Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
MarketWatch – Harbinger Capital, a big hedge-fund firm run by Philip Falcone, is selling 20 million shares of power company Calpine Corp.
Harbinger Capital Partners Master Fund I Ltd. is selling the stock in a public secondary offering underwritten by Morgan Stanley, Calpine said in a statement late Tuesday.
Harbinger plans to grant Morgan Stanley the option to buy another three million Calpine shares. The power company said it won’t get any of the proceeds from the sale.
CNBC – Cramer sees both of these as good companies in a great growth industry, but using a trick out of his old hedge fund playbook, he suggests the strategy of a paired trade: buying the best stock in the business while at the same time betting against a second stock in the same industry. By betting against another company in the industry, Cramer says, you’re hedging out the risk that home entertainment will turn out to be a flop, and because you’re buying the best company in the industry, the two trades shouldn’t cancel each other out.
Bloomberg – John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
His firm, Paulson and Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.
Gulf News – Short-selling, one of the few tactics that made money for hedge funds in 2008, has become a risky bet as prospects for equities have improved, while getting hold of stock to sell is harder as lenders shun weak funds.
Some hedge funds have already changed tactics and are simply buying cheap stocks, wary of getting burnt if a stock they are shorting announces unexpectedly good earnings and the share price spikes – a real possibility in an improving economy.
High-profile hedge fund manager Philippe Jabre said he had no short positions because it was "too dangerous", although in future shorting could prove a better trade.
Bloomberg – Man Group Plc, the largest publicly traded hedge-fund manager, rose as much as 4.5 percent in London trading after redemptions by institutional investors slowed.
Pension plans, endowments and money managers pulled $1.8 billion on July 1, half the $3.6 billion of redemptions three months earlier, London-based Man Group said in a statement today. The stock was up 1.7 percent at 243.25 pence as of 9:05 a.m.
CNN Money – Money managers must offer new portfolios and keep cutting costs to survive in an era where frightened investors prefer safer fixed-income funds to stock and hedge funds, a report released Monday showed.
Badly bruised by last year’s financial crisis when tumbling markets and investor redemptions shrank global assets 18 percent to $48.6 trillion, asset managers face more tough times in 2009 and the years ahead, The Boston Consulting Group wrote in its seventh annual asset management industry survey.
Profits will shrivel again, likely falling to 30 percent or less this year from 34 percent at the end of 2008 and 38 percent at the end of 2007, the consultants forecast.
Barron – Shares of auctioneer Sotheby’s have rebounded on hopes for a recovery in the art market, although the economic picture is still difficult to frame. However, although investors have bid up the shares in recent months, the stock still has new buyers.
On June 18 Atticus Capital disclosed that it now owns 3.6 million shares, or a 5.4% stake in Sotheby’s. At the end of the first quarter, the hedge fund showed no holdings in the company.
Seeking Alpha – William von Mueffling’s Cantillon Capital Management will be closing down the hedge fund portion of its business. The fund will wind down its positions except for $1 billion worth of long positions as it reverts to a long-only shop. We’ve not covered Cantillon in our portfolio tracking series before, but von Mueffling is quite a prominent name in the industry.
His firm had $10 billion assets at its peak and more recently had around $3.5 billion assets under management. He founded the firm in 2003 after leaving Lazard, where he helped build up the investment house’s hedge fund business. Like many of the long/short equity hedge funds we track, Cantillon is a stock picking firm.
Herald Tribune – Investors are always searching for the "Holy Grail" of investing; that is, investments with high returns, low risk and little correlation to the returns of the broad stock and bond markets.
Some investors believe that they have found it in the category of investments labeled as hedge funds.
A hedge fund is an investment partnership open only to a limited number of "qualified" (meaning wealthy and supposedly sophisticated) investors that engages in a range of non-traditional investment strategies, many of which are not permitted to mutual funds.
Reuters – Two U.S. Securities and Exchange Commission enforcement lawyers are under investigation by federal criminal authorities for allegedly using insider information to trade stocks, a report by the SEC’s internal watchdog said.
The Federal Bureau of Investigation and U.S. Attorney’s Office are conducting an investigation of possible criminal and civil violations.
The report alleges the two lawyers traded in stock of a large financial services company even though another SEC employee became aware of three separate enforcement investigations of that company. That employee told the two enforcement lawyers that she could not buy more stock in this company because she had become aware of these investigations.
But the two lawyers did trade in the financial services company and denied they heard about the investigations, the report alleges.
Motley Fool – Hedge funds — private investment partnerships for wealthy individuals and institutions — are thought to be managed by well-informed, talented investors. Where are they placing their stock bets in this highly volatile market? And does the investing community agree? Let’s see what CAPS has to say on the matter. The Fool’s community of more than 130,000 uses the wisdom of crowds to determine which companies might be worth investing in.
Running a screen on companies with a market value greater than $2 billion, I found that the following five are near the top in terms of the increase in the percentage of shares owned by hedge funds:
