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PAUL SINGER'S ELLIOTT: 'There is a deep underlying complacency which we think permeates global financial markets'

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paul singer

Elliott Management, the $31.6 billion New York hedge fund run by Paul Singer, is prepping for a wide swath of market moves as Donald Trump's presidency takes shape.

"Now more than ever, we want to be positioned for as many permutations as possible in order to preserve capital if market conditions deteriorate," Elliott wrote in its fourth-quarter letter released in January, a copy of which was reviewed by Business Insider.

Investors are battling uncertainty from the US in the wake of Trump's election win. Stocks had rallied to record highs since the election in November but dropped earlier this week after Trump's executive order barring people from seven Muslim-majority countries from traveling to the US.

In its letter, the hedge fund firm said it would not try to predict "the success or failure of a government's economic and monetary policy mix," but added that "it is essential to try to figure out how the central banks will exit from QE, ZIRP, and NIRP," referring to measures that global central banks took following the 2008-09 financial crisis.

"There is a deep underlying complacency which we think permeates global financial markets," the letter said. "We believe that the global confidence in the placidity and boundaries of inflation (and global financial risk) is misplaced and overdone."

Here's more from the letter (emphasis added):

"Because the monetary policies pursued throughout the developed world since the GFC were unprecedented, the outcomes of the foregoing scenarios are unknowable. Nevertheless, it is essential to try to figure out how the central banks will exit from QE, ZIRP, and NIRP.

"It will be interesting to watch. If inflationary expectations get rolling, it might be amazing how quickly they take hold. 'Very quickly' would be in rough alignment with the magnitude of the monetary extremism of the post-GFC period, but there is no way to predict exactly how it will all play out."

And:

"There is a deep underlying complacency which we think permeates global financial markets. The basically-low volatility of the last eight years has led to a widespread assumption that financial market volatility has been bottled and will remain controlled.

"Moreover, despite the radical monetary policy which has become orthodoxy for the entire developed world's central banks, there is no fear of a near-term eruption of significant systemic price inflation. It is a fool's errand to predict the near-term course of inflation (and global central bankers and policymakers have failed miserably and continuously in performing this errand), but we believe that the global confidence in the placidity and boundaries of inflation (and global financial risk) is misplaced and overdone."

The Elliott Associates L.P. fund returned 4.4% for the fourth quarter and 13.1% last year, according to the letter.

SEE ALSO: One of the most senior women in investing is going to work for George Soros

DON'T MISS: Paul Singer's Elliott: '8 years of growth-repressive and distorted fiscal and monetary policies' are coming to an end

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Meet the world's 7 most successful hedge fund managers

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Ray Dalio

London-based fund of funds LCH Investments, a subsidiary of Edmond de Rothschild Capital Holdings Limited, just released its annual top 20 "most successful money managers" list for 2016.

The list measures net gains, after fees, of hedge fund managers since their respective funds' inception.

We've included the top seven fund managers below.

As a group, they manage more than $275 billion in assets, and have generated more than $200 billion in gains since inception.

They generated $10.6 billion in returns in 2016, with one of the seven, George Soros' Soros Fund Management, losing money over the year. 

 

7. Och Ziff - Daniel Och

Net gains in 2016: $1.1 billion

Net gains since inception: $23.1 billion (1994)

Fund's assets under management: $33.5 billion

HighlightsOch-Ziff Capital Management agreed to settle charges of bribery, paying nearly $200 million to the Securities and Exchange Commission, in September. The hedge fund's CEO, Dan Och, agreed to pay nearly $2.2 million to settle the charges with the SEC, as did the firm's CFO, Joel Frank. The firm was accused of bribery in its financial dealings in Africa, which the SEC says included run-ins with Muammar Gaddafi's relatives.

The fund also found itself the recipient of some savvy investing advice from a 24-year old Chipotle cook. 



6. Appaloosa - David Tepper

Net gains in 2016: $0.7 billion

Net gains since inception: $23.5 billion (1993)

Fund's assets under management: $15.8 billion

Highlights: Tepper came out in support of Hillary Clinton ahead of the US election, calling Donald Trump, who went on to win the election, "the father of lies." He has said however that the US would benefit from some infrastructure spending, a key leg of Trump's campaign platform. 



5. Citadel - Ken Griffin

Net gains in 2016: $1 billion

Net gains since inception: $25.2 billion (1990)

Fund's assets under management: $24.1 billion

Highlights: Citadel has been hiring, recently adding portfolio manager Jennifer Pollak, who moved from Folger Hill Asset Management. Citadel's Aptigon unit last year poached about 17 portfolio managers from Visium Asset Management amid an insider-trading scandal.



See the rest of the story at Business Insider

Ken Griffin has shut down one of Citadel's stock-picking units

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Ken Griffin

Citadel is shutting down one of its four stock picking units a little over a year after launching.

Ravelin Capital, a San Francisco-based unit of Ken Griffin's $26 billion hedge fund firm, is shutting down, according to people familiar with the matter. The unit struggled with underperformance, one of the people said. 

Jeff Runnfeldt, who headed the unit, left on Tuesday, January 31. At the time of Runnfeldt's hire, the unit set out to manage as much as $1 billion with ten teams, Bloomberg reported at the time.

Runnfeldt had previously worked at Citadel for about a decade, up until 2012, before being rehired to head Ravelin, a LinkedIn profile shows.

The unit included six teams, and the majority of those teams are moving to one of Citadel's other units, Global Equities, one person said.

“Citadel has decided to consolidate Ravelin Capital into our Citadel Global Equities business," a spokesman for Citadel said. "This decision will further strengthen Global Equities by incorporating the best ideas and strongest talent from Ravelin.”

Citadel has just been named one of the most successful hedge funds of all time. The firm ranked fifth on a list put together London-based fund of funds LCH Investments ranking funds by net gains, after fees, since inception.

The hedge fund giant is also known to be one of the most competitive firms, with former employees and recruiters describing a culture that churns through portfolio managers and analysts who don't put up good performance numbers.

The Ravelin shutdown comes amid several other closures. Last year, Blackstone's Senfina platform closed following double-digit underperformance, less than two years after launching.

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DAN LOEB: Trump will make hedge funds great again

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Daniel Dan Loeb

NEW YORK — US hedge fund manager Dan Loeb is betting President Donald Trump will be good for investments thanks to his planned mix of tax cuts, reduced regulation, and infrastructure spending.

"This environment is undoubtedly better for active investing — just as active investing was considered to be on its deathbed," Loeb wrote in a letter to clients of his $15 billion (£11.8 billion) Third Point LLC on Wednesday.

A shift from government monetary stimulus to measures that will increase personal and corporate spending will create lower correlations between various types of securities and greater dispersion of results within them, such as stocks, Loeb said.

Higher interest rates will also create investment opportunities, Loeb added.

