Editor’s Note: Related tickers: Sothebys (NYSE:BID), J.C. Penney Company, Inc. (NYSE:JCP), Citigroup Inc (NYSE:C), Apple Inc. (NASDAQ:AAPL), Sears Holdings Corporation (NASDAQ:SHLD), Berkshire Hathaway Inc. (NYSE:BRK.A), Google Inc (NASDAQ:GOOG), Priceline.com Inc (NASDAQ:PCLN), QUALCOMM, Inc. (NASDAQ:QCOM), American International Group, Inc. (NYSE:AIG)
Sears Crimps ESL’s Gains (InstitutionalInvestorsAlpha)
Last Thursday’s 8.2 percent decline in the shares of Sears Holdings Corporation (NASDAQ:SHLD) was, of course, a big blow to Edward Lampert’s ESL Partners, the embattled retailer’s biggest shareholder with roughly 52 percent of the shares. But these days Sears is playing a bigger role in Lampert’s portfolio than it has for several years. This is because the hedge fund manager—who moved most of the operations of his firm, ESL Investments, to Bay Harbour, Florida, last year—has quietly streamlined his already concentrated portfolio. Lampert, who earlier this year ranked sixth on the Institutional Investor’s Alpha Rich List after earning $750 million in 2012, recently reported that at the end of the second quarter, he had positions in only four U.S. stocks.
Sotheby’s Auction House Becomes Target of Loeb’s Third Point (Bloomberg)
Sothebys (NYSE:BID), the New York-based art and collectibles auction house, is being targeted by Daniel Loeb’s Third Point LLC activist hedge-fund firm, which amassed a 5.7 percent stake. Third Point, based in New York, spent $156.7 million on the holding, according to a filing yesterday with the U.S. Securities and Exchange Commission. Loeb, 51, intends to engage Sothebys (NYSE:BID)’s board and management in talks, the regulatory filing shows. The filing indicates that the discussions may relate to changes in leadership or strategy at the auctioneer, led by Chairman and Chief Executive Officer William Ruprecht…
Ackman Moves to Dump Entire Stake in J.C. Penney (WSJ)
Hedge-fund manager Bill Ackman moved to dump his entire stake in J.C. Penney Company, Inc. (NYSE:JCP) -1.12% ending a failed bet on the retailer that cost his fund more than $600 million, resulted in the loss of thousands of jobs and left the 1,100-store chain still struggling to right itself. Mr. Ackman’s Pershing Square Capital Management LP is unloading its 39 million shares—nearly 18% of J.C. Penney Company, Inc. (NYSE:JCP)’s stock—with help from Citigroup Inc (NYSE:C), -0.46% which underwrote the sale. …In a letter to Pershing Square investors last week, Mr. Ackman conceded those “mistakes,” and said he would consider selling his stake in J.C. Penney Company, Inc. (NYSE:JCP). “Clearly, retail has not been our strong suit, and this is duly noted,” he wrote.
Mixed picture emerges on hedge fund fee structures (Risk)
Average hedge fund management fees have increased due to increased regulatory compliance and pressure from institutional investors to maintain more robust operational risk management. Management fees have increased to an average 2.58% after 2007. In 2002 the average management fee was around 1.38%, according to a study by eVestment. On the other hand fund of hedge funds (FoHF) management fees have decreased from 1.32% before the crisis to 1.26% after 2007. The current trend looks set to continue for some time but may be pressured as underlying funds raise their management fees.
Rupee at 66: Why ‘shorting India’ is the ‘in’ thing for hedge funds (FirstPost)
Hedge fund managers who typically frequent the same bars in upmarket areas of London, Hong Kong and Singapore greet each other with pleasantries that reflect their positions. One such pleasantry is “Short India” with beaming smiles that indicate a strong performance of their funds. Any fund manager not “Short India” is to be either excommunicated or sympathised with as that fund would be a severe underperformer. Not so long ago, the same fund managers were greeting each other with “Long India” pleasantries that indicated strong performance of their funds.
