Editor’s Note: Related tickers: AutoNation, Inc. (NYSE:AN), Sears Holdings Corporation (NASDAQ:SHLD), Orchard Supply Hardware Stores Corp (NASDAQ:OSH), Berkshire Hathaway Inc. (NYSE:BRK.A), Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), Dell Inc. (NASDAQ:DELL), Cisco Systems, Inc. (NASDAQ:CSCO), International Business Machines Corp. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Oracle Corporation (NASDAQ:ORCL), The Blackstone Group L.P. (NYSE:BX)
Edward Lampert used $393 million of shares in AutoNation, Inc. (NYSE:AN) to meet client redemptions from his main hedge fund, whose investment in Sears Holdings Corporation (NASDAQ:SHLD) has led to volatile returns. Lampert’s ESL Partners LP on June 10 distributed 9.09 million AutoNation, Inc. (NYSE:AN) shares, or about 41 percent of its stake in the auto retailer, to investors who were redeeming their interests in the fund, according to a regulatory filing June 12. The fund also used part of its stake in Orchard Supply Hardware Stores Corp (NASDAQ:OSH) to meet redemptions, filings show.
One Hedge Fund Manager’s War Against Corruption In Russia (HedgeCo)
Hedge fund founder and outspoken critic of corruption in Russia, Bill Browder, has told CNBC that he fears for his life and that if he were to be assassinated, “everyone would know who did it.” Browder’s lawyer, Sergei Magnitsky, was a Russian accountant and auditor who was arrested and died in custody while investigating fraud among Russian officials in 2009. Since 2007 Browder has been living in London after accusing Russian tax officials of embezzlement, Browder has been campaigning against Corruption in Russia ever since.
Icahn Names Four Possible Dell CEO Successors (TheVarGuy)
With a July 18 Dell Inc. (NASDAQ:DELL) shareholder vote fast approaching on Silver Lake Partners’ and chairman Michael Dell’s $24.4 billion proposal to take the embattled PC maker private, activist investors Carl Icahn and Southeastern Asset Management have named four candidates to helm the company should they prevail in the proxy battle. According to a Reuters report, possible candidates to succeed company founder Dell Inc. (NASDAQ:DELL) include Michael Capellas, currently a Cisco Systems, Inc. (NASDAQ:CSCO) board director and former VCE chairman and chief executive, as well as a Silver Lake senior adviser; Michael Daniels, a recently retired International Business Machines Corp. (NYSE:IBM) Services senior vice president and group executive; Mark Hurd, former Hewlett-Packard Company (NYSE:HPQ) chief executive and current Oracle Corporation (NASDAQ:ORCL) president and board member; and Todd Bradley, Hewlett-Packard Company (NYSE:HPQ)’s Printing and Personal Systems executive vice president.
Hedge Fund Research: $116 Billion Locked in Zombie Funds (HedgeCo)
Reuters reports that new data from Preqin shows that there are approximately 1,200 hedge funds that can be described as zombie funds sitting on $116 billion in assets. In a zombie fund, the GP is sitting on their assets past their expected holding period with no intention of making realizations and no plans to raise a successor fund, while continuing to collect management fees from their investors. “No one is a winner when zombie funds are involved and they represent a clear misalignment of interests between the fund manager and investor.
SAC Re ring-fenced from investor flight (Trading-Risk)
Steven Cohen’s hedge fund SAC Capital could face investor withdrawals of up to $3.5bn, or more than half the $6.75bn third-party capital it manages, according to reports. The $15bn SAC Capital also manages significant capital for its founder and has been embroiled in allegations of insider trading since the start of the year. In the first quarter, investors put in notices to pull out $1.7bn from the hedge fund by year-end, while second quarter redemption notices are expected to add…
Tracy Britt of Berkshire is Warren Buffet’s Protege? 28-Year-Old Could Lead Billionaire’s Hedge Fund (ChristianPost)
Tracy Britt of Berkshire Hathaway Inc. (NYSE:BRK.A), Warren Buffet‘s multibillion-dollar hedge fund, could be being groomed to take over the billionaire’s company once he’s retired. Britt is a 28-year-old graduate of Harvard Business School and has only been working as Buffet’s assistant since 2009, but already is managing four of the company’s subsidiaries. Tracy Britt’s Berkshire Hathaway Inc. (NYSE:BRK.A) work has led to rumors that she is Warren Buffet’s much-discussed protégé taking over once Buffet retires, according to The Wall Street Journal. Buffet has mentioned in the past that he already knows who is protégé is, although he refuses to divulge a name.
