Embed Size (px)
Citation preview
Tuesday
Nov. 17, 2015
www.bloombergbriefs.com
Aurora Looking to Seed Emerging ManagersBY HEMA PARMAR
Aurora Investment Management, the Chicago, Illinois-based asset manager, is looking to provide seed capital to as many as four managers in 2016, according to partner, president and portfolio manager .Scott Schweighauser
Aurora typically allocates between $75 million and $200 million to funds that manage less than $50 million, Schweighauser said in a telephone interview on Nov. 9. "Generally, the best performing years are in the first five years of developing their hedge fund, so you want to be there in the beginning with a meaningful amount of capital," he said.
In exchange, Aurora receives a percentage of the fund's management and incentive fees on non-Aurora capital. Aurora is also charged preferential fees by the fund.
The managers can focus on any strategy, but must be commercially scalable, Schweighauser said. Managers with niche or capital-constrained strategies, or managers that only want to raise a few hundred million dollars, are less attractive to the firm, he said. The due diligence process takes up to six months.
Aurora may also add as many as five managers to its flagship fund of funds next year, Aurora Limited Partnership, Schweighauser said. The fund, which has 30 underlying managers, sees about a 15 percent manager turnover each year. Aurora LP, which was launched in 1988, invests in six strategies: macro, opportunistic, long-short equity, long-short credit, event-driven and portfolio hedge, which consists of short sellers, futures, options and tail risk, Schweighauser said. The fund of funds will invest in new or developed managers.
The firm's macro fund of funds, Aurora Macro Opportunities Fund, may add up to two managers, emerging or developed, in 2016. As U.S. monetary policy tightens it will create "interesting opportunities for macro funds, particularly in currencies," Schweighauser said. The fund of funds currently has nine managers. It is divided into five strategies: systematic, emerging market, commodities, discretionary and macro tail risk.
“This is a human tragedy, but it doesn’t drive markets."
— Cliff Asness, co-founder and managing
principal of investment firm AQR Capital
Management, said markets are acting “rationally”
following the in Paris.terrorist attacks
QUOTE OF THE WEEK
RETURNS IN BRIEF: The venBio Select Fund experienced its monthly worstperformance last month since its inception in July 2010.
Reef Capital Group is LAUNCHES: expecting to start a long-biased equityfund in January.
STRATEGY FOCUS: Event-driven strategies have been the most disappointing performers this year, despite a record year for M&A deals, according to K2 Advisors.
Raveneur Investment MARKET CALLS: Group is on food retailer Kroger bullishand coffee-shop chain Starbucks.
MatlinPatterson's Ashwin SPOTLIGHT: Bulchandani talks about what a non-zero rate environment means for the creditmarkets.
INSIDE
BY DARSHINI SHAHThis year to Nov. 16, there were 303 searches for hedge funds that did not require a specific track record, according to data compiled by Bloomberg. For institutional investors that required a track record, hedge funds with at least three years of performance data were the most popular this year, with 121 searches.
Institutional mandates for hedge funds are now available on the Bloomberg terminal via . Access is provided MND<GO>to Bloomberg Anywhere clients at buyside firms. Contact your sales representative for questions about accessing the function. For more information about Bloomberg Mandates, e-mail [email protected].
RETURNS IN BRIEF
NEW MANDATES: TRACK RECORD
Scott Schweighauser
Nov. 17, 2015 Bloomberg Brief Hedge Funds 2
RETURNS IN BRIEFVenBio’s $334 million long-short
biotech equity fund saw its worst monthly performance in October since its inception in July 2010, according to an investor letter obtained by Bloomberg. The venBio Select Fund declined 12.8 percent in October, the third consecutive month of negative returns, the letter said. The fund has gained 9.6 percent so far this year, the letter said. "The continuation of September's negative sector sentiment, further fueled by media scrutiny on the specialty pharmaceutical sector's business practices (in particular Valeant Pharmaceuticals) and possible peer-group deleveraging and tax-loss selling, made it extremely challenging to navigate the long-portfolio," in October, the letter said. The fund is managed by
VenBio manages Behzad Aghazadeh.$829 million overall. A spokesman for the firm declined to comment.
— Hema Parmar and Suzy Waite
Wynnefield Capital, the $258 million New York-based firm that runs a special situations strategy which focuses on small-cap stocks, saw two of its funds gain last month. The $129 million Wynnefield Partners Small Cap Value LP 1 Fund returned 9.8 percent in October, bringing year-to-date losses to 5.9 percent, according to an investor letter obtained by Bloomberg. The $50 million Wynnefield Small Cap Value Offshore Fund Ltd declined 5.2 percent in the first 10 months of the year after gaining 12.5 percent in October, the letter said. A spokesperson for the firm declined to comment.