Hedge funds’ interest in reinsurance roils markets (PIOnline)
A small increase in allocations from institutional investors — mostly through hedge funds — is playing havoc with the property-catastrophe reinsurance markets. “Fifteen years ago, the catastrophic reinsurance market was close to 100% dominated by traditional reinsurance companies, like Berkshire Hathaway Inc. (NYSE:BRK.A),” said John Lummis, CEO of AQR Re Ltd., Hamilton, Bermuda. AQR Re is the reinsurance affiliate of alternative investment manager AQR Capital Management LLC, Greenwich, Conn. “The reinsurance business definitely is evolving under the influence of significant assets coming from the institutional investment market. The changes are on the margins now,” Mr. Lummis said, but likely will become more significant as institutional dollars suck up the industry’s limited capacity.
Ackman sells stake in JC Penney (CNBC)
Ex-Citi Emerging Markets Head Plans Hedge Fund (Finalternatives)
Former Citigroup Inc (NYSE:C) emerging-markets stock-research chief Rhys Summerton is set to launch a hedge fund with upwards of US$50 million in initial assets. Ascot, U.K.-based Milkwood Capital will launch its maiden fund in September, Bloomberg News reports. Summerton plans to put US$20 million of his own fortune into the project and has won “indications of interest” from potential clients exceeding US$50 million, he said in a pitch letter. Milkwood will employ a global long/short equity strategy, he said.
Stakes are high for firms caught in ego-driven wars (Telegraph)
George Clooney called them carpet baggers; Wall Street prefers the term activist investor. Whatever name you give them, one thing is clear: billionaire hedge fund managers have spent decades using their stakes in major corporations to agitate for change. But lately they have upped the ante. A handful of wealthy investors are becoming more aggressive, both in their demands of the companies they take stakes in, and towards each other. The most intense and riveting rivalry this year has been between Bill Ackman, chief executive of the hedge fund Pershing Square Capital, and billionaire investor Carl Icahn.
Apple stock took top hedge fund holding slot in Q2 (AppleInsider)
Citi analyst Tobias Levkovich noted in his most recent report that Google Inc (NASDAQ:GOOG) remains the most held stock among mutual funds, a position the search giant took from Apple in March of this year. Apple, though, beat out Google, Priceline.com Inc (NASDAQ:PCLN), and QUALCOMM, Inc. (NASDAQ:QCOM) to take first place among hedge fund holdings. Apple previously lost the top spot to insurance giant American International Group, Inc. (NYSE:AIG) in February, according to some estimates. At the time, Apple Inc. (NASDAQ:AAPL) fell to third place behind Google. Google subsequently went on to become the top holding in both hedge and mutual funds in March.
Argentina Just Lost Huge To A Bunch Of Hedge Fund Creditors, And The Judge Was Brutal About It (BusinessInsider)
Argentina just lost its appeal to continue refusing to pay a group of hedge fund managers, led by Paul Singer, $1.6 billion worth of sovereign debt dating back to its $95 billion default in 2001. You can read the full decision here (via Credit Slips). For years the country has been trying to avoid paying a bunch of “vulture” hedge fund managers that refused to take a 70% haircut on Argentine bonds like every other investor. This has resulted in some wacky news items — Paul Singer getting the government of Ghana to impound an Argentine naval ship last October, President Cristina Fernandez de Kirchner flying commercial to see the Pope so her jet isn’t taken — you get the idea.
How to Spot a Hedge Fund Fraudster (InstitutionalInvestorsAlpha)
Hoyder Asia is a hedge fund firm based in Shanghai, with offices in Hong Kong and London and some $4.6 billion in assets. The firm’s global macro and long-short equity hedge funds have performed impressively, with the equity funds even reporting gains in 2008, and the firm has won numerous awards from organizations including Alpha and Institutional Investor, according to its website. There is just one catch: There is no evidence that these funds exist. Hoyder has never won any awards from Institutional Investor, Institutional Investor’s Alpha or AsiaHedge, nor has it appeared in any of these publications’ rankings of hedge fund firms or extensive editorial archives…
