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The Morning Brief: Facebook Surges on Buyback Plans
Shares of hedge fund favorite Facebook surged more than 4 percent, to close at $121.77, on Monday after the social media giant announced plans to repurchase up to $6 billion in stock. This is the company’s first buyback program. Before the announcement, the stock was down about 12 percent from its high.
Wall Street applauded the news. “We view this as a welcome launch of a capital return program,” said Deutsche Bank in a note to clients Monday morning. “We would add to FB positions after the recent pullback given shares represent an outstanding value.” The stock is the largest long holding of Tiger Cub Coatue Management and the second largest long of Tiger Cub Viking Global Investors.
Shares of Lifelock surged nearly 15 percent, to close at $23.81, after computer security giant Symantec agreed to acquire the identity theft protection company for $2.3 billion. In mid-June, we reported that Paul Singer’s sometimes-activist hedge fund firm Elliott Management Corp. disclosed it owned 8.8 percent of Lifelock. In a regulatory filing, the hedge fund firm said the stock was undervalued and that Elliott initiated a dialogue with the company’s management and board of directors about “opportunities to enhance shareholder value.” Elliott stressed at the time that “there is material upside” from the company’s stock price on May 20 of $12.19 per share, the day before it started to significantly buy shares. Apparently he was right.
PointState Capital disclosed it owns nearly 1.5 million shares of Comstock Resources, or 9.9 percent of the total outstanding shares of the energy company. At the end of the third quarter, PointState did not own any common shares of Comstock but did have sizable positions in two different convertible securities issues.
Hedge funds suffered about $14.2 billion in redemptions in October, the fourth month of net outflows out of the past five and the seventh in 2016, according to a new report from data tracker eVestment. Altogether, $77 billion has been redeemed from hedge funds this year; there is now just a tad more than $3 trillion invested in hedge funds.
Event-driven funds suffered the largest reduction in assets among major strategies, with $4.49 billion in outflows in October. Macro hedge funds suffered their tenth monthly net outflow over the past year. Meanwhile, managed future funds, many of which are losing money this year, endured $1.63 billion in outflows last month. Even so, fund flows remain positive for the year.
The SS&C GlobeOp Forward Redemption Indicator rose to 4.25 percent in November, up from 3.40 percent in October. However, the November figure was down from 4.90 percent a year ago.
“With this favorable result, the 2016 year-to-date monthly average redemption rate is running slightly lower than for the same period of 2015,” said Bill Stone, chairman and chief executive officer of SS&C Technologies, in a press release. “This stability in redemptions indicates that despite this year’s market turbulence, investors are maintaining their allocations to the hedge fund sector.”