Investors in general are notoriously horrible market timers. This year is no different, apparently. In 2015 and 2016 investors pulled more money out of event-driven funds than any other major strategy, according to data tracker eVestment. Naturally, it has wound up being among the best-performing strategies this year. Event-driven funds are up, on average, by 5.40 percent year-to-date, including 1.28 percent in August, according to eVestment, What’s more, 85 percent of these managers have produced gains this year. This profitable group is up, on average, by 8.12 percent. Event driven-activist funds returned nearly 2 percent last month and are now up 6.56 percent for the year. The only better-performing strategy is distressed, with these funds up 2.18 percent in August and 8.06 percent for the year.
By contrast, managed futures funds took in more new money this year than any other primary strategy. However, they are up just 1.87 percent for the year after losing 2.36 percent in August, making them one of the worst-performing strategies for the year, according to eVestment.
Then there is the case of the multistrategy funds. They pulled in more new assets than any other strategy in the last few years leading up to 2016. Sure enough, last year they returned, on average, less than 1 percent thanks to a difficult second half of the year. In the three months ending in July, redemptions approached $10 billion. However, since January multistrategy funds have gained, on average 4.55 percent. They are now up nearly 3 percent for the year. “It will be interesting to see if enthusiasm returns along with recent good returns,” eVestment notes in a monthly report.
Seagate Technology said that it and San Francisco activist hedge fund firm ValueAct Capital Management have jointly participated in a block trade of about 12.5 million of the data storage company’s shares. As a result of the deal, ValueAct will own a total of about 9.5 million shares, making it one of Seagate’s largest shareholders. At the end of the second quarter, ValueAct already owned 3 million shares of Seagate. The company also said ValueAct has been invited to serve as an observer on Seagate’s board of directors. “Seagate approached ValueAct to execute this transaction and become an investor in our company, given their commitment to and success in creating long-term value for the companies in which they invest,” said Steve Luczo, Seagate’s chairman and chief executive officer, in a press release.
“Seagate has a strong storage technology portfolio and is well positioned to benefit from attractive long-term secular trends,” said Mason Morfit, ValueAct’s president, in a statement. Shares of Seagate closed down 0.61 percent after rising as much as 4.5 percent on an otherwise lousy day for the stock market.
Altogether, ValueAct owned 14 individual U.S. stocks at the end of June. In July the hedge fund firm, which manages $16 billion, reported it boosted its stake in Alliance Data Systems to 4 million shares, or 6.8 percent of the provider of loyalty credit cards and other marketing services. In August it raised its stake in Alliance to 5 million shares, or 8.5 percent of the total. Separately, in July the hedge fund said it raised its stake in Trinity Industries, a maker of industrial products, to nearly 10.4 million shares, or 6.8 percent of the total. ValueAct also recently sold 450,000 shares of MSCI, leaving it with just 850,900 shares of the company best known for its stock indices.
Shares of hedge fund favorite Restoration Hardware surged nearly 3 percent to close at $36.32 on an otherwise down day on Wall Street after several investment banks raised their price targets. On Thursday, the upscale home-furnishings retailer reported second-quarter results that exceeded consensus forecasts. Interestingly, Deutsche Bank points out in a note to clients that the company “pulled forward” results from the third quarter and updated its guidance for the current period to reflect this. Still, while Deutsche Bank raised its target from $28 to $40, it maintained its hold rating on the stock.
Meanwhile, UBS lifted its price target from $32 to $38 and kept its neutral rating on the stock, noting “there is a little less uncertainty on its outlook.” At the end of the second quarter, New York–based hedge fund firms Miura Global Management and Samlyn Capital were among its top-ten shareholders after taking new stakes in the company. The stock is up about 26 percent since the end of June.