Editor’s Note: Related tickers: AT&T Inc. (NYSE:T), Dell Inc. (NASDAQ:DELL), Goldman Sachs Group, Inc. (NYSE:GS)
One of the first lessons beginning investors learn is the value of diversification in preventing big losses. But in order to reap the largest gains when they make the right call, aggressive investors often use concentrated portfolios to tap into trends they see as potentially providing explosive growth opportunities. Unfortunately, those big bets don’t always work out. Hedge fund giant John Paulson has learned that lesson well this year with his gold-oriented fund, which has lost 65% of its value so far in 2013…
AT&T to pay hefty $1.2 billion for Leap in latest telco deal (Reuters)
AT&T Inc. (NYSE:T) will buy Leap Wireless International, Inc. (NASDAQ:LEAP) for $1.19 billion, paying almost double the current value of the prepaid mobile service provider as major U.S. carriers scramble to acquire valuable wireless spectrum. …Under the deal, Leap Wireless International, Inc. (NASDAQ:LEAP) cannot solicit rival bids but AT&T Inc. (NYSE:T) has the right to match rival offers that surface. Also, the companies said Leap shareholders will get the proceeds from a future sale of spectrum in Chicago that Leap Wireless International, Inc. (NASDAQ:LEAP) bought from AT&T Inc. (NYSE:T) in 2012 for $204 million. AT&T Inc. (NYSE:T) said it would keep Leap’s Cricket brand name. …At the end the of the first quarter, $19 billion hedge fund Paulson & Co owned 7.8 million shares or just shy of 10 percent of Leap Wireless International, Inc. (NASDAQ:LEAP), according to a regulatory filing.
Carl Icahn improves Dell counter-offer (BBC)
Mr Icahn is now offering the right to buy more Dell Inc. (NASDAQ:DELL) shares at a later date to his previous share buyback plan. In May, Dell Inc. (NASDAQ:DELL)’s board recommended that shareholders should accept a $24.4bn (£16bn) offer led by company founder Michael Dell. But Mr Icahn, who owns almost 9% of Dell Inc. (NASDAQ:DELL), says the offer undervalues the firm. Shareholders will vote on Michael Dell’s offer on 18 July. Mr Icahn opposed the offer and has instead suggested the company buy back 1.1 billion shares at $14 a piece – but now proposes adding warrants, meaning that investors also get the right to buy one Dell Inc. (NASDAQ:DELL) share for $20 over the next seven years.
Coffey Haunts GLG’s Investors as Sibanthracite Pulls IPO (SFGate)
GLG Partners Inc.’s attempt to mitigate losses from former hedge-fund manager Greg Coffey’s bet on a Siberian coal mining company was dealt a blow after Sibanthracite Plc pulled its initial public offering. The GLG Emerging Markets Growth Fund, a pool created to run down assets acquired by Coffey, had sought to raise as much as $214 million by selling its 25 percent stake in the IPO. The fund, now part of London-based Man Group Plc, will try to find an industrial buyer for the holding, its biggest asset, two people with knowledge of the matter said on July 12.
Hong Kong hedge fund managers lose jobs as opportunities dwindle (Opalesque)
Hong Kong-based hedge fund managers are losing their jobs as offshore fund managers wind down their operations from the former British colony because of slowing growth on the mainland and increasing opportunities in the U.S., the South China Morning Post reports today, adding that a leading hedge fund had just let is chief financial officer go. According to the report, hedge funds are seeing opportunities in the recovering U.S. economy as well as the appreciating U.S. dollar.
Gold shines to $1,291 an ounce on hedge fund buying (Opalesque)
Heavy buying by hedge funds last week lifted the gold price to its highest level since October 2011 which finished in the spot market at $1,277.60 an ounce on Comex, various media reported. Spot gold is currently trading up 0.5% to $1291. Proactive Investors cites data from the U.S. Commodity Futures Commission (CFTC) for July 9 that showed that futures market rose 5.4% last week and speculators increased their net-long positions over 4% to 35,691 futures and options on news that Federal Reserve’s chairman Ben Bernanke would pull back on the quantitative easing package.
Book Review: Hedge Fund Market Wizards (CFAInstitute)
Determining how great traders acquire and use their special skills has been an elusive quest. We have no shortage of cookbooks on how to trade, but only a limited number of books describe the decision processes of those who speculate as a profession. Trader confessionals exist often as testimonies to egos, but few focus on the details of decision making. Material that does successfully capture the essence of how speculators think is the Market Wizards series by Jack D. Schwager.
