Hedge Funds Had a Horrible Year, But Managers Are Billionaires (New York Post)
Hedge funds just finished one of their worst years in recent memory — but their high-paid managers are doing just fine. Some 39 hedge-fund managers made Forbes’ just-released billionaire list for 2014. Hedge funds, on average, returned just 2 percent last year, their worst performance since 2011, according to Bloomberg data. Ray Dalio, who runs Bridgewater, the world’s biggest hedge fund with more than $100 billion in assets, topped the list of active hedgies, with a net worth of $15.2 billion, despite returns on his various funds of between 3 and 8 percent. John Paulson, whose hedge funds were some of the worst performing in 2014, came in next, with $13.7 billion. Two of his funds lost 17 and 22 percent.
Paulson Funds Said to Shrink by $1.3 Billion After Losses (Bloomberg)
John Paulson’s hedge fund firm, which peaked at $38 billion in assets in 2011, is down to less than half because of investor withdrawals and losses. Paulson & Co. managed $17.8 billion in assets on Jan. 1, down from $19.1 billion at the start of December, according to two people with knowledge of the matter who asked not to be named because the information is private. The hedge fund firm lost money last year in three of its four main strategies, including a 36 percent drop in a fund that bets on company changes such as bankruptcies and spinoffs. The 59-year-old billionaire’s merger funds, which comprise about half of the firm’s assets, barely broke even.
Starboard Ratchets Up Its Demands For Staples Merger (Bloomberg)
Starboard Value, the activist investor with stakes in both Staples Inc. (SPLS) and Office Depot Inc. (ODP), is ratcheting up pressure on the office-supply rivals to merge. The investment firm sent a letter to Staples Chief Executive Officer Ronald Sargent Tuesday demanding that his company engage advisers to begin work on a deal. The move represents Starboard’s most public push for such a transaction following behind-the-scenes prodding. “The best way to maximize value for Staples’ shareholders is through exploring and completing a business combination with Office Depot,” Starboard CEO Jeffrey C. Smith said in the letter, which was addressed to Sargent and the rest of Staples’ board. “We believe that now is the right time to pursue such a transaction, and we urge you to immediately retain a reputable investment bank and legal advisers to assist the board in evaluating, structuring and executing a transaction.”
2 Wall Street Deal Makers Form an Activist Fund With a Twist (New York Times)
For years, Douglas L. Braunstein and James C. Woolery advised companies on how to defend themselves against activist investors. Now the two veteran Wall Street advisers plan to become shareholder activists themselves. The two men announced on Tuesday that they have formed a new hedge fund, Hudson Executive Capital, aimed at persuading companies to change their corporate strategies. The twist, however, is that the firm aims to do so by working hand-in-hand with management and boards, rather than threatening to wage proxy fights. That sort of “constructive” approach has been espoused by a number of activists, including Nelson Peltz of Trian Fund Management and Clifton Robbins of the Blue Harbour Group.
Lansdowne’s De Winton Departs Financials Fund After 11 Years (Bloomberg)
William De Winton, a money manager with Lansdowne Partners, is giving up control of the hedge-fund firm’s Global Financials Fund after 11 years, the London-based company told investors. De Winton, who has managed the $638 million fund since it started in 2004, will remain at the firm after he relinquishes control in April, according to a statement sent to investors, a copy of which was seen by Bloomberg. The fund posted a 12 percent loss last year, according to a person with knowledge of the returns, who asked not to be named because the information is private. The departure isn’t related to that loss, the person said. De Winton declined to comment.
$1 Billion Swedish Hedge Fund Bets Draghi to Aid EU Stocks (Bloomberg)
Catella Hedge Fund, a Swedish investor with more than $1 billion in assets under management, is buying up stocks it says will do well if Europe’s recovery picks up. After returning 8.2 percent last year and 7.5 percent in 2013, the self-professed risk-averse fund shifted its investments this month to profit if Europe’s economy starts growing at a faster pace, Co-Founder Ulf Stroemsten said in an interview in Stockholm. The fund targets a minimum annual return of 6 percent.
Hedge Funds Record Highest Inflows In Seven Years In 2014: Research Group (Reuters)
Hedge funds attracted their highest global net inflows in seven years in 2014, and the total size of the industry has risen to nearly $3 trillion, hedge fund tracker HFR said on Tuesday. Net inflows were $76.4 billion in 2014, the highest since 2007, the Chicago-based research group reported. While overall flows were strong for the year, the pace of new money slowed dramatically in the fourth quarter, HFR said. Only $3.6 billion was added in the quarter, compared with $15.9 billion in the third quarter and $30.5 billion in the second quarter.
