Hedge Funds

Overreaching enforcers redraw insider trading line

10 Dec 2014

A U.S. court tossed convictions of two hedge fund managers, sharply narrowing the law on improper dealings. Prosecutors should expect more embarrassing reversals. The silver lining is that the ruling gives Wall Street clarity on what’s forbidden and should curb government excesses.

Steve Cohen’s loot could land in undeserving hands

11 Nov 2014

A $600 mln insider trading settlement with his SAC hedge fund will probably go to investors on the other side of its dodgy deals. Better them than Uncle Sam. But the real victims were drug firms whose data SAC’s trader stole. U.S. watchdogs miss the mark in allotting fine proceeds.

Divorcing oil baron braves market decoupling

6 Nov 2014

Billionaire Harold Hamm’s $14 bln fortune hangs in the balance of a spousal court battle. He is now scrapping hedges for his Continental Resources, betting on a reversal in the price of crude. Marital rifts can hurt investors, but in this case the business risk looks calculated.

Amgen boss makes a prime breakup target

21 Oct 2014

Former Morgan Stanley banker Robert Bradway runs the $109 bln biotech being eyed by activist Dan Loeb. Splitting into a cash cow and a growth arm comes up often in the industry but rarely happens. In Amgen’s case, its drug focus and the CEO’s background give the idea a chance.

Hedge fund boss serves up arbitrage opportunity

13 Oct 2014

Shares of Bill Ackman’s new $6 bln fund fell 12 pct on their debut. Weak markets aren’t helping, but the result also leaves the Pershing Square vehicle trading at a 10 pct discount to net asset value. Exploiting the valuation gap is a better bet than trying to shake up companies.

Ackman bridges gap in race against Loeb

22 Sep 2014

A new $5 bln Amsterdam-listed fund from the Pershing Square founder should dust one in London run by his Third Point nemesis. Ackman’s lower fees and ease of valuation offset questions over governance and discount controls. The hedgie peloton has a new leader to follow.

Hedge-fund-free – the latest Californian fad?

16 Sep 2014

Calpers, the $300 bln pension manager, is offloading its $4 bln of hedge funds. Too many in the 2-and-20 crowd look like stock pickers yet still present liquidity risks and, lately, low returns. Endowments are different, but for retirement funds Calpers could be setting a trend.

U.S. insider trading cops pick a bad time to lose

9 Jul 2014

The acquittal of Raj Rajaratnam’s brother comes as the nation’s lawmakers thumb their noses at an SEC probe of their trades. The cases are unrelated, but appearances matter on Capitol Hill. If watchdogs look like they’re overreaching, they can expect more pushback from Congress.

Value puzzle impedes hedge fund founder’s divorce

20 Jun 2014

Chris Hohn’s TCI holding would be worth much less if the fund firm had to be liquidated or split up as part of his marriage’s breakup. For value maximisation, the couple should share ownership. But that requires more goodwill than can usually be mustered in such circumstances.

Man Group gives hedgies best of both worlds

19 Jun 2014

The hedge fund firm will pay up to $494 mln for Numeric, its second asset manager purchase in as many weeks. The deal addresses Man’s weak U.S. position. The target’s managers get a stable home within a big listed group. They also get autonomy and a good cut of future profit.

Henry Kravis cultivates private equity perennials

29 May 2014

U.S. firms like his are selling companies to each other at a record pace. Such deals are dubious, especially given how much capital is stockpiled. But KKR’s $1.6 bln buyout of landscaper Brickman and quick merger with rival ValleyCrest suggest the grass can indeed be greener.

M&A targets can get stiffed when they "go shop"

22 May 2014

The tactic of seeking bids after signing up a buyer is meant to ensure top dollar. More often, it leads to low offers and sale prices, new research shows. Deals like Media General’s buyout of Lin Media suggest sellers are wising up, though, portending better value for investors.

Valeant’s slashing could trigger FDA lashing

20 May 2014

The Canadian pharma M&A machine buys rivals and strips costs to the bone. It promises to cut Allergan’s R&D spending from $1 bln to $200 mln and still develop drugs. That doesn’t look sustainable. It may not be enough to even finish studies on existing drugs that regulators require.

Take hedge fund exuberance with grain of SALT

16 May 2014

Amid moans about conference fatigue, a near-unanimous confidence emerged at SkyBridge’s annual Las Vegas confab. Long-awaited opportunities in M&A, bargains in Europe and collapsing correlations have finally arrived all at once. The consensus itself, however, is reason for pause.

Red Lobster sale leaves fishy smell at Darden

16 May 2014

The restaurant conglomerate is selling its floundering seafood chain for $2.1 bln, pre-empting a non-binding vote on the separation forced by activists. Engaging with agitators doesn’t always bring harmony – ask Sotheby’s – but Darden’s siege mentality exposes its board and CEO.

Hedge fund customers’ yachts washing further away

13 May 2014

The flood of money – now $2.7 trln – in hedge funds has squashed returns below public stock markets. Private equity doesn’t seem to be doing much better. Both investing styles intuitively offer finite opportunity, yet fees encourage managers to hoard assets. Investors beware.

Interpreting Apple/Beats using Andreessenomics

12 May 2014

Venture capitalist Marc Andreessen partly justifies high tech valuations with the idea that huge companies can “attach” the products of smaller ones, rendering traditional analysis pointless. The idea can resonate - perhaps for Apple with Beats headphones - but it’s flawed.

Sotheby’s case for poison pill tough to swallow

28 Apr 2014

The auction firm has blocked uppity investors like Dan Loeb from owning 10 pct or more of its stock. The hedge fund boss has sued for being singled out and portrayed as a takeover threat. Legal precedent supports the company, but may stifle activism that benefits shareholders.

Valeant will need even more fancy legal footwork

23 Apr 2014

The pharmaceuticals company and hedge fund boss Bill Ackman built their Allergan stake by deftly tiptoeing around disclosure and insider trading rules. But a poison pill, antitrust issues and other pitfalls remain for the many law firms in the deal to navigate.

Argentina tests Elliott’s cunning at Supreme Court

17 Apr 2014

Two cases challenge the hedge fund’s ability to work around U.S. laws that shield the country’s assets. The court is hearing one of them as it mulls another on paying debt-swap holdouts. Upcoming arguments in the first may reveal how creative collection plans fare in the second.