The Morning Brief: Horseman Global and Odey Ride Net-Short Positions
Two hedge funds that have been net-short for all or part of the past year got off to strong starts this year. Russell Clark’s Horseman Global Fund, managed by London-based Horseman Capital Management, rose 8 percent last month. The fund finished 2014 up 12.7 percent after gaining about 2.7 percent in December. Entering 2015, Clark, who has been net short for several years, was still net-short equities and long bonds. His fund’s net-short position was roughly 50 percent. Meanwhile, Crispin Odey’s Odey European, managed by London-based Odey Asset Management, posted a 3.6 percent gain in January. Odey was 10 percent short in his equity book at the beginning of the year.
On the other hand, several high-profile managers posted big losses in January. Larry Robbins’ Glenview Capital Partners fell 4.5 percent while Richard McGuire’s Marcato International dropped 5.9 percent, according to new data from HSBC, which tracks hedge fund performance. The month was a mixed bag for several of the big-name macro funds that don’t rely on computers to make investment decisions. For example, the Fortress Macro Fund dropped about 6.8 percent. On the other hand, Alan Howard’s Brevan Howard Fund rose 3.32 percent, Paul Tudor Jones II’s Tudor BVI Global fund advanced 2.68 percent while Andrew Law’s Caxton Global Investment grew 3.4 percent.
Interpublic Group is the latest company to surrender to activists. The advertising giant announced a compromise deal with Paul Singer’s New York-based Elliott Management, agreeing to appoint three new independent directors to its board. Interpublic says it identified the individuals through a search process as well as from Elliott’s input. “We are pleased with the constructive dialogue we have had with Interpublic,” says a statement from Jesse Cohn, head of U.S. equity activism at Elliott, which owns 6.9 percent of Interpublic. As is customary, Elliott also agreed to certain standstill and voting provisions.
The Hathersage G10 Macro Access Strategy posted an 18.4 percent gross gain in January, according to a report from The Citi Access Managed Investment Platform. In fact, Hathersage G10 is up a total of 104 percent since August 2011, making it the top-performing fund of those with more than two years of performance on the Citi Platform, according to another Citi report. A knowledgeable source reports that in January the foreign-exchange fund made money betting on the euro falling versus the Swiss franc, the dollar rising versus the Japanese yen and the euro falling versus the dollar. South Norwalk, Connecticut-based Hathersage Capital Management was founded in 1991. Bill Lipschutz, principal and director of portfolio management, has been a forex trader for more than 30 years and was featured in the 1992 book, “The New Market Wizards: Conversations with America’s Top Traders” by Jack Schwager.
Shares of embattled Ocwen Financial surged 13.6 percent to close at $7.51. On Thursday, the mortgage servicer said in a filing that in 2014 state regulators launched some 46 examinations of one or more areas of its operation, and 25 exams in 19 states. As of year-end, Ocwen said it was aware of 21 pending exams in 15 states. “Based on our current engagement with state regulators, we are not aware of nor do we anticipate any material fines, penalties or settlements, although we do expect to resolve two open legacy matters for a total of less than $1 million,” Ocwen added in the filing. Perhaps more importantly the company assured investors that it is currently in good standing with all of its outstanding debt agreements, including its senior secured term loan. “In 2014, we generated significant normalized adjusted cash flow from operations,” it said. A number of hedge funds lost money on Ocwen last year, including Leon Cooperman’s New York-based Omega Advisors, Jonathon Jacobson’s Boston-based Highfields Capital Management and Matthew Iorio’s Greenwich, Connecticut-based White Elm Capital. We reported several weeks ago that Manhattan Beach, California’s Chapman Capital has been investing in Ocwen, believing the stock could double, according to a Bloomberg BusinessWeek report. It will be interesting to see over the next week or so who bought the stock at the end of last year when it hit bottom. Of course, we won’t know who bought in January unless they take at least 5 percent positions.