Third Point's main hedge fund lost 1.1% in the fourth quarter, wrapping up a year that Loeb said was "disappointing." The fund gained only 6.1% in 2016, below its 15.7% average annual return since 1996 and less than an approximately 12% gain for the S&P 500 index, with dividends.

Loeb wrote he had made changes to the New York-based Third Point's investment holdings immediately after Trump's election win, shifting to stocks and away from corporate and structured credit. Third Point now has similar-size holdings in the healthcare, technology, industrial, and financial sectors, according to the letter.

One large change was in securities of financial companies. The sector now represents 11.8% of the fund, up from 4.4% on November 8, according to the letter. Loeb's focus is now on banks and brokers and includes exposure to Japan.

"The pendulum in monetary policy has begun to shift away from the past decade of extraordinary easing just as the pendulum in fiscal policy has begun to shift away from austerity and its limiting factors," Loeb wrote. "The US elections served as a marker for these policy shifts which, in our view, are bullish for rate‐sensitive financials."

Loeb did urge some caution on investment during the Trump presidency, noting hedges on Third Point's portfolio. But he said that even volatility could be a boon.

"While America may or may not be made great again, there is no question that the rules are literally being rewritten," Loeb wrote. "We do not plan to trade the tweets but we expect an increasing number of real and, even better, fake dislocations to create some extremely rewarding investing opportunities."

Third Point's offshore hedge fund rose 2.6% in January, according to a person familiar with the situation who requested anonymity because the information is private.

(Reporting by Lawrence Delevingne; Editing by Lauren Tara LaCapra and Himani Sarkar)

SEE ALSO: THIRD POINT: 'The most disappointing and bizarre election in our country's history'

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A $40 billion hedge fund identifies its rising stars using 3 simple factors everyone should know

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Screen Shot 2017 02 01 at 3.09.51 PM

Two Sigma, a $40 billion hedge fund that uses advanced technologies to find investment opportunities, has grown at a rapid rate over the past few years. 

The number of employees at the firm has grown 400% over the past seven years, and it now has 1,000 staff, with offices in New York, Hong Kong, Houston, London and Tokyo.

It has generated $13.1 billion in returns since its inception in 2002, according to London-based fund of funds LCH Investments, making it the 20th most successful fund of all time. Only one fund, Brevan Howard, has generated more in a shorter period of time. 

Evan Anger is a senior vice president in recruiting at the firm, and at a breakfast event organized by recruitment firm Options Group, he explained how the firm identified the next generation of leaders within the firm.

He said it's all about three things:

  • Engagement - Anger and his colleagues in HR look at how engaged an employee is in what they're doing, life at the company, and their level of engagement with the company culture.
  • Contribution vs scope of the role - The firm also tracks how actively employees engage with topics outside their own day-to-day role. That helps provide insight into whether someone could maybe step up one day, or take a bigger role in a different team. 
  • Career velocity - How fast is someone rising through the ranks? Are they being promoted ahead of schedule?

It sounds pretty simple, but it's useful to know.  

SEE ALSO: The president of the New York Stock Exchange talks history, technology, and simplifying trading

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A partner at $20 billion investment firm Tiger Global has left

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Neeraj ChandraA partner at billionaire Chase Coleman's Tiger Global has left the New York investment firm.

Neeraj Chandra, who worked at the fund for the past 13 years, left this week, according to people familiar with the matter.

Chandra joined in 2004 and previously worked at Goldman Sachs, according to a LinkedIn profile. 

Chandra didn't immediately respond to a request for comment. 

Tiger Global Management invests in private and public markets and manages about $20 billion firmwide. The firm managed $5.9 billion in hedge fund assets as of mid-year 2016, according to the Hedge Fund Intelligence Billion Dollar Club ranking. 

The hedge fund was up 5.5% for January after tumbling 15.3% last year, according to a person familiar with the matter.

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Hedge funds are tracking your every move, and 'it’s the future of investing'

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Matei Zatreanu

It is one of the hottest trends in investing.

Often called "quantamental," it's a new investing strategy that uses algorithms to parse through reams of new data sets referred to as "alternative data."

Hedge fund managers in particular have always sought an edge over competitors; now they're vying for new data sets that their competitors don't have, or haven't thought of using.

This kind of data can range from the basic credit-card sales information to satellite data that tracks shipping routes.

Still, many investment managers are struggling to put that data to good use. Almost a third of hedge fund and asset managers recently surveyed by Greenwich Associates said they had "difficulty understanding/working with data sets that are not customized."

Funds are struggling to find the right people to hire to analyze all the new data, says Matei Zatreanu, founder of System2, which advises hedge funds on integrating alternative data to their investment strategy.

He helps run Augvest, which organizes events around alternative data. Previously, Zatreanu worked on data-science efforts at King Street Capital, a $19 billion New York-based hedge fund firm.

Business Insider spoke with Zatreanu about the future of alternative data and what kind of skill sets hedge funds are looking for when hiring for the new roles.

This interview has been edited for clarity and length.

Rachel Levy: What is the future of quantamental?

Matei Zatreanu: In short, it’s the future of investing. If you’re talking with people in finance programs — the Whartons of the world — and you ask those students in investment clubs how they think about investing, to them it feels natural that, obviously, you're going to use any data to make an investment.

data analystThe analyst is still in control, but now they’re augmented by this data and technology. There’s still a human decision-maker, but their decisions are now more accurate, more predictive of what they're trying to do. It just seems to me — and many others — like this is a natural progression of investing.

This is something that has been done for a long time, and there’s definitely a history of people doing deep due diligence on companies they’re investing in. With this data and technology, they're doing that, but on a larger scale. In general, once you figure it out, it’s going to be the future of investing.

Levy: What kind of people are hedge funds looking to hire if they’re interested in building out their alternative data teams?

Zatreanu: It’s an interesting question, because you’re basically trying to figure out what the research analysts of the future will look like — what the technologists and PMs [portfolio managers] will look like. Each is a role that has existed with most funds, and going forward we're still going to need them in some capacity, but they're going to look slightly different, if not fundamentally different.

Macys

What does a junior analyst look like? Right now it’s typically someone who went to a good Ivy League school, then an investment-banking program at one of the top banks, then a hedge fund poached them to analyze the fundamentals of companies.

What we argue is that that’s no longer enough. They need to understand math, statistics, and computer programming.

They don't need to be experts in these things, but they need to have the language to communicate with people who are experts in them. For instance, you're not expected to work at Macy’s before you can cover it and invest in it, but it certainly helps. You need to go through the s--- to understand the subtleties, like how to listen to the nuances in someone's voice on an earnings call.

We, as research analysts, have been abstracted from the businesses. We’re sitting in our Midtown offices analyzing businesses throughout the world that most analysts have never stepped foot in. And yes, it helps to listen to the calls and read through everything the company puts out, but on the other hand, wouldn’t you much rather get much more granular on the details of the operations of that company? And that’s what data can offer, being able to look at how promotional a retailer is, how the variance across the different locations around the world, the differences understanding customers at a high level — not as summarized on top line of a financial statement, but understanding the individual customers. Like, "Why has Rachael continued shopping at Macy’s? Why has she stopped shopping at some other store when another store came online?"

