The Morning Brief: Funds of Funds Still Down YTD Despite Strong Q3
Data tracker Preqin’s key hedge fund benchmark rose 0.91 percent in September, its seventh-straight profitable month. It gained 4.06 percent in the third quarter, boosting its return for the year to date to 5.41 percent. The firm, which tracks alternative investment strategies, points out that “all leading hedge fund strategies” were profitable in the third quarter, led by equity strategies, up 5.18 percent. Macro strategies gained the least, at 1.94 percent. Funds-of-hedge-funds, however, have not fared nearly as well. They gained just 0.11 percent, on average, in September and 1.90 percent in the third quarter. For the year they are down, on average, by 1.38 percent. Funds of funds that specialize in equity strategies are down 0.71 percent for the year, while multistrategy offerings are off by 1.81 percent through September. On the other hand, funds of CTAs are up for the first nine months, but only by 0.36 percent, after losing 1.54 percent in the third quarter.
Activist hedge fund P2 Capital Partners disclosed it owns 5.3 percent of Blackhawk Network Holdings, which helps companies to boost their brands. In an initial 13D filing, the New York investment firm, founded by Claus Moller, said it took its stake in order to obtain a significant equity position in the company. It notes in typical activist language that it has had or may have discussions with management, members of the board of directors and other shareholders and may make recommendations for boosting shareholder value. These discussions and advice may concern Blackhawk’s operations, capital structure, strategic and extraordinary transactions, management and governance and other matters. As of the end of 2015, P2 managed a little over $1 billion.
Shares of hedge fund favorite Pandora fell 3.5 percent, to close at $12.38. after Credit Suisse cut its price target from $16 to $14. The investment bank cited its “materially reduced” profitability estimates for 2017 for the streaming music company. Credit Suisse also maintained its neutral rating on the stock. At the end of the second quarter, the stock ranked among the top-ten holdings of two New York hedge fund firms, both of which also ranked among the company’s five largest investors: Eminence Capital and Corvex Management. The stock was also the eighth-largest holding of New York-based Tiger Management.