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The Morning Brief: Emerging-Markets Hedge Fund Assets Set Record
Assets in emerging-markets hedge funds rose by $9.8 billion in the third quarter, bringing the total to a record $199.66 billion. All of the gains were thanks to performance as net investor outflows came to $850 million, according to a new report from Hedge Fund Research.
The HFRI Emerging Markets (Total) Index rose 5.06 percent in the third quarter and gained another 1.10 percent in October, led by gains from Latin America, Russia, and emerging Asia. The HFRI EM index was up 9.1 percent for the year through last month. The best performers were hedge funds focused on Latin America. The HFRI Emerging Markets: Latin America Index surged 6.2 percent in the third quarter and 5.4 percent in October, bringing its gain for the year to 33 percent. Keep in mind, however, that performance was down in four of the past five years, including the past three.
Shares of hedge fund favorite Marvell Technology Group jumped 10.8 percent on Friday, closing at $14.80, after the semiconductor maker reported quarterly results that were much better than expected and announced a $1 billion stock buyback. That buyback will replace the company’s current $3.25 billion program, which has only $115 million left.
Marvell is a major target of Jeffrey Smith’s Starboard Value, its largest shareholder. The company activist hedge fund manager Starboard’s third-biggest long. Other investors that rank among the top ten holders include Jericho Capital Asset Management and Passport Capital, both of which count the stock as their No. 4 U.S. long. In April, Marvell announced a settlement with Starboard, appointing Peter Feld, the hedge fund firm’s research director, and two other people recommended by Starboard to its seven-member board.
On Friday, Barclays raised its price target on Marvell’s stock from $12 to $14, citing the strong results and guidance from the company. However, the bank maintained its equal weight rating, stressing that it’s sitting on the sidelines “pending further clarity on what will drive top-line growth once the current restructuring efforts have played out.”
Deutsche Bank raised its price target for Marvell from $13 to $15 but maintained its hold rating on the stock. “We believe management is taking the right steps to focus on the core businesses and costs, but view the majority of the benefits as already reflected in the share price,” the bank told clients in a note.
Elliott Management Corp. was one of several investors that participated in the newly closed $159 million Series E financing round for Sigfox, which operates a cellular network and describes itself as a provider of connectivity for the Internet of Things. This is at least the second investment in the French company by the New York hedge fund firm headed by Paul Singer.