A number of hedge fund firms are cheering the announcement that Valeant Pharmaceuticals International agreed to acquire Salix Pharmaceuticals. In what until recently was an unusual phenomenon, shares of the acquirer, Valeant, surged on the news, closing up nearly 15 percent at $198.75 per share.
This is especially great news for long-time holder ValueAct Capital. The San Francisco activist firm, headed by Jeffrey Ubben, is the second-largest shareholder of the Canadian drugmaker, and Valeant is also the firm’s second largest holding. Two Tiger Cub-owned firms are also among the seven largest holders, including O. Andreas Halvorsen’s Greenwich, Connecticut-based Viking Global Investors and Stephen Mandel Jr.’s Greenwich, Connecticut-based Lone Pine Capital. In the fourth quarter Barry Rosenstein’s New York–based Jana Partners raised its stake in Valeant by roughly 2.5 times, making Valeant the hedge fund firm’s seventh-largest holding.
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The average hedge fund turned over 29 percent of its portfolio in the fourth quarter, a slight increase from the previous period, according to Goldman Sachs’ comprehensive quarterly analysis of hedge fund holdings. Goldman says turnover rose most among energy and telecom services stocks and fell in consumer staples and financials. However, turnover among hedge funds’ largest 25 percent of positions was just 15 percent, according to Goldman. The investment bank also points out that 65 percent of all long-equity assets held by the 854 hedge funds it tracks are invested in the ten largest positions among those hedge funds. This compares with 32 percent for large-cap mutual funds and 22 percent for the average small-cap mutual fund. The ten largest funds in the S&P 500 account for 17 percent of the index’s total market cap and three percent of the Russell 2000 index’s total market cap.
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Jeffrey Smith’s Starboard Value continues to reduce its stake in Tessera Technologies to 6 percent from 7.1 percent. Shares of the semiconductor company have more than doubled from their mid-January 2014 low of about $18.
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Kenneth Griffin’s Chicago-based Citadel disclosed that it more than tripled its stake in Jones Energy to more than 1.4 million shares, or 7 percent of the oil and gas company’s total outstanding.
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Commodity trading advisers and managed futures funds were the top performers among hedge funds globally in January, posting a gain of 4.09 percent, according to a new report from Deutsche Bank. The report points out that CTA and managed futures funds posted the strongest returns in January in Europe, gaining 5.47 percent. In the U.S., however, macro led the way, gaining 3.63 in January, while in Asia, long-short strategies led with a 1.53 percent gain in January.
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Another data tracker, BarclayHedge, reports that the Barclay CTA Index rose 3.41 percent in January. “Trends from the prior month stayed on track in January as commodity prices continued to move lower while bonds, equity markets outside the U.S., and the U.S. dollar all moved higher,” said Sol Waksman, founder and president of BarclayHedge, in a press release. The Barclay’s Currency Traders Index rose 4.11 percent to lead the way among the individual CTA groups after gaining just 3.31 percent for all of 2014.
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Hedge fund administrator S&C GlobeOp said its Forward Redemption Indicator for February 2015 was 3.64 percent, up from 2.49 percent in January. This is consistent with historical averages, said Bill Stone, chairman and chief executive officer of SS&C Technologies, in a press release.
