MACRO HEDGE FUND MANAGERS KNOW THE MARKETS can be a cruel mistress. Just ask Louis Bacon. This past summer Bacon, a top macro investor and founder of New York-based hedge fund firm Moore Capital Management, announced that he was returning $2 billion-25 percent of Moore’s capital – to clients. He also said he was moving money out of macro, a strategy that seeks to exploit big-picture economic trends and global capital market events, because he wasn’t “comfortable” taking much risk in the current environment. Nowadays, central banks and policymakers drive the markets and fundamentals play a diminished role. Bacon has called his 2012 results disappointing. As of mid-November his flagship, $4 billion Moore Global Investment Fund, had returned just 3.72 percent on the year…
Fiscal Cliff Follow-Up at the Biggest and First Hedge Fund Networking of 2013 in New York City (Melodika)
Hedge Fund, Alternative Investments, Private Equity, High-Frequency, Algorithmic and Proprietary Trading Managers, Investors, Executives and Professionals From the Most Prestigious Firms Getting Together for Networking and Cocktails at Golden Networking’s Hedge Funds Happy Hour, January 8 New York, NY, United States, January 03, 2013 — The first day of the year, the U.S. House of Representatives approved a bill undoing tax increases for more than 99% of households, providing a temporary victory to President Obama and Democrats as Republicans vowed to fight them in the upcoming months for spending cuts in exchange for raising the debt ceiling. What will be the impact of the fiscal cliff debate resolution on the hedge fund industry and the economy in general?
SAC, Founder Face Investor Suit Over Insider Trading Scandal (Law360)
A putative class of Elan Corp. shareholders has sued Steven A. Cohen and his hedge fund SAC Capital Advisors LP over an alleged $276 million insider trading scheme involving shares of the drug giant’s stock, marking the first private suit to emerge from the tipping scandal. Six Elan investors allege in the Dec. 21 complaint that Cohen failed to properly supervise Mathew Martoma, a former SAC portfolio manager accused in November of netting the hedge fund $276 million in profits and avoided losses by trading on…
Hedge fund manager Cooperman optimistic toward stocks (Reuters)
Leon Cooperman, the chief executive officer of hedge fund Omega Advisors, said on Wednesday he is optimistic toward stock markets this year, while bonds are poised for a sell-off. Cooperman, whose hedge fund had $7 billion in assets as of November, told CNBC television that “equities are in a zone of fair valuation to modest undervaluation,” while bonds are in a “bubble.” He cited the slight improvement in the global economy, improving U.S. home prices and the pickup in China’s economy, while low-yielding government bonds are a “joke” and high-yield corporate bonds are no longer a bargain given their lower yields.
The Big Fiscal Cliff Deal Winners: Hedge Fund And Private Equity Moguls (Forbes)
In 2010 Steve Schwarzman, who runs the private equity and hedge fund behemoth the The Blackstone Group L.P. (NYSE:BX), compared efforts to raise taxes on private equity and hedge fund managers with Hitler’s invasion of Poland. Schwarzman ended up apologizing for the inappropriate analogy, but on the morning after the House of Representatives voted for a Senate-passed deal to avert the fiscal cliff, it increasingly looks like hedge fund and private equity managers have won their war in Washington. The bottom line is that hedge fund and private equity moguls will continue to be taxed relatively lightly after the new fiscal cliff legislation. Carried interest will continue to be taxed as long-term capital gains for hedge fund and private equity managers…
Hedge Funds End ’12 Up 5.5% (Finalternatives)
Hedge funds lagged the broader markets for the fourth straight year in 2012, with estimated returns of about one-third the performance of the Standard & Poor’s 500 Index. The average hedge fund rose 5.5% last year, according to Hedge Fund Research. That’s a good deal better than the average 5% loss suffered in 2011, but it was well behind the S&P500’s 16% return. Hedge funds have not beaten the broad-market index since 2008, when the S&P was down nearly 40%, while the average hedge fund was down less than 20%. It is the longest period of under performance for the hedge fund industry since 1998.
