This content is from: Portfolio

Morning Brief: Event-Driven & Equity Funds Still Tops

Tax reform drives stocks higher, while macro strategies lag.

Event-driven and diversified long/short equity funds outperformed during the first week of 2018, Lyxor said in its weekly report on hedge funds.

“The fallout from the U.S. tax reform spread and boosted event positions, as well as L/S equity’s cyclical stocks,” Lyxor reported. It said that “macro and neutral equity strategies lagged,” with the former suffering from weakness in the U.S. dollar and interest rates. It has downgraded its global macro outlook to neutral.

Lyxor also gave a note of caution on M&A deals, saying that regulation risks are “in the picture again,” and that it is underweight quantitative funds “as long as factors are unsettled by broader themes.”

___

One of the most heavily shorted stocks, European jewelry maker Pandora, gave a boost to hedge fund shorts this week. Pandora short sellers made $171 million Thursday, as the stock fell 10.67 percent on an earnings miss, data analytics firm S3Partners reported. Pandora shorts have now made $185 million in 2018 S3 said.

Last year, Goldman Sachs said that 59 hedge funds had shorted Pandora as of the third quarter of 2017, with short interest at 43 percent of the market capitalization. That made it the most shorted stock with a market cap of more than $1 billion at the time.

But “Pandora short sellers missed out on most of Pandora’s 2017 price drop,” S3 Partners said, “earning only $33.2 million in mark-to-market profits on an average short position of $951 million even though Pandora’s stock price was down 27 percent for the year.”

___

Former hedge fund kingpin Steve Cohen has scrapped his three-year lockup period to convince institutional investors to back his return to hedge funds, Business Insider reports.

Cohen’s new hedge fund is expected to launch in February with $3 billion, and “around 20 institutions have written checks of $100 million each,” Business Insider said.

___

Cliff Robbins’ activist hedge fund Blue Harbour Group this week sold 2.9 million shares of Rowan Corp., bringing it below the 5 percent ownership threshold for a securities filing. It now owns 4.6 percent of the company, according to its exit reporting.

___

Carl Icahn has raised his offer to buy all the outstanding shares of Cadus from $1.52 per share to $1.61 per share.

Related Content