On Thursday Greenlight Capital’s David Einhorn once again stirred up markets when he urged Apple to use its huge cache of cash to boost shareholder value. He filed a lawsuit asking the company to scrap a controversial shareholder proposal that he asserts limits the board’s flexibility to distribute preferred stock, one way to unlock that shareholder value. The stock climbed $9 on the news, only to fall back close to break even. With 25 minutes left in trading, Apple put out a statement saying it is “in active discussions about returning additional cash to shareholders” and that it “will thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock.” The stock closed up 3 percent, to $468.25.
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Shares of Moody’s Investors Service fell for the fourth straight day, hurting Jeff Ubben’s ValueAct Capital, the second largest shareholder behind Warren Buffett’s Berkshire Hathaway. Ubben unloaded 10 million of his 17 million shares. The stock, ValueAct’s fourth largest holding in its concentrated portfolio as of the end of the third quarter, is now down more than 15 percent since published reports correctly predicted the government would sue Moody’s rival Standard & Poor’s.
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January was the best month for long-short equity funds since May 2009, rising 4.22 percent on average, according to eVestment. Funds targeting Japanese equities gained more than 8 percent. The month also favored a couple of strategies that have been struggling for awhile. Macro funds had their best month since January 2012, while foreign exchange strategies enjoyed their best month in more than a year, thanks to long, downward moves in the Japanese yen and British pound. Meanwhile, five of 10 strategy groups enjoyed net increases in assets last year: fixed income/credit, multi-asset, multi-strategy credit, macro and relative value credit, eVestment reported.
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Shares of Och-Ziff Capital Management Group fell more than 2 percent Thursday, even though the publicly-traded hedge fund firm reported an increase in fourth quarter earnings that exceeded Wall Street expectations. Incentive income, which are generated by tperformance fees, surged 13 times to $568 million in the fourth quarter, when the firm recognizes this income. It helped that its main fund, the OZ Master Fund, posted an 11.6 percent gain in 2012, after dropping 0.5 percent in 2011.
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Federal prosecutors charged two individuals in the hedge fund industry with defrauding institutional investors that resulted in more than $311 million in losses. Helmut Kiener of Aschaffenburg, Germany, was charged with four counts of wire fraud, two counts of bank fraud, and three counts of money laundering, while John C. Tausche of Blowing Rock, North Carolina was charged with one count of bank fraud and one count of money laundering. According to the government, Kiener controlled several hedge funds, including K1 Global and K1 Invest, also known as Oceanus Funds. He allegedly devised a scheme whereby he fostered the false appearance that funds managed on behalf of Bear Stearns were increasing in value, in order to get Bear Stearns to continue to invest in his K1 Funds.