Levy: How would you be able to tell that Rachael made that decision?

credit cards

Zatreanu: It depends. You can look at a credit-card data. That gives info on an individual person. The huge difference is, unlike marketers, I don't care that your name is Rachael and that you live at a certain address. I just care that a person with ID 345 used to shop at a Whole Foods but then — all of a sudden — an Aldi opens up in your neighborhood.

And now I see that person with ID 345 no longer shops there and I see an Aldi transaction. That means that Whole Foods potentially lost a customer.

You can see what the customer loyalty looks like and how fragile is that loyalty. As soon as the new sexy store opens up, do my customers shift over? That can speak volumes to the future of a company … but like I said, I don't care that it’s you, whereas the marketer does so they can send you advertising. I just care about the trend at large.

Levy: So it sounds like you need to have more of a hybrid analyst who knows this data is out there, on top of the other skills they’d already have. You have also said that sometimes you have a hard time finding people who meet that criteria and other skill sets, like finding people who could go out and get the data. Could you speak to the challenges in hiring?

Zatreanu: The skill sets that you now need for an analyst or data scientist at a hedge fund — you need them to have the typical data-science background, which is an understanding of math and stats, computer programming, and also domain expertise in finance.

What I would add to that for our purposes is also someone who has the soft communication skills. People who can go out there and negotiate, and then a broader curiosity about how the world works. Like you know, you’re picking up a rental car and you ask the person at the desk a bunch of questions, like, "How many cars do you have in this garage now? How is business? How do your systems work?" Those are the components of a successful data scientist, analyst, whatever you want to call them.

Google Campus bikes

The problem is, we’re competing for those sills sets with the likes of a Google or Facebook or some sexy startup, and there are a lot of factors going against hedge funds — one of which is that their very mysterious. They have very little publicity. They don't like to talk to the press.

Whereas the other startups are all about advertising. And telling people who they are, and what they believe in. And that speaks to the whole millennial ethos about wanting to work for something more than the paycheck. It used to be extremely easy to hire at funds. But that’s gotten harder.

The funds realize they are competing with the Googles of the world and they have to do these kinds of things to make themselves look less like the villainous hedge fund and more like the cool tech startup.

It’s kind of interesting. A lot of it is psychology and optics, because at the end of the day, it's the same problem. A lot of funds were very sensitive about their use of credit-card data hitting the news because, you know — "These evil hedge funds are looking at my credit-card statements knowing what I am buying." But at the same time, you have Mark Zuckerberg knowing everything about you, including who you are talking to, who you like, and not just that, but affecting the results of political elections, by curating your news you have access to. It’s the same thing.

You have rich guy Mark Zuckerberg using people's private data without them knowing it, but they don't get vilified. For whatever reason, if you're a tech entrepreneur, you created your money by creating a real tangible product as opposed to just hedge funds, which are seen as gamblers. But it’s an interesting PR battle they’re facing, especially after the financial crisis, where they're trying to attract the top minds of the field.

Mark Zuckerberg

Before the crisis, they had no trouble hiring; now it’s much more of a marketing push to figure out how to incentivize people to join them.

Levy: Some people say, "Quantamental is a big trend, people are getting into it," but they also say it’s relatively easy to find people who can do this. Some critics will say that, in the end, they all end up doing the same thing, doing bottoms-up analysis of data without really understanding the bigger picture. What do you think? Is quantamental going to become crowded?

Zatreanu: Fundamentally, I disagree with that. It’s easy to hire a physics Ph.D. and just say, "Now I'm doing data science," just checking the box. The problem is, those people don't have the domain expertise. They’ve never worked in finance. They don't understand what matters. It’s basically seen like the head of the chess club arguing with the head of the football team — the nerds versus the PMs, analysts, and traders. The nerds will get stuck on some problem that is intellectually stimulating and really interesting but has no business value.

You can find people who have technical skills. The problem is they don't have the understanding of what matters to these companies or how these investments get made.

Levy: You’ve mentioned the social aspect as well. What’s the challenge?

Zatreanu: Having good communication skills is hard to find. Where that is important is sourcing data sets. Once you’ve identified an investment thesis and the relevant KPIs [key performance indicators] we're trying to measure, we start the discovery process, which is basically a due-diligence initiative, where we will look at the data ecosystem, you have the target company we’re interested in, and then we try to figure out who their partners are, who their customer are, what charities do they donate to, what invoicing systems do they use, what technology do they use for their payment system.

talking, socializing, networking, social media roi, bi events, september 2012, bi, dng

Understanding all these components, where there might be data and where that data might legally be purchased. Then after that, you basically start calling them up and telling them this is what we're trying to do and negotiating that and convincing them that it would be a good idea for them and figuring out a good price for it.

It’s not a skill set most people have. It’s extremely important when you’re trying to source a data set that no one has thought of before and you're talking with someone who has never heard of a hedge fund before, and you have to explain to them why you want to them to send you their database.

Levy: Do a lot of these conversations start in person? Do you have to fly out to Kansas or wherever?

Zatreanu: A lot of it starts over email or LinkedIn, then an email, and after a phone call, we’ll go in person. I’ve flown to Sweden, for example, to speak with a guy who had a data company we were trying to get data from — also to Hong Kong and Singapore. It’s one of those things where I value conversations on the phone or in person much more than over email.

Levy: So you’re trying to find someone who can code, is an analyst, and can socialize.

Zatreanu: Not everyone on the team has to have these skill sets. You can obviously compromise on one over another. But if you’re talking about the person who wants to set up these teams, they should have these skill sets. They might not need to be an expert in programming or statistical theories, but they still need to have intelligent conversations with the people who are the experts, to call out the bulls---. If your developer tells you this is going to take forever, you can push back and say, "What if we do it this way?"

If you're a portfolio manager and you're talking to an analyst, you don't understand the companies as well as your analysts do because you're not as into the weeds of it, but you can still speak intelligently about it. It’s a similar kind of thing from a management perspective. That person needs to understand a little bit of everything. And then on the team you definitely need to have people with these different skill sets.

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A secretive hedge fund firm that has legendary status on Wall Street is attracting new money

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Jim Simons

A strategy run by Renaissance Technologies, the secretive multibillion hedge fund firm, is attracting fresh money.

The firm's Renaissance Institutional Equity Fund (RIEF) grew by about $4 billion in 2016, ending the year with $14.9 billion after starting 2016 with about $10.9 billion, according to a person familiar with the matter.

The person declined to be named because the information is private.

To be sure, most of that increase is from performance, as the fund returned 21.5% last year, equal to about $2.35 billion in gains. Still, a rough calculation shows that the fund probably took in about $1.6 billion in new money in 2016.

The capital raise comes at a time when many hedge funds are struggling to attract new money. A spokesman for Renaissance declined to comment for this article.

