The Morning Brief: What Investors Expect from Hedge Funds
Virtually every hedge fund expert has modest expectations for performance for this year. Some 99 percent of hedge fund managers and 98 percent of hedge fund investors interviewed in June expect performance this year to come up short of last year’s gains, according to a new survey from London-based industry tracker Preqin. In fact, all but 1 percent of hedge fund managers predict that Preqin’s All Hedge Funds benchmark will come in at 11 percent or below. This compares with the 11.69 percent return posted by hedge funds in 2013. What’s more, a little more than half of the two camps are expecting performance to fall in the 4 percent to 6 percent range. As of June 30, the Preqin All Hedge Fund benchmark has posted a 3.68 percent net gain.
New York–based hedge fund firm Starboard Value on Tuesday announced a settlement with Quantum Corp., a computer storage company. Under the deal, Quantum will re-nominate Starboard CEO Jeffrey Smith and two other current Starboard-recommended directors, as well as one other Starboard nominee, at the 2014 annual meeting. If Quantum does not meet certain agreed-upon objectives in its fiscal 2015 business plan, Starboard will be able to add two additional directors. On the other hand, if Quantum achieves all the objectives, the agreement’s standstill provisions will remain in effect until the 2016 annual meeting.
In an interesting provision of the agreement, Starboard agreed to vote all of its shares in favor of each of the board nominees at the 2014 annual meeting, unless Institutional Shareholder Services (ISS) “recommends otherwise regarding any such proposal.” Starboard is also subject to certain standstill provisions up to the 2015 annual meeting. The hedge fund owns 17 percent of the company’s outstanding shares, including shares underlying Quantum’s convertible senior subordinated notes.
Bank activist Lawrence Seidman, the founder of Parsippany, New Jersey-based Seidman & Associates, added 100,000 or so shares of Fox Chase Bancorp to bring his total holding to 762,605 shares, or 6.29 percent of the total outstanding in the Hatboro, Pennsylvania company, which owns 10 branch offices.
Steven Cohen’s family office, Point72 Asset Management, made $1 billion in profits in the first half of this year, according to DealBook. Cohen, of course, is no longer permitted to have outside clients, given that his previous firm, SAC Capital Advisors, pleaded guilty to insider trading charges. Last year, he personally made $2.4 billion, ranking number two in his final appearance on the rich list.
Meanwhile, Point 72 also disclosed it owns 5 percent of Bloomin’ Brands, Inc., a large casual dining company best known for its Outback Steakhouse chain.