Sotheby’s Faces Headwinds that Could Hurt Its Investors (InstitutionalInvestorsAlpha)
The activist hedge fund firms that have been pushing for change at Sothebys (NYSE:BID) may have won their big boardroom battle. But they may be losing the war. Shares of the famed auctioneer stood at close to $45 on May 5, when the company agreed to appoint Third Point founder Daniel Loeb and two other Loeb-selected people to its board of directors as part of a compromise agreement to avert a proxy fight with the New York-based activist firm. “This is good for shareholders and we are supportive of the settlement,” wrote…
Hedge Fund Alpha Trades Shown to Lose Money (WSJ)
Investors have piled into hedge funds for years because they supposedly possess the holy grail of investing—the ability to make money through their own skillful trades, regardless of the direction of financial market moves. But the presumptive skill of hedge-fund managers may not be what it seems, new research shows. Data produced by BlackRock, Inc. (NYSE:BLK) -0.78% the world’s largest fund manager, with assets under management of $4.6 trillion, of which $51 billion is in hedge funds, breaks down the returns produced by hedge funds into what is known in industry jargon as ‘beta’, or returns due to moves in financial markets, and ‘alpha’, the highly prized ability to profit through strategic trading and stockpicking.
Is that hedge fund really worth it? (LosAltosOnline)
One expert argues that hedge funds are overpriced, nontransparent and provide poor returns over time. Simon Lack, author of “The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True” (Wiley, 2012) and previously a member of JPMorgan Chase & Co (NYSE:JPM)’s hedge fund due-diligence team, spoke at the CFA Institute’s annual conference in Seattle earlier this year. He explained that hedge funds suffer from some of the same problems as actively managed mutual funds. Their managers claim to be able to take advantage of market inefficiencies, improve diversification and provide lower correlations to more traditional investments.
NY Hedge Fund Tycoon Ackman Plans Perishing IPO (Jewishvoiceny)
Bill Ackman, the manager of Pershing Square Holdings, announced that he intends to take the company public. The activist investor is plans to raise $2 billion through an IPO. The hedge fund firm will list its shares on the Euronext Amsterdam Stock Exchange at $25 per share, and are expected to start trading by October 13. Ackman hopes to drive a market capitalization past $5 billion. Perishing Square said it has arranged 30 investors, with a combined commitment of around $1.5 billion…
Ex-Deutsche Bank trader Hal Lehr to set up hedge fund (Reuters)
Hal Lehr, a former trader at Deutsche Bank AG (USA) (NYSE:DB) and Soros Fund Management LLC, is set to start a hedge fund firm after receiving support from JPMorgan Chase & Co’s asset management unit, Bloomberg News reported on Tuesday. Aithon Capital is expected to be set up by January with JPMorgan investing about half of its initial capital of $100 million, the report said, citing a person familiar with the matter. The firm is likely to focus on commodity trading and JPMorgan may increase its investment to as high as $500 million, the report added. Aithon is looking to set up office at 501 Madison Avenue in New York City, the person told Bloomberg.
