Editor’s Note: Related tickers: Dell Inc. (NASDAQ:DELL), PLX Technology, Inc. (NASDAQ:PLXT)
Carl Icahn expects to wrap up formal commitments today for the $5.2 billion six-year financing package he is raising for Dell Inc. (NASDAQ:DELL), The Post has learned. “Everything we heard is the book is in shape,” a source who is buying a piece of the loan said yesterday. “Friday morning it should be wrapped up.” While the financing deal is expected to carry no covenants, the source said, the senior loan is equal to only half of the cash Dell Inc. (NASDAQ:DELL) is expected to have on hand should Icahn’s recapitalization plan succeed. Icahn plans to use the $5.2 billion — combined with Dell Inc. (NASDAQ:DELL) cash and money borrowed against receivables — to pay shareholders the more than $15 billion needed to give them $14 a share for 60 percent of the business. When combined with the outstanding shares, he is claiming his offer is worth $17.32 a share.
Quants tackle hedge fund operational risk (Risk)
Over the past three decades, the investment world has been transformed by an army of mathematicians, physicists and computer scientists using sophisticated quantitative techniques to play the markets. Nowhere is this more apparent than in the hedge fund industry, which has embraced quantitatively driven strategies such as statistical arbitrage and managed futures. Investors have also had to adapt. The best funds of hedge funds (FoHFs) have developed an array of sophisticated quantitative scoring systems and analytical tools to aid them in their investment decisions.
PLX Technology Faces Pressure from Activist Hedge Fund (SECFilings)
PLX Technology, Inc. (NASDAQ:PLXT), a developer of integrated circuits that perform critical system connectivity functions, continues to be the target of at least one activist hedge fund. On June 27, 2013, Potomac Capital Management II delivered a letter to the company demanding to inspect documents related to any alternative acquisition proposal presented or considered by the Board of Directors during its go-shop period in 2012 merger attempt. …“It is clear that shareholder value can best be created by capitalizing on the historic interest in PLX Technology, Inc. (NASDAQ:PLXT) from potential acquirers, while leveraging the improved operating model of the Company. There is significant strategic value in PLX Technology, Inc. (NASDAQ:PLXT)’s dominant position in the PCI Express market which coupled with the cost synergies that a large acquirer could recognize, would drive an acquisition value substantially higher than what the Company could achieve as a standalone business.
Largest Hedge Fund Operator Ray Dalio Stricken by Emerging Markets (Nasdaq)
Investor Ray Dalio , founder of the $150 billion hedge fund Bridgewater Associates, has developed a unique view of the economy, comparing it to a machine. In March, he told CNBC that he expects stocks to perform well over the short term, but foresaw a pullback after that: “I think what has been artificial is that there has been a lot of printing of money which has driven short-term interest rates down to make cash a terrible investment and to make bonds a terrible investment, both the printing of money and the seeking of safe returns have driven money into cash, and so with the negative real return of about 2% in cash and half a percent in bonds, that’s a bad investment.
Fishing for Stocks as Market Regains Mojo (Barrons)
The stock market, which appeared troubled in recent weeks, has scored three straight days of solid gains. This rebound shouldn’t come as a surprise to Cliff Asness, the respected hedge-fund manager who told Fortune in an interview that stocks are in solid shape. “There is no liquidity crisis or big unwind,” said Asness. “This is not 2008.” Asness, who runs AQR Capital Management, told Fortune that the market has been caught off guard because long-term interest rates are rising at a time when inflation is flat, expectations for corporate cash flows haven’t dramatically improved, and commodity prices are falling.
Broadridge To Acquire Hedge Fund Management Specialist Bonaire (HedgeCo)
Hedge fund service provider Broadridge Financial Solutions, Inc. has signed an agreement to acquire Bonaire Software Solutions, LLC., according to sources. Bonaire provides fee calculation, billing, and revenue and expense management solutions for asset managers including institutional asset managers, wealth managers, mutual funds, bank trusts, hedge funds and capital markets firms. The addition of Bonaire a step in Broadridge’s strategy to build a suite of data-driven solutions for mutual fund, retirement, and asset management firms to help them grow their businesses, operate efficiently and minimize risk.