— Hema Parmar and Nathaniel Baker
Horseman Capital Management lost 8.7 percent in its global pool in October as bets by the $2.5 billion hedge fund firm that stocks would drop turned sour, according to two people with knowledge of the matter. It’s the the biggest monthly loss for London-based manager Russell
’s Horseman Global Fund since ClarkNovember 2011 and pares gains for the year to 13 percent, said the people. A spokeswoman for Horseman Capital declined to comment.
— Nishant Kumar
's Assegai MAP Equity Fairtree CapitalFund, managed by , Stephen Brownreturned 8.9 percent in October for a 29 percent increase this year to the end of
last month, according to the company, which has 21 billion rand ($1.46 billion) across 20 funds. The fund benefited from directional bets on the market, such as declines by Sasol, a producer of liquid
fuel from coal, and diversified miners in iron ore and platinum, Chief Executive Officer said in a Nov. 13 Kobus Nelinterview.
— Colin McClelland
October Returns
Year-to-Date Returns to End-October
NOTE: Corrects year-to-date returns in the chart for Wynnefield Partners Small Cap Value LP 1
Nov. 17, 2015 Bloomberg Brief Hedge Funds 3
LAUNCHES
Nov. 17, 2015 Bloomberg Brief Hedge Funds 4
LAUNCHESReef Capital to Start Energy Equity Fund in January
Reef Capital Group, the Dallas, Texas-based hedge fund firm, is expecting to launch a long-biased equity fund in January, according to , the firm's co-founder and Wade Sukichief investment officer.
The Reef Energy Fund will make long and short bets on energy stocks and will have the ability to trade related fixed-income and derivative instruments, according to an investor presentation obtained by Bloomberg. The fund will focus on North America.
"One of the reasons why we are directional and long-biased is we expect, at some point, a cyclical move up in the price of energy equities and the commodity, and we want to be able to capture that move on the way up," said Suki. "When you look out to 2017 and beyond, the fundamentals look very strong."
The fund, which will be managed by Suki, will have a bias toward mid- and large-cap companies. It will not invest in commodities, non-energy-related ETFs or royalty trusts, according to the presentation.
The fund will start with the co-founders' personal capital, Suki said.Suki, a former partner at Roundrock Capital, started Reef Capital in November with ex-
Bank of America Merrill Lynch analyst . Suki spent nine years at Douglas BeckerRoundrock — which was started by Tiger Cub Peter Vig — where he co-managed a long-short energy-focused hedge fund. Before that, he was an analyst covering energy exploration and production at both JPMorgan Chase and Bank of America Securities.
Becker led Bank of America Merrill Lynch's oil services and equipment equity research franchise, prior to which he focused on Canadian exploration and production equities at Credit Suisse Group.
— Hema Parmar
Ex-SocGen Traders Said to Start Multi-Strategy Fund Former Societe Generale traders led by plan to start a new fund that Jong Beum Kim
will employ several strategies seeking to profit from volatility in Asian markets and exploiting mispricing of related securities, according to people with knowledge of the matter.
The Three Stones Asian Multi-strategy Fund is scheduled to start trading on Nov. 30, said the people. Kim, chief investment officer of Hong Kong-based Three Stones
, will manage it with and . All three Capital Sebastien Cerbourg Alexandre Avanianworked for the French bank.
Three Stones will initially employ three trading strategies rarely seen among Asian hedge funds, according to the people. Capital structure arbitrage will allow it to take advantage of pricing discrepancies of different securities sold by the same companies. An option-based-trend-following strategy uses option theory to seek to profit from the trending behavior in equity markets, especially in Asia. Volatility trading will tap into swings in prices of securities as a result of imbalanced supply and demand or investor sentiment, said the people.
More trading strategies will be added when fund assets hit $500 million, they added.Kim was a co-head of Asia-Pacific equities at Societe Generale between 2013 and
2014 and led regional proprietary trading earlier, the people said. Cerbourg was an Asia quantitative equity trader at the bank. Avanian co-headed Asia equities trading at the French bank as late as May.
Nicholas Bloom, a former Asia chief operating officer of billionaire Ken Griffin’s Citadel, has taken the chief operating officer role at the new fund.
Bloom could not immediately be reached for comment. Jerome Tam, a Hong Kong-based spokesman at Societe Generale, declined to comment on past employees.
— Bei Hu
FUNDRAISING
F&H Fund Management, the asset manager co-founded by the former chief technology officer of Alibaba Group Holding, is so bearish on stocks in China that it is opening its hedge fund to outside investors.
The FengHe Asia Fund is seeking to more than triple assets to $300 million by the end of next year from $80 million currently, said , a former portfolio Matt Humanager at China Securities who started Singapore-based F&H in 2010 with John
, the 19th person hired by Jack Ma’s Wue-commerce company Alibaba.
FengHe, which means "risk and return" in Mandarin, has returned 20 percent on an annualized basis, including 24 percent this year, according to Chief Operating Officer .Rebecca Walters
The firm is bearish on China as the economy is slowing from a multi-decade bull run. It is wagering against companies that depend on growth in the smartphone market in China, such as MediaTek, traditional automotive manufacturers such as Great Wall Motor and Hong Kong retailers including Luk Fook Holdings.
