Editor’s Note: Related tickers: Herbalife Ltd. (NYSE:HLF), UBS AG (ADR) (NYSE:UBS), Dell Inc. (NASDAQ:DELL), Goldman Sachs Group, Inc. (NYSE:GS), J.C. Penney Company, Inc. (NYSE:JCP), Caterpillar Inc. (NYSE:CAT)
Larry Robbins usually describes the approach of his $6.4 billion hedge-fund firm, Glenview Capital Management, as “suggestivist,” cultivating amicable working relationships with corporate management to propose shareholder-friendly changes. Now he’s becoming an activist for the first time, challenging one of his holdings in a proxy contest that is under way. The switch in tactics isn’t the result of any shortfall in Glenview’s performance. Its flagship, the $4.8 billion Glenview fund, returned 26.8% last year, and over 10 years has provided an annualized 13.4% gain to its investors, due in large part to Robbins’ focus on health-care stocks.
David Einhorn Has Closed His JCPenney Short Position And The Stock Is Spiking (BusinessInsider)
Greenlight Capital’s David Einhorn closed out his J.C. Penney Company, Inc. (NYSE:JCP) short position in the second quarter, according to a letter sent to investors, Reuters Katya Wachtel reports. “J.C. Penney Company, Inc. (NYSE:JCP) (short): This was our most profitable short of 2012. Though the retailer was poorly positioned, the shares rocketed in early 2012 based on overhyped promises put forth by a highly promotional CEO. Following the presentation of its strategy, the new CEO dumped a bunch of his personal stock on the market. We doubted the new strategy would succeed. We covered when the Board fired the CEO before he could turn the company into a J.C. Penney Company, Inc. (NYSE:JCP) stock,” Einhorn wrote in the letter. …So far, Ackman, who has has 17.74% stake in J.C. Penney Company, Inc. (NYSE:JCP), has taken a bath betting on the retailer.
Herbalife surge costing hedge fund mogul $200 million (NYPost)
Hedge fund mogul Bill Ackman likes to say short selling causes “brain damage” — and his $1 billion short on Herbalife Ltd. (NYSE:HLF) is proving a case in point. Herbalife Ltd. (NYSE:HLF) shares have surged in the past two weeks, pushing Ackman into the red for the first time since he began building the short in June 2012. His $12 billion Pershing Square hedge funds are carrying a paper loss of about $200 million, including borrowing costs. The bet has cost his funds about 2 percent since they put on the short, sources said.
Steven Cohen throws a party despite his fund’s indictment (Reuters)
Hedge fund billionaire Steven A. Cohen did not let the filing of criminal charges against his $14 billion SAC Capital Advisors get in the way of a party this weekend at his vacation estate in tony East Hampton, New York. The Saturday night party at Cohen’s 10-bedroom home on Further Lane took place two days after federal prosecutors in New York announced a five-count criminal indictment against SAC Capital that portrayed the 21-year-old Stamford, Conn.-based fund as a breeding ground for unlawful insider trading.
Big hedge funds enjoy buyers’ market for recruitment (eFinancialNews)
Marshall Wace, which has seen its assets grow 60% in the past 12 months to $10.7 billion, is planning a recruitment drive in the US, which will be spearheaded by partners Daniel Roberts and Nick Nielsen, who are relocating to New York. The firm plans to hire about a dozen portfolio managers in the next couple of years and is moving its US office from Connecticut to mid-town Manhattan. Last week Izzy Englander’s $18.5 billion US hedge fund Millennium hired Stephen Keller from UBS AG (ADR) (NYSE:UBS) as head of European business development, a new role to source potential portfolio management hires.
When dealing with money, check hedge fund’s back office (SCMP)
The lure of high returns that aren’t correlated to other markets has led to an explosion of global hedge fund money, to more than US$2 trillion. Unfortunately, “explosion” also describes a number of hedge funds that literally blew up over the years due to fraud or poor risk controls. Hedge funds are typically managed offshore, outside the jurisdiction of local regulators. The funds use wide-ranging investing styles and ask for maximum flexibility from investors on the ways they can use their money. The managers of these often obscure, boutique funds move capital quickly from trade to trade, into many different accounts.
