Billionaire John Paulson, who controls an 8.4 percent stake in Hartford Financial Services Group Inc. (HIG), filed a document with regulators so he can approach other investors about his plan to break up the insurer. “We have done exhaustive research on the challenges and opportunities of the Hartford and believe that a spinoff would produce an increase in value for Hartford shareholders,” the hedge fund manager said in a letter to Chief Executive Officer Liam McGee that was published today in a statement. Hartford said in a separate statement it is willing to talk to Paulson and other investors about his proposal.
Paulson, Vinik, Tudor Sell SPDR Gold ETF Shares; Soros Buys (Bloomberg)
Paulson & Co., the hedge fund founded by billionaire John Paulson, cuts its stake in the SPDR Gold Trust by 15 percent in the fourth quarter, while George Soros increased his holdings. Paulson held 17.3 million shares in the exchange-traded fund backed by gold as of Dec. 31, compared with 20.3 million at the end of September, Securities and Exchange Commission filings showed today. The firm remained the largest holder in the trust, data compiled by Bloomberg show. Paul Touradji sold his entire stake, while Vinik Asset Management Holdings, Tudor Investment Corp. and SAC Capital Advisors LP sold shares. Soros Fund Management LLC increased its stake to 85,450 shares from 48,350.
Billionaire Paulson Sold Citigroup, Bank of America in Fourth Quarter (Bloomberg)
John Paulson, the billionaire hedge fund manager who had his worst year on record in 2011, sold his entire stakes in Citigroup Inc. (C) and Bank of America Corp. in the fourth quarter before the shares rallied. Paulson & Co., which owned $643 million worth of Citigroup at the end of the third quarter, had sold its entire 25.1 million shares as of Dec. 31, the firm said today in a filing with the U.S. Securities and Exchange Commission. Paulson also sold $394 million worth of Bank of America, or 64.3 million shares. It also sold its 998,900 shares of BlackRock Inc. (BLK) valued at $146 million.
Cohen’s SAC Capital Purchased Shares in Reliance Steel in Fourth Quarter (Bloomberg)
SAC Capital Advisors LP, the $14 billion hedge fund run by Steven A. Cohen, bought stakes in Reliance Steel & Aluminum Co (RS). and Michael Kors Holdings Ltd (KORS). in the fourth quarter. The firm held 1.26 million shares of Los Angeles-based Reliance valued at $61.5 million as of Dec. 31, according to a filing today with the U.S. Securities and Exchange Commission. SAC bought 1.3 million shares of apparel retailer Kors Holdings valued at $35.2 million at the end of the quarter.
Soros Buying Google Leads Managers Seeking to Profit From Tech Stock Surge (Bloomberg)
Billionaire George Soros’ firm added shares in Google Inc. (GOOG) and Comverse Technology Inc. (CMVT) in the fourth quarter, leading purchases of technology stocks by asset managers in the quarter. Soros Fund Management LLC bought 258,774 shares of Mountain View, California-based Google, the largest maker of smartphone software, bringing the total position to 259,900 shares valued at $167.9 million as of Dec. 31, Soros increased holdings of information technology stocks by 12 percent in the quarter. Hedge funds Lone Pine Capital LLC, Maverick Capital Ltd. and Lansdowne Partners LP also added to Google during the quarter, seeking to profit from a surge in technology stocks. Information technology stocks returned 19 percent over the past six months, the best out of 10 industry groups in the Standard & Poor’s 500 Index.
Lansdowne Buys Google, Amazon While Selling its Stake in IBM (Bloomberg)
Lansdowne Partners LP, the largest European hedge fund that invests in stocks, bought stakes in Google Inc. (GOOG), Amazon.com Inc. (AMZN) and Morgan Stanley and sold shares of International Business Machines Corp. worth $464.5 million. The hedge fund purchased 760,952 shares of Google in the fourth quarter valued at $491.5 million and 709,250 shares of Amazon.com valued at $122.8 million, according to a filing today with the U.S. Securities and Exchange Commission. The London- based firm bought 3.1 million shares of Morgan Stanley valued at $46.7 million.
Lone Pine Capital LLC Acquires 3.75 Million SPDR Gold ETF Shares (Bloomberg)
Lone Pine Capital LLC, the hedge fund run by Stephen Mandel Jr., acquired 3.75 million shares of the SPDR Gold Trust in the fourth quarter, according to a U.S. Securities and Exchange Commission filing. The SPDR Trust is the biggest exchange-traded product backed by gold.