Jason Beaird Joins Steel Vine Investment Fund, L.P. as Partner and Director of Marketing (Chron)
Jason Beaird joins Steel Vine Investment Fund, L.P., a hedge fund specializing in commodity and stock options based in Nashville, Tennessee. Beaird will serve as Partner and Director of Marketing, primarily focusing upon marketing to accredited high net worth and institutional investors. Beaird’s past experience includes Director of Client Service for Jetstream Capital from 2005-2011 and positions at Goldman Sachs and Merrill Lynch in Private Wealth Management from 1999-2004. Immediately prior to joining Steel Vine Investment Fund, L.P., Beaird worked as a hedge and private equity fund placement agent with Constellation Associates through BTIG. He earned the Chartered Financial Analyst® designation in 2004.
Ex-Citigroup Prop. Trader To Launch Hedge Fund (Finalternatives)
One of Joel Salomon’s New Year’s resolutions was apparently, “Launch a hedge fund,” because the former Citigroup Inc. (NYSE:C) proprietary trader plans to do just that this month. SaLaurMor Capital, a long-short fund named for Salomon daughters Lauren and Morgan, will be based in New York and focus on small and mid-cap financial stocks—initially insurance companies and asset managers, but eventually the credit of financial firms.
Cognios Capital Launches New Mutual Fund with Innovative Investment Approach (EON)
Cognios Capital, LLC today announced the launch of the Cognios Market Neutral Large Cap Fund (COGMX & COGIX) – the firm’s inaugural mutual fund with a goal to provide individuals and institutions with an investment product previously reserved for hedge fund clients. The investment strategy of the Fund aims to outperform the S&P 500 Index1 over time by purchasing and selling short large capitalization U.S. equities through its proprietary ROTA/ROMETM valuation method. “In times of unpredictable and volatile markets, investors are seeking long-term performance regardless of market conditions and a management team they can trust,” said John Brandmeyer, chief executive officer of Cognios Capital. “The goal of this new mutual fund is to give retail investors access to a proprietary long/short equity strategy. Strategies of this type have generally only been available to institutions and wealthy individuals through hedge funds.”
The future of hedge fund fees (FierceFinance)
I’ve noted over the years that the traditional hedge fund fee structure, the age-old 2 and 20, was slowly disintegrating. Breakingviews now says that the 2-and-20 era is officially dead. The catch is that this death will take place in roughly 2020. In an article mockingly dated eight years ahead, the authors note, “In September 2012, the average hedge fund still charged 1.6 percent annually in management fees and collected 18.7 percent of any gains, according to data provider Preqin. Through November of that year, the average global hedge fund investor earned just 2.6 percent, according to the HFRX global index maintained by Hedge Fund Research. In 2011, investors lost nearly 9 percent. The average annual return from 2009 to 2012, supposedly recovery years following the losses of more than 20 percent in 2008, was a measly 3 percent.”
Winton CEO Daniell To Step Down (Finalternatives)
Winton Capital Management CEO Anthony Daniell is leaving his post. Daniell will step down after more than two years at the helm, but will remain with the hedge fund, Financial News reports. He will be succeeded as CEO by Tony Fenner-Leitao, Winton’s current deputy CEO, pending regulatory approval. Fenner-Leitao has been with the US$26 billion hedge fund for four-and-a-half years. The former Goldman Sachs executive director was named Daniell’s deputy in October.
Buffett Is Still Crushing That Bet He Made Against Two Hedge Fund Managers In 2008 (BusinessInsider)
It’s 2013, and that means that Warren Buffett is 5 years into a bet he made against two hedge fund managers at New York based fund Protege Partners. Back in 2008, Buffett told Ted Seides and Jeffrey Tarrant of Protege that funds that invest in hedge funds for their clients would not beat the S&P 500 over ten years. The loser of this bet has to donate $1 million to the winner’s charity of choice on December 31st, 2017. Right at this very moment, Buffett is still winning. That may not be too surprising, since according to hedge fund tracker HFR, hedge funds returned an average of 5.5% in 2012.