The Leona M. and Harry B. Helmsley Charitable Trust continues to expand its combined exposure to hedge funds and private equity (PIOnline)
The $3.874 billion Leona M. and Harry B. Helmsley Charitable Trust continues to expand its combined exposure to hedge funds and private equity, which totaled $1.598 billion as of March 31, 2012, the most recent data available. That is an 85% increase from the $864 million in 2011. In 2009, hedge funds and private equity accounted for $159.1 million. The number of hedge fund strategies and private equity funds in the trust’s portfolio increased to 40 from 21 in 2011 and only nine in 2009. The foundation’s largest hedge fund investment was Coatue Offshore at $111.9 million. Notable new hedge fund and private equity investments included $108 million each with Daruma Capital Management and Highclere International Investors, $107 million with L.A. Capital and $101 million with Colchester Global Investors.
Retired Arnold Eyes Pension Reform (Finalternatives)
Another hedge fund manager is weighing in on the thorny issue of public pension reform. John Arnold, who made billions running Centaurus Advisors before shutting the hedge fund last year, is turning his foundation and fortune to reforming California’s public pensions. Arnold aims to back groups seeking to limit public-employee pension deals, which are threatening the fiscal health of states and municipalities across the country. Arnold has been involved in the pension reform movement for years, having given $150,000 to the California Foundation for Fiscal Responsibility two years ago, out of a total of about $10 million spent nationwide on the issue.
Hedge Fund Revenue Climbs Past Pre-Crisis Peak (Hedgeco)
Median pre-tax operating margins rose to 32%, the highest since 2007, according to a new survey by Casey, Quirk & Associates. The new high in profit margin was driven by market appreciation, which also lifted 2012 revenue in the global asset management industry past the previous 2007 peak, Reuters says. However, net inflows of 1.2% last year – compared with 3.7% in 2007 – increasing fee pressure, and a widening economic divergence among firms post-financial crisis point to growing industry challenges, according to Performance Intelligence: 2013 Survey Results. The global survey participants largely came from the U.S. Institute and European Institute, members-only forums established by Institutional Investor’s conference division for CEOs of leading investment management firms.
Roubini and Bremmer on Charlie Rose: Unveiling New Abnormal (EconoMonitor)
After the Great Recession, commentators have espoused their idea of the “New Normal”—a post-growth era of stagnant developed economies. But is it so simple? Nouriel Roubini and Ian Bremmer appeared on Charlie Rose to discuss their take on what the new paradigm will be like. Roubini differentiated what he is calling the “New Abnormal”: “Our point is that this situation is one that is not a stable equilibrium, is not even a stable disequilibrium. It’s an unstable disequilibrium. Take for example the eurozone. You cannot have just a monetary union without banking, political, economic, fiscal union.
Fashionable ‘Risk Parity’ Funds Hit Hard (WSJ)
Investors who piled into “risk parity” funds, which follow a popular strategy that promises to make money in most environments, are being hit hard by the current market turmoil. The losses are touching a broad swath of investors, ranging from hedge-fund firms Bridgewater Associates LP and AQR Capital Management LLC, to mutual funds and local pension funds. Risk-parity funds use leverage to try to increase returns on bond investments so they more closely resemble returns of stocks. The basic idea of the strategy is that by equally distributing risks among stocks, bonds and commodities, the portfolio can weather huge price…
Consultants Can’t Quit Hedge Funds (InstitutionalInvestorsAlpha)
What do hedge funds have to do to fall out of favor with consultants? This group is more bullish on hedge funds than it was a year ago, even though the average fund continues to lag the broad market averages for a fifth straight year, a new survey shows. Some 38 percent of consultants polled by London-based alternatives data provider Preqin said they plan to commit slightly more capital to hedge funds on behalf of clients, while another 17 percent said they will invest “significantly more.” This compares with last year, when 28 percent said they planned to commit slightly more and 10 percent significantly more…
