Editor’s Note: Related Tickers: Apple Inc. (NASDAQ:AAPL), The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), Citigroup Inc. (NYSE:C), Trinity Industries, Inc. (NYSE:TRN), American Railcar Industries, Inc. (NASDAQ:ARII)
Hedge fund chief Paulson loses big on gold (Reuters)
Einhorn adds to Apple stake, awaits ‘blockbuster product’ (Economic Times)
David Einhorn’s Greenlight Capital has added to its investment position in Apple Inc. (NASDAQ:AAPL) and is waiting for the company’s “next blockbuster product,” Einhorn said on Tuesday. In a conference call for his Cayman Islands-based reinsurer Greenlight Capital Re Ltd, Einhorn did not specify when the hedge fund added to its Apple position or the size of its current holdings. At the end of 2012, the $8.8 billion Greenlight Capital held 1.3 million Apple shares, according to a regulatory filing. At the market close on Monday, the shares were worth about $600 million.
Tips from Wall St hedge fund gurus fail to reward faithful (Financial Times)
Advice from the gurus of Wall Street may be rather less valuable than their fans would like to believe. Investors who bought on the basis of top tips from one of New York’s most celebrated hedge fund conferences last year spectacularly failed to beat the market. The Ira Sohn Investment conference held at New York’s Lincoln Center brings together the leading lights of the hedge fund community to share market insights as a way of raising money for cancer research. But a Financial Times analysis of last year’s tips shows decidedly mixed results. Many of the ideas have proved woefully miscued, including some from the most high-profile managers who will return to the stage on Wednesday: David Einhorn of Greenlight Capital and Bill Ackman of Pershing Square.
Nat Rothschild Rues ‘Terrible Mistake’ in Deal Gone Sour (Bloomberg)
Nat Rothschild recalls the fateful day in October 2010 when, as he scanned the globe for business opportunities, he first heard the word Bumi, Bloomberg Markets will report in its June issue. Ian Hannam, a well-known JPMorgan Chase & Co. (NYSE:JPM) investment banker, had e-mailed Rothschild suggesting he look at two coal companies, including PT Bumi Resources (BUMI), linked to the Bakrie family, a powerful Indonesian business dynasty. “He said it was the best deal he had ever seen in his life,” Rothschild says. Hannam’s approach was the first step down a path that would lead to an ugly boardroom brawl pitting Rothschild against the Bakries. As it unfolded, the clash would see the two sides trading claims of e-mail hacking, bad faith and fraud. It would leave few reputations, including Rothschild’s, unscathed.
Hedge fund trial to raise pressure on UK fraud prosecutor (Reuters)
Britain’s top fraud prosecutor is likely to face serious criticism over its handling of an investigation into the $600 million collapse of one of London’s oldest hedge funds, a judge said on Tuesday. Already smarting from a 300 million pound ($466 million) damages claim after a botched investigation into the Tchenguiz property moguls, the office is under pressure from politicians who say it has not done enough to bring bankers and other financial industry figures to book since the 2008 crisis. Judge Alistair McCreath set a provisional date for the criminal trial of Magnus Peterson, the founder of Weavering Capital, for October 2014 and a provisional date for an abuse of process hearing for November 8.
Cantab closes hedge fund as EU rules curb commodity investing (Reuters)
Cantab Capital Partners is to close a retail investor-friendly version of its flagship hedge fund because of new European guidelines regulating investment in commodities, underlining the growing difficulty firms face in trading metals, grains and oil. Cantab, which manages $5.5 billion in assets, said it is closing its CCP Quantitative UCITS Fund at the end of June in response to guidelines from Europe’s financial watchdog that make it tougher for “UCITS” funds to invest in commodity indexes. A UCITS (Undertaking for Collective Investment in Transferable Securities) wrapper acts as a ‘passport’ enabling firms to freely sell regulated investment funds across the European Union to all types of investors, including retail.
Hedge Funds Rush Into Debt Trading With $108B as Banks Trim Risk (Businessweek)
Hedge funds using debt-trading strategies honed on Wall Street are expanding at a record pace as they profit from risks big banks are no longer taking. BlueCrest Capital Management LLP doubled its New York staff in the two years through December, while Pine River Capital Management LP increased its global workforce by one-third in 2012. Hedge-fund firms are hiring from companies such as Deutsche Bank AG (DBK), Barclays Plc (BARC) and Bank of America Corp. (BAC) as their credit funds have attracted $108 billion since 2009, data compiled by Chicago-based Hedge Fund Research Inc. show.
