This content is from: Portfolio
The Morning Brief: Comac Is Latest Fund Felled by Franc
Global macro shop Comac Capital is the latest casualty of the Swiss National Bank’s surprise move last week to freely float the Swiss franc, according to a Reuters report. The London-based hedge fund firm is returning $1.2 billion in external capital to clients, having lost 8 percent after the Swiss currency surged versus the euro. Comac, founded by Soros Fund Management and Balyasny Asset Management veteran Colm O’Shea, posted double-digit gains from 2007 to 2010 and managed $6 billion at its peak in 2010. But it had been struggling since 2012, a difficult period for many global macro managers. The firm will continue to trade with about $150 million in internal capital, according to the report.
In a separate report, London-based BlueCrest Capital Management shut down a portfolio run by currency trader Peter Von Maydell after he suffered losses from the Swiss franc’s upward move, according to BusinessWeek. He is still with the firm, according to the report. And Marko Dimitrijevic’s Everest Capital said it is closing down its $830 million Everest Capital Global fund after its short bet on the Swiss franc wiped out the fund. We earlier reported that Robert Citrone’s Discovery Capital Management moved fast to deftly mitigate its losing bet on the Swiss franc following the SNB’s surprise announcement last week. As a result it was only down 2 percent to 2.5 percent for the year through last Friday.
Chris Rokos, one of the co-founders of London-based Brevan Howard Asset Management, has settled a lawsuit with his old firm, paving the way for him to launch his own hedge fund firm. Rokos — “R” in Brevan, who left the firm in 2012 — had signed a contract at Brevan Howard that contained a five-year non-compete provision. Under their deal, Brevan Howard will take “a financial interest” in the new firm, according to a Reuters report citing an announcement.
Rokos made about $4 billion for Brevan Howard’s flagship macro fund between 2004 and 2012 and earned about $900 million during this period, according to Reuters, citing court documents. In fact, Rokos twice qualified for Alpha’s annual Rich List ranking of top-earning hedge fund managers. In 2008 he earned $90 million and in 2011 he earned $200 million. In a lawsuit filed last May, Rokos asserted that the non-compete clause would “atrophy” his skills and that his professional reputation would be “irreparably damaged,” according to the report.
Shares of Insperity surged 13.5 percent on Wednesday after Jeffrey Smith’s Starboard Value late Tuesday reported that it now owns a 13.2 percent activist stake in the human resources outsourcer and called on the company to put itself up for sale. The hedge fund firm did not own any shares of the company as recently as the end of the third quarter, according to regulatory filings.
In a letter fired off to Insperity chairman and CEO Paul Sarvadi and the company’s board of directors, Smith stressed that the stock is “deeply undervalued” and noted that there are steps the company can take “to create significant value,” including reducing operating expenses, improving capital allocation, improving corporate governance and exploring “all available alternatives to maximize shareholder value.”
More specifically, Smith advocated reducing excessive corporate overhead expenses, including selling its two corporate jets, and more efficiently allocating advertising expenses, including shifting advertising away from expensive television advertising, golf tournaments, and other golf and sports-related marketing. Smith also called on the company to buy back its stock and sell the company to either a financial or strategic buyer. He also identified several corporate governance practices to change, including “excessive” executive compensation, numerous related-party transactions, the lack of an independent chairman, a staggered board of directors and the company’s poison pill.
Shares of Actavis jumped 2.5 percent, to $275.77, after Deutsche Bank raised its price target on the pharmaceutical company’s stock from $280 to $330. Noting that the company will have a $110 billion market capitalization when it completes its $66 billion acquisition of Allergan in a few months, the investment bank notes that the newly merged company with have high revenue and EPS growth, strong and diverse branded and generic franchises, and a strong and shareholder-driven management team.
“We believe the new Actavis should be a core holding for investors,” Deutsche Bank adds. The stock was the fifth largest holding of Greenwich, Connecticut-based Viking Global Investors at the end of the fourth quarter, according to its recent letter to investors. In addition, Daniel Och’s New York-based Och-Ziff Capital Management was one of the top-10 holders of the stock in the third quarter, according to regulatory filings.