This content is from: Portfolio

The Morning Brief: The Hedge Fund and the CIA Interrogator

It is not unusual for hedge fund managers to subject potential hires to personality tests. Tiger Management’s Julian Robertson, Jr. famously did so for years, as did SAC Capital’s Steve Cohen. Usually psychologists administer these tests. However, Jason H. Karp, founder of Tourbillon Capital Partners, shocked attendees to this week’s Milken Institute Global Conference by saying that he uses a former CIA interrogator to conduct the test. He said he is mostly looking for whether traders and analysts display an “openness to change.” In other words, according to businessinsider.com, how easily can they alter their views if they receive conflicting information. “And I found that [openness to change] combined with a variable that’s in psychology called ‘grit’— in our business we call it ‘resilience’— those are the two factors we search for the most,” Karp said. He also said he likes to hire people who had a spectacular failure in their life and were able to persevere. Karp, who launched his firm in 2012, also reportedly told the audience: “It’s helpful on how to manage them,” he said. “Some people are push, some are pull. Some people actually respond better to criticism and some respond better to a carrot.” Karp previously worked for Carlson Capital and Cohen’s CR Intrinsic.

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Kenneth Griffin’s Citadel disclosed that it owns more than 9.3 million shares of Lennar Corporation, or 5.3 percent of the total outstanding of the homebuilder.

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Deutsche Bank raised its price target on hedge fund favorite Valeant Pharmaceuticals International from $200 to $207 and raised its estimates, citing higher sales and gross margins at the drug company following the release of first-quarter results. However, it is keeping its Hold rating on the stock, noting that shares are trading above its new target. “But we note that our estimates could prove conservative if Valeant can drive double-digit organic revenue growth beyond 2015,” the investment bank added in a note to clients.

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Deutsche Bank also raised its price target on Mondelez International from $36 to $43. Nelson Peltz’s Trian Fund Management is the third-largest shareholder of the snack foods company, which the activist firm has been urging to seek a merger with PepsiCo. “We felt Mondelez the last 2½ years has lacked balance” in its long-term targets,” the bank said in a note to clients. “But we are now more encouraged senior management will focus on category growth/share gains while also improving margins.”

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