SAC Gains While Greenlight Drops as Hedge Funds Rise 0.5% (Bloomberg)
Hedge funds returned 0.5 percent in April, lagging behind global stock markets for the sixth straight month. Firms including SAC Capital Advisors LP and Jana Partners LLC posted gains, while Renaissance Technologies LLC and Greenlight Capital Inc. funds declined. Long-short equity, macro hedge funds and multistrategy managers rose. Hedge funds trailed equities as managers took few risks, said Donald Motschwiller, chief executive officer at Discovery Capital Management LLC, a New York-based firm that runs a fund of separately managed accounts. Global stocks gained 2.9 percent, including dividends, as new U.S. home sales climbed and earnings from The Coca-Cola Company (NYSE:KO) to Johnson & Johnson (NYSE:JNJ) beat analysts’ estimates. Equities returned 9.7 percent this year through last month, compared with hedge funds’ advance of 3.2 percent.
Japanese hedge funds lead Asian sector to 5-year high (The Asset)
Total Asia-focussed hedge fund capital increased by +7.6% in Q1 2013 to nearly US$95 billion, reaching the highest level since Asian hedge fund capital peaked in 2007, according to the latest HFR Asian Hedge Fund Industry Report. Investors allocated over US$1.3 billion in net new capital to Asian hedge funds in Q1 2013, the largest quarterly inflow since Q3 2011, as the total number of Asian hedge funds increased to more than 1,150. The HFRX Japan Index posted a gain of +11.7% for the quarter, the strongest quarterly gain since Q4 2005, exceeding the Q1 2013 gain of the S&P 500, although trailing the torrid gain of over +19.0% for the Nikkei 225.
Commodity hedge funds suffer weak first quarter (Financial Times)
The commodities hedge fund industry is bleeding money. The average fund lost 0.8 per cent in the first quarter of the year, according to a closely watched index compiled by brokerage Newedge. The losses come after commodities hedge funds lost 3.7 per cent in 2012, the biggest decline in more than a decade, according to the Newedge Commodity Trading Index. The average commodities hedge fund already lost 1.4 per cent in 2011, a significant change from the typical gains of 20-40 per cent per year in 2000-2008.
Future Fund cuts alternatives exposure (IPE.com)
Australia’s A$85bn ($86.4bn) government-owned Future Fund has reduced its portfolio allocation to alternative investments by 3.5% in one year, the fund’s latest portfolio update confirms. The Future Fund’s holdings in alternative assets, which largely comprise hedge fund strategies, dropped from 18.8% of the portfolio in March 2012 to 15.3% as at 31 March. The Fund’s head of public affairs, Will Heatherton, told IPA: “The change over the 12 months reflects adjustments to the portfolio as we develop and implement new strategies and as existing strategies are reduced or refreshed once the original investment case is met.” In dollar terms, the fund now holds A$13bn in alternative assets, down from A$14.4bn in March 2012. The fund had A$7.8bn invested in alternatives in March 2010, from a base of only A$1.9bn in 2009.
Napier Park Investing in Railcars Joins Icahn to Buffett (Bloomberg)
Napier Park Global Capital, the $6.8 billion hedge fund spun out of Citigroup Inc. (NYSE:C), is investing $362 million in a railcar leasing venture, betting on an industry favored by billionaires Carl Icahn and Warren Buffett. Napier Park is forming a partnership with Trinity Industries, Inc. (NYSE:TRN) to acquire about $1 billion of railcars by the end of 2014, according to a statement. Napier Park also will provide financing to a second entity that owns an additional 14,455 cars, Dallas-based Trinity said yesterday. Demand for new rolling stock to carry railroads’ rising crude-oil shipments is benefiting Buffett and Icahn. Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) owns railcar maker Union Tank Car Co., while Icahn controls 56 percent of manufacturer American Railcar Industries, Inc. (NASDAQ:ARII).
Citadel Vet Youderian Joins PTIA (FINalternatives)
Ethan Youderian, who started his career at the Chicago-based Citadel Investment Group, has become CIO for another Windy City firm, Performance Trust Investment Advisors. Youderian, who joined Citadel in 1994, was a managing director and senior portfolio manager responsible for the firm’s multi-billion-dollar North American convertible bond portfolio. In 2005, he joined a Chicago startup company as executive vice president, and eventually became a member of its board of directors. From 2009, Youderian was a portfolio manager/strategist for a Lake Forest, IL-based proprietary trading firm where he ran complex strategies employing corporate bonds, swaps, derivatives, currencies, equities and Treasuries.