Renaissance's most famous fund, Medallion, has been closed to money from outside investors since 1993. RIEF, however, is open, and Renaissance believes it still has room to grow, the person said. 

Renaissance, or RenTec for short, is one of the industry's most successful hedge fund firms, gaining legendary status for its Medallion fund. The fund, perhaps the most successful moneymaker of all time, has beat out legendary investors like George Soros and Ray Dalio, Bloomberg reported last year.

The firm has a history of minting millionaires and billionaires, some of whom have gone on to donate a lot of money to politicians.

Robert Mercer, RenTec's billionaire co-CEO, is one of Trump's biggest backers, and donated $22.5 million last year to conservative groups, according to a tally by the Center for Responsive Politics.

He and is daughter, Rebekah Mercer, are close with many in the Trump team, including Stephen Bannon, Trump's adviser and founder of website Breitbart, a far-right website that is known for promoting white-nationalist views.

The firm's founder, Jim Simons, meanwhile, has backed liberals. Simons donated about $25 million to liberal groups last year, according to the Center for Responsive Politics, making him the fifth biggest individual donor overall.

SEE ALSO: Hedge funds are tracking your every move, and 'it's the future of investing'

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A $30 billion hedge fund's foreboding letter on Trump starts with quotes from The Joker, 'Lord of the Flies,' and Thomas Jefferson

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Seth Klarman

Baupost Group's Seth Klarman is worried about what the election of President Donald Trump means for global markets.

In a private letter to investors dated January 20, reviewed by Business Insider, he starts with three quotes:

  • "In matters of style, swim with the current; in matters of principle, stand like a rock."— Thomas Jefferson
  • "The world, that understandable and lawful world, was slipping away."— William Golding, "Lord of the Flies"
  • "Do I really look like a guy with a plan? You know what I am? I'm a dog chasing cars. I wouldn't know what to do with one if I caught it. You know, I just ... do things."— The Joker, "The Dark Knight"

The rest of the letter serves as an explanation for the inclusion of those three quotes. Klarman runs through his thoughts on Trump, volatility, and the stock market. You can read more about the letter at The New York Times.

Baupost, the Boston-based hedge fund firm, managed $29.2 billion as of mid-2016, according to the Hedge Fund Intelligence Billion Dollar Club ranking. A spokeswoman for Baupost didn't immediately respond to a request for comment.

SEE ALSO: A secretive hedge fund firm that has legendary status on Wall Street is attracting new money

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A partner at Dan Loeb's Third Point has left

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Keri Findley.

A partner at Dan Loeb's Third Point has left, according to people familiar with the matter.

Keri Findley left last week and was one of four partners at the $15 billion hedge fund, the people said. Her departure means the firm now just has three partners.

Findley started at New York-based Third Point in 2009 as an analyst and worked her way up, covering structured credit. She was made partner a little over a year ago, one of the people said.

Findley was the only female partner at the firm, according to the firm's website, and was one of the few senior women in the hedge fund industry. Her profile on the Third Point site has been taken offline.

Third Point, one of the industry's most tracked funds, managed $14.9 billion as of midyear 2016, according to the Hedge Fund Intelligence Billion Dollar Club ranking.

SEE ALSO: A $30 billion hedge fund's foreboding letter on Trump starts with quotes from the Joker, 'Lord of the Flies,' and Thomas Jefferson

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A top investor at $3 billion hedge fund Hutchin Hill Capital has left

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shadow

Jet Theriac, a portfolio manager and managing director at Hutchin Hill Capital, has left the hedge fund firm.

Theriac started at Hutchin Hill in its San Francisco office in October 2015 and left last month, according to a LinkedIn profile. He oversaw a long-short equity team investing in energy and utilities, a person familiar with the situation said.

Theriac previously worked as a portfolio manager at Balyasny Asset Management from 2012 through 2015, according to the LinkedIn page.

Theriac couldn't immediately be reached for comment.

Hutchin Hill was started by Neil Chriss, a former managing director at SAC Capital. His New York-based firm launched in 2008 with $300 million from billionaire James Simons, founder of Renaissance Technologies.

The firm's diversified alpha master fund, with $3.3 billion under management, returned 4.6% last year and 0.13% through mid-January of this year, according to HSBC data.

Last year, the firm announced it would shut down its then-19 month old Hong Kong office, Bloomberg reported.

SEE ALSO: One of the senior women in the hedge fund industry has left Dan Loeb's Third Point

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'Wiped out': Hedge fund assets could drop by 30%

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Hedge funds might be facing a rocky road ahead.

A new report out from Boston Consulting Group plots three possible scenarios for hedge funds for the period until 2020. In the worst case scenario, BCG predicts industry-wide assets could shrink by as much as 30% and margins could fall by 20% as a result of fee reductions and increased capital expenditure.

In that scenario, performance would be similar to that of 2015 and 2016. Hedge funds on the whole returned about 3% last year, according to BCG, a period where the stock market hit all time highs.

“In the most dire scenario, disruption, the structure of the market would be wholly transformed and hedge funds would suffer significant reductions in AuM, margins, and employee compensation," BCG said. 

In this scenario, very large players and niche players would win out, "and a large portion of the middle of the market [will be] wiped out."

A copy of the relevant table from BCG is below. You can check out the full BCG report here.

BCG hedge funds

Even in the momentum scenario, hedge funds will have to retool, according to BCG. "The hedge fund of the future will need to do things differently," the report said. 

The report set out a number of steps hedge funds should take, including putting an increased focus on their clients, and improving their operating model. In addition, BCG suggests hedge funds "embrace the technology revolution," and change how they source technology and talent. The report said:   

  • "Sourcing. Hedge funds will need larger “intelligence teams” to gain access to the best ideas and skills. They should build new partnership models to develop or source technology, often collaborating with tech companies or other investment managers that might otherwise become competitors."

  • "Talent. The traditional hedge fund talent model is poorly suited to attracting, developing, and retaining technology talent. Hedge funds need a new value proposition for employees, complete with a new breed of manager, a tech-style working environment, and even a tech-heavy location such as the West Coast. Hedge funds must become more team based and less founder driven, with a culture that encourages innovation."

SEE ALSO: One of the most senior women in the hedge fund industry has left Dan Loeb's Third Point

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Goldman Sachs is folding its London hedge fund operations and moving staff to the US (GS)

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A sign is displayed in the reception of Goldman Sachs in Sydney, Australia, May 18, 2016.   REUTERS/David Gray/File Photo

NEW YORK/LONDON (Reuters) - Goldman Sachs Group Inc's hedge fund Goldman Sachs Investment Partners (GSIP), which was one of the largest-ever hedge fund launches in history, is closing its London operations and shifting staff members to New York, four sources told Reuters.

About eight staff members who made up the London team were recently told to move to Goldman's Battery Park City headquarters or find a new job internally, said the sources.

