Hedge Funds Dodge Brunt of Selloff as Dalio to Paulson Gain (BusinessWeek)
Hedge funds held up better than global stocks last month, falling an average of 0.1 percent as equities slumped amid a selloff in emerging-market currencies and signs of weakness in China. Ray Dalio’s Bridgewater Associates LP rose 1.1 percent as of Jan. 28 at its Pure Alpha II fund, and John Paulson posted gains in all his main funds in the month, according to people familiar with the matter. Global stocks declined 4 percent for the full month, including reinvested dividends.
Baupost Returns 15% (Finalternatives)
The Baupost Group enjoyed its best year in four in 2013. The Boston-based hedge fund returned 15% last year, Alpha magazine reports. The return easily topped the average hedge fund, which rose in the mid- to high-single digits, but was only half of the return posted by the Standard & Poor’s 500 Index. One reason for the lag is that Baupost kept about 40% of its assets in cash last year, leaving it on the sidelines even as stocks soared. The $26 billion firm wasn’t thrilled with the opportunity set in the current market, and returned $4 billion to investors in December.
Eighth SAC employee convicted of insider trading (WestFairOnline)
An eighth SAC Capital hedge fund employee was found guilty of insider trading by a federal jury in Manhattan Thursday. The jury convicted Mathew Martoma, a former SAC portfolio manager, of illegally trading on confidential information with regards to a clinic trial for an Alzheimer’s drug. The deal earned SAC $275 million. With two counts of securities fraud and one count of conspiracy, a prison sentence of seven to 10 years is expected for Martoma, according to the New York Times.
Two Sigma Suspends Surveys of Stock Analysts (WSJ)
Hedge-fund firm Two Sigma Investments LLC has suspended a survey program intended to garner information about companies from stock analysts, following a similar move by asset manager BlackRock, Inc. (NYSE:BLK) last month under a settlement with New York. The New York-based Two Sigma decided to suspend its survey program in mid-January, shortly after BlackRock’s agreement with New York Attorney General Eric Schneiderman was announced. The attorney general’s office had issued a subpoena to Two Sigma last year, the firm said, as the state was taking a broader look at such surveys.
Hedge funds protect the downside in January (PIOnline)
Critics of the industry who cite increasing correlations between hedge fund returns and overall equity markets during the recent bull market will be upset to see they actually appear to be what their name implies – hedged. In January eVestment’s aggregate hedge fund performance measure was down 0.56% for the month. Market neutral equity strategies were up 0.22% and long/short strategies were down 0.28%. The S&P 500 returned -3.46%, while the MSCI ACWI ex-U.S. was down more than 4.5%.
Buffett Leads Money Manager Protege in 10-Year Market Wager (MoneyNews)
Berkshire Hathaway Inc. (NYSE:BRK.A) CEO Warren Buffett leads New York money manager Protege Partners six years into their 10-year, $1.27 million financial market bet. Buffett wagered that Vanguard 500 Admiral fund, which tracks the Standard & Poor’s 500 Index, would beat the average returns of five hedge funds of funds chosen by Protege, Fortune reports. The Vanguard fund rose 43.8 percent in the six years ended Dec. 31, compared with an estimated 12.5 percent for the five Protege funds, according to the magazine.
Hedge funds & the Japanese trade (CNBC)
Korea’s $400 Billion Pension Plans Hiring Spree for Push (Bloomberg)
South Korea’s National Pension Service plans to double its investment staff within three years and hire foreigners for the first time as the $400 billion fund boosts holdings of overseas assets. NPS, whose 200 money-management employees earned about 83 million won ($77,000) on average last year, must increase salaries to attract talent in New York and London, said Chief Executive Officer Choi Kwang. The fund started a team this month to manage its foreign-exchange risk and is studying investments in hedge funds as it plans to lift overseas holdings to about 30 percent of assets from 20 percent within five years.
Ariad stock spikes on report that hedge fund wants board seats (BizJournals)
Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) stock was up double-digits this afternoon following a Reuters article late Thursday that said a large shareholder is angling to get at least two of its eight board seats. Sarissa Capital Management, a hedge fund run by Alex Denner, disclosed a 6.3 percent stake in the company last November, becoming the second-largest shareholder after the Cambridge, Mass., drug company’s stock had hit its lowest point in almost three years. Reuters cited unnamed sources who reportedly said Sarissa has spoken to Ariad, and is interested in reaching a settlement before a proxy deadline on Feb. 20.
Hedge funds avoided short-term pain: Lyxor (International-Adviser)
Hedge funds have weathered the relative storms attached to emerging markets, global growth and central banks in recent weeks. According to the Lyxor Alternative Investment Industry Barometer, the Lyxor Hedge Fund Index was only down 0.4% compared with the MSCI World Index, which lost 3.8% over the month. It said after three weeks of “tactical retracement” to take in the rally witnessed at the end of last year, several events in emerging markets contributed to hurting both their economies and those of developed nations, while relative value strategies fared better.
Guess Who’s Calling for Taxpayer-Financed Campaigns (TheBlaze)
Jonathan Soros, son of progressive billionaire investor George Soros, is among a group of 60 wealthy Democratic donors who signed a letter to members of Congress calling for taxpayer-financed political campaigns. “We urge you to fix today’s broken campaign finance laws. Nothing less than our democracy is at stake,” the letter said. “We who sign this letter raise and give substantial sums for elections. The influence that people like us have will be curtailed by the changes we seek, but our democracy must return to the First Amendment principle that all Americans, not just the wealthy, must have their voices heard.”
Dr. Doom: Tech stocks even more overvalued now than in 2000 (Yahoo)
With stocks worldwide off to a bad start in 2014, one man isn’t surprised by any of this. Dr. Marc Faber, editor and publisher of the Gloom, Boom, and Doom Report, thinks the drop in the markets, particularly with US stocks, were nothing compared to what they could – or should – have done. While turmoil in emerging markets is often cited as the culprit for stocks’ decline, others are pointing the finger at the Federal Reserve Bank for tapering its monetary stimulus. Faber believes the fall in equities is the fault of the Fed, but not because of tapering.
Can Apple’s Buybacks Bring the Stock’s Shine Back? (WSJ)
Apple Inc. (NASDAQ:AAPL) +1.40% bought $14 billion of its own shares in the two weeks following its recent earnings report, but it may not be enough to appease shareholders like Carl Icahn who want the iPhone maker to do more with its cash. Apple “has to do something,” Roger Kay, president and founder of Endpoint Technologies, said Friday on the Digits show. “If it’s not going to buy a big company or several big companies, it has to do something else because nobody really wants Apple to be a bank and just manage money.”
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