"Now is a perfect time for us to open because of our short expertise," Hu, who has been trading the fund with internal capital since December 2012, said in a telephone interview from Singapore. "We are becoming more and more bearish on China and Asia, and feel that we can generate returns on our short positions."
Luk Fook declined to comment. MediaTek, Taiwan Semiconductor and Great Wall Motor Company did not immediately respond to requests for comment.
The fund is bullish on the renewable energy automobile sector and invested in Zhengzhou Yutong Bus.
— Suzy Waite
China Bear F&H Fund Opens to Outside Investors
STRATEGY FOCUS
Nov. 17, 2015 Bloomberg Brief Hedge Funds 5
STRATEGY FOCUSEvent-Driven Funds 'Worst Disappointment,' Says K2
Event-driven strategies have been the most disappointing performers this year, said , head of investment research at ’ K2 Advisors, Robert Christian Franklin Resources
after many hedge funds failed to profit from mergers and acquisitions despite a record year for deals.
Funds have crowded into the largest corporate deals and have been reluctant to bet on smaller ones, said Christian, whose unit allocates capital to hedge funds and oversaw $10.5 billion of assets at the end of September. That contributed to low returns for event-driven hedge funds in a year that has seen a record number and value of deals such as mergers and acquisitions, he added. Global macro funds have also fallen short of expectations, he said.
Event-driven hedge funds lost an average 1.4 percent this year, according to an index compiled by Chicago-based Hedge Fund Research.
Allen & Co.announced in September that it was shuttering the merger arbitrage strategy that it had offered clients since 1975, in part because of poor returns for such funds. closed a portfolio managed by Steven Mermelstein Hutchin Hill Capital that made wagers on corporate events.
"The worst disappointment relative to our expectation at the start of the year and throughout the year would have been event,” Christian said. “You have all the matrices that tell you it should have been a great year for event-driven.”
Hedge fund returns overall have fallen short of expectations in 2015 as low interest rates have artificially dampened market volatility and suppressed the range of returns for different assets, known as dispersion, he said. While price swings spiked in August amid a global market selloff, the Chicago Board Options Exchange Volatility Index, or VIX, stayed close to its five-year average.
The HFRI Fund-Weighted Composite Index tracking all hedge fund strategies was flat in the first 10 months of 2015, on track for the worst annual industry performance since 2011. About 67 percent of investors in a Deutsche Bank annual survey released in March anticipated the gauge to rise between 5 percent and 10 percent this year.
The HFRI Macro (Total) Index, which tracks funds that seek to capture macro trends in the stock, fixed-income, currency and commodity markets, lost 1.5 percent this year. Such funds have also been hurt by sustained low interest rates and a shortage of big profitable trends apart from the selloff of emerging-market currencies, Christian said.
"There is definitely a very high correlation between the level of interest rates and the amount of alpha that managers can produce," said Christian.
K2 has pared allocations to event-driven funds since May, Christian said. It started the year with an overweight allocations to macro hedge funds, scaling it back between May and August, and is boosting it again in anticipation that interest rates will rise. A rate hike will increase asset price volatility, leading to outperformance for funds betting on rising and falling stocks in the U.S. as well as those focused on emerging markets, he said.
— Bei Hu
ON THE MOVE
Whitebox Equity Head Jason Cross to Leave
Whitebox Advisors equity head is resigning from the hedge Jason Cross
fund and mutual fund company where he’s worked for 14 years.
Cross will leave Minneapolis-based Whitebox on Dec. 15, the firm said on Nov. 16 in a letter to clients, a copy of which was obtained by Bloomberg.
Paul Karos, an equity portfolio manager who joined the firm in 2012, will replace Cross. Cross didn’t immediately return a call seeking a comment.
Whitebox, which manages about $4 billion and was founded by Andy Redleaf15 years ago, lost about 42 basis points, or 0.42 percent, in its main multistrategy fund this year through October, according to an investor.
— Katherine Burton
UBS O'Connor Hires Ex Citi Equity-Trading Head as CIO
Kevin Russell, former global head of equity trading at Citigroup, is joining UBS
as chief investment officer.O’ConnorRussell will join UBS Group’s O’Connor
hedge-fund business in New York and report to Dawn Fitzpatrick, according to internal memo seen by Bloomberg. Russell became head of equity trading last year and spent his entire 22-year career at Citigroup, the memo shows.
— Donal Griffin
Apollo's Tan Chin Hwee to Join Trafigura
Tan Chin Hwee, the founding partner in Asia for $162 billion hedge fund Apollo Global Management, will join Trafigura as the world’s second-largest metals and independent oil trader expands in the region.