The move was triggered by managing director Nick Advani, who led the hedge fund from London and said in June he would be stepping down from his role, the sources said.

Advani, now an advisory director at Goldman, did not respond to requests for comment. Advani is expected to leave the firm later this year, the sources said.

Managing director Raluca Ragab, who had been formally leading the London-based team since Advani's departure, will leave Goldman once the move is complete, one of the sources said.

Lloyd BlankfeinMulti-strategy hedge fund GSIP launched in November 2008 with $7 billion in assets, making it one of the largest hedge fund launches at the time. GSIP, run globally by co-heads Raanan Agus and Kenneth Eberts, sits within Goldman's asset management division.

But a focus on value investing with around 20 positions mainly in equities became more challenging in recent years, a former employee told Reuters.

Goldman's Global Long Short Partners Offshore fund posted losses of 8.2 percent in the year to end-September in 2016 after small gains of 1.5 percent in 2015, according to an investor letter reviewed by Reuters.

Last September, three of the fund's top five credit positions were in the Europe Middle East and Africa region, according to the letter.

Assets fell in 2014 after Goldman pulled out $2.8 billion in response to the U.S. Dodd-Frank financial reform law and the Volcker rule, which restricted banks' proprietary trading. The fund now manages around $3.5 billion.

Separately, Goldman may move up to 1,000 staff out of London in response to Britain's vote to leave the European Union, it was reported last month.

 

(Reporting by Maiya Keidan in London and Olivia Oran ia New York, additional reporting by Carolyn Cohn and Simon Jessop)

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Be very afraid of the stock market

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  • Investors are realizing the tax cuts and pro-business reforms will take longer to materialize than they expected.
  • In the meantime, stocks and bonds are correlating with President Donald Trump's popularity (or lack thereof), Credit Suisse says.
  • Adding to this pressure, stock valuations are high by any measure.

Ever so slowly, Wall Street is being shaken from the trance of President Donald Trump's promises of deregulation and tax reform.

As this happens, an entire industry known for sharing notes and trading tips is starting to worry whether it has been working off of the wrong playbook.

"When Trump's favorability initially rose after the election, equity investor optimism was driven by an intense focus on how to position for rising interest rates and improving prospects for economic/earnings growth driven by corporate tax reform, infrastructure spending, and regulatory relief," analysts at Credit Suisse wrote in a recent note. "But since Trump's favorability peaked in mid-December, that optimism has been replaced by a wait and see approach among many investors, along with a healthy dose of frustration."

The fears that are rattling the "Masters of the Universe" are varied: Baupost's Seth Klarman is worried about Trump's tax cuts and spending plan. He is also, along with Bridgewater's Ray Dalio, scared of populism and trade wars. Greenlight Capital's David Einhorn is worried about inflation, and Elliott Management's Paul Singer worries that the world has gone complacent.

He's right. It has. That means it's time to be afraid of the stock market.

First things first; next things, perhaps never

The "frustration" Credit Suisse is describing comes from the fact that investors don't know when the plans they like will actually be enacted, while measures that are actually disconcerting to investors — immigration bans, trade-war mongering, and healthcare uncertainty — have taken center stage.

They are also frustrated that details of plans they thought they liked could hurt some industries. Think, for example, what the border-tax element of Trump's plans — essentially a tax on importers — could do to retailers like Kohl's, Lululemon, and Urban Outfitters that make their products abroad and sell them at home.

peter navarroMessages from the administration have not been reassuring. Peter Navarro, the head of Trump's National Trade Council, dismissed as "fake news" Wall Street analysis that concluded retailers would be hurt and jobs would be lost through the border-adjustment tax.

Navarro has, so far, been the clearest messenger of Trump's — and top adviser Steve Bannon's — vision for the economy: taking resources away from the services economy we have, and recreating the manufacturing economy we used to have, to save jobs.

"We envision a more Germany-style economy, where 20% of our workforce is in manufacturing," Navarro told CNBC in a recent interview. This comment, as we've pointed out before, compares apples to oranges. The US manufacturing sector alone would be the eighth-largest economy in the world. Germany's entire economy is the fourth largest in the world.

This is not an idea Wall Street signed up for.

Trading on Trump

But let's say Wall Street does get a few things on its wish list, even though House Speaker Paul Ryan says they won't materialize until 2018.

In that event, according to Credit Suisse, we still have a problem: "Investors have been asking how valuations look on 2018 EPS, when it is becoming more likely ... that stock market friendly policy changes in Washington could materialize. On current 2018 expectations, US stocks still look highly overvalued."

The charts below trace forward-looking price-to-earnings ratios all the way back to the mid-1980s:

US stocks over-values on 2018 earnings per share expectations, says Credit Suisse.

Perhaps more disconcerting to Credit Suisse — and this correspondent — than any of these things is that the stock market and a few macroeconomic indicators are actually trading on Trump's favorability right now. (For more on that, see the slides below).

It seems as if Wall Street has given up the difficult work of picking stocks and making models, of calling experts and building theories. Instead it is allowing the market to try to figure out whether the president can handle his new job. Of course, it's unclear how long that will take.

As a result, 10-year Treasury yields, the dollar, crude oil, small-cap stocks, financial stocks, high-tax-paying stocks, and more are correlated to Trump's favorability.

This is a delicate state, to say the least. The American people don't like it when their president is rattled, and we know it doesn't take much to rattle Trump – a skit on "Saturday Night Live," poor sales at his daughter's company, The New York Times reporting the truth. It could be anything.

And you don't want to be in a stock market that can move on just anything.

Stocks and yields are correlated to Trump's favorability. (Red is Trump's favorability rating, blue is the market).



The US dollar and crude oil also appear to be trading on Trump.



Large-cap stocks also seem to have caught the bug, depending on what they pay in taxes. It seems as if low-tax payers get hurt when Trump's favorability is high — a sign the market thinks it will be easier for him to pass tax reform.



See the rest of the story at Business Insider

Billionaire hedge funder Steve Cohen just got the go-ahead to build a massive six-story mansion in New York City

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It's champagne and caviar tonight for billionaire hedge funder Steven A. Cohen, who received the official go-ahead to build a massive, six-story, single-family mansion at 145 Perry Street Wednesday. The Landmarks Preservation Commission (LPC) voted almost unanimously in favor of the plan despite outcry from local residents and, most notably, Andrew Berman of the Greenwich Village Society for Historic Preservation (GVSHP) who had denounced the design in a statement as "starkly modern,""fortress-like and massive," and more like a bank or a luxury retail store you'd find in Miami or Los Angeles, not the "simple but charming" Village.

145 perry street old

According to CityRealty, there are currently are two low-slung, nondescript brick buildings with shuttered storefronts located on the prime corner site. The site itself sits within the 2006 expansion of the Greenwich Village Historic District that was in part extended to preserve the two- to four-story scale of the block. The buildings will be demolished to make way for the new scheme which is comprised of two buildings: a large mansion and a smaller attached apartment-style house — again, all for one family.

