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The Morning Brief: Number of Investors With $1 Billion-plus in Hedge Funds Climbs

A new report shows that the number of investors whose hedge fund allocations top $1 billion has increased, with pension funds leading the way.

A growing number of institutional investors are building up their hedge fund portfolios to more than $1 billion. Over the past year 36 investors have joined Preqin’s Billion-Dollar Club ranking of investors putting more than $1 billion into hedge funds, while 28 have left, for a net gain of eight investors. Altogether, there are now 242 investors who have $1 billion or more invested in hedge funds. They have a combined $805 billion invested in hedge funds, up 6 percent from June 2016.

This group of investors now accounts for 24 percent of total hedge fund industry assets under management, according to the study. Preqin points out that public pension funds account for the biggest group, representing 28 percent of the capital in the Billion Dollar Club. They also had the most new entrants — 11 investors — over the past 12 months. Preqin also notes that the average Billion Dollar Club investor allocates 16 percent of their assets to hedge funds, compared with 14.5 percent for all of the other investors. However, a year ago club members plunked down 16.8 percent of assets to hedge funds. These figures, however, don’t tell the entire story. In the past 12 months, 37 percent of club members reduced their total allocations, while 28 percent increased them.

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Marcato Capital Management received support from another proxy advisory firm in its battle with Buffalo Wild Wings. Egan-Jones is recommending that shareholders support the activist hedge fund’s four director nominees at the upcoming annual meeting. It joins ISS, which has already issued a report supporting Marcato.

“We believe that the dissident shareholders’ nominees, if elected, will make significant contributions to the company as evident in their skills, experience and qualifications in the restaurant and financial business and will be highly committed in working with the incumbent members of the Board and management,” Egan-Jones states in an excerpt provided by Marcato in a press release.

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Bill Ackman’s Pershing Square Holdings is enjoying a strong quarter. The activist hedge fund is up 5.7 percent for the period through May 23. As a result, it is up 2.9 percent for the year. This compares with a 2.2 percent gain posted by another high-profile activist, Trian Partners, for the year through May 12. Marcato International is up 8 percent for the year through May 15.

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