Tan, who stepped down from Apollo last month after joining in 2007, will take on a senior position at Trafigura’s Asia-Pacific operations. The appointment was confirmed in an e-mail by Jonathan Pegler, Trafigura’s co-head of crude oil.
— Andy Hoffman
Year-to-Date Returns to End October
Nov. 17, 2015 Bloomberg Brief Hedge Funds 6
MARKET CALLS ITEMS MAY BE SUBMITTED TO [email protected] FOR CONSIDERATION
Nov. 17, 2015 Bloomberg Brief Hedge Funds 7
MARKET CALLS ITEMS MAY BE SUBMITTED TO [email protected] FOR CONSIDERATION
Raveneur Investment Group, the New-York based hedge fund firm, is bullish on food retailer Kroger and coffee-shop chain Starbucks, according to an investor letter obtained by Bloomberg.
Starbucks and Kroger are "market-share taking companies that are well-positioned to continue to compound earnings despite today's generally low corporate earnings growth environment," the letter dated Oct. 26 said.
Kroger's launch of its natural foods brand, Simple Growth, and its use of M&A and data analytics to enhance product innovation helped the firm produce consistent growth, the letter, written by founder , said.Mark Black
The company has "a proven management team" and "will continue to grow sales as a result of its ability to cater to a diverse customer base," and drive margin expansion, it said.
Starbucks is expected to deliver "above consensus earnings for the forseeable future given that it is a truly category dominant, global growth compounder with a significant number of adjacent market growth opportunities," the letter said.
The Raveneur Master Fund declined 5.9 percent in the third quarter, and gained 0.9 percent in the first nine months of the year.
The firm did not respond to telephone calls asking for comment.
— Hema Parmar and Simone Foxman
Kase Capital Management founder said his top long wager Whitney Tilson
is Spirit Airlines, the no-frills carrier that charges fees for almost everything including water.
The airline’s growth potential and the fact it trades at eight times earnings makes it a good investment, even as its shares have tumbled this year, the hedge-fund manager said.
“The stock’s gotten hammered,” Tilson said on Nov. 16 in an interview with Bloomberg Television’s Stephanie Ruhle. “A lot of customers like to criticize it because they really pack people onto the planes, the seats don’t recline. But it’s
Raveneur Bullish on Kroger, Starbucks
Kase's Tilson Says Spirit Airlines Is Top Long Bet
MARKET CALLS, REVISITED BY HEMA PARMAR
Passport Capital, the $4.4 billion hedge fund firm run by , boosted John Burbankits bullish position in Palo Alto Networks in the third quarter of 2014, according to a quarterly filing with the Securities and Exchange Commission. In a dated documentNov. 11, 2014, the San Francisco-based firm cited security provider Palo Alto as having “strong and accelerating growth” and pointed to anticipated increases in cash flow.
On a total return basis, shares in Palo Alto have risen 93 percent since the beginning of the third quarter last year, outperforming the S&P 500 Index by 86 percentage points. A spokesman for Passport declined to comment.
been growing north of 20 percent a year, it has the highest margins in the airline industry, great returns on equity, net cash position on the balance sheet.”
Tilson said falling oil prices have allowed rivals such as American Airlines Group, which competes on about 50 percent of Spirit’s routes, to engage in a price war with the smaller carrier. “And when a giant takes on a little minnow like Spirit, they can hurt Spirit temporarily,” he said. “But here’s the thing: American Airlines’ unit costs are 57 percent higher than Spirit’s. So Spirit is going to win that price war eventually.” A spokesman for American declined to comment.
Tilson said he’s still betting against Lumber Liquidators Holdings, calling the company “permanently impaired.” He reiterated that Wayfair is his new favorite stock to short, accusing the online furniture retailer of selling some products that contain formaldehyde, similar to Lumber Liquidators. A spokesman for Wayfair didn’t immediately respond to an
e-mail seeking comment.— Claire Boston
Scott Ferguson, the money manager who runs Sachem Head Capital
, recommended buying Managementshares of drug developer Akorn, while
’s PointState Capital Zach Schreiber recommended the shares of Italian aerospace and defense company Finmeccanica at the Robin Hood Investors Conference on Nov. 16, according to people familiar with the matter.
Ferguson said shares of Akorn could double in two years. Schreiber also said shares of Finmeccanica could double in two years and will benefit as the European Central Bank boosts economic stimulus in the region.— Simone Foxman, Katherine Burton and Joshua
Fineman
Akorn, Finmeccanica Touted at Robin Hood
REGULATORY/COMPLIANCE
Nov. 17, 2015 Bloomberg Brief Hedge Funds 8
REGULATORY/COMPLIANCE
The U.S. House Ways and Means Committee and a former top staff member must obey subpoenas in a Securities and Exchange Commission insider-trading investigation tied to health-care legislation, a federal judge ruled, rejecting their claims of immunity from such an inquiry. The ruling, which tested the limits of federal insider-trading law, will allow SEC lawyers to question the staff in a probe of allegations that nonpublic information was disclosed about a change in a U.S. health-care policy. The SEC says the change resulted in a spike in health-insurance companies’ shares.