Herbalife Continues to Soar As Company Prepares to Answer Pyramid Scheme Accusations (Benzinga)
Shares of Herbalife (NYSE: HLF [FREE Stock Trend Analysis]) soared 12 percent on Monday, and tacked on nearly another three percent Wednesday along with broader market indicies. Herbalife suffered a 37 percent drop in 2012 as hedge fund magnate Bill Ackman accused the company of running a pyramid scheme. In May, Einhorn questioned company officials about the Herbalife business model resulting in a loss of 20 percent the next day.
Big Hedge Fund Whacked (WallStreetPit)
One of the biggest leveraged hedge funds in the world got hit with a 2×4 during the 4th Q. This fund has a mixed bag of assets, but was heavily exposed to big FX positions. The fund made a big “bet” recently when they went short EURYEN. This turned sour in a very big way; the EURYEN moved an incredible 14 big figures against them in just 60 trading days. Street players, who know of this currency spec, refer to it as a “Size” position. At the end of Q3, it came to a lumpy short $40B. There were rumors that the fund added to the short during the Q (not confirmed yet). But even if the book was kept static, the mark-to-market loss comes to $5+B. That’s serious money to anyone.
Hedge funds gain $75bn in 2012 – Eurekahedge data (InvestmentEurope)
The data provider, which monitors some 26,000 products including hedge funds, funds of funds, Ucits, private equity, Islamic and property funds, said managers faced a difficult trading environment over the period. Markets were hit by risk-on and risk-off modes driven by political and macro events rather than fundamentals. The Eurekahedge Hedge Fund Index was up 1% in December, bringing the yearly number to 5.63%. The MSCI World Index1 returned 2.28% in December and was up 13.75% for year 2012.
US Attorney Preet Bharara and other financial heavyweights opposing Paul Singer’s attempt to get Argentina to pay debt (NYPost)
A growing list of financial and legal heavyweights are playing pile-on Paul Singer. US Attorney Preet Bharara and BlackRock, Inc. (NYSE:BLK) CEO Larry Fink are among the latest bold-faced names to oppose Singer’s attempt to get Argentina to pay him and others $1.3 billion on defaulted debt. Singer, the hedge fund billionaire who runs Elliott Management, is among the 8 percent of Argentina debtholders who refused to accept a 70 percent haircut following a 2001 default by the embattled South American country.
Brie Larson Will Star in First Feature Produced by George Soros’ Nephew (ShowBiz411)
Exclusive: Billionaire philanthropist and Democratic fundraiser George Soros has a nephew named Jeffrey, who also happens to lead the board of directors for Los Angeles’s Museum of Contemporary Art. And now Jeffrey, well endowed with funds to produce movies, is going to make his first feature. I’m told “Basmati Blues,” shot entirely in India, will star up and comer Brie Larson (“United States of Tara”). The blonde ingenue has five films just about in the can including the directorial debut of actor Joseph Gordon Levitt and a possible new film from the great Peter Bogdanovich. The word is that Larson is about to get a push along the lines of Jennifer Lawrence and Jessica Chastain.
Nouriel Roubini: US fiscal talks will ‘soon get messy’ (EmergingMarkets)
In an opinion article in the Financial Times, Roubini said that the deal did prevent the US economy from falling of the fiscal cliff, but added that “given the dysfunctional nature of the American political system, it won’t be long before there is another crisis.” Analysts have warned that the deal was just a temporary solution, as it did not include the thorny issue of raising the debt ceiling, nor spending cuts.
Buffett Like Icahn Reaping Tank Car Boom From Shale Oil (BusinessWeek)
Warren Buffett and Carl Icahn are reaping the benefits of surging demand for railroad tank cars to haul shale oil from beyond the reach of existing pipelines. Buffett’s Union Tank Car Co. is working at full capacity and Icahn’s American Railcar Industries Inc. (ARII) has a backlog through 2014. Trinity Industries Inc. (TRN), the biggest railcar producer, began converting wind-tower factories last year to help meet demand for train cars that can transport the petroleum product.
