Editor’s Note: Related tickers: The Blackstone Group L.P. (NYSE:BX), Citigroup Inc (NYSE:C), Apple Inc. (NASDAQ:AAPL), Goldman Sachs Group, Inc. (NYSE:GS), United Parcel Service, Inc. (NYSE:UPS)
The Blackstone Group L.P. (NYSE:BX), the largest outside investor in SAC Capital Advisors, is to pull out its money from the firm, Reuters reported. Reuters, citing a May 21 letter from pension consultant Russell Investments to clients, said that The Blackstone Group L.P. (NYSE:BX) had informed SAC Capital of its intent to “fully redeem” an important part of the estimated $550m it has invested with the $15bn hedge fund firm. The Blackstone Group L.P. (NYSE:BX) reportedly sent the notice to SAC Capital sometime before May 15 as it was concerned over the ongoing insider trading probe against SAC Capital and its executives that might even involve Cohen himself. The redemption affects only client money invested in SAC’s fund of hedge funds, the letter notes.
After Predicting Apple’s Collapse, Jeff Gundlach Now Owns The Stock (Businessinsider)
Bond god Jeffrey Gundlach, who runs DoubleLine Capital, told TheStreet.com’s Chris Ciaccia that he now owns Apple Inc. (NASDAQ:AAPL) in his portfolio. Gundlach famously shorted Apple Inc. (NASDAQ:AAPL)’s stock last year and called it going to $425 a share on CNBC when it was trading around the $560 level in November. From TheStreet: “We bought it at $405 the first time, and I think our average cost is below $425. I said Apple Inc. (NASDAQ:AAPL) would go below $425. I wasn’t committed to buying it, but I think Apple Inc. (NASDAQ:AAPL) is an interesting play,” Gundlach said during the interview. Gundlach told TheStreet that the tech giant’s stock is “sorta cheap” and that he “sorta” likes Apple Inc. (NASDAQ:AAPL).
Wheat price revival questions hedge fund selling (Agrimoney)
Hedge funds returned to taking a more negative stance on agricultural commodities, largely through increasing bets on falling values of sugar, which have paid off, and of wheat, in which they have been caught out. Managed money, a proxy for speculators, decreased its net long position in US traded agricultural commodity futures and options by more than 47,000 contracts in the week to last Tuesday, regulatory data show. The decrease, the first in six weeks, reflected in part a return to taking a more negative stance on corn, after a week in which US farmers planted the grain at a record pace, easing concerns over a yield penalty from sowings which had been running at a historically slow level.
You can be a hedge fund investor. But why would you? (TicoTimes)
Earlier this year, Goldman Sachs Group, Inc. (NYSE:GS) Asset Management announced that it would launch a new mutual fund that — apparently — will bring the joy of hedge fund investing to the masses. For as little as $1,000, the Multi-Manager Alternatives Fund (GMAMX) allows mom-and-pop investors to put their life savings into some of Wall Street’s riskiest and most expensive products. This “fund of funds” will, according to its prospectus, let investors gain exposure to the trading strategies of hedge funds. The obvious question is: “Why would investors want that?” Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high — some say excessively high — fees; their short- and long-term performance has been poor.
Illinois Teachers fund embraces directness (PIOnline)
The Teachers’ Retirement System of the State of Illinois, Springfield, is drastically restructuring its $2 billion hedge fund portfolio in a move to all direct investments within the next two to three years. The changes are the brainchild of Kenneth Musick, absolute-return investment officer, who joined the $39.6 billion fund in October and wasted little time in reconstructing the hedge fund program. More staff will be needed, Mr. Musick told trustees at May 22-23 investment committee meeting. He didn’t provide any details. First on the tap are searches for a hedge fund consultant and a hedge fund risk management provider.
Outspoken hedge fund boss who made the journey from city to city (Telegraph)
Andrew Law was on the losing side earlier this month when his beloved Manchester City lost the FA Cup Final. But the hedge fund millionaire has been a winner on recent bets on the financial markets. Mr Law, chairman and chief executive of Caxton Associates, has used the firm’s $7bn (£4.6bn) macro hedge fund to focus on the yen, which has fallen by about 25pc since November due to the Japanese government’s massive monetary stimulus. This month, the yen fell to a four-and-a-half-year low against the dollar, with Kyle Bass, founder of US hedge fund Hayman Capital, warning that Japan is careering towards a major debt crisis and likening the nation’s measures to boost growth to “adding a Ponzi scheme to a Ponzi scheme”.
UPS gets best of both worlds with fund-of-funds platform (PIOnline)
United Parcel Service, Inc. (NYSE:UPS) combined investment insourcing with operational outsourcing in building its fledgling opportunistic hedge fund of funds for its U.S. defined benefit plans. Built to pump up returns for the four U.S. plans, which total $27 billion, the new fund matches the expertise of Leo R. Svoboda, portfolio manager-absolute return at United Parcel Service, Inc. (NYSE:UPS), and HedgeMark International LLC, which provided the operational infrastructure, hedge fund risk monitoring and performance, and managed account know-how. The 1907 Partners Fund is named for the year of United Parcel Service, Inc. (NYSE:UPS)’ founding as a bike and foot messenger service. But its investment premise is thoroughly rooted in the 21st century.