Manager of defunct U.S. hedge fund pleads guilty to fraud (Reuters)
A former hedge fund manager pleaded guilty on Friday to defrauding investors in a $12.6 million scheme, more than five years after the fund collapsed under the weight of failed real estate loans. Lloyd Barriger, who operated Gaffken & Barriger, a Monticello, New York-based investment fund, pleaded guilty in White Plains federal court to charges of securities fraud, mail fraud and conspiracy, the U.S. Attorney’s Office said in a statement. …Barriger’s lawyer, federal defender Mark Gombiner, did not immediately respond to an email seeking comment.
Dell’s Future Is Rocky: Analysts (CRN)
Advice to Dell Inc. (NASDAQ:DELL) VARs: put on your seatbelt things are about to get bumpy. That’s what industry analysts are advising Dell Inc. (NASDAQ:DELL) channel partners as the buyout vote that will determine the company’s future approaches. The vote pits Michael Dell, CEO, Dell Inc. (NASDAQ:DELL) against investor Carl Icahn as they both fight for two different visions of the company. Caught in the crossfire are Dell Inc. (NASDAQ:DELL) channel partners, which nearly unanimously are rooting for Michael Dell to emerge victorious from next week’s vote. Partners are in line with CEO Dell Inc. (NASDAQ:DELL)’s goal of taking his company private and focusing on growth instead of shareholders value—an Icahn priority.
Hedge Funds Raise Gold Bets as Goldman Sees Decline: Commodities (Bloomberg)
Hedge funds raised wagers on a gold rally as speculation that the Federal Reserve will hold off on curbing stimulus drove prices toward the biggest gain in 18 months. Goldman Sachs Group, Inc. (NYSE:GS) expects the rally to reverse. Money managers increased their net-long position by 26 percent to 70,067 futures and options as of July 23, U.S. Commodity Futures Trading Commission data show. The fourth consecutive weekly gain is the longest streak since October. Bullish wagers across 18 U.S.-traded commodities gained 7.4 percent to 615,140. Investors more than doubled bets on lower corn prices to a record net-short holding.
Icahn’s Barbs Reflect a Broader Trend Against Short-Selling (InstitutionalInvestor)
Last week’s Delivering Alpha conference was filled with impressive speakers, lively investment chatter, insightful macro outlooks and even a fair amount of comedy. But ironically for a hedge fund conference, the event – hosted by Institutional Investor and CNBC – was short on one traditional staple: short-selling ideas. Save for permabear Jim Chanos’s case for shorting construction-equipment manufacturer Caterpillar Inc. (NYSE:CAT) and Richard Perry’s condemnation of Japanese corporate bonds, the day was notable for a dearth of suggestions on what investors could profitably sell short.
Hottest trade on Wall Street: Detroit bonds (CNN)
Detroit’s bonds have become the hottest trade on Wall Street, since the Motor City filed for the largest municipal bankruptcy two week ago. Prior to the bankruptcy filing, Detroit’s emergency manager, Kevyn Orr, offered to pay bondholders roughly 10 cents on the dollar to help keep the city going. That would result in huge losses for the city’s original creditors. But hedge funds, particularly those that invest in troubled or bankrupt companies, think these bonds will turn out to be lucrative in the long run. The problem is there aren’t that many available. Few have traded, and the waiting lists are long.
GLG launches Total Return fund (MoneyObserver)
Hedge fund firm GLG Partners has launched a ‘value driven’ Total Return fund for investors. The UK-domiciled Ucits fund will invest across a range of liquid asset classes, including equities, foreign exchange, sovereign bonds, currencies, credit, rates and commodities. The annual management charge for the fund is 0.75 per cent – there is no performance fee. James Ind, who recently joined GLG from Russell Investments, will be responsible for ongoing portfolio management. The fund will be managed by the GLG macro and relative value team, headed by Jamil Baz and Sudi Mariappa.
