief — was Lone Pine Capital’s Stephen Mandel Jr. That’s because Lululemon Athletica inc. (NASDAQ:LULU), a retailer of yoga wear and other athletic clothes, was the third stock in Mandel’s portfolio of just 57 long positions to suffer a big one-day drop in June alone. On June 4 shares of Dollar General Corp. (NYSE:DG) sank more than 9 percent after the company lowered its guidance for gross profits for the year. At the end of the first quarter, Greenwich, Connecticut–based Lone Pine was the third-largest shareholder, with more than 14 million shares.
AIMA Says Andrew Baker to Step Down as CEO by End of the Year (Bloomberg)
The Alternative Investment Management Association, a lobbying organization that represents more than 1,300 hedge-fund firms, said Andrew Baker plans to step down as chief executive officer by the end of the year. AIMA is in the process of identifying a successor, the London-based group said in a statement today. Baker, 56, has been CEO since 2009. Baker plans to leave as European regulators implement the Alternative Investment Fund Management Directive, which lays out disclosure and fundraising requirements for hedge funds across the region. The industry successfully watered down earlier proposals that would have restricted hedge-fund leverage and implemented higher hurdles to raising money in Europe.
Charting Hedge Funds’ Long Term Gains (WSJ)
A popular refrain in recent years has been how hedge fund performance continues to trail equity indices: the average hedge fund has underperformed the S&P500 index for the past four years and is lagging it by two thirds in the first five months of this year. Over a longer period, however, a different picture emerges, according to a chart compiled by JPMorgan Chase & Co. (NYSE:JPM) -1.63% prime brokerage division. …JPMorgan Chase & Co. (NYSE:JPM)’s report uses Hedge Fund Research’s HFRI Composite index, which tracks hedge fund returns net of fees. Over the 16-year period, hedge funds posted annualized returns of 8.24%, compared with 6.24% for bonds and 6.08% for the S&P500 Index.
National Express moves higher despite £101m stake sale (Guardian)
National Express has accelerated more than 4% despite one of its biggest investors selling its remaining stake in the transport group for around £101m. UBS AG (ADR) (NYSE:UBS) is placing 50.6m shares at 200.5p on behalf of US hedge fund Elliott Advisors, its last remaining shareholding after it sold a 9.9% stake in March. At the time Elliott said the sale was part of a desire to diversify its portfolio and invest in new opportunities, and agreed not to sell any further shares for at least 90 days from the placing. It said National Express remained one of its most important investments.
Ex-Citadel Credit Chief Boas Cancels Hedge Fund Plans (Bloomberg)
Chris Boas, a former global head of credit at Citadel LLC’s securities unit, canceled plans to start his own hedge fund after failing to raise money from investors. Boas’s Longwood Credit Partners LLP “has decided not to pursue investor funds due to fundraising market conditions,” Andrew Honnor, a spokesman for the London-based firm, said in an interview today. Boas didn’t return an e-mail seeking comment. Longwood was scheduled to start in the first quarter and follow a strategy that seeks to profit from price differences between debt securities, two people with knowledge of the matter said in August.
Hedge Fund Hot Shot Anthony Scaramucci Is Opening The Wall Street Bar To End All Wall Street Bars (BusinessInsider)
Play close attention everyone because you’re only going to read this for the first time, once. And there’s never anything like your first time. Anthony Scaramucci, co-founder of SkyBridge Capital, Romney bundler, and Master of Ceremonies at the oh-so-epic SALT Conference is opening a bar for hedge funders and private equity guys in Midtown Manhattan. At last, Paradise. It will be called the Hunt and Fish Club, Bloomberg reports (of course, that’s no reference to the Bergin Hunt and Fish Club, John Gotti’s infamous Queens hangout). The partners seek to raise $4 million for the project, which is slated to open in December.
Billionaire John Paulson, the hedge-fund manager trying to recover from losses related to bullion this year, posted a 13 percent decline in his Gold Fund last month, according to a letter to investors. The drop brings losses in the strategy to 54 percent since the start of the year, the firm said in the letter, a copy of which was obtained by Bloomberg News. The Gold Fund is the smallest strategy of the $19 billion money manager, with about $360 million, or 2 percent of assets, most of it Paulson’s own money.