Lone Pine Capital Slashes Stake in Murdoch’s News Corp. by 93% (Bloomberg)
Lone Pine Capital LLC slashed its stake in News Corp. (NWSA), the media company being investigated by U.K. authorities for hacking phones of celebrities and politicians.
Yahoo-Alibaba Talks Falter (Bloomberg)
Yahoo! Inc. (YHOO)’s board faced renewed shareholder pressure to make changes yesterday amid a breakdown in negotiations to sell its Asian assets, a deal that could generate more than $10 billion for the company. “The recently announced changes do not put the issuer on the right track towards maximizing shareholder value,” Third Point, a New York-based hedge fund run by Daniel Loeb, said in a filing yesterday. “Installing the hand-picked choices of the current board does nothing to allay investor fears that Yahoo is poised to repeat the errors of its past.”
Loeb’s Third Point Increases Yahoo, Sara Lee Stakes in 4Q (Bloomberg)
Third Point LLC, the hedge fund run by Daniel Loeb, added to shares of Yahoo! Inc. (YHOO) and Sara Lee Corp. in the fourth quarter, according to a regulatory filing today. Third Point, based in New York, owned 56 million common shares, valued at $903 million, of the Sunnyvale, California- based Internet search company at the end of the quarter, according to a filing with the U.S. Securities and Exchange Commission. A separate filing today showed that Third Point now holds 68.9 million common shares of Yahoo.
Finding Common Themes in Investors’ 13F Filings (Bloomberg)
Bloomberg’s Sheila Dharmarajan reports on investing themes emerging from the 13F filings of big name hedge fund managers including David Einhorn and Paul Tudor Jones. She spoke on Bloomberg Television’s “Inside Track.”
LightSquared Blow Leaves Falcone Few Options to Salvage Value From Assets (Bloomberg)
Billionaire Philip Falcone’s effort to build a national wireless network was rejected by U.S. regulators, leaving him limited options to salvage value from his LightSquared Inc. assets and dealing a blow to efforts to increase industry competition. The Federal Communications Commission said yesterday it won’t let LightSquared begin service after an Obama administration adviser found that it disrupts navigation gear used by planes, boats and autos. Closely held LightSquared invested $4 billion in airwaves crucial to its plan to offer service that lets users browse the Web at higher speeds.
LightSquared to Be Blocked by FCC over GPS (Bloomberg)
The U.S. Federal Communications Commission vowed to block LightSquared Inc. after the Obama administration found the wireless venture backed by hedge-fund billionaire Philip Falcone would disrupt navigation gear.
Falcone’s Harbinger Seeking to Sell Ferrous Stake to Repay Jefferies Loan (Bloomberg)
Harbinger Capital Partners LLC, the New York-based hedge fund run by billionaire Phil Falcone, is seeking to sell shares in Brazilian iron-ore producer Ferrous Resources Ltd. to raise cash for loan repayments. Harbinger Capital Master Fund’s 19.5 percent holding in Ferrous will be “marketed to investors immediately,” according to loan documents seen by Bloomberg News. The proceeds will be used to repay a $190 million loan Harbinger got Jan. 30 from Jefferies Group Inc., according to the documents. It didn’t specify whether Harbinger, owner of 26 percent of Ferrous, would seek to sell its remaining stake.
Jefferies’ $190 Million Loan to Harbinger Will Default If Falcone Charged (Bloomberg)
Jefferies Group Inc. (JEF) has been trying to spread the risk of a $190 million loan to Phil Falcone’s Harbinger Capital Partners LLC by offering a syndication deal with an unusual caveat: it defaults if Falcone is indicted. Jefferies has been marketing all or part of the loan to other investors, said a person with knowledge of the situation. Loan documents detail the securities firm’s pitch to investors, saying it’s collateralized by $2.4 billion in assets in Harbinger’s main fund. The terms include a “key man” provision mandating the loan’s default if Falcone reduces his role, his ownership stake, or is indicted for any criminal offense.
Berkshire Takes Stakes in Liberty Media, DaVita as Weschler Joins Buffett (Bloomberg)
Berkshire Hathaway Inc. (BRK/A) took stakes in Liberty Media Corp. and dialysis-facility owner DaVita Inc. (DVA) after billionaire Warren Buffett hired Ted Weschler to help manage investments. Weschler oversaw investments in the two firms while running Peninsula Capital Advisors LLC, the hedge fund he wound down after agreeing to join Buffett. The new Berkshire stakes, listed yesterday in a filing disclosing U.S. equity holdings as of Dec. 31, probably reflect Weschler’s influence, said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business, in an interview.