Trust CEO Recalls Big Hedge Fund Egos, Porn Donation (Bloomberg)
As chief executive officer of the National Philanthropic Trust, Eileen R. Heisman counsels billionaires, receives their seven- and eight-figure wire transfers and accepts odd gifts such as surf boards and an antique Army tank. Heisman has made the Jenkintown, Pennsylvania-based trust a player in the charity world. Since its launch in 1996, it has raised more than $3.3 billion in gifts and has made grants totaling $1.7 billion to charities around the world. The trust also manages $1.7 billion in assets, which include about 3,000 donor-advised funds.
Suddenly Everyone Hates Hedge Funds — Now Here’s What That Actually Means (BusinessInsider)
Over the last month, the low hum of anti-hedge fund murmuring has exploded into a full-on festival of malice – thousands of investors, having spotted the 2-and-20 emperors sans clothing for the umpteenth time, are now reveling in their newfound courage to say it out loud: “I don’t get it.” The media – always in possession of a keen nose for blood in the water – has been all too happy to encircle the debate with articles, viewpoints, charts and statistics (oh so many statistics).
Bill Ackman Needs A Huge Score (Chron)
One of a hedge fund manager’s super powers is the ability to move market’s with a few words. On Wall Street, that’s like being able to leap tall buildings in a single bound. To do it you need cash, a platform, and faith. Living legend Bill Ackman no longer has all three of those things. He still has the cash and the platform, but the faith has waned, and if Ackman wants to keep all of those from eroding further he’ll need to pull off a feat of heroic proportions this coming week. That’s when he’ll announce where exactly his hedge fund, Pershing Square, is putting $1 billion of investor money. Investors have until July 17th to commit some cash.
Former Hedge-Fund Manager Andy Kessler Blames Homeless Problem On Volunteers (OpposingViews)
A former hedge-fund manager might have come up with the solution to the homeless problem in America — stop feeding them. In an op-ed that ran in the Wall Street Journal on Monday, Andy Kessler seemed to make the argument that shelter workers and volunteers — including his own teenage son — are enabling the homeless by giving them food. “My 16-year-old son volunteers with an organization that feeds the homeless and fills kits with personal hygiene supplies for them,” Kessler wrote. “It’s a worthwhile project, and I tell him so — but he doesn’t like it when our conversation on the way to his minimum-wage job turns to why these homeless folks aren’t also working. Perhaps, I suggest, because someone is feeding, clothing and, in effect, bathing them?
Hedge Funds Have Actually Been Pretty Good Stock Pickers This Year (BusinessInsider)
The hedge fund industry has been taking a lot of heat in recent days and years for delivering poor performance at a high cost. Indeed, according to a recent report from Goldman Sachs Group, Inc. (NYSE:GS), the average hedge fund returned a measly 2.5% during the first half of the year compared to the S&P 500 which returned 12.6% (13.8% including dividends). It’s worth noting that hedge funds often consist of both long and short positions. Short positions lose value when the asset price goes up. Some hedge funds take these long and short positions so they can be neutral on the direction of the stock market.
Ranking the Hedge Fund All-Stars at “Delivering Alpha” (InstitutionalInvestorsAlpha)
One day after baseball’s best battle it out at New York’s Citi Field, the hedge fund industry will be hosting its own all-star game of sorts ten miles away in Manhattan. On Wednesday, July 17, many of the greatest managers of all time will suit up at Manhattan’s Pierre hotel to pitch their favorite investments at the third annual Delivering Alpha conference, which is cosponsored by Institutional Investor and CNBC. It is in some ways more like the home run competition the day before the All-Star Game. Hedge fund superstar after superstar will take a swing at their favorite investments. Several of them will strike out, a few will knock it out of the ballroom, while many will smack singles up the middle.
Small hedgie bests the rest (NYPost)
June was a tough month for most hedge funds — but not for one small manager who foresaw the commodities rout. Anuraag Shah’s Tusker Investment Fund, a $105 million commodities fund based in Chicago, gained a whopping 15.6 percent last month, compared with a loss of 2.75 percent for the Absolute Return Commodities Index. The entire hedge-fund universe fell 0.78 percent. Industry insiders said that Tusker’s performance could be the best monthly gain in the $2 trillion industry — certainly light years ahead of what the billion-dollar rock-star funds turned in.
Wall Street’s ‘Fabulous Fab’ heads to trial (CNN)
The trial of the infamous ex-Goldman Sachs Group, Inc. (NYSE:GS) trader Fabrice “Fabulous Fab” Tourre, which starts Monday, could put a face on the type of Wall Street recklessness that imploded the housing market and almost sank the economy five years ago. “This is one of the few opportunities that a court has had to punish conduct associated with the financial crisis that put this country into a grave recession,” said attorney David Marder. Marder is a former assistant director of the SEC’s Boston office who now defends clients against SEC charges.