“Members of Congress and Congressional employees are not exempt from the insider trading prohibitions arising under the securities laws,” U.S. District Judge Paul Gardephe in Manhattan wrote in the Nov. 13 ruling.
“Congress barred such claims of immunity when it adopted the Stop Trading on Congressional Knowledge Act — commonly known as the STOCK Act — in April 2012,” the judge said.
The SEC is investigating the sharp share increases of companies including Humana, ahead of a government announcement in 2013 of increased, rather than reduced, payments to health insurers. The SEC says it has evidence that former top congressional staff member Brian Sutter “may have been a source” used by a lobbyist at the law firm Greenberg Traurig. The lobbyist disclosed the health policy changes to an analyst at Height Securities who sent out an alert before the government announcement, according to the SEC. Within five minutes of the Height Securities’ report, prices and trading volumes of health-care insurers spiked, with Humana rising 7 percent, according to the SEC. The agency sought the information to determine whom Sutter spoke with and if he had contact with Greenberg Traurig, court papers show.
The committee and Sutter argued that the agency didn’t have the authority to conduct such an investigation or request the documents, because the Constitution protects members of Congress and staff from any outside inquiry into legislative business. Lawyers for the committee also argued that federal courts didn’t have
House Staff Told to Obey Insider Probe Subpoenas Global Regulators to Focus on Asset Managers in 2016
FSOC-IDENTIFIED RISK POSSIBLE FUNDS AFFECTEDPOSSIBLE REGULATORY
SOLUTIONS
Liquidity and Redemptions
Pooled investment vehicles that provide redemption rights, especially those investing in less liquid assets, e.g. ETFs, private/hedge funds, registered funds
Remove incentives to be the first to redeem under market stress, e.g. gates, fees or restrictions on redemptions
Leverage
Funds using leverage that could be forced to sell assets during times of market stress, e.g. private/ hedge funds, separately-managed accounts
Quantitative/qualitative limits on the magnitude or type of leverage funds can employ, especially during periods of market stress.
Operational Risk
Asset transfer risk from one manager to another; risk of multiple managers relying on a limited number of 3rd parties for key services, e.g. large, interconnected funds, 3rd-party providers
FSOC offers few potential solutions at this stage.
ResolutionHow would a failed or closed management impact the economy?
Suggests FSOC remains concerned with individual entities, but few solutions are presented.
Source: FSOC Dec. 24 Federal Register notice on asset managers, Bloomberg Intelligence
Asset managers will find themselves under a regulatory microscope in 2016 as U.S. and global regulators assess their systemic risk. Regulators are expected to release broad recommendations targeting activities and products of hedge funds, ETFs and other funds by 3Q. With time for public comment, limited resources and a backlog of other rules, any U.S. regulation won't be finalized until 2017. The U.S. Securities and Exchange Commission has also proposed two rules focused on asset managers that should be finished in 2016.
— Nathan Dean and Benjamin Elliott, Bloomberg Intelligence Analysts
jurisdiction over legislative matters or staff and hadn’t shown that any “exceptional circumstances” existed. Christopher Guest, a lawyer for Sutter, didn’t return a voice-mail seeking comment. Messages left with the speaker’s office, the Office of General Counsel and the Ways and Means Committee weren’t returned. John Nester, a spokesman for the SEC, declined to comment on the decision. Kerry Kircher, the top lawyer for the House, didn’t respond to a voice-mail message seeking comment on the ruling.
— Patricia Hurtado
The U.S. Justice Department renewed its push to charge executives in corporate fraud cases, encouraging companies to come to them early even if they can’t yet identify individual wrongdoers.
Deputy Attorney General Sally Quillian Yates clarified the department’s new policy requiring federal investigators to produce charges against individuals during corporate prosecutions in a speech
U.S. Urges Early Company Reports in New Pollicy
to bankers and compliance officials in Washington on Nov. 16. That policy, announced in September, is now official.
“A company won’t be disqualified from receiving cooperation credit simply because it didn’t have all the facts lined up on the first day it began talking with us,” Yates said in remarks at a conference in Washington. “Rather, under those circumstances, we expect that cooperating companies will simply continue to turn over the information to the prosecutor as they receive it.”
In September, Yates said cooperation had to be “all or nothing” for companies to win credit for working with prosecutors. Her remarks on Nov. 16 emphasized that the DOJ doesn’t expect companies to come in with a full accounting of what went wrong and who’s responsible. Under the new policy, the DOJ will give special weight to whether a company discloses possible wrongdoing early in evaluating whether the company should get any leniency. Companies that cooperate with government investigations may pay less in fines and could avoid charges.
