Editor’s Note: Related tickers: Nuance Communications Inc. (NASDAQ:NUAN), Herbalife Ltd. (NYSE:HLF), Deutsche Bank AG (NYSE:DB), Apple Inc. (NASDAQ:AAPL), Goldman Sachs Group, Inc. (NYSE:GS), The Blackstone Group L.P. (NYSE:BX), Morgan Stanley (NYSE:MS), Hertz Global Holdings, Inc. (NYSE:HTZ)
Less than a month after disclosing his initial position in voice-recognition firm Nuance Communications Inc. (NASDAQ:NUAN), billionaire investor Carl Icahn disclosed he’s still buying the stock. The legendary activist now controls more than 10% of the company reportedly behind Apple Inc. (NASDAQ:AAPL) +2.94%’s Siri. Shares in the company had tanked during Tuesday’s trading session after disappointing second quarter results. Icahn bought an additional 4.23 million shares, an SEC filing revealed during afterhours trading, taking his stake in Nuance Communications Inc. (NASDAQ:NUAN) from 9.3% to 10.7%. The billionaire hedge fund manager now owns nearly 34 million shares worth more than $645 million as of Tuesday’s closing price. While the timing of Icahn’s trade isn’t entirely clear, he disclosed his purchase while everyone was selling. The stock closed the trading session down 18.3% to $19.04 after reporting weak top and bottom-line numbers for the second quarter.
AIMA reviews hedge funds’ charitable performance in new paper (Opalesque)
AIMA, the global hedge fund association, has just produced the first ever global review of the hedge fund industry’s charitable and philanthropic activities. This comes at the heels of news that The Blackstone Group L.P. (NYSE:BX), one of the one of the world’s largest investment and advisory firms, had partnered with the White House to encourage private sector hiring of America’s veterans, and would hire 50,000 veterans in the next five years. AIMA’s 44-page report, Contributing to Communities, “gives a detailed picture of the global hedge fund industry’s public charitable activities, from workplace-giving schemes and industry fundraising campaigns for charity to individual examples of philanthropy.”
Deutsche Bank’s Head of Rates Sales Sana Is Said to Be Leaving (Bloomberg)
Deutsche Bank AG (NYSE:DB)’s global head of rates sales Haroon Sana is leaving the company, according to three people with knowledge of the matter. Sana will depart his London-based role at Germany’s biggest bank later this year, said two of the people, who asked not to be identified because they aren’t authorized to speak on the matter. Prior to joining Deutsche Bank AG (NYSE:DB), Sana worked for Morgan Stanley (NYSE:MS) and Merrill Lynch & Co., according to data compiled by Bloomberg. Paul Swaddling, head of hedge fund sales for rates, has left the company, two of the people said today. Sebastian Howell, a spokesman for Deutsche Bank AG (NYSE:DB) in London, declined to comment on Sana’s and Swaddling’s positions when reached by phone. Sana wasn’t immediately available to comment. Deutsche Bank AG (NYSE:DB) said on April 29 that pretax profit at the investment bank fell 2 percent in the first quarter from a year earlier to 1.85 billion euros ($2.4 billion). Cost reductions failed to offset a 4 percent decline in revenue to 4.6 billion euros.
Investor wants buybacks, spinoffs on Tim Hortons menu (ChicagoTribune)
Canadian coffee-and-doughnut chain Tim Hortons Inc has come under pressure from a large investor to aggressively boost returns through debt-funded share buybacks and a scaling back of U.S. expansion plans, according to documents seen by Reuters and two sources familiar with the matter. Hedge fund Highfields Capital, which owns about 1.5 percent of the company and which has a track record of bringing about change at other firms, wants Tim Hortons to borrow $3.4 billion to buy back more than one-third of its outstanding shares at $59 apiece, the documents show. Highfields’ behind-the-scenes agitation, which was previously unknown, shows how even large and relatively healthy companies are vulnerable to activist investors demanding bold strategies – and even financial engineering – to boost shareholder returns in the absence of growth.