Hennessee Hedge Fund Index up 1.79% in May, Lagging Market Advances (WSJ)
Hedge funds gained 1.79% in May, again lagging broader market advances, according to a monthly report from industry adviser Hennessee Group LLC. Outpacing the Hennessee Hedge Fund Index, the Standard & Poor’s 500-stock index rose 2.08% in May, the Dow Jones Industrial Average climbed 1.86% and the Nasdaq Composite Index climbed 3.82%. Bonds fell, as the Barclays Aggregate Bond Index declined -1.78%. “At month end, managers saw significant increases in volatility, a significant drop in the dollar, especially against the Japanese Yen, the Japanese market experienced a major pullback which were compounded by global GDP, employment, housing, and consumer spending disappointments,” said Charles Gradante, co-founder of Hennessee.
Houston hedge fund raises millions (BizJournals)
Motion Capital Partners LP, a Houston-based hedge fund, recently raised $15.9 million in capital, regulatory filings showed Tuesday. The fund had 20 investors after the date of first sale, June 1, in pooled investment fund interests, according to the U.S. Securities and Exchange Commission filing. David Fulghum, manager of Motion Capital Management LLC, declined to comment on the raise. The SEC filing indicated the offering would last more than one year.
‘Little reason’ for lack of transparency in hedge funds (FTAdviser)
There is “very little reason” for hedge fund traders to be so opaque, according to the chair of one hedge fund investment company. Speaking at a press event focused on listed credit, Charlotte Valeur, chair of Brevan Howard Credit Catalysts, said she has been trying for 10 years to increase transparency in the sector. “For me, transparency is everything,” she said. “We are pretty transparent with everything. I see very little reason to not be transparent with people.” Hedge funds are known for being more secretive than other fund types. Despite calling for greater transparency, Ms Valeur said there was a logic in traders’ mindsets prior to executing a trade.
Metacapital in Worst Slide as Bloodbath Roils Funds: Mortgages (BusinessWeek)
Deepak Narula rose to fame as manager of the best-performing hedge fund last year by navigating the government’s stimulus efforts. He’s having a far harder time as the Federal Reserve moves closer to an exit. Metacapital Management LP’s flagship $1.5 billion fund lost an estimated 6.4 percent last month, the worst decline since it started in 2008, according to a letter to investors obtained by Bloomberg News. That followed drops of 0.5 percent in April and 0.1 percent in March, after 17 months of consecutive gains including a 41 percent return last year.
Severn Trent deal blow hits “merger arb” funds (Reuters)
Hedge funds that bet Severn Trent would agree to a Canadian-led takeover are reeling from losses after the water company refused to talk, casting further doubt on their money-making abilities in an anaemic M&A environment. The LongRiver consortium walked away after the British utility let the bid deadline expire on Tuesday, ignoring an effective invitation to negotiate on price. That sent Severn Trent shares down 8.3 percent on Wednesday, adding to falls on Monday and leaving it below its pre-bid price, piling up the losses for hedge funds that bought stock in the past three weeks expecting a deal to be sealed.
Warren Buffett Becomes a Cheap(er) Lunch Date (BusinessWeek)
How to explain the dramatic drop in bids for a lunch with billionaire Warren Buffett? An online auction for the chance to break bread with the Oracle of Omaha took in just over $1 million this past week. That’s the lowest price since investor Mohnish Pabrai and two friends won with a $650,100 bid in 2007, and an astonishing 71 percent discount below the $3.45 million paid by last year’s winner for lunch at a Manhattan steakhouse. This year’s winner—one of eight contenders—chose to remain anonymous. Proceeds go to Glide, a San Francisco charity supported by Buffett’s first wife for many years. “It’s a sad day for Glide and for all of us,” Pabrai said Monday of this year’s more modest auction result. “Our hero got beat down.”
