The Morning Brief: Highfields Takes Hit on Ocwen Bet
Jonathon Jacobson’s Highfields Capital Management, which was reportedly hurt by a bet on mortgage-servicing company Ocwen Financial Corp., is expecting redemptions to come in at about 3 percent of its $12.5 billion in assets, according to a Bloomberg report. The Boston-based hedge fund firm was said to be up somewhere in the low single digits in 2014, according to the report, citing clients of the hedge fund.
Ocwen’s stock plummeted by more than 70 percent last year amid regulatory questions swirling around the firm. Highfields was also reportedly hurt by a losing bet on Greek bank debt. Last year Jacobson made $500 million after posting a 27.3 gain in his main fund in 2013, enabling him to rank number 12 on Alpha’s annual Rich List ranking of top-earning hedge fund managers. The firm has only had two down years since its inception in 1998, according to Bloomberg.
Thierry Lucas, who founded London-based hedge fund firm Portland Hill Capital, and was named an Institutional Investor Hedge Fund Rising Star in 2013, finished last year strong, posting a 3.6 percent gain in his firm’s main hedge fund. Even so, Lucas’s fund returned just 0.3 percent in 2014, according to its December letter to clients. The long-short and event-driven firm had a tough time gaining traction after losing money in five of the first seven months of the year.
As of the end of December, the fund had a 62 percent gross exposure to Europe, compared with 18 percent to the U.S., 2 percent to Hong Kong and 17 percent to what it calls “others.” Breaking down the European bet, it had a 26 percent gross exposure to the U.K., 18 percent to France, 12 percent to Germany, 4 percent to Italy and 2 percent to the Netherlands. “Looking into 2015, the starting point is that investors continue to be very strongly overweight North American equities and underweight European equities, which we believe has created an attractive valuation gap,” the fund’s December letter states. Lucas, who grew up in Portugal and France, worked for Eric Mindich’s Eton Park Capital Management before launching Portland Hill in 2012.
Nelson Peltz’s Trian Fund Management sold more than 6 million shares of Family Dollar Stores, leaving the New York hedge fund firm with a little more than 2 percent of the discount retailer’s total shares outstanding. Last week Family Dollar shareholders approved a takeover offer from rival Dollar Tree, thus rebuffing a higher offer from another rival, Dollar General.
Barry Rosenstein’s Jana Partners sold another 2.6 million shares or so of PetSmart for between $81.14 and $81.52 a share, reducing its total stake to 5.1 percent of the total outstanding. In December, the retailer announced that it agreed to be acquired by a group led by European private equity firm BC Partners for $83 per share in cash, less than five months after New York-based Jana called on PetSmart to seek a buyer for itself.
Omega Advisors’ Leon Cooperman disclosed that he owns 5.28 percent of Harbinger Group, the investment firm with a diversified product lineup formerly headed by the now-disgraced one-time hedge fund manager Philip Falcone.