Edoma Founding Partner Joins Soros-Linked Hedge Fund (WSJ)
One of four founding partners of now defunct hedge fund Edoma Partners is understood to be joining Indus Capital, a $4.4 billion hedge fund manager set up by former partners at Soros Fund Management, Financial News has learned. Ali Hedayat, a former proprietary trader at Goldman Sachs Group, Inc. (NYSE:GS), is joining Indus in London as a partner to launch a global special-situations fund, according to two people familiar with the situation. He is joining next week and the fund will launch in the next few months, one of the sources said. A spokesman for Indus was not immediately available for comment.
Another hedge fund manager bets against Canada’s big banks (TheGlobeAndMail)
Another investor is fessing up to shorting Canada’s big and almost universally loved banks. He’s hedge fund manager Albert Friedberg, founder of Toronto’s Friedberg Mercantile Group Ltd., who indicated in his latest quarterly report to clients that he has a short position on the banks as a kind of disaster insurance should global financial conditions worsen. There was considerable buzz this past weekend after reports in The Globe and Mail that a small San Francisco-based hedge fund, Hyphen Partners LP, has staked 95 per cent of its assets on a bet that Canada’s housing market is about to go bust and the banking sector is going to tumble.
PineBridge Partners with CICC Investment Management to Launch the First Global Fund of Hedge Funds Targeting Qualified Chinese Investors (Zawya)
CICC Investment Management (USA), Inc. and PineBridge Investments LLC (“PineBridge”) announced the launch of the first global fund of hedge funds (“Fund”) on April 1 targeting qualified Chinese investors. The launch of the global fund of hedge funds demonstrates the strategic decision of CICC Investment Management (USA)’s parent company, China International Capital Corporation Limited (“CICC”), to expand its investment management business globally. PineBridge and CICC Investment Management (USA) have both invested proprietary capital to seed the Fund and ensure alignment of interests with investors. CICC Investment Management (USA) serves as the Fund’s investment manager and PineBridge as its sub-advisor. CICC Investment Management (USA) will leverage its resources in Beijing and New York. The PineBridge Hedge Fund Solutions team is primarily based in New York, London and Hong Kong.
Tough times for hedge funds that bet on market tumult (Reuters)
Nelson Saiers, a trader and math whiz, runs the type of hedge fund that tends to perform best when markets are going haywire. The $600 million Saiers Capital fund and other so-called volatility funds use complex trading strategies to take advantage of pricing discrepancies caused by gyrations in global financial markets. These funds flourished in the years after the financial crisis, when volatility was running hot, but this year is a different story.
Diamondback Capital says it’s victim of ex-manager’s crimes (CTPost)
Diamondback Capital Management, one of the hedge funds raided by the FBI in 2010, is seeking $39 million in restitution from former fund manager Todd Newman, saying it’s a victim of his insider-trading scheme. Newman, 48, was convicted of conspiracy and securities fraud by a federal jury in New York in December. Prosecutors said he was part of a group of fund managers, analysts and insiders at technology companies who swapped inside information in a scheme that reaped $72 million in illicit profits. The hedge fund, which closed in December, is asking for the restitution, claiming its goodwill and reputation were “tarnished,” Prosecutors called the request “unprecedented.”
Hedge fund buys up thousands of homes in central Florida (WFTV)
The country’s largest private real estate owner, The Blackstone Group L.P. (NYSE:BX), is pouring millions of dollars into the central Florida real estate market. Some are concerned the company is squeezing out the average home owner and turning too many single family homes into rentals. …The biggest is The Blackstone Group L.P. (NYSE:BX), a hedge fund that through Invitation Homes has bought up 24,000 homes around the country in just one year. The homes are then rented out. Realtor Ray Lopez said there are now more buyers in the market than there is inventory to be sold.
Richland Capital Quits Hedge Funds (Finalternatives)
In a surprising move for one of Asia’s most well-respected hedge fund managers, Richland Capital Management has shuttered its hedge funds and may close its doors entirely. The Hong Kong-based fund, which managed about US$100 million in two hedge funds, has liquidated the portfolios and wound down yesterday, Reuters reports. It is unclear why Richland moved to pull the plug on the funds; both had posted solid returns and sources told Reuters that neither fund faced major redemptions.
