This content is from: Portfolio

The Morning Brief: Och-Ziff Faces Big Outflows — Again

More woes for Och-Ziff Capital Management Group. The embattled New York hedge fund firm reported that its total assets under management fell by $2.3 billion in September, to $36.9 billion. Given the performance of its main multistrategy hedge funds, it is safe to assume that all or most of this decline is due to redemptions. After all, its flagship OZ Master Fund returned 0.65 percent last month, boosting its gain for the year to 1.10 percent. The OZ Asia Master Fund fell by just 0.23 percent and is now down 3 percent for the first nine months. And the OZ Europe Master Fund was essentially flat for the month, declining by a mere 0.07 percent in September. It is still up 1.16 percent for the year. Last week, Och-Ziff — including its subsidiary OZ Africa Management GP — agreed to pay a total of $413 million to settle bribery charges with the U.S. government, while CEO Daniel Och agreed to pay nearly $2.2 million to settle charges that he and CFO Joel Frank caused certain violations of the Foreign Corrupt Practices Act. Frank also agreed to settle the charges. Och-Ziff also acknowledged it expected to enter into a deferred prosecution agreement with the Justice Department as part of a parallel criminal investigation.

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Daniel Loeb’s Third Point Offshore fund, managed by New York-based hedge fund firm Third Point, gained 1.1 percent last month, boosting its return for the year to 7.2 percent. This is just slightly below the 7.8 percent gain for the Standard & Poor’s 500 stock index in the first nine months of the year. Third Point’s performance was driven last month by its credit book, which gained 0.70 percent, all on the long side. The equity book gained 0.20 percent, thanks totally to its long bets. The long side rose 0.50 percent, while the short side lost 0.20 percent. The fund’s so-called other group gained 0.20 percent. Entering October, Third Point boosted its net exposure in its equity book to 54 percent, from roughly 47 percent the previous month. However, Third Point more or less maintained its net exposure in the credit book, at a little above 29 percent.

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ValueAct Capital Management sold 9 million shares of Baker Hughes, cutting its stake in the oil field services company to 7 percent. In July ValueAct, a San Francisco activist firm, agreed to pay $11 million to settle with the government over its purchase of more than $2.5 billion worth of voting shares of Haliburton and Baker-Hughes, which had been planning to merge. The Department of Justice had accused the hedge fund firm of violating disclosure rules under the Hart-Scott-Rodino Act.

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Activist firm Marcato Capital Management cut its stake in Sotheby’s to 3.4 percent. As a result, San Francisco-based Marcato no longer needs to file updates whenever it sells additional shares of the auction house, as it is now under the 5 percent threshold.

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New York-based Soroban Capital Partners bought 7.5 million shares of Autodesk, boosting its stake in the maker of 3-D design software to more than 17.8 million shares, or 8 percent of the total outstanding. This transaction was disclosed in a 13G filing, suggesting it is a passive investment.

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