This content is from: Portfolio
The Morning Brief: Corporate Execs, ValueAct’s Ubben Unveil Governance Principles
A group of some of the best-known CEOs in America, including Mary Barra of General Motors, Jeff Immelt of General Electric, Jamie Dimon of JPMorgan Chase, Larry Fink of BlackRock, and Warren Buffett of Berkshire Hathaway — along with shareholder activist and ValueAct Capital founder Jeff Ubben — unveiled a list of what they called “commonsense corporate governance principles” on Thursday. The list — launched at a time when shareholder activism remains a popular hedge fund strategy with investors, while critics charge that shareholder activists do more harm that good in terms of societal benefit — is the result of about a year of meetings, according to Buffett, who discussed its contents on CNBC on Thursday.
The manifesto doesn’t represent consensus among all of those who signed it, but it lays out the executives’ hopes for improved corporate governance and better communication between boards and investors. Among the recommendations: “No board should be beholden to the CEO or management”; “Diverse boards make better decisions”; and “A common accounting standard is critical for corporate transparency.” In discussing the report on CNBC, Buffett also mentioned what he sees as the dangers of the pressure for companies to release guidance about future performance.
Hedge fund managers may dislike Brexit on a personal level, but apparently they’re okay with it from a business perspective. New data from London-based industry tracker Preqin says that 16 percent of hedge funds launched in the second quarter are focused on investing in the region, up from just 1 percent in the first quarter. The research firm says managers are hoping to capitalize on opportunities created by the economic uncertainty Brexit has unleashed.
“The run-up to and aftermath of the UK’s decision to leave the EU caused volatility across several markets within Europe and beyond,” said Amy Bensted, Preqin’s head of hedge fund products, in a press release. “Hedge fund managers have seen increased opportunities to capitalise on this turbulence, and more Europe-focused hedge funds have been launched by managers both in and outside the region.”
Meanwhile UCITs-compliant funds — which enable non-European firms to raise money from European investors — accounted for 18 percent of new funds launched in the second quarter. Equity strategies were the most common new funds, accounting for 53 percent of second-quarter launches, while credit strategies accounted for 18 percent of new launches.
Platinum Partners, the New York-based hedge fund firm at the center of a bribery scandal, said it has hired an independent monitor to handle the liquidation of its two hedge funds, Reuters reported. The firm hired Bart Schwartz from Guidepost Solutions to “assist...with the development and implementation of a plan for the orderly liquidation of the Funds under management,” according to a letter Schwartz sent to Platinum clients that was obtained by Reuters. Guidepost will report to the Securities and Exchange at least monthly, according to the report, updating the regulator on asset sales as well as any potential illegal activity.
Last month the feds charged Murray Huberfeld, a founder and part owner of the firm, with committing wire fraud after he allegedly paid a $60,000 bribe to Norman Seabrook, who has been president for more than 20 years of Correction Officers’ Benevolent Association — New York City’s largest correction officers union and the largest municipal jail union in the United States — to obtain an investment from the union in Platinum’s funds. According to a recent profile by Reuters, Platinum managed $1.35 billion, and its two main funds were up between 9 percent and 10 percent last year. The firm is planning to stay in business despite liquidating the two funds that comprise the bulk of its assets, a source familiar with the firm told Reuters.