Ambit’s new hedge fund comes with high risks and high rewards: Andrew Holland (Business-Standard)
It’s been a long-standing grouse of fund managers in India that billions of dollars that come into Indian markets are managed from either Hong Kong or Singapore. This might change if Indian fund managers prove their mettle in sophisticated investment strategies that long-short funds deploy. After the Securities and Exchange Board of India allowed Indian entities to set up domestic hedge funds, Ambit Investment Advisors has come up with such a sophisticated long-short fund for high networth Indians and corporates. Andrew Holland, CEO of Ambit Investment Advisors, talks to Malini Bhupta and Vishal Chhabria on key aspects of this fund and its track record so far.
Another Major Shareholder Joins CommonWealth REIT Fight (WSJ)
Hedge fund firm Perry Corp. said it supports the views of two major shareholders of CommonWealth REIT (CWH), as it becomes the latest stakeholder pushing for a removal of the real estate investment trust’s board. Perry, which owns a 5.5% stake in CommonWealth, said in a regulatory filing it supports the views expressed by Corvex Management LP and Related Fund Management LLC, which launched an initial bid for the real-estate investment trust in February, citing poor corporate governance and undervaluation. The pair also called on shareholders to vote out the entire board.
Dr Doom: Markets heading for bubbles as Fed commits ‘massive fraud’ (FundWeb)
The loose monetary policy being pursued by the US Federal Reserve is increasing the risk of bubbles emerging in equity and credit markets in the short term, Nouriel Roubini warns. Writing on Project Syndicate, the New York University economics professor points out that the Fed is likely to maintain its third, indefinate bout of quantitative easing for the foreseeable future owing to the weak economic growth, high unemployment and below-target inflation blighting the world’s largest economy. The Fed unveiled QE3 on 13 September 2012, initially pledging to buy $40bn in agency mortgage-backed securities a month and later increasing this to $85bn a month. This bout of QE followed two earlier rounds that pumped about $1.75trn and then $600bn into the financial system.
Herbalife says KPMG’s resignation hindered stock buybacks (LATimes)
Herbalife Ltd. (NYSE:HLF) said it had to scale back plans to repurchase its shares after KPMG resigned in early April as its auditor and withdrew its review of the company’s annual financial statements for the last three years. The Los Angeles nutritional products company canceled plans to borrow money that “would have been used to repurchase a meaningful amount of company stock,” John DeSimone, Herbalife Ltd. (NYSE:HLF) chief financial officer, told analysts Tuesday in a conference call. …Ackman’s allegations led to a massive sell-off in the company’s shares in December. But rival investor Carl Icahn immediately started buying what would amount to more than 15% of Herbalife Ltd. (NYSE:HLF) shares, betting that Ackman was wrong and the company would continue to thrive. Icahn’s holdings are worth more than $600 million.
Hedge Funds Drive Demand For Greek Corporate Debt (WSJ)
Hedge funds are the driving force behind the substantial demand for Greek corporate debt most recently seen in the Hellenic Petroleum ELPE.AT +3.45% bond sale, say market participants, in a sign that investors with longer-term horizons still shun the riskiest of high-risk debt despite renewed appetite for yield. Hellenic’s bond was 5.5 times oversubscribed with the final deal size set at €500 million ($654.9 million), twice the amount initially contemplated. Demand emanated from a “combination of wealthy Greek money coupled with decent interest by US and UK fixed income hedge funds,” said George Zois, head of Greek equities and fixed income at emerging market investment banking boutique Exotix. “Domestic Greek based-funds were also seeking allocation,” Mr Zois said.
Three Columbia Business School Students Won $100,000 With This Monster Presentation About Investing In Hertz (BusinessInsider)
This year, three Columbia Business School students took home $100,000 from Bill Ackman’s hedge fund, Pershing Square Capital, for their long thesis on rental car company, Hertz Global Holdings, Inc. (NYSE:HTZ). They were the winners of the Pershing Square Challenge, an investment thesis contest Ackman has held since 2008. And it just so happens that two of the winners of Ackman’s contest are members of SumZero, an online community for buy-side investors. They were kind enough to share the winning slide deck with Business Insider.
