Citrone’s Funds Take March Beating (Finalternatives)
Hedge fund billionaire Robert Citrone was probably glad to turn the calendar page after a brutal March for his flagship funds. Citrone’s Discovery Global Opportunities Fund was down 7.46% in Q1 and his Discovery Global Macro Fund down 9.17% after each fell some 10% in March, according to Forbes. It’s a sharp reversal for Citrone, who was one of the few hedge fund managers to give the S&P 500 a run for its money in 2013, returning about 27%.
Fortress to Tudor Lose in First Quarter as Macro Misfires (Bloomberg)
Paul Tudor Jones, Michael Novogratz and Louis Bacon, hedge-fund managers that profited last year from bets on macroeconomic trends, posted losses in the first quarter as some of those trades turned against them. Markets gyrated in the first three months of the year as investors fled developing countries in anticipation of further reduction in U.S. monetary stimulus, Russian President Vladimir Putin annexed Ukraine’s Crimea region and Japanese stocks tumbled. The losses for macro managers have caused them to cut some of their bigger bets, Anthony Lawler, a money manager at the $120 billion Swiss firm GAM, wrote in a report last week, though their views — including that Japanese stocks will rise and the U.S. dollar will gain — could make money later in 2014, he said.
Why Your Average Investor Is Crushing Big Hedge Funds These Days (Businessinsider)
Everyone’s talking about the stock market’s “internal correction“: investors have been dumping high-beta, momentum stocks for low-beta, value names. Facebook Inc (NASDAQ:FB) is among the stocks that are down more than 20% during the period. Investors who are broadly diversified aren’t doing too terribly. The S&P 500 is just 1.6% from its all-time high of 1,897. But the Nasdaq has tumbled by more than 5%. According to Goldman Sachs Group, Inc. (NYSE:GS)’ David Kostin, the big hedge funds are among the investors exposed to these losers.
Economist Who Once Advised Obama Now Consults With Hedgies (Finalternatives)
A former top economist for U.S. President Barack Obama is now offering his take on market developments with hedge fund managers and other financial market players. Austan Goolsbee, through a contract with New York City-based consultancy 32 Advisors, has chatted most Fridays since February 2013 with employees of large hedge fund firms Fortress Investment Group, York Capital Management, Perella Weinberg Partners, SkyBridge Capital and others. Firms who pay to join the 45-90 minute conference calls get to hear Goolsbee opine on issues such as the rise of bitcoin and the controversy surrounding high-frequency trading.
Only 4% of hedge fund managers say to have registered to market under JOBS Act (Opalesque)
Preqin’s recent survey of more than 150 private equity and hedge fund managers reveals that these firms have been slow to take advantage of the marketing opportunities presented by the JOBS Act, which allows them to advertise and perform general solicitations to showcase their funds to a larger number of potential investors. Only 4% of hedge fund managers and 5% of private equity managers surveyed said they have registered to market under the JOBS Act. Many alternative asset managers believe that the audience they target – for many firms, large accredited institutional investors – is better reached through traditional methods of connecting and building relationships rather than through mass marketing.
Lone Star Value hedge fund plans to take its objection over Hilltop’s $7.88-a-share buyout of SWS Group directly to shareholders (Dallasnews)
Activist hedge fund investor Lone Star Value Management is vigorously objecting to Dallas-based Hilltop Holdings’ $7.88-per-share buyout of the parent of Southwest Securities Inc. and Southwest Securities FSB of Dallas. In a letter to SWS Group’s board of director, Connecticut-based Lone Star Value founder and CEO Jeffrey E. Eberwein is accusing the board of “failing to run a proper auction process.” “It is clear that the Board has not fulfilled its fiduciary duty and has failed, for the second time in three years, to obtain maximum value for the long-suffering shareholders of SWS,” Eberwein added.
Is it time to look to hedge funds as the market stumbles? (TrustNet)
Now could be a good time to buy into listed hedge funds as the UK equity market starts to stumble, according to Monica Tepes, investment trust analyst at Cantor Fitzgerald, who notes they have the ability to do well in sideways or downwards markets. Hedge fund BH Global is simplifying its fee structure which in effect amounts to a fee cut and brings the sector back into the limelight. Tepes says that following a few years of boring performance this could be a good time to buy into the sector as developed world markets look frothy – particularly given the discounts that have opened up.