Eton Park, Arrowstreet Buy Bank of America Ahead of Share Rally (Bloomberg)
Eton Park Capital Management LP and Arrowstreet Capital LP bought Bank of America Corp. shares in the fourth quarter ahead of a rally that sent the stock up 44 percent. Eton Park, the hedge fund run by Eric Mindich, purchased 20 million shares of the Charlotte, North Carolina-based lender in the period valued at $111 million as of Dec. 31, according to a filing yesterday with the U.S. Securities and Exchange Commission. Boston-based Arrowstreet purchased 14.4 million shares valued at $79.8 million. Billionaire John Paulson’s $24 billion hedge fund Paulson & Co. exited a Bank of America position in the quarter, selling 64.3 million shares worth $394 million. Paulson’s Advantage Plus Fund had a 51 percent loss in 2011 in what he called an “aberrational year” on investments including Bank of America and Citigroup Inc. (C).
Big Long Is New Big Short as Bass Joins Subprime Bet: Mortgages (Bloomberg)
Investors who made some of the biggest profits from the 2007 bust in U.S. mortgages are once again in agreement. This time, they’re going long. Hedge fund manager Kyle Bass, who made $500 million betting against subprime debt in the crash, is raising a fund to buy home loan securities. He’s joining Greg Lippmann, a former Deutsche Bank AG trader, and John Paulson, who made $15 billion in 2007, in betting on default prone mortgages. Goldman Sachs Group Inc. (GS) and American International Group Inc. (AIG) have also emerged as buyers this year as trading more than doubled for non-agency mortgage notes.
Lasry Sees Europe Bankruptcy Bonanza as Bad Debts Obscure Assets (Bloomberg)
Avenue Capital Group founder Marc Lasry and Bruce Grossman, his senior manager of investment, were on a private jet returning to New York from Harrisburg, Pennsylvania, in 2005 when they felt the plane’s cabin suddenly heat up. Outside the window, smoke billowed from one of the engines. The two men looked at each other and remained wordless until the plane landed safely back in Harrisburg.
Ackman’s Pershing Boosts Canadian Pacific Stake, Reduces Kraft (Bloomberg)
Pershing Square Capital Management LP, the hedge fund run by William Ackman, boosted its stake in Canadian Pacific Railway Ltd. (CP) to about 14 percent of the company’s stock and cut its holding in Kraft Foods Inc. (KFT). The fund reported holding about 24.2 million Canadian Pacific shares valued at $1.63 billion as of Dec. 31, up from about 4.04 million shares as of Sept. 30, according to a filing today with the U.S. Securities and Exchange Commission.
Tudor Adds to Virgin Media, Yahoo Stakes in Fourth Quarter (Bloomberg)
Tudor Investment Corp., the $11 billion hedge fund run by Paul Tudor Jones, boosted investments in Virgin Media Inc. (VMED) and Yahoo! Inc. (YHOO). during the fourth quarter. Tudor bought 1.36 million shares of Virgin Media bringing its total stake to 1.65 million shares as of Dec. 31, according to a filing today with the U.S. Securities and Exchange Commission. The firm added 1.06 million shares of Yahoo, boosting its holding in the Sunnyvale, California-based company to 1.16 million shares.
Pentagon Capital, Closed U.K. Hedge Fund, Ordered to Pay $76.8 Million (Bloomberg)
Pentagon Capital Management Plc, a closed U.K. hedge fund, was ordered to pay $76.8 million in a lawsuit filed in 2008 by the U.S. Securities and Exchange Commission over allegedly abusive mutual fund trading. U.S. District Judge Robert Sweet in Manhattan ruled today that the SEC proved its claim in a 17-day trial last year that the hedge fund and its chief executive officer, Lewis Chester, engaged in a fraudulent scheme by making mutual fund trades after the 4 p.m. close of markets in New York.
Four Men Plead Not Guilty to Dell Stock Tipping Scheme (Bloomberg)
Four men arrested last month and charged with participating in a “criminal club” that made almost $62 million using illegal tips to trade in Dell Inc. (DELL) stock pleaded not guilty. Level Global Investors LP co-founder Anthony Chiasson; Todd Newman, a portfolio manager formerly at Diamondback Capital Management LLC; Jon Horvath, an analyst at hedge fund Sigma Capital Management LLC; and Danny Kuo, a fund manager for Whittier Trust Co., entered not guilty pleas to conspiracy and securities fraud charges today in Manhattan federal court.