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Leroy Street Studio drafted the design which, diverging from the overall neighborhood aesthetic, features a cream-colored masonry exterior accented with bronze, terracotta and wood details, as well as deeply inset windows shrouded by wooden louvers and a perforated brick screen. The attached apartment house essentially flips that palette and is emphasized by more windows and bronze across its facade.

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perry street

CityRealty writes that the main entry to the mansion will sit on Perry Street and inside there will be a grand curving staircase, fireplaces, an elevator and a private rear garden designed by Hollander Landscape Architects. The buildings will also be topped off by a planted terrace.

145 perry street old plans

Per city records, Cohen purchased the lot for $38.8 million in 2012. But before he came along, there were two other major proposals floated for the site by developer Scott Sabbagh and Madison Equities: a seven-story, 93-room boutique hotel designed by Morris Adjmi in 2008 (seen above left), and then later a joint hotel and two townhouse development in 2009 designed by Helpern Architects (seen above right). While both plans were approved by the LPC, they never moved forward.

[Via CityRealty]

SEE ALSO: This outrageous $250 million mansion in LA comes with a 4-lane bowling alley and an entire collection of cars

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Top Bridgewater exec explains how its intense, unique culture helped the most successful hedge fund of all time make $50 billion

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  • Bob Prince, co-CIO of the world's largest hedge fund, correlates its longterm investment success with its unusual and demanding culture.
  • Bridgewater employees rate each other's performance, and their profiles are considered for "believability-weighted decision making."
  • He explains how the firm recovered from a rough losing period in 2016 to become the most profitable hedge fund in 2016.

Bridgewater Associates is as well known for being the world's largest hedge fund, with $150 billion in assets under management, as it is for its quirky culture of "radical transparency."

At the firm's Westport, Connecticut office, its 1,500 hundred employees abide by Bridgewater founder, chairman, co-CEO, and co-CIO Ray Dalio's set of "Principles," a collection of lessons on success and management that serves as a sort of constitution. Most meetings are recorded on camera or audio recorders so that they may be scrutinized, if necessary, later, and employees constantly measure each other's performance using an iPad app called "Dots."

It's a demanding environment, and 30% of new employees leave within their first two years, but many of those who remain choose to embrace the Bridgewater way of life.

From a performance side, Bridgewater took the title of "world's largest hedge fund" in 2005 and has remained there. In February, London-based LCH Investments released its annual "Most Succesful Money Managers" list, and at the top was Dalio, whose firm, according to LCH, made $4.9 billion in net gains in 2016 and $49.4 billion in net gains since its inception in 1975 through its two actively-managed funds, Pure Alpha and Optimal Portfolio (its passively-managed fund, All Weather, was not considered).

An obvious question that arises when looking at the company is how — or if — Bridgewater's unique culture contributes to its success on the investment side. For the firm's co-CIO, Bob Prince, there's a clear correlation. He's been with Bridgewater since 1986, before it even had assets under management, and to him, the firm's "idea meritocracy" and its way of partnering with clients has allowed it to become a consistently successful giant.

Prince spoke with Business Insider after the LCH rankings came out to discuss the way he views the relationship between performance and culture. We discussed his 30-year career at Bridgewater, how and why employees measure each other's attributes, how the firm bounced back from a losing period last year, and why he thinks the culture has adapted since the days of six employees, but has never truly changed.

The following interview has been edited for length and clarity.

Richard Feloni: How do you link performance to Bridgewater's unique culture?

Bob Prince: Culture is just how we interact. At the very basic level, is it better to be honest with each other or not honest with each other? Is it better to talk behind your back or to talk in person? Do we want the best ideas to win or should the boss get his or her way? Should we be insulting and yell at each other or should we have calm conversations?

There's sort of a qualitative way to talk about it but then I could very directly link it to performance, in a very linear way.

Feloni: How would you describe the general benefits of the culture?

Prince: If I just take it from a qualitative standpoint, it's who do you want to spend your life with and what do you want to do? It just comes down to quality relationships. Long-term quality relationships are both intrinsically gratifying and productive. The fact that I've worked with Ray as a partner for 30 years means we're best friends, you know? That friendship has really evolved, from that shared mission and being in the trenches together, learning things about each other, and learning things about the world.

bob princeAnd I work with Karen Karniol-Tambor, who's fantastic. She started here as a 22 or 21-year-old, 10 years ago. At first it was like, wow, she's really smart but she knows nothing! She was a government major or something. But she was super engaging, really forthright. She's been my research partner for 10 years and what I told her at the start was, "You're not my assistant, you're my alter ego. Whatever I do, you do." I shared things with her and I put my work in front of her. She's 23 years old and I'm just throwing it in front of her. By her just seeing that, she can then connect the dots and then over time, she's become an important leader in our research area.

What happens is both gratifying and fun but also like super productive. We had a conversation this morning, for example, about how to approach some particular topic and it just flowed. Ray refers to it as playing jazz together. It's like back and forth, back and forth — she's constantly disagreeing with me but I can explain where she's wrong, and then she can explain why I'm wrong again and it takes like 30 seconds to sort it out and we get to a great answer.

It's an idea meritocracy. It really just comes back to how important are quality relationships to you, what does it mean to have a quality relationship, and how do you achieve it? That's what it comes down to.

Feloni: And then how does this relate to making money?

Prince: It does almost algebraically, is the answer.

If you generated $49 billion of returns for your clients, what is that? Well, it's a product of two things. You've got a certain amount of assets under management multiplied by a certain amount of return. So if you don't add any clients, you're not going to add any value to clients. And if you don't have positive returns, you're not going to add value, and you're then not going to have any clients.

So if I just break those two things down, the first thing you need is clients. And so the culture for us totally extends to the relationship with them. In fact, typically what will happen, going all the way back, is we develop a quality relationship with somebody before they hire us. We're engaging with them in a sharing of ideas — "If we were in your shoes this is how we would think about it; if we applied our principles for investment management to your situation this is how we would think about it." We're operating as a partner with them, and therefore for them to have us manage their money is just a natural extension of that.

But we don't act as hired guns. I'd say it's 35% making money in the markets and it's like 65% a quality of exchange of ideas.

If you think about it, that's totally logical because if you're managing 0.5% of their portfolio but you're helping them think better about 99.5% of the portfolio, the second thing is obviously of more value than the first. So the relationship itself is actually kind of superseding any particular returns that you're generating in the markets. The two things really reinforce one another because if you have that kind of quality relationship, then they trust you more and they're likely to give you more funds to manage.

We have about 300 clients in total, but it's not as if we have 3,000 clients. We are able to know them all personally and they're partners. I think our average client has been with us 11 years. We've lost almost no clients through history. I think our turnover is 1%.

Even during losing periods. We had a losing period last year and clients added.