Who the biggest hedgies are holding (CNBC)
High-Frequency Din Evokes Scandals Past as Gabelli Sees Ripoff (Bloomberg)
Scrutiny of high-frequency trading is stirring memories among investment veterans of earlier scandals when the government targeted price-fixing and fraud in U.S. equity markets. Michael Lewis’s book “Flash Boys” and probes by the New York attorney general and Federal Bureau of Investigation are spurring outcry from Washington to Newport Beach, California, as investors and politicians ask if exchanges are rigged. Shares of NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) and Intercontinentalexchange Group Inc (NYSE:ICE) have lost at least 8.8 percent in 2014 after each posted their best annual gains since 2007 and 2006, respectively.
Sears CEO Slices Off Assets, Leaves Less for Bondholders (WSJ)
Chief Executive Edward Lampert is carving out some of the best pieces of Sears Holdings Corporation (NASDAQ:SHLD) +0.08% for its shareholders, moves that could leave bondholders at risk if its remaining businesses continue to deteriorate. The latest step in that pattern was Sears’s spinoff of Lands’ End, one of the crumbling holding company’s few bright spots. Shares in the preppy clothing maker were distributed to existing Sears shareholders on Friday. Lands’ End had net income of $79 million in the most recent year, compared with a loss of $1.4 billion for Sears Holdings. All told, in the past 27 months Mr. Lampert, whose hedge fund owns nearly half of Sears’s stock, has distributed to shareholders—through various means—assets and divisions valued at roughly $2.3 billion.
A field guide to shareholder-friendly activism (Reuters)
The rise of shareholder activism has made it harder to distinguish between different species. Many corporate agitators say they are acting for all investors. Billionaire Carl Icahn’s online mission statement, for instance, touts “a platform from which we can unite and fight for our rights as shareholders and steer towards the goal of real corporate democracy.” Whether that’s true depends largely on the goals and methods used. Breakingviews provides a field guide to the activist animal kingdom. …Leo Strine, the vocal former Delaware chancellor who is now the state’s chief justice, implies in a recent essay that the relatively robust market for corporate control, evinced by widespread successful activism, may mean that power is now fairly balanced between boardrooms and investors.
SEC forms squad to examine private funds (VCCircle)
The U.S. Securities and Exchange Commission (SEC) has put together a dedicated group to examine private equity and hedge funds, after the 2010 Dodd-Frank law required the funds to be regulated, according to people familiar with the matter. The examiners will look at areas including how private equity and hedge funds value their assets, disclose their fees, and communicate with investors. The SEC regularly examines a wide range of financial institutions including brokerages and clearing houses to ensure compliance with federal securities laws. But the regulator’s exams have been criticized for missing big violations such as the Ponzi scheme at Bernard Madoff’s asset management arm.
Hedge Fund Seeks Assets in Nevada in Battle Over Argentine Debt (WSJ)
Argentina’s dispute with creditors took a twist as a U.S. hedge fund in search of defaulted debt is seeking to seize assets allegedly owned by a close associate of Argentine President Cristina Kirchner and her late husband and predecessor Néstor Kirchner. The move is the latest legal long shot launched by NML Capital Ltd., founded by U.S. billionaire Paul Singer, as it chases Argentine assets across the globe in its battle over the government’s 2001 sovereign-debt default on almost $100 billion. Creditors have tried to have courts seize the presidential plane Tango 01 in 2007 and to embargo a navy training vessel that docked in Ghana in 2012. NML recently filed suit in California to block Argentina from launching a pair of satellites into space.
Bahrain’s Investcorp tie-up targets European distressed debt (Reuters)
Bahrain-based investment company Investcorp is seeking exposure to distressed debt in Europe through a tie-up with Eyck Capital Management, a newly established investment manager founded by former hedge fund principal Khing Oei. Investcorp will provide Eyck with capital as the new London-based firm invests in opportunities related to highly leveraged companies in Europe, using instruments including bonds, credit default swaps and equities, Investcorp said on Sunday.
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