— Tom Schoenberg
OVER THE HEDGE
Nov. 17, 2015 Bloomberg Brief Hedge Funds 9
OVER THE HEDGELucio
Fontana’s egg-shaped, yolk-colored painting sold by billionaire money manager Steven A. Cohen fetched $29.2 million at Christie’s in New York on Nov. 10. “Concetto spaziale, La fine di Dio” was offered at Christie’s postwar and contemporary evening sale. It was estimated at more than $25 million. The price was a record for the postwar Italian
artist. It beat Fontana’s previous high of $24.7 million, set less than a month ago
for a black egg from the same series, at Sotheby’s in London. Cohen frequently
buys and sells art at auctions. The owner of Point72 Asset Management, a family office that manages about $11 billion,
also parted with Andy Warhol’s “Mao” at Sotheby’s on Nov. 11, fetching $47.5
million.— Katya Kazakina
, founder of Winton David HardingCapital Management, is backing the campaign to keep Britain in the European Union. Harding, who helps manage $30 billion of assets, has joined the board of the Britain Stronger In Europe group and will become the co-treasurer and chair of its finance committee, Lucy Thomas,
deputy director of the campaign, said in a statement. “This is a vital campaign for the future of Britain which I couldn’t stand by and watch from the sidelines,” Harding said in the statement. Alexandra Rhys-Jones, a spokeswoman for Winton, did not respond to an e-mail seeking comment. British Prime Minster David Cameron has said that he will campaign to avoid the U.K. exiting the EU if a deal can be reached on reforms, with a referendum taking place before the end of 2017. The Financial Times said John
, founder of Egerton Capital, is Armitagegiving a “six-figure” amount to the campaign. The newspaper did not specify the source of information. The hedge-fund firm declined to comment.
— Nishant Kumar
High Returns of Robin Hood Heroes Offer Fund Managers SolaceHedge-fund returns may be down but managers heard
some good news on the morning of Nov. 10 on three high-performing investments in the Robin Hood Foundation portfolio.
These returns aren’t monetary, though they’re awesome. Coalition for the Homeless helped a mother leave an abusive husband with her children and find a job and an apartment. Two women became the first in their families to attend college, with support of iMentor’s one-on-one mentoring model. And Lawyers for Children put forth a young man it helped navigate through multiple foster homes.
"Whenever things weren’t working out, I knew I could say to my foster mom, ‘I’m calling my lawyer,’" said Demetrius Johnson, now 21 and in college with aspirations to become a lawyer.
This is the type of achievement that earned these nonprofits the Robin Hood Heroes Award and $50,000 in additional funding — as well as the chance to share their stories over breakfast at Cipriani 42nd Street.
Steve Schwarzman, , , David Larry Robbins Bill AckmanSolomon, Barry Sternlicht, Jon Bon Jovi and Zach Schreiberwere at tables stocked with Hot Bread Kitchen chocolate-cherry rolls as well as cups of yogurt and berries. Dan Och sat next to Roger Goodell after speaking with Robin Hood’s new president, Reynold Levy.
, who founded iMentor, sat next to his mentor, John Griffin, who, Griffin said, taught him the value of Julian Robertson
“small but consistent and insightful advice over a long period of time.”
There were tears on stage — from the mother whose children ask her every month if they will be able to make the rent — and in the audience.
“I’m the worst, I’m like Old Faithful," Paul Tudor Jonessaid of his crying record.
David Einhorn said the Heroes breakfast is different from Robin Hood’s gala. "That’s about raising money, headline entertainment and getting some of the message out," Einhorn said. "Here, we don’t try to raise any money, and we bring people together over what Robin Hood actually does. The more people know, the more excited they become about our work."