When you're looking at a market, the basic essence of a market is the price reflects the consensus. The only way you can add value in a market is to be an independent thinker. You have to be able to deviate from the consensus but you have to be able to think differently and then be right about it. It's easy to think differently but it can't be 50-50! You have to be right more than you're wrong. That means you need quality people and if you have independent thinkers, they by definition disagree with one another. And so you need to have ways, processes in place that independent thinking people can work effectively together.

Feloni: How do you get them to work well together?

Prince: There are two things that are really essential.

lebron jamesNumber one is you've got to get people in the right positions on the field. Think of it like a basketball team.

In a basketball game there's radical transparency, right? Because you've got five players on the court in little short uniforms and you've got a scoreboard and you've got 20,000 people watching, and then you've got instant replays and you've got a post-game interview. If you lose the game, A, it's crystal clear that you lost the game and B, it's crystal clear why, and we can pin it to the players on the court and the coach who put him there and so forth.

On a team you may see that a three-point shooter might think they're a rebounder, or that rebounder might think they're a three-point shooter, but it becomes evident that they're not. But, if you just switch positions maybe everything's great.

The first thing that you have to do to put a team together is you have to know what everybody's like. What are their strengths, what are their weaknesses? And the real challenge when you have a company is that it's not as visible as being 7' tall versus 5'11". But truly, some people are more creative than others, some people are more analytical than others, some people are better at communicating. You have big differences in people, they're just not as evident as on a basketball team.

You have to find a way for figuring out what people are like and a big part of that is each person really has to want to know what they're like. Because if I'm not open to an objective assessment of what I'm like, it breaks down the whole system. My defensiveness is going to break down that process.

The second main thing that has to happen is that you have to have an idea meritocracy, a way that you can resolve differences and have the best ideas win. If the summer intern has a better idea than Ray, we're going to go with what the summer intern says.

Richard Feloni: Is that just an extreme example, though? That wouldn't actually happen, would it?

Prince: No, literally! And it has to be. Otherwise you'll fail. Think about it. In the markets, the markets are a pure meritocracy. When we put a trade on the bond market, there's no branding that goes on that trade! You're right or you're wrong. The markets are the ultimate meritocracy and if your organization isn't a meritocracy, you're just going to be fooling yourself or you're going to bang your head into a wall. [Prince told us later that the idea for putting down Dalio's "Principles" into a handbook came from an intern, and that his and Dalio's fellow co-CIO Greg Jensen started as an intern in 1995.]

To do this, we have a thing that we refer to as "believability-weighted decision making." Which is that based on how different people are more or less believable on different areas. And therefore, if we need to determine what is the best idea in a discussion, that we can consider the believability of the people making that choice. And so in a sense, I need to stand down on certain decisions because I'm less believable on particular things. But on the other hand I should get more weight on other things.

BI Graphics How Bridgewater Measures Employees

If you think about it, you've got dictatorship on one side and you've got democracy on the other side — believability-weighted decision making is probably the optimal way to do it, if you could just figure that out.

There's a proverb: "As iron sharpens iron, so one person sharpens another." So you need to hold one another accountable and you need to be clear cut. Principle number one is "Trust in truth." The net of it is that you end up with what is really a community of people where people actually care about and trust each other because you're honest and straightforward.

Feloni: Can you explain how you manage through a losing period, both with clients and employees?

Prince: Trust and truth. What we do is, number one, is that when anybody hires us, the first thing that we do is we show them the range of returns that's going to occur, which includes losing periods. And it's what we call a cone chart. The cone chart has an upward slope to it, we expect to have an upward slope over time, but certainly expect there to be a range, pluses and minuses along the way.

Bridgewater Cone Chart

And so, for example, back in 1991, when we first started Pure Alpha, we basically plotted the cone chart out, 10 years and more, and then what happens is that cone chart is just an empty cone because it's all expectations. And now every quarter, you just plot the dot to show where you are in the cone. And then if you have a losing period, the question is not was it a winning or a losing period, the question is are we inside the cone. Because if we're inside the cone and the cone is sloping up, then over time I could figure it's going to work out OK. But we basically say, look if we break outside the bottom of the cone, we have deviated from what we're conveying to you and you should fire us.

I remember back when we first started doing this in the early 90s, one of our sales guys said, "Man, you've got to be crazy to do this cone because if you have a losing period you're going to get fired, you can't talk your way out of it." And we're like, well, that's what it is. Here we are 25 years later and we're in the middle of the cone.

What happens is if you go through a losing period, A, you've already told everybody there's going to be losing periods; B, I say, well when I look at it, I have a checklist of items to see if they fall out of our range of expectations. It's not what we wished would happen — we wish we could make money every day, but I can assure them that no, it's not outside the range.

What's very important is that the client needs to know that you are paying attention, have a great sense of what's happening, and that you're learning something. One of our basic principles is that the way you improve is largely by learning from mistakes, and this applies both to individual employees and our investment process. When you go through a losing period, it shines a light on a vulnerability in the process. That gives you the opportunity to deal with it and improve.

And so last year, when we had that losing skid there, we had a lot of those kinds of conversations with clients. Some very in-depth reports, some very in-depth conference calls, where we really went through what's going on in the markets, what's consistent with what we expect, what's inconsistent with what we expect, what are we learning, what are we improving, and so they're really going along with that, along with us on that.

Feloni: So there wasn't anything very unexpected last year, then? It fell within the range?

Prince: Totally.

bob prince ray dalio bridgewater

Feloni: How has the culture changed over the 30 years you've been there?

Prince: If I go back to 1986, when I started, it was a single digit number of people and we had no assets under management! We basically sold our research and did risk-management consulting for companies. But I'd say the core mission and the values have never changed. What has changed is that it's gone from implicit to explicit.

Over time, what Ray has done is distill that culture into words. We would have a back and forth about it — debate it, discuss it. And then those things become explicit. It's been very beneficial to me because even though I know Ray well, you could still not know where the guy's coming from. But when he lays it out and explains how he's thinking, it helps me  understand him and also helps me think better.

I personally have much greater discipline and fluidity in how I think about things than I would have had if those things weren't expressed explicitly. And then the systematization [e.g. iPad apps] carried that further.

Feloni: Has the culture been affected by Ray having a spotlight shone on him in the last six years or so?

Prince: Ray's not trying to get a spotlight shone on him! [laughs]

Feloni: But he has had to react to it. How does that play into the balance of everything?

Prince: Yeah. What matters to us is the quality of the relationships we have with clients and the quality of the relationships we have inside the company. And those two things reinforce each other. That's what matters. An article doesn't contribute at all to the quality of client relationships, so we never cared about whether we're in the newspaper or not in the newspaper.

And then what happened then as we got bigger and kind of more noticed, we got pulled into that world of mass media. At that point we had to then decide do we participate or do we not participate? We decided it's better to participate and explain ourselves then to take a chance of being mischaracterized.

So the only reason that we're really engaging in that way is just a matter of trying to create clarity around the accuracy of what we do here. But it doesn't have any impact on the actual nuts and bolts of our client relationships because those people are practically like family.