Business book review: ‘Hedge Hogs’: The sad saga, and juvenile culture, of Amaranth Advisors (DenverPost)
In September 2006, hedge fund Amaranth Advisors collapsed after losing more than $6 billion in the natural-gas futures market. In “Hedge Hogs,” Barbara T. Dreyfuss tells the story of the math-whiz traders whose risky dance with deregulation led to the collapse. The star of Dreyfuss’s distressing tale is Brian Hunter, the Amaranth celebrity described by sycophants at the now-defunct Trader Monthly magazine as a top dog among a crop of “red-hot traders.”
Hedge funds face $20bn a year UK tax clampdown (FT)
A proposed clampdown on tax avoidance by UK-based hedge funds, private equity firms and other investment management partnerships could raise tax bills by as much $20bn a year, industry figures believe. HM Revenue & Customs last week launched a consultation document designed to tackle the disguising of employment relationships through limited liability partnership structures and the manipulation of profit and loss allocations to achieve tax advantages. Joe Seet, senior partner at Sigma Partnership, a London-based hedge fund consultancy, said the latter tactic was commonly used by hedge funds to shield performance fees from tax, a loophole he estimated at $20bn a year.
How to Build a Hedge Fund (Barrons)
Launching a new hedge fund has always been difficult, and even more so since the financial crisis. More funds are closing down than starting up these days, and most of the failures are small operations with short histories, says Daniel Celeghin, a partner at Casey, Quirk and Associates, which advises asset managers. Because investors have become “more educated and more paranoid” since the 2008 crash, he notes, they gravitate toward “the perception of safety” in large hedge funds that boast long track records. Of the $15.3 billion that investors poured into hedge funds during the first three months of this year, firms that managed more than $5 billion soaked up $10.1 billion; firms managing less than $100 million got just $1.14 billion, according to analysts at Hedge Fund Research.
Interpol rebuffs Russian request to place hedge fund manager William Browder under surveillance (Opalesque)
The International Police or Interpol on Friday rejected a request by Russian authorities to place hedge fund manager William Browder under surveillance by issuing an “all points bulletin” for the leader of the worldwide campaign for justice for slain lawyer Sergei Magnitsky. In a press statement issued by Law and Order in Russia it was gathered that Interpol’s General Secretariat has now deleted the request from the Russian authorities seeking to “locate” Browder in order to detain him on a Russian arrest warrant.
2 years on, ‘Dr Doom’ shuts India centre (TOI)
Renowned US economist Nouriel Roubini, who has been referred to as “Dr Doom” for predicting the 2008 financial crisis, has downed the shutters on his India centre nearly two years after setting up shop in Asia’s third-largest economy. Roubini had chosen India as one of his key centres for economic research and analysis. This is his third centre after New York and London. The centre, which began operations in July 2011, was closed down a few months ago, sources said.
Hedge Fund Tiger Global Invests $50 Million In Blogging Platform WordPress.com (Businessinsider)
Tiger Global has invested $50 million in web developer company Automattic, the parent company of WordPress.com. From Automattic’s president/founder Matt Mullenweg: Anyway, wanted to get in front of the news that will inevitably come out in the next week or two (hi Kara!): there has been a large secondary transaction in Automattic stock, about $50M worth. “Secondary” means that it’s existing stockholders, like the earliest investors or employees, selling stock to another investor versus money going into the company (“primary”).
Retail Alternatives to Triple to Nearly $1 Trillion by 2017 According to Citi Prime Finance Survey (WSJ)
Global demand for retail focused, liquid alternative investment products will reach $939 billion by 2017, more than three times the current level, according to a just-released survey from Citigroup Inc (NYSE:C) Prime Finance. The growth forecast comes amid new flexibility for mutual fund and exchange-traded fund (ETF) providers, unprecedented levels of transparency among hedge funds, and new demands from wealth managers and broker-dealers who want to add alternatives to more mainstream portfolios. This market-leading outlook and analysis is contained in the fourth edition of Citigroup Inc (NYSE:C) Prime Finance’s annual survey of hedge fund industry trends, this year titled The Rise of Liquid Alternatives & the Changing Dynamics of Alternative Product Manufacturing & Distribution.
Hedge fund managers increase net exposure (Opalesque)
In the week ending May 24, 2013, Jeffrey Yap reportedly left Mizuho Securities Asia as head of Asia fixed income trading to launch his own hedge fund; Diapason Commodities announced the launch of its tangible forestry assets hedge fund ForestCare Investment Fund; and Moore Capital founder Louis Bacon was said to be raising $750m for a new senior debt loan fund. The Emerging manager hedge funds and CTAs index gained 0.72% in April (+3.18% YTD); The Dow Jones Credit Suisse Hedge Fund Index finished up 1.39% (+4.99% YTD); All Edhec-Risk Alternative indexes were in positive territory and YTD (except for Short Selling);