— Amanda Gordon
HEDGE FUNDS ADDED TO BLOOMBERG THIS WEEK
Source: Bloomberg/Amanda Gordon
John Griffin and Julian Robertson
Source: Christie's
A yellow “La Fine di Dio” by Lucio Fontana
Nov. 17, 2015 Bloomberg Brief Hedge Funds 10
TICKER BLOOMBERG IDFUND
MANAGER(S)MANAGEMENT COMPANY STRATEGY
MANAGER LOCATION
INCEPTION DATE
PRIME BROKER
MAN15AG KY
BBG00BDMH4G8Team Managed
AHL Partners LLP Multi Strategy U.K. 9/30/2015 N/A
ETIALRE MV
BBG00BDQTCC2Team Managed
Argentarius ETI Management Ltd
Macro Discretionary Thematic
Malta 11/2/2015 N/A
OKEANOS US
BBG00BFNPHG6 Ryan Butz BC Holdings IncMacro Discretionary Thematic
U.S. 10/24/2014 UBS Securities
CRAWFEN US
BBG00BGM1VF3Team Managed
Crawford Lake Capital Management LLC
Long Short Equity U.S. 6/1/2015 BTIG
AVDCLOA BM
BBG00BDD5SK3Team Managed
EOF Services Asia Pte LtdFixed Income Diversified
Singapore 11/1/2015 N/A
MYOCAPF KY
BBG00BCBJR34Justin Ferrier, Tony Welland
MYO Capital Advisers LtdEvent Driven Distressed
Hong Kong 4/1/2008Interactive Brokers Hong Kong
WINDVEC LX
BBG00BCHWS70Team Managed
Winton Fund Management LtdManaged Futures Systematic
U.K. 10/21/2015Goldman Sachs International
WINDFEC LX
BBG00BCHWK40Team Managed
Winton Fund Management LtdManaged Futures Systematic
U.K. 10/21/2015Goldman Sachs International
HEDGE FUNDS ADDED TO BLOOMBERG THIS WEEKThe following hedge funds were added to Bloomberg’s database this week. Access the Hedge Fund Database Portal by typing HFNDon your Bloomberg Terminal. To view U.S. hedge fund managers, users must fill out an Accredited Investor Form and Qualified Purchaser Questionnaires ( ).HFND3
SPOTLIGHT
Nov. 17, 2015 Bloomberg Brief Hedge Funds 11
SPOTLIGHTMatlinPatterson's Bulchandani Says a December Rate Hike Is 'Done'
Ashwin Bulchandani,
chief risk officer at
, spoke to MatlinPatterson
Bloomberg TV's Erik
Schatzker and Stephanie
Ruhle on Nov. 11, about
what a non-zero rate
environment means for the
credit markets. Comments
have been condensed and edited.
Q: You recently wrote a piece saying bonds are back. What do you mean by that? What kind of bonds, first of all?A: If you want to invest in a market that's distressed, that offers real value and is reasonably liquid, credit is the one that's in trouble right now. And some parts of the credit market are — have been — particularly bad. What we've been looking at is the BBB- part of the commercial mortgage-backed securities market. This sort of toxic CMBS blew up the world in 2008 and '09. We're in a different world right now. We're in a world where underwriting standards are better. These are structured securities, so you're much higher up in the capital structure than you were five, 10 years ago. And yet, these assets are trading, on a relative basis, at the widest level they have been that I've seen. Back in sort of pre-crisis time they traded at 50 basis points back in investment grade. Now they're 450 basis points back in investment grade. And I think part of this is because people are just reluctant to own these assets.
Q: Is this divergence that you've identified between credit and equity going to persist, or is it a temporary phenomenon and there will be, effectively, a correction?A: The markets made new highs in February. Credits started to sell off. The stock market rallied all the way. It made a new high in October because the Fed eased. And then bad things happened and everything fell apart. So we are in the sort of re-levering end, in my opinion — the end of the credit cycle part of the trade.
Q: Really, the end of the credit cycle.
A: Yes, but let me caveat that for a second. I don't know how long this is going to last and I don't think anyone else does either. In '07, it lasted a year, call it a year. And in 1998, it lasted four years.
Q: So what does a December rate hike mean to you?A: Well, December rate is done. It's going to happen. The real risk from our perspective is what happens after that. And the Fed told us in September that they were going to raise rates 100 basis points in 2016. The market, in its infinite wisdom, said: 'no, no, no, you are going to raise rates 50 basis points.' And that's where the real tussle is going to happen in 2016. Is the market right? Is the Fed right? In 2004, we got it right. We got it right because Greenspan said, I'm going to raise rates 25 basis points every six weeks, and that's what got priced in. In 1994, we didn't get it so right. Bad things happened. We bailed out Mexico and Orange County. Orange County defaulted in October and the muni market fell apart.
Q: And how is a rising rate environment a condition precedent for the end of the credit cycle? In theory, if the economy is chugging along at a speed adequate enough to create inflationary pressure, that signals a healthy environment for corporates, unless you hit a refinancing wall.
Two caveats to that. One is if you are A:a company that needs access to the credit markets on a repeated basis, the cost of that credit has just gone up. And the second — which I think is the worst- or the best-kept secret about the U.S. asset markets — is we care a lot about what the short rate is doing. Everyone says 'Hey, we'll run our models and we'll look at where P/E should be based on where the 10-year note is.' We actually did some work a long time ago where you find that the greatest relationship, the greatest correlation — if there is a correlation at all — is between valuation multiples and the short rate, which is a little counterintuitive.
Q: If there is a concern that inflation might start to take off and the Fed
would have to jump in more
aggressively, how concerned are you about that in your investing?
There are two things that we are A:paying attention to. One is the difference within market expectations with the rate hike and the Fed, and we talked about that. The other is if you go back and you look at the inflation numbers — CPI core, I think, last printed 1.9 percent on a year-over-year basis. The headline number was flat. Why? Because oil has done what it's done and energy has done what it's done. Simple math says if energy stays right here, that headline number is going up toward the core number. And the core number is pretty healthy. I mean 1.9 percent core CPI is nothing to scoff at, right? And it's coming from services. It's coming from rent. So there is some underlying inflation force in this country that we've been waiting for for six years. So, yes, it is a concern, but I think it will largely boil down to the Fed and how the Fed messages this. They know, and we know, that it's a pretty big deal for rates to go from zero to 1 percent. Zero to 25 basis points? Not so much.
