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CFO.com – At 12:01 a.m. this morning, the Securities and Exchange Commission pushed out a new "emergency" disclosure rule that requires hedge funds and other large investors to disclose their short positions. The mandate is one of three new SEC investor protection rules that went into effect early this morning in response to widespread drops in stock prices in the wake of a liquidity crisis exacerbated by this week’s Lehman Brothers bankruptcy and sale of Merrill Lynch.
In a joint statement, SEC chairman Christopher Cox and SEC Enforcement Division director Linda Chatman Thomsen said that the rule, which is designed "to ensure transparency in short selling," will affect funds with more than $100 million invested in securities. Those fund managers, who are currently reporting their long positions, will now be required to "promptly begin public reporting of their daily short positions."
Reuters – Hedge fund manager Jim Chanos, who makes money betting that companies’ stock prices will fall, said financial stocks have probably seen the worst and his fund has fewer short positions now than it did in the past.
"We have probably seen the worst in the financials," Chanos said on cable television channel CNBC. He also said that he has fewer short positions on financials now than he has had in the past, largely because much of the bad news is known about financial sector stocks.
Instead, Chanos, whose roughly $5 billion hedge fund Kynikos Associates often has between 40 and 60 short positions, said he is concentrating more on shorting some companies involved in the commodities area. "We would short companies that might depend on cement prices or steel prices going up," Chanos said, declining to reveal the companies he has shorted.
CNBC – Hedge funds have more control over stock prices than market and business fundamentals, Cramer said yesterday during Wednesday’s show, but now it looks like at least two companies are fighting back.
Yesterday Cramer explained how massive hedge fund selling has been forcing down commodity-related stocks. It’s true that the fall of commodities themselves is partly to blame, but the rate of decline for the sector’s stocks has far outpaced that of oil, natural gas and other resources. So what’s going on? Investors in poorly performing hedge funds are demanding their money back, so the funds are dumping millions of shares into the open market to generate cash.
The trend has been enough to drive both investors in and CEOs of these commodity-related companies crazy. But today Joy Globalcnbc_comboQuoteMove(‘popup_JOYG_ID0EZE15839609′);and CSX pulled a Howard Beale, declaring they’re mad as hell and they’re not going to take it anymore. cnbc_quoteComponent_init_getData(“CSX”,”WSODQ_COMPONENT_CSX_ID0EZBAC15839609″,”WSODQ”,”true”,”ID0EZBAC15839609″,”off”,”false”);
The Age – Third Point, the New York-based hedge fund run by Daniel Loeb, bought a stake in BHP Billiton worth $US162 million at the end of June, adding the world’s largest mining company to its portfolio.
Third Point, known for pushing companies to make changes that increase their stock prices, bought 1.9 million shares in Melbourne-based BHP during the three months ended June 30, according to a filing with the US Securities and Exchange Commission on August 14.
Loeb, 45, who started Third Point in 1995, bought the stake in the quarter after BHP announced a hostile $US134 billion bid for Rio Tinto. Loeb pressured US oil and natural-gas producer Pogo Producing for more than a year to shed assets or sell itself before it agreed to be bought by Plains Exploration & Production for $US3.6 billion in July last year.
Bloomberg- Carl Icahn has hit the roughest patch of his hedge-fund career.
His $7.9 billion in hedge funds fell 7 percent between October and April, the biggest peak-to-trough loss since the funds opened in November 2004, according to investors. That compares with an average annual return on his investments of 53 percent from 1996 to mid-2004.
Icahn has lost money on cellular-phone maker Motorola Inc., his biggest investment. The 72-year-old billionaire also failed to persuade executives at Yahoo! Inc. and Biogen Idec Inc. to take his advice for boosting their stock prices.