Hedge Funds See Treasure In New Public Players (Reuters)
Hedge fund managers bought shares of several of last year’s hot IPOs in the fourth quarter, including upscale retailer Michael Kors and online networking site LinkedIn. Another company with an initial public offering that was a hedge fund favorite was online coupon company Groupon. But the company’s stock has performed poorly since its November debut. The hedge fund holdings were disclosed Tuesday in quarterly 13F filings with the U.S. Securities and Exchange Commission.
Top Hedge Funds Made Timely 4th Quarter Apple Buys (Reuters)
Leading hedge fund managers including David Tepper, Andreas Halvorsen and David Einhorn smartly added to their holdings of Apple in the fourth quarter after the death of Steve Jobs. The stakes have likely provided a quick payoff. Shares of Apple are up 26 percent this year, equalling their 26 percent rise for all of 2011. The Cupertino, California-based maker of the iPhone, iPad and Macintosh computers posted spectacular quarterly results on Jan. 24, and in the weeks that followed its shares surged to over $500.
U.K. Fund Ordered to Pay $76.8 Million for Late Trading (WSJ)
A U.K. hedge-fund company, which liquidated its funds amid scrutiny by U.S. securities regulators in 2008, must pay $76.8 million in a market-timing and late-trading lawsuit brought by the Securities and Exchange Commission, a U.S. judge has ruled. The SEC had alleged Pentagon Capital Management PLC and its chief executive, Lewis Chester, engaged in a scheme to defraud mutual funds by circumventing the 4 p.m. cutoff for trading U.S. funds. ..
Former Bear Hedge Fund Managers Settle For $1 Million (FINalternatives)
The Securities and Exchange Commission has settled fraud allegations against two former Bear Stearns hedge fund managers for “chump change.”
Polygon Funds Rise in January (FINalternatives)
Polygon Investment Partners has opened 2012 with positive, if not spectacular, returns for both of its hedge funds.
Ex-Goldman Oil Prop. Trading Chief Readies Hedge Fund (FINalternatives)
Another veteran of Goldman Sachs’ proprietary trading operation is set to launch a hedge fund. Taimur Hassan has founded Frere Hall Capital Management in London. The firm will launch an energy-focused commodities hedge fund in July or August, Financial News reports.
Elliott Credit Trader Plans Convertibles Hedge Fund (FINalternatives)
A former Elliott Management credit trader will launch his own hedge fund this summer.
Lurking SS&C Drives GlobeOp Share Price (FINalternatives)
TPG Capital is doing what it can to present its planned purchase of GlobeOp Financial Services as a fait accompli, but investors aren’t buying it. The private equity firm’s bid for the hedge fund administrator is a 50% premium to GlobeOp’s share price the day before the deal was announced. But shares are now trading well in excess of that, after SS&C Technologies last week urged GlobeOp shareholders not to tender their shares until it has a chance to make an offer of its own.
Exclusive: Event-driven funds bet on GlobeOp takeover (HFM Week)
Event-driven hedge fund managers, including $7bn firm Cheyne Capital, have been buying GlobeOp shares in recent weeks as speculation continues over whether a higher acquisition bid will come in for the administrator. Private equity firm TPG Capital remains the frontrunner in the absence of a bid to rival its $800bn offer, but GlobeOp analysts have described the bid as low, while fellow admin firm SS&C has voiced its interest publicly.
Ex-Mets Hedge Fund CIO To Testify She Warned On Madoff (FINalternatives)
The chief investment officer of a hedge fund co-owned by the owners of the New York Mets warned one of them that Bernard Madoff was likely a fraud.
A Hedge Fund Bets Big On A Canadian Mega Quarry (CNN Money)
Superstar investor Seth Klarman‘s controversial plan to develop a quarry in Ontario could pay off bigtime.
Morgan Stanley To Raise $1bn For Two Major Hedge Funds (HFM Week)
Morgan Stanley is in the process of raising a combined total of roughly $1bn for US hedge fund firms SAC Capital Advisors and KLS Diversified Asset Management, HFMWeek can reveal. The two mandates, for around $500m each, are being undertaken by the bank’s New York-headquartered Capital Markets division, although the SAC deal, for the $14bn hedge fund giant’s new reinsurance venture, is a joint project with Barclays, unnamed sources said.