Q: You mentioned 1994 earlier. Is that what the Fed is trying to avoid?A: I think that is exactly what the Fed is trying to avoid. I also think the Fed is trying to avoid a 2004-type scenario where they telegraph it so much at one point that everyone is very comfortable taking risk. So it's a delicate balance; this is a new Fed. They need to figure it out. They need to message it a little better and see what the market prices in, versus what they want to do.
Q: The Alibaba IPO day was one of the most exciting days on the New York Stock Exchange. What does that tell you about the broader markets and the enthusiasm and momentum gone?A: What does a non-zero rate environment mean for the world? That's the question that we're all grappling with right now. We're going to raise rates, and it's having its effect on our markets. Ultimately, the Europeans will raise rates and the Bank of Japan will hopefully, at some point, start to raise rates. That's where we'll have issues.
CALENDAR TO SUBMIT AN EVENT E-MAIL [email protected]
Nov. 17, 2015 Bloomberg Brief Hedge Funds 12
DATE ORGANIZER EVENT SPEAKERS/ATTENDEES OF NOTE/DETAILS LOCATION
Nov. 18 EYGlobal Hedge Fund Symposium
Available for registrants. Chicago
Nov. 18 Markets GroupHedge Fund Midwest Investor Forum
Dhvani Shah, Illinois Municipal Retirement Fund; Jeb Burns, Municipal Employees' Retirement System of Michigan; Christopher Engelman, Cedar Hill; James Maloney, Chicago Police Pension.
Chicago
Nov. 18 IIRHedge Fund Startup Forum
Adam Wagner, Blue Jay Capital Management; Andrew Ross, Paamco; Rachel Minard; Minard Capital; Seaven Sternheim, Baylight Capital; Zach Stout; Blum Capital; Lee Seward, Aquilo Capital; James Koutoulas, Typhon Capital.
The Fairmont San Francisco
Nov. 23New York Hedge Fund Roundtable
Measuring and Accounting for Sustainability
To be announced. New York
Dec. 1 Morgan StanleyAsia Hedge Fund Manager Forum 2015
By invitation only.The Waldorf Astoria, New York
Dec. 7 UJA Federation of New York40th Anniversary of the Wall Street Dinner
Steven A. Tananbaum, GoldenTree Asset Management; Andrew V. Rechtschaffen; Greenlight Capital. Hilton New York
Dec. 7 BloombergUncovering Value in Latin America and Asia
Alison Graham, Voltan Capital Management; Urvish Bidkar, Alpha4x Asset Management; Deepinder Bhatia, Bayard Asset Management.
Bloomberg Princeton, 100 Business Park Drive
Jan. 25-27 Managed Funds Association Network 2016 Available for registrants. InterContinental Miami
Feb. 3-5 Context Summits Miami 2016Fontainebleu, Miami Beach
April 27-29 Minard Capital EPIC ReturnsRitz Carlton, Half Moon Bay
May 10-13 SkyBridge Capital SALT 2016 To be announced. Bellagio, Las VegasDISCLAIMER: The information on this page was compiled by Bloomberg from multiple sources, public and private, and is deemed to be accurate, but not definitive or exhaustive. Questions about events should be addressed to the event organizer.
CALENDAR TO SUBMIT AN EVENT E-MAIL [email protected]
The "organizer" and "event" columns link to websites, where available. "Attendees of note" links to the individual's BIO page, where available, on the Bloomberg terminal.
BLOOMBERG BRIEF: HEDGE FUNDS
Bloomberg Brief Managing Editor
Jennifer Rossa
+1-212-617-8074
Hedge Funds Editor
Darshini Shah
+44-20-7392-0790
Contributing Editors
Melissa Karsh
+1-212-617-4557
Nathaniel E. Baker
+1-212-617-2741
Reporter
Hema Parmar
+1-212-617-6990
Contributing Brief Reporters
Will Wainewright
Suzy Waite
Contributing News Reporters
Katherine Burton
Saijel Kishan
Simone Foxman
Contributing Data Editors
Anibal Arrascue
+1-609-279-5084
Ryan Kreger
Advertising
Adrienne Bills
+1-212-617-6073
Reprints & Permissions
Lori Husted
+1-717-505-9701 x2204
To subscribe via the Bloomberg
Terminal click BRIEF<GO> or on the
web at www.bloombergbriefs.com.
This newsletter and its contents
may not be forwarded or
redistributed without the prior
consent of Bloomberg. Please
contact our reprints and
permissions group listed above for
more information.
© 2015 Bloomberg LP. All rights
reserved.
Nov. 17, 2015 Bloomberg Brief Hedge Funds 13
