Tepper’s Long On European Equities, Short On US Bonds Approach Is Correct: Barings (CNBC)
Amid the political uncertainty in Europe and expectations of a stronger U.S. economy, David Tepper‘s approach to go long on European equities and short on U.S. bonds is right, an investment director told CNCB on Thursday. American hedge fund manager David Tepper told CNBC on Wednesday that once the French election is out of the way, there’s nothing else to worry about in Europe. This is despite a federal election in Germany and a potential general election in Italy. “If we are short U.S. bonds we are betting on a stronger economy here. That’s the bet. So we are betting on strength one way or the other here, strength around the world in one way or the another,” Tepper said.
Elliot’s Choice To Run Arconic Hit With Claims He’s Violating Noncompete Deal (TheStreet)
Elliott Management Group, the activist hedge fund currently engaged in a fight with Arconic (ARNC), said in a filing this week that the former employer of its choice to be the firm’s new CEO claims he is violating a noncompete agreement. On January 31 Elliott said it hired Larry Lawson, former Spirit Aerosystems Holdings (SPR) CEO, as a consultant at $100,000 a month salary. In a filing on March 8, Elliott informed the SEC that, “In connection with the Consulting Agreement, Elliott Associates, Elliott International and Mr. Lawson also entered into an Indemnification Agreement pursuant to which Elliott Associates and Elliott International have agreed to indemnify Mr. Lawson for certain potential claims, losses and expenses.
Utility-Focused Hedge Fund Electron Capital Hires Melloul From TIAA (Reuters)
Hedge fund Electron Capital Partners, which invests in global utilities and infrastructure companies, has hired Eric Melloul as a partner from financial services company TIAA, a person familiar with the move said on Thursday. Melloul, who joins the $610 million fund as its sixth investment professional, was responsible for overseeing portfolios with combined assets of $1.3 billion at TIAA. Electron, an 11-year old hedge fund founded and run by Jos Shaver, is attracting attention. Many large investors are searching for assets not correlated to the broader stock market or interest rate movements as the U.S. Federal Reserve is signaling plans to raise borrowing costs, analysts said.
Ackman Lost Bet On Herbalife (TheStreet)
Judging by stock market indications, hedge fund boss Bill Ackman has lost his $1-billion short bet on Herbalife (HLF) . Ackman’s 2012 shorting attempt of Herbalife-claiming that the company is a pyramid scheme-seems in all likelihood, to have gone kaput. Shares are at much higher levels, making Ackman’s big short a very costly bet. We think that Ackman, famous for taking contrarian positions on Valeant (VRX) and Chipotle (CMG) , should probably throw in the towel and accept Herbalife’s relentless growth curve. Since the early days where Mark Hughes was allegedly, “selling a protein powder out of his car trunk,” the product has transformed into a worldwide nutrition phenomenon.
Retired Hedge Fund Billionaire Doesn’t Need Two Beach Houses (DealBreaker)
Caxton Associates founder Bruce Kovner was a cab driver before he made 10 figures in the hedge-fund game. That has given him something of a practical side (to go along with his less-practical pre-finance activities, including studying political economy, learning the harpsichord and writing). And that practical side is telling Bruce, who, as you’d expect, moved to Florida after he retired six years ago, that he doesn’t need a New York apartment, a new Sunshine State house and a seven-and-a-half acre estate on St. Barth’s. Especially when that seven-and-a-half acre estate on St. Barth’s can net him a cool $67 million—even if it lacks the “military-grade” speakers favored by other hedge fund snowbirds—which buys a lot of early-bird specials in the greater Hobe Sound metropolitan area, he’ll tell you.
Does Warren Buffett Not Understand Risk-Adjusted Returns? (Bloomberg)
In his latest investor letter, Warren Buffett says everyone should be in low-cost S&P 500 index funds — except for Warren Buffett, of course. Buffett has handily outperformed the benchmark, with Berkshire Hathaway shares gaining 20.8 percent annually on average since 1965, compared with 9.7 percent for the S&P 500. If you thought this performance was repeatable, you would just give your money to Warren Buffett instead of Vanguard. But Buffett doesn’t invest in a slice of the S&P 500. He has a very concentrated portfolio. How does he pick the right stocks? Is he some kind of sorcerer? No doubt he’s a great investor, but he also has the advantages of scale, and he can do things normal investors can’t, such as provide quasi-bailout financing to Goldman Sachs Group Inc. and Bank of America Corp., which pay humongous preferred dividends.
As Icahn Prevails, One Of These Managers May Be Next To Lead AIG (Bloomberg)
It’s been 17 months since activist Carl Icahn started targeting American International Group Inc.’s Chief Executive Officer Peter Hancock, faulting him for the company’s sluggish returns and pressuring him to sell assets. The CEO announced his resignation Thursday after posting losses in four of the past six quarters. Here are some of the people who may be considered to replace Hancock, based on interviews with executives and advisers across the industry: Dan Glaser: CEO of Marsh & McLennan Cos. Why he could be a good fit: He was previously an executive at AIG, working there for seven years through 2007.
David Tepper On Trump’s Deregulation Unleashing ‘Animal Spirits,’ Shorting Bonds, Favorite Stock Ideas (CNBC)
Billionaire investor David Tepper of Appaloosa Management shared his market views in an exclusive interview on CNBC’s “Squawk Box” Wednesday. On the market: “On a multiple basis it’s kind of full … I don’t think the market’s cheap,” Tepper said. “On the other hand, with that backdrop of growth around the world, with the potential we’ll do other things here, with the sugar that’s still being put on by the ECB, BOJ and let’s face it the Fed is way low … you can’t be short in that kind of setup.” On deregulation: “The day that we had three Republican houses, the President, the two houses, that was the day there wasn’t going to be another regulation put on the economy. And that alone just releases animal spirits,” he said. It “upticks earnings.”