Scaramucci Plans NYC Eatery With Elite Vibe for Hedge-Fund Crowd (AmericanThinker)
Anthony Scaramucci is teaming up with a restaurant owner and a former Morgan Stanley (NYSE:MS) executive to open a Manhattan eatery catering to hedge-fund and private-equity professionals. The group, which includes restaurateur Eytan Sugarman and David Barrett, a 22-year veteran of Morgan Stanley (NYSE:MS), seeks to raise $4 million for The Hunt and Fish Club, set to open in December. It will have the feel of an elite “clubhouse” and be an alternative to bars and eateries surrounding the Grand Central Terminal in Midtown, which are “not fun” and have unattractive staff…
Hedge fund gains may not be what they seem (eFinancialNews)
Hedge fund performance data published this week by JPMorgan Chase & Co. (NYSE:JPM) prime brokerage appears to show that the sector outperformed domestic and international equities, commodities and fixed income during the 16 years from 1997 through 2012. But there are several reasons why this chart may exaggerate the actual performance of hedge funds. The chart [ http://bit.ly/1bzWAa9] documents time-weighted returns, rather than asset-weighted returns. Some will argue this is misleading because it gives the same weight to positive returns on a smaller asset base as it does to performance losses when the industry was at a historic high.
Hedge Fund Industry Continues To Underperform (WealthBriefing)
The hedge fund industry took in a net $430 million (0.02 per cent of assets) in April, building on an inflow of $817 million in March, according to the latest data from BarclayHedge and TrimTabs Investment Research. The results are based on data from 3,393 funds. Despite these April inflows, the hedge fund industry continued to struggle with performance, delivering a return of 0.6 per cent in April, one-third of the S&P 500’s 1.8 per cent rise. In the past 12 months hedge fund investors had a return of 8.1 per cent and the S&P 500 rose 14.3 per cent.
Hedge fund lobby group CEO to step down (Reuters)
The chief executive of hedge fund lobby the Alternative Investment Management Association, Andrew Baker, will step down at the end of 2013, AIMA said on Wednesday. Baker, who has been in the job since the start of 2009, will remain until his successor – who AIMA is in the process of identifying – has begun work. Baker said in a statement he was “looking forward to future challenges” but did not specify what he planned to do next. London-based AIMA, representing the interests of more than 1,300 corporate members, has spent recent years lobbying European policymakers to temper parts of an incoming Alternative Investment Fund Managers Directive, involving curbs on hedge fund pay and borrowing money to fund investments.
Stocks on a Fed high fail to impress Jim Rogers (IndiaTimes)
Investor Jim Rogers said he’s not optimistic on global stocks given central bank stimulus measures are providing an “artificial” boost to prices. “Quantitative easing is going to end,” Rogers, chairman of Singapore-based Rogers Holdings, said in an interview in Kuala Lumpur today. “Either the central bankers are going to wake up to reality and stop this insanity of printing money all over the world or the market is going to say ‘we don’t want your paper money’ anymore.” Equities around the world plunged this month after Federal Reserve Chairman Ben S Bernanke said May 22 US policy makers could scale back debt purchases that have driven demand for higher yielding assets.
Million Dollar 60th Birthday Parties With Private Concerts Are Still Hot On Wall Street (BusinessInsider)
Lavish 60th birthday bashes are still a hot trend in the private equity and hedge fund world. Page Six reports that hedge funder Thomas Kempner, Jr., who runs Davidson Kempner Capital Management, celebrated his birthday on Wednesday night at the Museum of Natural History complete with a Billy Joel concert. Joel played for the audience of financial heavy-hitters, which included Dan Loeb and The Blackstone Group L.P. (NYSE:BX)‘s Tony James, for an hour and a half, the report said. The Post estimates that the performance costs up to $2 million.
Todd Newman’s Insider Trading Conviction, Hedge Funds Take Heed (Forbes)
Todd Newman (Diamondback Capital) and Anthony Chiasson (Level Global) were both convicted in December of trading, and profiting, on inside information they gained from analysts who worked for them. The jury believed, as many juries do believe these days in about 90% of cases brought to trial, that the two men were guilty beyond a “reasonable doubt.” However, the conviction of Newman and his appeal should be of interest to every portfolio manager in the hedge fund industry …. because if he’s guilty, you’re all guilty.
