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Morning Brief: Hedge Funds See Largest January Inflows in Ten Years

Investors pumped more than $14 billion into hedge funds last month, according to eVestment.

  • By Stephen Taub

Investors extended their renewed love affair with hedge funds in January. Last month they pumped about $14.12 billion in new money into hedge funds, making it the best start to a year since the 2008 financial crisis, according to data tracker eVestment. As a result, total assets in the hedge fund industry currently stand at a record $3.37 trillion. Macro funds led the way, attracting $6.87 billion in new money last month. Long-short equity pulled in $4.16 billion, while directional credit strategies attracted $3.62 billion. On the other hand, multistrategy funds and event-driven funds suffered net redemptions. Interestingly, eVestment notes that products targeting U.S. markets have seen “a slow but steady pace” of redemptions.

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Starboard Value’s Starboard V&O Fund nominated four individuals to the board of directors of Cars.com, an auto-related transaction website. The move was made just before the company’s February 22 deadline for submitting nominees. In a letter sent to Cars.com’s secretary, Starboard said it hopes to continue to engage in “constructive dialogue” with management and the board about ways to unlock value, including changing the composition of the board. The four nominees include Gavin Molinelli, a partner of Starboard Value, and Meredith Adler, a managing director and senior equity analyst at Barclays Investment Bank (her biography mentions she was ranked as the No. 1 Food and Drug Retailing Analyst in Institutional Investor’s annual ranking of equity analysts for 14 years in a row, and in 2011 she was entered into the II All-America Research Hall of Fame.) The other nominees include Michael Kelly, co-founder of Kelly Newman Ventures, an advisory and investment firm, and Bryan Wiener, who has served as the executive chairman of digital marketing agency 360i since February 2014.

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Ricky Sandler’s Eminence Capital boosted its stake in Wendy’s to 12.1 million shares, or 5 percent of the fast-food giant’s total. The filing was made in a 13G, meaning it is a passive investment.

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It looks like the longs were right. Shares of Herbalife Friday surged more than 3 percent and closed at a new high of $85.85 after the multi-level marketer of health and nutrition products reported quarterly revenues and adjusted earnings that beat expectations. Although revenues fell in the U.S., they grew in China and the EMEA (Europe, the Middle East, and Africa) region. This is the stock Pershing Square’s Bill Ackman famously shorted, asserting the company was a pyramid scheme. On November 1, he closed out his short position but replaced it with put options. The largest long investor, however, remains Carl Icahn. In late January D.E. Shaw reported owning a 5.4 percent stake in the company.

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