Hedge Funds

Banks’ prime broking blowup reveals lurking danger

29 Mar 2021

Credit Suisse and Nomura could lose up to $6 bln on the default of Archegos Capital. Neither have been forthcoming yet about how a single client cost them so much. But such glaring control failures raise questions about what other risks are hidden in banks’ trading books.

SoftBank financial innovation fails at Greensill

12 Mar 2021

The Japanese investor’s Vision Fund seems to love byzantine funding structures as much as disruptive technology. Its involvement with the supply-chain lender, which supported other investees, has backfired. It’s another cautionary tale for the ex-bankers in the fund’s ranks.

Capital Calls: Petrobras CEO, Kohl’s

22 Feb 2021

Concise views on global finance in the Covid-19 era: Brazilian President Jair Bolsonaro nominates a former general to replace the oil group's market-friendly boss, tanking the shares; and U.S. department store Kohl’s has some unhappy shareholders.

Capital Calls: Super Bowl, Poison pills, Experian

8 Feb 2021

Concise views on global finance in the Covid-19 era: America’s game doesn’t benefit from scarcity value; Cubic’s poison pill serves a purpose; And Brazil’s cyberattack has a price for Experian.

Hedge funds will evade short-squeeze enthusiasts

2 Feb 2021

Melvin Capital suffered huge losses after retail traders pushed up the share prices of companies against which it had bet. Such traps can be avoided by using derivatives. And small investors will struggle to boost the value of larger companies in the way they did with GameStop.

Short squeezers could end up strangling themselves

27 Jan 2021

Heavily shorted European stocks like Pearson, Cineworld and Ambu surged on Wednesday morning. The craze of trying to force hedge funds and market makers to cover their bearish positions has spread beyond the U.S. It increases the risk of the squeezers ending up with a dud.

Hedge fund backers must pick winners twice over

25 Jan 2021

Equity-heavy hedge funds did well in 2020. Industry-wide, though, the top 20 managers made half the $127 bln of gains in the 8,000-strong industry. Stock pickers may thrive again this year, but there is no guarantee. Investors’ double bet is choosing both the game and the player.

Corona Capital: Icahn, Productivity, Natixis

4 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Carl Icahn sells half his Herbalife Nutrition stake; an ECB survey suggests Covid-19 will make big firms more productive, but that may not be all good news; and Natixis fast-tracks its overhaul.

Loeb injects paranoia into Intel a bit too late

30 Dec 2020

Activist investment fund Third Point correctly diagnoses the $200 bln chipmaker's main woe as a loss of its manufacturing edge. Separating chip design and production would help both, perhaps with a little boost from Uncle Sam. Regaining a lost tech lead, however, is hard.

Vodafone finds better German M&A pain threshold

22 Dec 2020

Seven years after its Kabel Deutschland deal, the UK telco is paying $2.6 bln to buy out minorities like Elliott. That’s better than the 18 years taken to settle a similar saga with Mannesmann. But as with other “domination agreements”, holdouts are unlikely to have done badly.

Corona Capital: Chevron, Boeing, OPEC, Orange

3 Dec 2020

Concise views on the pandemic’s corporate and financial fallout: Chevron cuts spending, prudently; Boeing orders are a solid step; OPEC makes up its mind; and Orange’s Belgian deal has some juice.

Elliott’s Swiss cookie raid merits activist slap

24 Nov 2020

Paul Singer’s fund made a 733 mln euro bid for debt-laden baker Aryzta. It comes as the Otis Spunkmeyer maker’s soggy valuation may gain from a plan backed by other investors to break it up. The easing pandemic gives shareholders reason to hold out for more.

Steve Cohen’s Mets win could rewrite comeback tale

15 Sep 2020

The hedge fund manager has agreed to buy the underachieving sluggers at a $2.5 billion valuation, a U.S. sports-team record. It tops off his rocky return to prominence after his former firm was investigated for insider trading. Outperforming in the ballpark may be an easier task.

Norway’s $1.1 trln fund is a bad toy for hedgies

24 Aug 2020

Nicolai Tangen’s appointment as boss of the gargantuan rainy-day fund hangs in the balance. Norwegians mostly worry about the big investor’s conflicts, but his likely approach is a larger concern. Active trading of so much money could pointlessly disrupt global markets.

Breakingviews’ imaginary SPAC one-ups hedgie stars

20 Aug 2020

Blank-check firms launched by Bill Ackman, Dan Loeb and others create stiff competition for Breakingviews’ $500 mln offering. But previous successes don’t always translate. Our track record is strong, we have no conflicts, our fees are lower. Herewith, the (theoretical) pitch.

Dan Loeb may have to eat his SPAC cooking

16 Jul 2020

His Third Point hedge fund is behind a listed vehicle that offered $1.9 bln in January for Global Blue, a tax-free-shopping payments firm. Then travel all but stopped. The buyer now says shareholders should reject the deal. But the SPAC’s features complicate what happens next.

Green laggards face a rising tide of short selling

15 Jul 2020

A new BNP Paribas fund will hedge investments in companies embracing the energy transition by betting against shares in refuseniks. Shorting ESG sinners isn’t easy, and has even caused controversy. But as disclosure improves it can play a growing role in sorting sheep from goats.

Virus binge gives hedgies easy prey in testing M&A

13 Jul 2020

Davidson Kempner wants Thermo Fisher Scientific to up its $11.5 bln bid for peer Qiagen. The German group’s business is improving as governments use its kits to fight the coronavirus. The recent rally in diagnostic stocks, and potential counterbids, mean there is little to lose.

Bye, bye Mister Hedge Fund Guy

2 Jul 2020

Fund manager John Paulson had the guts to go all-in betting against subprime mortgages over a decade ago. Unable to replicate his biggest claim to fame, he’s turning his fund into a family office. He’s not alone in that, but it’s still a moment that bookends the financial crisis.

Corona Capital: U.S. recovery, Small-business aid

30 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: White House virus adviser Anthony Fauci’s estimate that U.S. cases could breach 100,000 a day is bad news for the economy. Plus: Uncle Sam’s loan program for small businesses comes to an end with money in the bank.