Editor’s Note: Related Tickers: Morgan Stanley (NYSE:MS), The Blackstone Group L.P. (NYSE:BX), Wells Fargo & Co (NYSE:WFC), Berkshire Hathaway Inc. (NYSE:BRK.B), Apple Inc. (NASDAQ:AAPL)
Morgan Stanley Said to Move Asia Hedge-Fund Event to New York (Bloomberg)
Morgan Stanley (NYSE:MS) will hold a gathering in New York to showcase Asian hedge funds to investors after pulling its capital introductions event in China because of the bird flu, said three people with knowledge of the matter. Morgan Stanley told managers and investors last month the annual forum scheduled for Shanghai between May 21 and May 23 would be postponed and relocated to New York in July because of health concerns after the avian flu outbreak earlier this year, said the people, who asked not to be identified as the information is private. Xu Li, a Beijing-based spokeswoman of Morgan Stanley (NYSE:MS), declined to comment on the delay.
We also like to see what top fund managers such as billionaire David Shaw of D.E. Shaw are doing- their picks can serve as initial investment ideas. Wells Fargo & Co (NYSE:WFC) – which we’d previously mentioned as one of Berkshire Hathaway Inc. (NYSE:BRK.B)’s largest holdings- rounds out our list as D.E. Shaw had 8.7 million shares in its portfolio. Investors are confident in Wells Fargo & Co’s own assets, giving it a premium to book at a P/B ratio of 1.4. However, the bank is valued very much in line with its peers in earnings terms with trailing and forward earnings multiples of 11.
Destructive attitudes about women remain too common (Washington Post)
Paul Tudor Jones’ comments about women nursing babies and their resulting inability to focus in the fast-paced world of hedge fund trading were striking but, sadly, not unusual. I suspect that many people in fields beyond hedge funds may share similar “concerns” about the commitment and abilities of women in the workplace, particularly working mothers. When I informed my boss in 1988 that I was pregnant and intended to return to work after a brief maternity leave, he said his wife told him that women who love their children stay home with them. I laughed, because I truly thought he couldn’t be serious. But I returned from a three-week leave to find my responsibilities reduced. Prejudices toward women existed then and exist now, despite what appear to be sufficient legal protections.
Hedge funds call for break-up of Kleinwort owner (Financial Times)
A group of hedge funds have called for the break-up of RHJI, the investment company founded by Timothy Collins, in a move that would pave the way for a sale or possible relisting of one of the City of London’s oldest private banks, Kleinwort Benson. In a letter sent to the board of RHJI on Monday, the hedge funds, led by Geneva-based Equilibria Capital, say RHJI’s management have presided over “very clear value destruction” through “poor investments” and “weak execution”. The letter was accompanied by a series of resolutions, for inclusion on the agenda of RHJI’s forthcoming AGM in June, which would oust the company’s board and replace them with the hedge funds’ own nominees, according to a person familiar with the matter.
Fund’s Bright Packaging buildup ‘a surprise’ (Business Times)
Luxembourg-based Halley Sicav-Halley Asian Prosperity hedge fund has emerged as Bright Packaging Industry Bhd’s third largest shareholder, a development that has surprised some analysts. The fund has been accumulating the Bright Packaging stocks since early this month, claiming that the move is a long-term investment. Formed in November 2012, Halley Sicav-Halley Asian Prosperity is a sub-fund under Halley Sicay, an open-ended investment company with a total of nine sub-funds. The company said it aims to maximise “returns offered by the capital market in positive trend and consistent reduction of volatility and possible drawdown in negative phase”.
Towers Watson stages a fund-of-funds rethink (Financial News)
Towers Watson, a critic of the fund of hedge funds industry, is planning to enter the sector, according to two people familiar with the situation. The investment consultant is targeting smaller institutional clients for whom investing directly in hedge funds can prove challenging. The company is seeking…
…to address the main flaws it sees in the traditional fund-of-funds model, including high fees, close correlation with equity and credit markets, over-diversification, an assets and liabilities mismatch and a lack of transparency and risk monitoring.
Boutique primes enable new generation of entrepreneurial hedge fund managers (Opalesque)
Small has proved beautiful for hedge funds struggling to find returns over recent periods of unpredictable markets. Analytics firm PerTrac recently reported that funds with less than $100m in assets have outperformed much larger funds in 13 out of the last 16 years. But starting small and getting any support from key service providers such as prime brokers is increasingly challenging as the banks themselves struggle with squeezed profit margins. The high barriers to entry for fledgling funds from large banks have created a new phenomenon, boutique primes. In an interview with Opalesque, Kevin M. LoPrimo, MD, Global Head of Hedge Fund Services at Global Prime Partners (GPP) explains: “We don’t do anything that the big firms can’t do, but we do it for smaller managers.”
Billionaire Dan Loeb’s Top Stock Picks Include American International Group Inc (AIG) (Insider Monkey)
Third Point, an activist and value hedge fund managed by billionaire Dan Loeb, filed its 13F with the SEC in mid May. While Loeb and his team cut their stake in American International Group Inc (NYSE:AIG) they still owned 13.5 million shares at the beginning of April. Apple Inc. (NASDAQ:AAPL) regained its place as the most popular stock among hedge funds during Q1, with AIG dropping to third place (find more of hedge funds’ favorite stocks). The stock still trades at a considerable discount to the book value of its equity, with a P/B ratio of 0.7. We think that this is in part because large institutional investors such as mutual funds continue to avoid the bailed-out insurer, potentially creating a value opportunity.
Steve Cohen’s SAC Capital About to Lose Blackstone (Wall St. Cheat Sheet)
When subpoenas keep coming for a hedge fund’s executives and investors learn the company is definitely not cooperating with investigators, it’s likely to cause a run for the exits. The Blackstone Group L.P. (NYSE:BX) is following this path with SAC Capital as the hedge fund faces mounting legal pressure and Steve Cohen may be forced to plead the Fifth in a Manhattan court. Blackstone’s $550 million investment represents the largest chunk of outside money in SAC Capital, which manages $15 billion of assets, about $9 billion of which belong to Cohen himself. If Blackstone removes the majority of its investment from the fund, as Reuters is reporting, more investors are likely to follow. According to The New York Times, SAC Capital has several controls in place that restrict the options for investors when exiting the fund.
Family offices most exposed to hedge funds, PE (Asian Investor)
Family offices have the biggest portfolio exposures to hedge funds and private equity on a global basis, indicates a new Preqin report. On average, family offices have 24.5% of their portfolio assets allocated to PE and 19.1% to hedge funds. Endowments have the second biggest exposures, of 12.9% to PE and 18.8% to funds, says the 2013 Preqin Investor Network Global Alternatives Report. Insurance firms have the smallest allocations, with 2.6% allocated to PE and 2.4% to hedge funds. In terms of capital inflows, public and private pension funds are the largest PE allocators, accounting for 43% of capital invested by private equity funds during 2001-2011. By comparison, foundations and endowments collectively comprise 19% of total PE capital invested during the same period.