SEE ALSO: Transcendental Meditation, which Bridgewater's Ray Dalio calls 'the single biggest influence' on his life, is taking over Wall Street

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Dan Loeb made a nearly $1 billion bet on Wall Street (GS, JPM, BAC)

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Dan Loeb went big on Wall Street.

A February 10 regulatory filing shows that Loeb's Third Point took large positions in JPMorgan and Bank of America and, to a lesser extent, Goldman Sachs — investing nearly $1 billion in total in the banks' shares during the fourth quarter of 2016.

The JPMorgan position was worth about $453 million; the Bank of America holding about $387 million; and the Goldman holding about $96 million, the filing shows

Bank stocks soared after of the US election but have since leveled off. JPMorgan, Goldman Sachs, and Bank of America are all flat or up slightly for the year to date.

The regulatory filing, called a 13-F, lists long stock positions that investment firms make. The positions are current as of 45 days prior, so it is possible that Third Point has since changed its positions. 

In a recent letter to clients, Loeb said that his $15 billion hedge fund firm was betting President Donald Trump's propositions for tax cuts, infrastructure spending, and deregulation would be great for investors.

"This environment is undoubtedly better for active investing — just as active investing was considered to be on its deathbed," Loeb wrote in the letter, dated earlier in February.

Loeb also wrote that he had made a large move into the securities of financial companies. He said that the sector represented about 12% of the fund, up from 4.4% on November 8, the day of the US election. Loeb didn't mention positions in the banks, and it's not clear when during the fourth quarter of 2016 that Third Point made the investments.

Third Point returned about 6.1% last year, according to the letter, less than the roughly 12% gain for the S&P 500 index, with dividends.

SEE ALSO: A partner at Dan Loeb's Third Point has left

DON'T MISS: DAN LOEB: Trump will make hedge funds great again

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Hedge funds shorting Ocado has led to the quirk that big investors own over 100% of the stock

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Tim Steiner Ocado

LONDON — The top 26 shareholders in online grocer Ocado have the rights to more than 100% of its shares due to an unusual quirk in the market, the Financial Times reports.

The situation has arisen because a large number of investors have borrowed stock, effectively doubling the rights to the same shares.

Hedge funds and other sophisticated investors will borrow shares to "short" them, effectively betting that the share price will fall. The process of borrowing the shares creates two parties with claims on the shares: the short seller who borrowed the shares and the lender who can recall them.

Ocado is a highly contentious stock in the City, with hedge funds making major bets against the company. It is the second most "shorted" stock in the UK, according to Shorttracker.co.uk, with 17.9% of its stock out on loan to investors betting it will fall.

Roughly 75% of Ocado's shares, controlled by 10 investors, have never be sold. The concentration of shares among 10 investors, combined with the heavy short interest in the remaining shares, means that just 26 investors in Ocado now have rights to on 100.3% of its total shares, according to the FT.

Ocado provides online grocery delivery services and also develops technology for picking and packing goods that it hopes to license to other supermarkets and shops. Bulls of the stock believe this will be successful and the company will expand overseas; bears think this is a stretch.

Bernstein's retail analyst Bruno Monteyne says in a note on Monday that Ocado "investors [are] remarkably unconcerned" at delays to recent new technology launches and says he does not think Ocado has enough cash to fund international deals. Bernstein rates the company "underperform."

Ocado's stock has reflected the contrasting narratives in the City about the stock, with jerky moves both up and down along a relatively flat baseline.OcadoYou can read the full FT story here.

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Another portfolio manager has left struggling hedge fund Folger Hill

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Mitul Shah, a portfolio manager at Sol Kumin's Folger Hill, has left the hedge fund firm.

Shah worked at Folger Hill Asset Management for about two years starting in February 2015, according to a LinkedIn page. He left last week, according to people familiar with the matter. 

Shah has since moved to Holocene Advisors, according to his Bloomberg terminal profile. 

Shah is at least the second portfolio manager to recently leave Folger Hill. Jennifer Pollak previously left for Ken Griffin's Citadel, Business Insider reported.

Folger Hill, founded by ex-SAC Capital chief operating officer Sol Kumin, has faced concerns over investor redemptions and performance. Its flagship fund fell 17.5% in 2016, according to investor documents reviewed by Business Insider.

A media rep for Folger Hill didn't immediately comment and a spokesperson for Holocene couldn't immediately be reached.

SEE ALSO: Ken Griffin's $26 billion firm has made a hire from a struggling hedge fund

DON'T MISS: Dan Loeb made a nearly $1 billion bet on Wall Street

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A high-profile hedge fund sent a letter explaining all the reasons it lost money last year, and why it is going to do better this time

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A high-profile hedge fund founded by a Steve Cohen acolyte sent a letter to investors explaining all the reasons for its underperformance.

In a January investor letter, Folger Hill's Sol Kumin set out why his firm's flagship fund dropped 17.5% last year. Among the cited reasons: a difficult environment for stock pickers, hedge fund "crowding" and the US election.

"I am truly sorry that we have not delivered better results thus far to our investors who put their faith in me," Kumin wrote in the letter, a copy of which was reviewed by Business Insider. "I can assure you that we are committed to fighting back in 2017."

Folger Hill faced concerns over investor redemptions last year. At the same time, two of its portfolio managers have recently left for competitors, with one leaving as recently as last week, Business Insider reported.

The firm's flagship fund, Folger Hill Partners LP,  fell 17.5% last year net of fees, compared to a 12% rise in the S&P 500, according to the letter. In the fourth quarter alone, the fund fell 10% compared to a 3.8% gain for the S&P 500. 

"[T]he Fund’s net short positioning (1.7%) served as a material headwind, as U.S. equity markets generally moved higher throughout the year," Kumin wrote in the investor letter. "In addition, our short book performance was particularly poor following the U.S. election results in November."

The firm also chose the wrong sectors to invest in, Kumin wrote, focusing on "out of favor" sectors like healthcare, consumer staples, and technology, media, and telecoms rather than sectors "with greater overall momentum" such as energy, financials and industrials.

Donald TrumpStill, the firm expects a turnaround this year. "We believe the U.S. election marks a major historical turning point for the global economic system and could create a target rich opportunity set, especially for shorting stocks," Kumin wrote.

"We believe moving from a monetary to fiscal policy driven economy will favor fundamental security selection more than during the Quantitative Easing era and should reward active investment managers in the years ahead."

Kumin, an ex-SAC Capital chief operating officer, launched Folger Hill in 2014. The firm lost about a third of its assets last year, Reuters reported. The firm managed about $1 billion as of mid-2016, according to the Hedge Fund Intelligence Billion Dollar Club, and assets fell to about $600 million just three months later, according to Reuters. Its current assets under management were not clear. 

A spokesman for Folger Hill declined to comment.

SEE ALSO: Another portfolio manager has left struggling hedge fund Folger Hill

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