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The Morning Brief: Third Point’s Loeb Apologizes for KKK Reference

The hedge fund founder and charter school booster deleted a Facebook post claiming an African-American New York state senator’s support for public schools does more damage to people of color “than anyone who has ever donned a hood.”

  • By Stephen Taub

Call this an unforced error. Third Point’s Dan Loeb got himself into an embarrassing controversy when he made a reference to the Ku Klux Klan in a social media argument with African-American New York state senator Andrea Stewart-Cousins over school choice. According to various media reports, Loeb, a big supporter of charter schools, posted on Facebook: “Thank God for [New York state Sen.] Jeff Klein and those who stand for educational choice and support Charter funding that leads to economic mobility and opportunity for poor knack [presumably a typo for black] kids,” adding, “Meanwhile hypocrites like Stewart-Cousins who pay fealty to powerful union thugs and bosses do more damage to people of color than anyone who has ever donned a hood.”

The New York Times reported Loeb’s postings. Loeb deleted his posts Thursday evening and sent a statement to the paper that said, “I regret the language I used in expressing my passion for educational choice. I apologize to Senator Stewart-Cousins and anyone I offended. I have taken down the post from Facebook.”

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Shares of Snap plunged more than 14 percent on Friday, to close at $11.83, after the social media company reported disappointing results for the second quarter. In response, UBS cut estimates for the coming year and slashed its price target on the stock from $19 to $12. In a note to clients, the bank said the company’s report “produced a set of quarterly results that continue to leave unanswered many of the long-term debates on the scope of its platform.” It is also looking for the stock to remain volatile. We will know over the next day or two which hedge funds held the stock at the end of the second quarter.

Snap was a favorite holding among hedge funds when it was a private company, including Glade Brook Capital Partners, Lone Pine Capital, Coatue Management, and York Capital Management. At the end of the first quarter following its IPO, the stock became the seventh-largest U.S. long of Coatue. The hedge fund boosted this stake by another 4 percent in the second quarter.

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ValueAct Capital boosted its stake in Seagate Technology by roughly 50 percent. In a 13D filing, the San Francisco activist firm said it bought nearly 7 million shares from July 28 to August 9 for between $32.19 and $33.50 per share. As a result, the firm now owns 21 million shares of the data storage giant, or 7.2 percent of the total outstanding. In a regulatory filing ValueAct said it bought the shares because they are undervalued and are an attractive investment opportunity. Last September ValueAct employee Dylan Haggart was invited to serve as an observer of Seagate’s board of director.

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Three exchange traded funds (ETFs) tracking broad market indices continue to account for roughly three-quarters of Bridgewater Associates’ U.S. equity assets. In the second quarter, the world’s largest hedge fund firm boosted its stake in ETFs that bet on emerging markets. It lifted its largest position — Vanguard Emerging Markets Stock Index Fund — by 9 percent and raised its stake in iShares MSCI Emerging Markets Index by 44 percent. Bridgewater also trimmed its stake in SPDR S&P 500 Trust by 2 percent. This ETF tracks the Standard & Poor’s 500 stock index. Altogether, Bridgewater’s U.S. equity portfolio was valued at a little less than $11 billion at the end of the second quarter, up from $8.8 billion the previous quarter. Firm-wide assets currently stand at $160 billion, according to the firm.

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