Duet Launches Aggressive Version Of Flagship Fund (HFM Week)
Duet Group, a $2.8bn London-based asset manager and wealth manager, has launched a more aggressive version of its flagship global market neutral hedge fund to outside investors on the back of client demand, HFMWeek has learned. The Duet Global Plus Fund, which currently has $70m of internal capital along with one institutional commitment, quietly rolled out in August 2010 and is geared to global funds of hedge funds, and family offices that are targeting a higher return profile.
Big-Name Funds Recover With A Strong January (HFM Week)
Several big-name hedge funds have bounced back from a disappointing 2011 to outperform their peers in January, HSBC Private Bank’s latest Hedge Weekly Investment Funds Performance Review has revealed.
Deutsche Managed Account Offering Overtakes Lyxor (HFM Week)
Deutsche Bank has overtaken Lyxor Asset Management to become the hedge fund industry’s biggest managed account platform provider, HFMWeek has learned. Combined assets at Deutsche’s two managed account platforms, dbalternatives and dbSelect, currently stand at $12.2bn, a spokesperson revealed.
Contour Launches Flagship Hedge Fund To Investors (HFM Week)
Contour Asset Management, the $1bn New York-based investment manager part-owned by Scandinavian hedge fund giant Brummer & Partners, has launched its flagship hedge fund to outside investors, HFMWeek has learned. According to an investor document, the Manticore Fund LP and Ltd, which initially debuted in October 2010, implements an equity US long/short strategy focused on the telecom, media and technology (TMT) sector.
Carried Away vs. Best Interest (HFN)
A question to those in the hedge fund industry and others in the financial world: How do politicians resurrect the carried interest and tax inequality issues that got much play in 2011?
The Hedgies’ Tool Of Choice (Financial Times)
The letter. From an old New Yorker story on Daniel Loeb:
Whitney Tilson Likes Netflix But Not Apple (Value Walk)
From Whitney Tilson: I hosted a webinar yesterday in which I gave a brief overview of the economy and the housing market, what worries us, our view of the stock market, and the opportunity in large-cap blue-chip stocks today. I then disclosed our 12 largest long positions and discussed three of them: Berkshire Hathaway, J.C. Penney, and Netflix. During the Q&A, I answered questions on why we’re bullish on the U.S. financial sector and, in particular, Citigroup and Goldman Sachs; why we share Kyle Bass’s bearish view on Japan; and why we don’t own Apple.
Balestra Capital Partners up 1620% since 1999: January Stat Sheet (Value Walk)
Balestra Capital Partners, L.P.(the“Fund”) is a discretionary global macro-economic hedge fund, which emphasizes long term investment themes based on economic data, market pricing, demographic, social, political and other factors. It utilizes dynamic asset allocation and hedging to implement its strategy. Investment themes will be implemented through selective purchases or short sales of instruments across the entire spectrum of derivatives and investment securities, including but no limited to, exchange traded funds, options, commodity futures, currencies, swaps (such as interest rate and credit default swaps) and other investment contracts, as well as traditional equities and debt instruments.
Bloomberg Interviews Bruce Berkowitz (My Investing Notebook)
In an interview with Bloomberg TV today, Berkowitz said: “Investors are going to do well with all of the survivors. If you go back to the late ‘80s, the early ‘90s, the last time we went through this extreme cycle, to survive is to win. And you’re looking at the survivors today.”
Morning News: February 15, 2012 (Crossing Wall Street)
Hot Links: NO SUCH THING (The Reformed Broker)
10 Mid-Week AM Reads (The Big Picture)
Frontrunning: February 15 (Zero Hedge)
Ransquawk European Morning Briefing – Stocks, Bonds, Fx Etc. – 15/02/12 (Zero Hedge)
Premarket Read: China Can Fix It, Paulson Versus Soros On GLD (Barrons)
Wednesday 7atseven: Ugly Bond Math (Abnormal Returns)
AR Database Top 40: January 2012 (AR)
HFMWeek Daily Snapshot – 15 February (HFM Week)
Eurozone optimism to boost stocks (CNN Money)
Deals of the Day: Goldman Analyst Draws Scrutiny (WSJ)
Breakingviews: Volcker On Volcker (Reuters Hedge World)
Volcker Rule Feedback, Hedge Funds Ride Euro Bank Rally, Wall Street’s Terrible Poll Numbers And More (Reuters Hedge World)
